In this training, we answer a Thriver's question that asks when to stop pitching in the face of adversity and how to deal with rejection. We dig into 7 other billion dollar companies that were rejected too and give Thrivers action steps for how to deal with that rejection.Sign Up to Watch
Marshall: Okay, so the fifth one that Bessemer Venture Partners they passed on was FedEx. Incredibly BVP passed on Federal Express seven times. Not one, two, three, four, five, six times, but seven times. Clay: There's CEO, the founder of FedEx, I'll put the graphic on the screen. This dude worked for almost a decade before the company got to any profitability at all. I mean, it was just a grind. With your business, [inaudible 00:00:30] how many different businesses are you involved? I don't want to put you on the spot with the number but there's like seven, eight? Dr. Z: I own six and I'm involved in a few others. The nice thing about when every year you're starting a business and you have already businesses then you don't have to make a profit day when you can pour money back to the business and build a genome. Sometimes you had that luxury and if you do, you can just make it stronger and stronger and stronger. Clay: Tell me about, [inaudible 00:00:57] the sleep center. For Thrivers who don't know, can you describe what the sleep center is? Dr. Z: It's a diagnostic sleep center where people come in, they're diagnosed with sleep problems, they come in and they have to sleep at least ... a minimum is 6 hours. We had come up to 24 different electrodes, different testing things. They sleep for a minimum 6 hours and when they get up we have a doctor read the sleep study, then they diagnosed what the problems are. Clay: You in Tulsa, you know about this business. [inaudible 00:01:23] Midwest, you might know but Zzz's Sleep ... Dr. Z: Dr. Zzz's Sleep Center. Clay: Multiple Zzz's. Dr. Z: Kind of like you're sleeping. Clay: Yeah. You have that ... but what kind of rejection did you deal with when you were trying to get that into the market place? Did it take a while for you to get the [crosstalk 00:01:36]? Dr. Z: In fact it did, because we did a different kind of model than was out there. It's like [inaudible 00:01:42] they changed some laws in the state of Oklahoma, we tried to counteract, non sleep guy, getting him to sleep. When they changed the laws, when they changed the rules you just say where are the new rules, where are the new laws and let's adjust and adapt and do what we need to do to carry on with business. Clay: Let's talk about the laws thing really quick, because think about this. If you're watching right now we have a video version on thrive15.com where you can go online and listen to the podcast or whatever. Maybe you log into your friend's account and shame on you, but a very resourceful video. The thing is if you're out there growing a business, you're going at some point half the laws are going to change. Something's going to happen that's ... same about YouTube. YouTube is breaking all sorts of laws right now, the copyright laws have changed. Airbnb. There's like a class action they're trying to stop Airbnb [inaudible 00:02:30] someone's house with Airbnb. Facebook. They're always dealing with legal ... I mean. Dr. Z: Uber. Clay: Uber. Dr. Z: Uber is getting shut down in different countries, yeah. Clay: There's no business that you've probably been involved or I've been involved, where there was not some sort of legislative change that affects things or some loop hole you have to. Dr. Z: If you're successful that means you're [inaudible 00:02:49] offs a group of people. The bigger the group of people you are the more likely you are to encounter legislative push back. Clay: Yeah and I just want to encourage you if you're listening to this and you're going gosh, I feel like there's some laws changing in my town, what do I do? I just know for me, we did wedding photography. It might seem like a big little thing for someone. They used to take photos in the park, you didn't have to pay for it. Then we started taking so many photos in the park it became almost kind of creeper, you know? Where people would go that's epic photography, you're in the park with your date and there's like 17 photographers and [inaudible 00:03:23] paparazzi. It changed the laws they said now you have to be a permit to go into this park and the permit was very expensive. We had to figure out okay, we're going to have to raise out prices to accommodate this or find a way. You just find a way. Dr. Z: Sure. Clay: Point number six or this is sixth company, billion dollar with the B, billion dollar [inaudible 00:03:40] billion dollar company rejected by a major of [crosstalk 00:03:44] Dr. Z: I'm so excited, I have no idea what it is. [crosstalk 00:03:48] Marshall: Sixth company started by Elon Musk, Tesla. Dr. Z: Oh yeah, that makes sense. Marshall: Have you driven a Tesla before? Dr. Z: I've driven in a Tesla, a good friend of mine has one. Marshall: Okay. Tesla in 2006, Byron Deeter met the team and test drove a roadster. He put a deposit on the car but passed on the negative margin company telling his partners, "It's a win win. I get a great car and some other VCs pay for it." The company passed 30 billion in market cap in 2014. Byron is still on the waiting list for a model X. Clay: I'm going to put the graphic on the screen, so Thrivers can see this, but I don't want to get the amount of time wrong. But I know Tesla took an unbelievable amount of time to make a profit. It was a long time, years and years and years and years. Specifically, I want to go back to the bank example here because I think that's the one that Thrivers maybe wouldn't think about as being a challenging industry. When you got into the banking you were competing against the biggest banks. National banks, regional banks. How did the strategy have to change as you have faced some rejections in the marketplace or a little adversity? What did you have to go from here to here? What did you have to change? What kind of pivots did you have to make to do that? Dr. Z: Most of them went to the bank on every corner and they wanted everybody's banking accounts and most of big banks, actually, most of profits made on people [inaudible 00:05:09] checks. Clay: Really? Unbelievable. Dr. Z: You can do the research and see that. We wanted to be more of a specialized bank for business builders. We didn't want to build a bank on every corner. We wanted to have people that went out and visited with them, with professionals and small business owners and we wanted to provide them a service that was not being provided by the other banks. That was kind of our niche and that's what we went out and did. We did a lot of online banking. We brought a green banking philosophy into it. A little paper and most of it online. With lot of hard work in those first few years of trying to dig, dig, dig now we're profitable and doing very well.
Clay: I just encourage you, if you're listening, you can go on Google this stuff. You can check it out. Z is a real entrepreneur. You have done so well, I want to point out, that you choose to wear a soccer jersey every day. Can you explain why you wear a soccer jersey, how that ties in? Why do you wear one? Why aren't you wearing scrubs or a doctor's outfit? Dr. Z: Well, you know, because 1.) I like soccer or futbol, as it's known around the world. And I played it and I still do it in some old man's league, but I do it as a reminder to myself that I can do it. Every now and then, most of the time I'm the buyer, but every now and then I'm the seller. When I'm the seller, I still have to dress in what I call my monkey suit or my suit, if you will. Clay: I am the czar of the monkeys. Dr. Z: Yes. It's kind of fun to be able to wake up and say, "What do I want to wear today?" I like the soccer jerseys, so that's what I wear. Clay: I have an inner ... I can't quite, we're not on the outside yet here. I'm wearing a Karl Malone jersey today - Dr. Z: Nice. Nice. Clay: [crosstalk 00:01:09] Marshall: Is that the mailman? Clay: The mailman. Dr. Z: The mailman. Marshall: The mailman. Clay: Yeah, the mailman. He's a big deal. Marshall: You know, when we do the mail bag, we should have Karl Malone deliver that. Clay: Okay. Marshall: We should work on that. Clay: Karl Malone, if you're watching this, or listening to this, or you found this transcription, we want you on the program here. So let's go on to the seventh one. Seventh one. Rapid fire. Marshall: Seventh one. Google. Have you guys heard of Google? Clay: No way. Really them, too. I use Bing. Dr. Z: Wow. Marshall: Big Bing fan. Cohen's college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000, she tried to introduce Cohen to these 2 really smart Stanford students writing a search engine. Students, a new search engine, in the most important moment ever for [inaudible 00:01:48] anti portfolio, Cohen asked her, "How can I get out of this house without going anywhere near your garage?" Clay: That had to feel pretty rough. Dr. Z: Wow. Clay: I think the main point of this, drivers is sometimes when you're resilient, you don't make it. I mean, Google's not going to make it. Bing's the one people are using, right? But seriously, to summarize, these 7 billion dollar companies that have all made big successes, you can see rejection is a prerequisite to success. It's just going to happen. Dr. Z: And yeah, who wouldn't think now, looking at each of these that those weren't going to be complete home runs? Clay: If we could all go back in time and bet on these top companies, we would all be billionaires. One thing I will tell you is that, as you mentioned earlier, looking at the character of the entrepreneur is so important to you. You want to the kind of person, Dr. Z, that people say, "Wow. That guy is not going to quit." You want to be the kind of person that doesn't quit, as you opened up with. Marshall, go ahead and queue up our next segment. I'm excited about our next segment because I just want to unleash the beast here and let Z do what he does here. Marshall: So, Z, we've talked about these companies but I think it's about time for you to get real and raw with us here. Okay? So, we're talking about this, but you just need to give it to us straight. I need you to be frank with us. Have you seen a successful business that hasn't faced some kind of rejection? Dr. Z: No, I haven't. In fact, my optometry business when I got out of school, I went to every single bank in Tulsa, Oklahoma. Every bank. Knocked on every door. Sat down at every desk and every one of them said, "No, thank you." I had a contract to buy a practice that was in town. That was a money making deal. I had the deal all signed and sealed and I went to every single one of them and everybody rejected me. Clay: I just want to ask you. Were you, you have your briefcase, you're dressing up sharp for each one of these, you're going there dressing sharp, you're in the suit - Dr. Z: I even had hair gel. Clay: Really? Dr. Z: That's how serious I was. Clay: And you went to all of them? Dr. Z: All of them. Clay: Maybe you should've - Dr. Z: And then I had 1 that said, "Okay, listen. You seem like a nice enough kid. I'm going to do this. I'm going to give you the money but the guy you're buying it from has to put half of it in a CD for 6 months and if you're not successful within 6 months, that CD is ... I can hold that against the loan. But I'll give you the money." And I said, "Oh my gosh. Wow." I said, "Thank you," shook his hand and I walked out of ... I thought I'd hit the home run. I thought finally, somebody - Clay: Boom! Can I get some air horn for that? Dr. Z: Boom! Somebody, yeah. So I go in to the doctor's that I'm going to buy his practice and I sit down and say, "I've got great news. I've got great news." And he says, "Okay, what?" And I said, "I got the money." He goes, "Oh man. That's awesome. That's great." And I said, "But. Here's the parameters." And he looked at me and he goes, "I don't accept that. That's not our deal." Clay: Oh. Dr. Z: I walked out the door without a deal. Clay: Argh. Dr. Z: That's the raw truth. Clay: But you just have to encourage yourself, I guess, in the car, or as you're crying, or ... when you get in the car, were you just, "Come on!" Dr. Z: No. At first I was keying his car and then, no, no. I'm teasing. No, yeah. No. You just have to say, "Okay. Where do I go from here?" The raw truth is I went and I did something kind of crazy. I went and got a job and I started saving my money and then eventually about a year and a half later I was able to get into my own practice.
Clay: I will say I tried to get the money I needed to start my DJ business. It does not seem like a lot for some people. It might not seem like a lot for some people. Some people it seems like a lot. Some people might not think it's a lot at all. I had to get about $20,000 together. I remember sitting down and going, "I have no skill or talent." I remember thinking that, "I have no skill or talent, but I can do construction probably." I got a job doing construction and I just worked and worked and worked, just to raise the money to start the DJ company. I guess all of us have to start somewhere. Don't feel like you're an idiot if you're rejected by the banks or you're having a hard time. Marshall, I want to go ahead and hop onto this notable quotable here. I want to get into this Notable Quotable because I feel like this will really ... We have a special treat for the thrivers coming up here in just a couple of minutes- Dr.Z: Oh nice, I can hardly wait. Clay: Don't spoil it but Marshall has hit that notable quotable. Marshall: In thrivers, this just in from our home office off the coast of the Arkansas River here. The video version of today's podcast, the Notable Quotables, the Mystic Statistics, and all the downloadables from today's podcast, it's always available at Thrive15.com. You can go on there, log on and get it there. Clay: I've heard about it. Marshall: This notable quote in no way has been sponsored by our very famous friends, The Modern Prophets, Kim Kardashian, or Kanye West. Clay: Oh really? : I am the number one most impactful artist of our generation. I am Shakespeare in the flesh, Walt Disney, Nike, Google- Clay: He's so wise. : They aren't who we thought they were. Marshall: Modern Prophet. Speaker 5: There's product here, and this is where you end up, right here. If you could communicate this product you could make money off the product. Speaker 6: I can't believe we drove around all day and there's not a single job in this town. There's nothing, nada, zip. Speaker 7: Unless you want to work 40 hours a week. Marshall: Dumb and Dumber, I wish they would make another sequel. Marshall: Dumb and Dumber 3? Marshall: In no way it's sponsored by those Modern Prophets here but, this Notable Quotable comes from Peter Thiel. "First, invest only in companies that have the potential to return the value of the entire fund." That's form his book, Zero to One here. Clay: I want to tackle this. If you and I were pitching, if you were pitching the optometry business and I was pitching my DJ business, at no point would Peter Thiel ever invest, ever, because that's not his appetite. He's an investor that ... he doesn't look for anything to invest in unless it can be a billion dollar company. Just so we're clear, if you're listening to this right now and you're watching this, if you have a great business idea, open a great local restaurant, don't feel bad that Peter Thiel says no. Certain investors only say yes to certain kinds of deals. Deals they can understand and kind of wrap their mind around. You probably know guys who invest in oil and gas and that's what they know, right? Marshall: Yeah, and I don't because I don't know the business. Clay: Everyone has their own appetite so don't feel like your idea was a bad idea because Peter Thiel was like, "well, this local restaurant doesn't have a chance to make a billion." If your local restaurant can make a billion, show that restaurant to me. We now have, to kind of take you out, to kind of give you that encouragement you need, we have a special musical guest here today, Doctor Z. Marshall: Oh yeah, I'm looking forward to it. Clay: We are going to bring him onto the set. Now thrivers, you might not know this guy. Some of you might know this guy, this is our good friend TL O'dell, and not only is he a beautiful man, but he is a great American and we are excited for this performance. Now TL, you've been working on this song here, this is just for our main man here, Michael. Michael, this song goes out to you, and for people like you. Hit it. Speaker 8: (singing) Marshall: Oh wow, Usain Bolt reference. Speaker 8: Fastest man in the world. Clay: I just want to clarify, that was not you singing. I know a lot of the thrivers are going, "man, Doctor Z has a great voice." Marshall: You're probably right. Clay: All right well, thrivers as always we want to encourage you to go to Thrive15.com. You get the full transcription of today's training. You can get the downloadables, you can get the outlines, you get everything you need to take and actually execute what you learned today. Marshall what are we going to be talking about next time here? What should thrivers be sticking around on our next podcast? Marshall: The thrivers, they have to check out this next episode, the next podcast, we are going to be tackling how to lead effective meetings. You are going to want to listen in because most companies, they have those boring meetings, no action steps, no direction for getting anything done. Here we are going to help take you to the next level. Marshall: Does it fade out on this one? I'd like to give s little farm logic. Couldn't you give me a little farm logic to the left? As we are fading out on this one. Clay ill tell you what, a lot of farmers ... keep it going you can keep it going. Little bit, I'd like a little bit of that background. Clay a lot of farmers come to you with their pitch, and they say, "listen, what I envision is a whole pasture full of cows, and when I get a whole pasture full of cows think of all the money I can make. Milk, and beef, and all the wonderful things we can do with the pasture full of cows. Clay: I'm picturing it, I'm picturing it. Marshall: I need X amount of dollars to do that. I look at that farm and I say, "you know what, that's a great idea, and you know what we are going to do? We're going to start with one cow." So sometimes your idea is really big. Start with that first step. Clay: First step. Marshall: First step. Clay: One cow. Marshall: One cow, farm logic. Clay: Boom. Marshall: From Farmer Z. Marshall: This just in, from Farmer Z America's business [inaudible 00:05:55].
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