426. Creating Unstoppable Teams with Mike Michalowicz

Chris Dixon:

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Hey, everybody. Welcome back to The ONE Thing podcast. I'm Chris Dixon. And today we have Mike Michalowicz on the podcast. And Mike has written at least eight books about transformative business concepts and methodologies. And today, we talked more about his new book, All In, and he shared a really cool acronym for Building Unstoppable Teams he called FASO. So finding the right fit, the abilities, the safety of your teams and creating ownership within them so that you can build unstoppable teams. And I think there's a lot of great takeaways from this conversation.

So if you want to hear what Mike thinks about recruiting the right talent, transforming employees into superstars, matching individual abilities of your team with the needs of the organization, and how to elevate your company to where every employee cares as much as the owner, then you're going to love this conversation with Mike Michalowicz. So let's go talk to Mike.

Michalowicz on the podcast with us today. And he is the entrepreneur behind three multimillion-dollar companies. He's also the author of eight business books, including Profit First, which has sold more than one million copies, Clockwork, The Pumpkin Plan, and his newest book, which we're really excited to talk about today, All In. Welcome, Mike. Thanks so much for being here. Excited to talk to you.

Mike Michalowicz:

Yeah, I'm excited to talk with you, too, Chris. Thanks for having me on your show.

Chris Dixon:

Appreciate it. So tell us a little bit more about your journey and why you seem to be so focused on this challenge and this problem, and what brought you here today.

Mike Michalowicz:

You know, I have a saying I've been using recently. And it goes, basically this -- I'll be on stage or something, I'll say, you know, they say small businesses are the backbone of the economy. I'm speaking with small businessowners. They would nod your head like, yes, thank you. And then I say, well, I've run the analysis. This is true. I looked at the data and I say, I hate to say this, but small business is not the backbone of the economy. And then you see the droopy faces. And then I say, small business is not the backbone of the economy, small business is the economy. And right, and then people lose their minds but it's the reality.

I did all this research, and I've identified that every single business in existence started off small, either in a garage as a startup, or maybe they got invested in by funding, but it was one person's idea or just a small collective of people. It's not this massive group of 10,000 people come together and say, we have an idea. It always starts off small. So that's why I believe small business is the economy. I lived it myself. I've been a small businessowner my entire adult life. I love the experience. It is harrowing and scary and challenging. And I've experienced the roller coaster from, for me, significant success and absolute abject failure losing everything.

And I decided that my purpose, I think why I'm put on this planet is that I need to find ways to simplify the entrepreneurial journey. And admittedly, Chris, I think what we teach, what you teach, what I teach, is actually what we need to learn. So every book I'm writing is also highly self-reflective in something I'm trying to improve, be it profitability, be it business efficiency. And now with my new book, Team Leadership, it's something I need too. And that's why I write this, and that's why I've devoted this. I believe the rest of my life I'll be writing for small businessowners.

Chris Dixon:

That's great. It keeps you pretty close to the trends that are happening in the marketplace and what you're experiencing personally so it's relatable as you write it. So you're coming up on a challenge and I guess you're experiencing some capacity, some challenges in and around developing things in leadership. Right. So that's where inspiration for this new book comes from.

Mike Michalowicz:

That's right. I own three companies right now with equity, and I have invested in some capacity another seven to nine companies. And so I'm intimately connected with these businesses. And their success or failure is my success or failure. And what's interesting is, because I'm in such a diverse group of businesses, is when something happens on a macro environment like a Covid pandemic, wow, do I see it ripple through my businesses, but in different ways. The hospitality businesses were collapsing, and some supply businesses got, I wish I was manufacturing toilet paper, like that exploded. And you just see these interesting dynamics happening.

But I think more importantly, I see what my partners, these business leaders, these business owners go through one on one. And we have the calls. I remember this one. It was like 4 a.m., I'm sitting in -- I'm in Germany, I'm talking with a businessowner back here. It was around like 10:00 or 11:00 at night here. I'm on the East Coast, just in a real bad situation, and we're navigating through it. So that ultimately means what I feel is I have a privilege of having my thumb on the pulse of many small businesses.

And then through the work I do as an author, my readership community is in constant contact with me. I'm getting emails every hour from somewhere, someone, somewhere on this globe, giving me a download on their situation, or asking for help, or sharing an idea that I could use for my own businesses, or disperse and share with other people. So I'm very fortunate. I feel I'm so immersed in small business. I'm definitely not looking from the outside saying, well, here's what we should do, small businessowners, but I'm not one of you. This is my life too.

Chris Dixon:

I think so many people can relate to challenges. I mean leadership is a constant and it's something that's always out there, but there's been a spike in or maybe a gap that's been created that's greater than normal. And I'm curious to hear what you think might be some of the root cause of that, which would have ultimately inspired you to write this book. But I mean there's obvious things out there. There's big work from home shift. Maybe it's swinging back now, in many cases. I mean, you've got generational stuff happening. There's like these traps of workplace incentives that have really not produced fruit for us. I mean, what are the big things that you've run into or seen that maybe causing this unusual blip in the challenge of leadership?

Mike Michalowicz:

Yeah, yeah, we have to act differently, betterly. That's not a word, but you know what I'm saying? As leaders --.

Chris Dixon:

I think it should be.

Mike Michalowicz:

It should be betterly. We got to be betterly. Why I wrote All In, there was an inception point and then the dynamic changed. So the inception point was I want to say it was five years ago, but now I think, when I really think about it, it's probably 7 or 10 years ago, I got a call from a Fortune 500. And I'm a small business author and they said, hey, we want you to come in here and work with our team recruiting leadership.

And I'm like, okay, I think you have the wrong number. And they said, no, no, no. We see what you're doing helping small business. And what we're really curious about is how these small businesses are getting talent, like really exceptional people that are really driven to serve the company's mission, but also to achieve their own personal goals. How can small business, who lacks the financial means, who doesn't have the full suite of benefits, we don't have all the things that entice great people, how come great people are going to small business?

We, as this large corporation need to figure this out because we're losing the small business, and we don't know what else to offer. It isn't the ping pong tables. It's like, oh, this is really an interesting insight. And that triggered me to research this out. And ultimately, I developed this model I call FASO, F-A-S-O, which indicates why great people go to great companies of any size. Well, as I started researching this and codifying it, deploying it, and testing our own businesses, then the world changed. It shifted on its axis with the Covid pandemic.

And so an environment that we were slowly moving toward with remote stuff, but this kind of old-world expectation that people come into work immediately shifted. And we're not going back. Yes, some companies are trying to mandate and require, but the second you have to mandate or demand or require something, when people are forced to comply, they will seek to defy. So that's not sustainable. We have to cater to what people desire. And if you're forcing them to comply and there is no alternative, they will seek employment elsewhere. So the Covid pandemic became part of it.

And then many stories I was reading in the news about these traditional command and control structures where the leader of the company says, this is what we're doing. It kind of flushes down and everyone's expected to behave a certain way, but this is a person that's not involved watching from the outside. So all those things weren't working or changing or shifting. And so that's what caused me to conceive this book and address this. I think the employment environment we're in now and the leadership environment is in its best position ever. I think we are positioned for extraordinary improvement and change for the leaders who adopt it. And that's why I think All In is timed nicely to serve that movement.

Chris Dixon:

Yeah. I love it. Can you tell me a little bit more about FASO, F-A-S-O?

Mike Michalowicz:

Yeah, yeah, yeah.

Chris Dixon:

And what that looks like?

Mike Michalowicz:

Yeah. I got all excited. Yeah. I can go on for hours. Yeah. So FASO is an acronym, F-A-S-O. It's the model I documented, but it already existed. But I just pulled in the piece and said, oh, I see how this works together. That is a way to recruit extraordinary talent, to retain extraordinary people and talent, and to raise the bar for the entire organization.

F stands for fit. It's the first stage. And ironically, most businesses don't even really consider about this, but it's the true intrinsic needs the organization has. What most businesses have done historically is they've identified an organizational chart, usually a pyramid like structure, and they have all these titles. There's a president or a CEO. There are some other C-suite folks. It depends on the size of the business. Even micro enterprise with like two or three people has a CEO and the COO, and there's a structure put here.

And what many of these businesses were doing was a command-and-control environment. And when it came to finding people to fit in, you know, president, who would be a good maybe marketing person? And so what we were doing is we were matching people's talent to a title. And that was the mistake I saw. People come on and maybe be really good at something, but not be able to fulfill other obligations in that role, and then we're being maybe terminated or let go in some capacity.

I'll give you an example, because I did this my own business. This is a few businesses back. We needed to hire a receptionist. We had many people physically coming into our office. While we identified the role of a receptionist, and the receptionist would have to greet people who walk in, answer the phones. But also, that didn't happen all the time, so data entry and other components.

Well, a person came on and it was a woman. She was amazing at that quick personal bonding. So when someone came in or she answered the phone, you felt a sense of comfort and she would take care of you. But then when it came to data entry and we had her doing some accounting, it was a nightmare. That just was not her skill set. And so we said, gosh, we don't have the right receptionist. I guess we have to let her go.

Well, at the same time, I was evaluating one of our salespeople who was a closer. She was amazing at closing the deal. She sucked at the relationship though. She couldn't farm if her life depended on it. It's only when we had an opportunity in our grasp, she'd be the one we send in. And she was meticulous in tracking the accounts once we had them on board. And we said, oh, this is it. Let's take our salesperson title and actually move her into the right roles. Great at data entry tracking. She could be doing our accounting work. Great at closing, but not personable. Let's take our receptionist who's personable and have her be our frontline salesperson.

So what we started to do, and this is what you do in fit, is you understand all the roles you have in your organization, and you match people with their talents to the tasks, not the titles. What comes out of this now is like a web like structure. So instead of that pyramid structure, you have people touching different parts and communicating with different people in the organization and becomes a web like structure, which in nature, by the way, a web like structure is the most superior strength structure. And it's also very flexible. And so that kind of speaks to the type of organization, flexibility, redundancy, strength. So that's the first part of FASO.

Chris Dixon:

I like that. It makes sense when you say flexible for you went back to it. That really stood out for me because it allows your organization to be more flexible. And instead of traditionally trying to fit a square peg into a round hole inside of your org structure, saying, hey, let's look at the talent we have on our team and what their strengths are and what potentially would fulfill them in the workplace in balance and adapt that to just the overall list of things that must be accomplished instead of a person or job description that is fixed so it can give you more flexibility.

Mike Michalowicz:

There was research. I don't remember the source. And this is going to be shocking. But when people do, when you and I do what we like to do, we do it better than the stuff we don't like to do. That's the shocking truth. Yeah. Go figure. But the research supports this.

Chris Dixon:

Go figure.

Mike Michalowicz:

And what our job as a leader is to find out what people are naturally talented toward, what they naturally enjoy to do, and fit them within the organization that way. It's not these cut in the box, square peg, round hole situations like you said. It is much more morphic and great leaders recognize that and do that. So the takeaway here again is match talent to task, not to title.

Chris Dixon:

Is there a balance to be aware of or an edge that you could perhaps fall off of with just being the spectrum?

Mike Michalowicz:

Yeah. So if the business has to modify what it's offering to cater to what employees are capable, most capable of or talented at, and the business starts changing, that's the problem. So it's kind of like the business structure or offering suite must stay consistent because otherwise you start modifying. Now, you have to cater to different clients, and it becomes very dangerous. It's too amoebic like. So you want to keep the structure, the box of the organization and put people in and let them flow in the way they naturally fit.

The realization here is sometimes you will have people who are expressing a talent of sorts that is extraordinary, but not a fit for your organization. And that's where a great leader will recognize that and turn them on to another opportunity, even if it's outside the business to serve that. And I'll give you an example. We had a person here who was filling among different roles. The scheduling responsibilities for me, that's one of the tasks we need taken care of. Her name is Lisa. And she was good at it. She wasn't great at it, but she was good at it. It just wasn't her thing. It was very detailed, and it was very dynamic. It shifted sometimes by the hour or by the minute.

But what we found during interviews, we could do ongoing interviews, by the way, that's another technique. So you interview when you hire, but you also continually interview when people are on board. We call them one on ones. It's a dialogue. And it came out that she had this passion for firefighting. She was a volunteer firefighter and so forth. And wow, we have an extraordinary firefighter here who is a scheduler.

So step one is how do we make the scheduling more like a 911 schedule, because that's what a firefighter gets involved in. So it can give her a taste of it. Second step is ultimately she's a fit not for here but for somewhere else. And she ended up working for an airport in Georgia. She's an airport firefighter and loving it.

But I think the ultimate expression of why this was the right move and served us, our company does an annual retreat. Lisa asked our president, Kelsey, I like to come back on my own dime and on my own time to be at the retreat to support our organization because we have a great organization. She still saw it as part of her. It was still our organization, and she was willing to come back and participate. And she did extraordinary things in giving us direction, even though she no longer was employed by us. So that's what a great leader will do, is when the fit is elsewhere, they'll recognize that and support that.

Chris Dixon:

Help them transition to a place that will help them be more fulfilled and that fits their needs, which makes perfect sense. And so if the kind of lagging indicator is that you're having to shift the structure of the business to adapt for the needs of the organization or the team members, then you're probably being too flexible but you --

Mike Michalowicz:

Yeah. Yeah, exactly. Just like everything else, there's a yin and yang here. We need to bring that balance. But if you're modifying your organization to cater to your team, that's when you probably need to find a better fit for your team.

Chris Dixon:

Yeah. Do you see that there's also a benefit in approaching your talent arrangement this way and in the fit model that gives them some authorship and where they're spending their time, that creates more buy in and more fulfillment in the workplace?

Mike Michalowicz:

Yes. So in this model, F-A-S-O, FASO, O stands for ownership. So let's jump the bridge over there.

Chris Dixon:

Okay.

Mike Michalowicz:

In my research, I found that one of the most common things I heard from employees, from businessowners, leaders, is I wish my employees would act like owners, act like me. And so I was like, oh, this concept of ownership. Well, there was research that was started in the 1980s. There was this guy named John Pierce. He was the authority in the space. It's expanded, called psychological ownership, which is different than legal ownership. So legal ownership is where I have stock in a business or something, but psychological ownership is where my mind sees me as part of the business and the business is part of me. So we want to do is invoke, to your point, psychological ownership.

And psychological ownership comes about in three ways. One is giving people control, authority, direction, right. So if people can lean in where they want to do, they have a greater sense of ownership over it. Another one is the ability to personalize it, to make it about them or involve them, integrate them. And the last one is that they have control, meaning they have the ability to give it direction. So the ability to have knowledge, intimate knowledge, to personalize it and control. So I may say control twice, but intimate knowledge, knowing something in detail is the other one.

I'll give you an example. Just because it makes it real simple is with cars. Renting a car versus owning a car, and how we behave. When someone rents a car, you go through that DMZ checkout. It's crazy. Sirens and spikes and all that stuff. You show your license 100 times. They tell you fill the tank, no scratches, clean interior and limited certain miles or where you can go. When people, I said this earlier, when we're forced to comply, we will seek to defy. So when I take a rental car out, the second I get to that traffic light, my God, I cannot wait for it to turn green. I'm going to see those wheels spin. And I'll do donuts in a parking lot, and I'll jam on the brakes coming in to a red light. I will definitely be more abusive of it.

Now, if I own a car, I will absolutely care for it much more. I won't abuse it in that way. I'll get the car washed. I'll never wash a rental. I'll take all these actions because I own it. But here's what's fascinating. I don't own my car. The bank owns my car. I'm making the payments on it. So I don't have legal ownership. I have what's called psychological ownership because I have control. I decide when and where I'm going to drive it. I have the ability to personalize it. I can put dice on the rear view mirror. I can tune the radio stations to the stations that I want and are my stations. I can set the car seat the way I want. And I have control and knowledge. I know it in detail. I know the vehicle intimately. I know the nail that's stuck in the tire right now that's not leaking, thank God.

Chris Dixon:

Yet.

Mike Michalowicz:

All those things, all those things give me ownership. And so that's what we need to do with our employees. Give them the opportunity to gain more and more knowledge about something, to have control over its direction and personalize it. And they will act like owners.

Chris Dixon:

Yeah, there's something we say a lot, and I like to say a lot is authorship equals ownership. And so giving your team the opportunity to have authorship in their role, the business plan, direction will help them feel a sense of ownership versus having a very command and comply approach towards, hey, you need to act like an owner. You're just not going to speak to people that way. They're not going to hear you. Instead of taking an approach of helping them actually build what is the the piece of the business that they own.

Mike Michalowicz:

That's right, Chris. One of the great reveals is when you hear an employee, a colleague saying, this is mine or this is ours, are signs of psychological ownership. So this is my job, this is our company, are all indicators of that. But when they say this is the job or this is your company, they are actually disassociating with them with it psychologically. So look for those indicators. And to your point, you can't force it. You can't say you have to act like an owner. You have to give them the opportunity to experience that ownership psychologically.

Chris Dixon:

It seems like, at least from my experience and from the outside looking into other organizations, that there's more of a headwind around ownership than there has been in the past. And it could be somewhat of a generational thing. I mean, we had this whole quiet quitting pop up and people saying, like, look, I'm going to do exactly what I'm asked to do and nothing more. And even that's going to be a fight. And it's interesting. So if ever now is a time where you really need to shift your focus towards this in how you create ownership within your teams.

Mike Michalowicz:

I write about quiet quitting in the book. And I was actually a quiet quitter. I sold one of my companies to a Fortune 500, acquired a business I had many years ago. And when I arrived, I'll never forget this. I came to the new office. I was excited. We sold a business. I'm an employee now of a big company. Never done that before. This is cool. And they said, hey, this is where you sit. And it was a cubicle or something. I said, oh, okay. But I said, the rest of the team is over there, can I sit in the cube over there? And the person scoffed and said, you're not at that level yet.

And they had spent 24 months of due diligence and research to acquire a company. And within 24 hours, they had lost my heart. And then I left the business about a year later. But within a day, I was out. I was out. And that became a quiet quitting scenario. You always lose your employee in two stages, heart then body. And it's the leader's responsibility to keep that heart engaged, to be catering to those needs they have.

And that's actually other parts of the model in FASO. So we talked about ownership and fit, giving people a sense of safety. That's the S in it. And leveraging their abilities are ways that you'll keep the heart engaged at the highest levels.

Chris Dixon:

It's heart. And what was the second you said?

Mike Michalowicz:

Oh. So in FASO, it's fit, ability, and safety. So the heart stays engaged when we're giving or letting people express their abilities. And there's different types of abilities and giving them a sense of safety, a real sense of safety.

Chris Dixon:

Right. So yeah. Well, the way you said it, though. It resonated with me because there's in my experience, like, if you can win over somebody's heart, as you say, then you can move into the next phase of that, which I've had some experience, positive experience with as well. Sometimes there's the challenge or I can't think of a better word at the moment. It's not hazing, but there's something where you have to like overcome challenge with the team to demonstrate that you deserve to be there in a way. But if you lead with that without first winning over somebody's heart, that you might shut them off or turn them away. But there's something to making people feel like they have to earn a place at the table. But you, as a leader, need to make sure that you're fighting to win them over as well.

Mike Michalowicz:

Oh, absolutely. I was in a fraternity in college, and they used that protocol, and a lot of organizations do, is you have to exert an effort to qualify, because once you qualify, you realize you've exerted an effort. It actually affirms why you're here and you're more devoted once you get in. What was interesting about me in my situation when I got hired was, I was put in a spot because that's what they -- that's the blank they were looking to fill in.

They said, you're going to sit there. It didn't make sense. It wasn't like, Mike, we want you to prove your loyalty to the company, it wasn't any of those components, in order to sit with the rest of your team. Stay with my team brought about the biggest strength that I saw, but they were inflexible in that regard. They just said, no, you fill in the blank here. That's your spot. It doesn't make sense for you, but this is what we require of you. And that lost me.

You know, a fraternity or sorority or anything, these other organizations, you're actually looking to form that brotherhood. You're showing devotion to the greater group. And I was trying to show my devotion to the greater group by being able to sit with these people, learn, listen in, be supportive, but they were excluding me from that brotherhood, if you will.

Chris Dixon:

Yeah. That's so interesting. There's that show is out on Netflix recently about the septuagenarians with the blue zones, I think it's called in these areas.

Mike Michalowicz:

Oh, yeah, yeah.

Chris Dixon:

These pockets of places where people live to be a hundred statistically more than other places. And I wonder because the community was a big component of that, and I think like exercise and challenge and community and all of that. And there's probably parallels to sustainable organizations and people who will stick around inside of an organization to some of that in a weird way, because you are getting challenged regularly, but you have a strong sense of community and you feel like you have ownership in the business's success, then you're likely to stick around a long time.

Mike Michalowicz:

I would say there's no question about it. So the A in FASO, so we talked about fit, we talked about ownership, but the ability is actually the expression of potential. So I can explain that. But when you put people in a position where they are challenged, but in a way they want to be challenged, that's where loyalty is stemmed from. So I'll break that down for us real quickly.

There are three types of abilities that people have. Most businesses only consider one. More evolved businesses consider two. And I've yet to find any business, I shouldn't say any, very few that consider the biggest and most important ones. The third one. So first is experiential ability. And experiential ability is your historical proof of capability. I am proficient at words, so it goes on my resume. I speak a second language. It goes my resume. I program. Those things are things I demonstrate in the past that have proficiency.

And the expectation is, oh, if you were good at it then, you're probably good at it now, which is not necessarily true. People bluff and lie, which is not appropriate, but they do. The other thing they do is that ability they had back then has not been maintained and it goes away. So yeah, you were a programmer back in the day, but that language is no longer used in programming. And yeah, yeah, it's perishable. That's great choice of words. That's called experiential ability. Most businesses put 80 percent of their hiring consideration in that.

The other consideration is innate ability. Now, this is stuff that's revealed through systems like Myers-Briggs and DISC and Enneagram, all these powerful tools out there. It shows what our natural propensities are. Someone that's a starter or someone that's very detail oriented, that's an absolute soft skill that we need to consider. And it's sad how few businesses measure that, but more are, which is wonderful.

But in the middle of this is the biggest thing that very few businesses consider and it's potential, potential ability. Potential is what could this person do in the future given the opportunity? So potential, of course, is invisible. How do you find it? And I'll do it through an example that I use in the book. I talk about Eddie Van Halen, who has unfortunately passed away. But say, Chris, you and I, let's start a 80s rock band. We're going to do all these 80s tunes. We need a guitarist. That's amazing. Why don't we ask Eddie Van Halen to join us? Well, Eddie would say no, no way. He's got his own band, Van Halen. He's doing okay financially. Like he would scoff at our consideration. And yet that's what many companies are doing. We're looking for that star candidate who has this experiential proven ability.

But imagine this, Eddie Van Halen, what if we approached him when he was 12 years old? That's when he first really got into the guitar. He moved from the Netherlands to the US, started to play guitar. He was expressing potential. Well, he'd be wonderful to get then. But of course, the question is, how do you know Eddie Van Halen is going to be Eddie Van Halen? There's probably countless kids like that. Well, the technique is to run a workshop or sometimes a camp. What this is, is an opportunity for people to express their potential.

So if you and I said, hey, we're going to have a guitar workshop, maybe we bring in another guitarist and hire them to teach, because I don't play that well and maybe bring them in and say, hey, Eddie, you can come to this workshop. We're going to teach you how to play guitar, and we're going to teach all these other kids. Eddie would likely show up. He was so interested in guitar. Yeah, he would show up and take lessons. But now the opportunity is for us to observe him.

Potential ability always reveals itself in three ways. First, from curiosity. If someone raised their hand and say, I'd be interested in that, they're demonstrating curiosity. It doesn't mean they're going to be good at it, but it's the first step to potential. The next one is desire. Once Eddie's there, is he the one who's listening closely, learning, trying to demonstrate, repeating, practicing over and over again? That's desire.

The highest level of potential is thirst. Thirst is where I can't quit it. Our job, if we're running these workshops, is to see which kids are more than curious, are showing desire, and is any kid really stepping up and thirsty, practicing extremely hard, coming in early, repeating the process. And that's how we could have found Eddie Van Halen.

Now, here's the thing. This isn't just a concept. This is used in practice all the time in a multibillion-dollar industry. It's in the sports industry, college football teams, they have camps all the time with students that come in and demonstrate their skills and learn new skills. But the power of a camp is, what's so interesting to me, is every single student athlete gets better. We, the employer, get an opportunity to cherry pick the ones that are fit for us. In traditional interviewing, it's just the one person we think is a good fit, and everyone else doesn't even know why they didn't get hired. In camps, everyone's getting better, but the people with the most thirst and demonstrating the most potential are the ones who get tapped on the shoulder and brought in.

And I just want to give one last little example. It's a business example. Home Depot does this. Next time you go to a Home Depot, and you see a sign up saying, hey, we have a workshop on building a birdhouse or something, bring your kid or come on your own, what they're doing is they're using that as a recruiting platform and people don't know it. You go there, you build your workshop. Yeah, sure, you're ingratiated with the store. Sure, they want you to buy stuff from them, but they're observing the participants and seeing who is the most participative, what parent is helping other parents. And they tap that person on the shoulder and say, you really showed interest in this. Have you ever considered working at Home Depot? We'd love to have you. So workshops give us an ability to review or see potential ability, and then we can recruit those people.

Chris Dixon:

That's awesome. Yeah. I mean, you see, there's demonstrated success in this, like you said, in the sports world. I mean, soccer clubs and football clubs come to mind as a place where they farm talent, and they get to see all the things you just mentioned. And everybody has visibility into the person's total skill set. So I had a question.

So inside of ability, you talked about experiential innate and then potential. And then inside of potential, it was curiosity, desire, and thirst. And where do you, inside of potential, I'm assuming this is where it would fall, inside of the curiosity, desire and thirst, where would you put receptivity to feedback as a trait?

Mike Michalowicz:

Yeah, yeah. You'll see that in desire, right? So curiosity, like if you said, hey, Mike, I'm thinking about going skydiving. I'm like, hey, I've always thought about that. Okay, I'll do one. Raising the hand is simply curiosity. But I may change my opinion when we're starting to load up on the airplane. Or maybe, somehow, I get pushed out, and I actually do it once. I think I would never do it again. It just doesn't feel like it's right for me. The person who does it and says, you know, I want to do it again, that's where feedback comes in. And we say, hey, when you left, we want you to know that you were not holding the right form and that causes a wind shear or whatever, do it again. And people with desire will listen and say, oh, let me try to improve that. So feedback starts at the desire level, and it continues through the thirst level.

Interesting. Eddie Van Halen. Eddie Van Halen had a piano teacher who was learning piano. And his piano teacher noticed one day, he said, hey, Eddie, you're doing great, but I don't think you're reading the music. And he goes, no, I can't read the music. The teacher actually thought, he's teaching reading music. The teacher, and this is so smart, said, you don't need music. You can do this one by ear and didn't give feedback to force the structure. Gave feedback to say, oh, you have an opportunity to actually go even further without reading. And he never learned to read music and plays the guitar wickedly well.

Chris Dixon:

Yeah, yeah. One of the best, if not, top. Something like that. That's great.

Mike Michalowicz:

Yeah, yeah, yeah, yeah. Everyone has their own opinion.

Chris Dixon:

Sure. Sure. Yeah. For sure. I just I zoomed in on receptivity to feedback because inside of potential, that's something I've always looked for. And if I could identify that, and it makes sense and desire, that totally makes sense. But if I could always identify that there was if they had the desire and the thirst and the curiosity and they were willing to take feedback, well, then I felt like they could grow into whatever the role was, even if they weren't quite there yet.

Mike Michalowicz:

Yeah, I totally agree.

Chris Dixon:

FASO. We talked about fit, ability, and ownership, but the S is safety. Can we talk a little bit about safety and what that means for you?

Mike Michalowicz:

When people, when you and I can express ourselves fully without concern of retribution or embarrassment or compromise, we will perform our best. And there's different forms of safety. So there's first of all, physical safety. This is where you imagine someone's over your shoulder with a knife at your throat saying, okay, work well, can you focus on your work? We're sweating out. Like, what's this person going to do? It's a terrifying time. So physical safety, physical harm compromises our ability to perform. And so obvious, yet it's not always addressed in work environments.

So one may be simply we have a parking lot for our own office here down the street, but you have to go down a dark alley to get to this street. Well, there's never been a crime. Some of our employees here feel very concerned about that. And so when they come in to work, they're like, later this afternoon, I have to leave down the dark alley and it becomes a concern. So as a leader of the team, I have to be aware of that. That is a safety concern.

Then another form of safety is financial safety. And this all comes from Maslow's hierarchy of needs. We need physical safety. We need some security in our finances to know that we can bring ourselves a degree of comfort. Now, I'm not saying that a business needs to keep on paying an employee more and more. We do need to pay an employee what that position is valued at, what the worth is of course, as long as we can afford it. But a company also has a responsibility to assure the employees of its own financial security, open books.

Many companies keep the books tight. And then one day they come in and say, we're in real trouble. We need to let some people go. And now the employee is like, well, what else is in trouble? Like it puts us on this constant edge. So I'm not saying a company's always going to be fiscally healthy. We are going to go through a sawtooth experience. I surely have. During tough times, we're like, hey, we're going through a tough period, and this is how we're navigating it. When things are good, we're saying, hey, things are good and we're squirreling away for tough times, but we're very open book about it. So people have a sense of security because they have a sense of control.

Chris Dixon:

For me, there's a really clear tie to ownership in that regard. From experience, where I've worked with some organizations that were in a tough place and chose to go the path of transparency with their books, and you had team members who were stepping up in ways that they wouldn't have otherwise, because they may not have even known they needed to, and just taking ownership over things differently because they felt like they were a part of the solution. And that's a piece that I just wanted to call out. I think it's so significant that not only does it help people feel safe, but also you can provide a level of ownership and authorship by letting people see, and you never know where they're going to step up. And you wouldn't have known otherwise.

Mike Michalowicz:

A hundred percent true and necessary. There are some other safety components. It's a emotional safety and relational safety. I think I can kind of blend those together, but do I feel safe in being my true self, in my environment? And when people don't, they start bringing a different person to work than they do at home. And there's this disconnect and therefore we can't fully express ourselves.

So a leader, first of all, wants to and should bring about that diversity and sharing and usually has to do it by sharing themselves, revealing, hey, this is who I am as a human. Let's learn about each other as a human so that we feel in total comfort. And there are situations where people have left employment because they didn't feel safe with the relationships there. And no one was intentionally trying to harm this person or exclude this person, they just didn't feel they fit in and then people will leave. So we need to give people that safety, emotional safety and relational safety by ourselves participating in that as a leader.

Chris Dixon:

It makes total sense. So fit, you need to find ways to make your team members fit within the organization that leverages their skills, ability, emotional, innate potential, a heavy focus on potential. You mentioned creating an environment of safety, and then how can you have your team members take ownership and the success of the business. That's the FASO.

Mike Michalowicz:

That's right. And I think great leaders focus on this holistic approach now with their teams. I do want to share I'm not suggesting that great leaders are wishy washy and allow everyone to do what you want as long as you're happy. And then there's this anarchy that comes about. We have to work within the structure of the organization, but we do have the ability to allow people to express their greatest selves by using this model.

Chris Dixon:

I know one of the things that you aim to enhance with the book is recruitment and finding the right talent. Is there anything more that you would offer with recruiting from your experience? I mean, obviously you talked about the workshops and that's a way to farm talent and even from within your own team. But what else should entrepreneurs be thinking about when it comes to recruitment to build a team that is transformative?

Mike Michalowicz:

Yeah. So market the environment, not just the job tasks. So in traditional advertisements, you'll see computer operator needed, must have seven years of experience. But why not say you love Star Wars, we're geeks too. Looking for someone to work on our computers and then express what your environment is like. The thing is, when we do something like that, it breaks the mold of the common and the right person will say, finally, there's someone who's like me, I love Star Wars too. So be expressive of your corporate culture and your environment in your advertising, and you'll attract people that are much greater fit right from the get-go.

Chris Dixon:

It ties back to that need to create community or foster community inside of your business.

Mike Michalowicz:

That's right. That's right. And I'm excited about that because specifically, I emphasize that over culture. And I want to differentiate this. Culture is critical but it's self-forming. I think how some leaders consume culture is I'm going to set a standard of rules that I believe in, and this is going to be our standard, and we're going recruit people accordingly. What I found is the community itself brings about a all-inclusive culture.

So I'll give you a very personal example. My own company, I have a value that says No Dicks Allowed, which is kind of cheeky, it's kind of funny, but it's a standard that I won't behave in that way toward others, and I won't permit others to treat me that way. So I share with my team like this is the value. And then someone came back and said, Mike, that is so broey, not a fit here. And I was like, wow.

And when we talked with the community, now our community is eight employees here. But when I talk to my team, the feedback was, let's be the Ted Lasso. Ted Lasso is hot on TV right now. And like, that's who we are, the eternal optimist. And out goes the No Dicks Allowed and in comes the Be The Ted Lasso. And I think ten years from now, it may not be that anymore. It's more morphic. So culture is an expression of community. And what we need to do as leaders is build a diverse community and seek what the common values are from it. And that boils up to be our culture.

Chris Dixon:

Yeah. That's so good. It's difficult because if you focus on culture first and you see, I'm sure you've experienced this a million times and I know I have where you try to force create it, and it's just something that almost feels like it needs to happen organically. But you can foster it is what you're saying or what I'm hearing. You can foster the development of an organic community through the development of community or culture.

Mike Michalowicz:

That's exactly it.

Chris Dixon:

Yeah. And versus trying to say, hey, here's our culture on the wall and no one's bought into it.

Mike Michalowicz:

Right. And people don't buy into it because they don't have ownership over it. It's funny, when we were talking about ownership, the ability to have intimate knowledge, control, personalization. When someone has their own idea of voice, they are much more likely to believe in it than if they hear the same idea from someone else because they had the control of voicing it and so forth. So when it comes to community, it's a collective extraction or participation of every individual. There's ownership into it. So that's why community is so important and brings about this kind of cultural standards and they're morphic. They change over time as your community changes.

Chris Dixon:

Yeah, that makes sense. So you've got if someone's listening and they're new entrepreneur or even experienced, but they've got a relatively developing team and they're trying to raise the bar for their team members, transform them into superstars from where they are, is there anything else that you would offer for them from your experience that would help start to foster some of that development?

Mike Michalowicz:

Yes. I think just I wanted to give a little mental shift, is that everyone you consider, be it employees or contractors, part time or full, subs or not, is that everyone has a potential. I mean, everyone is A star in waiting or A player. I ran a survey. I do this informally, but I've been doing it a lot now with live audiences. I'll say hey to the few hundred people, sometimes a thousand people in the room who here is an A player, every hand goes up. I would say 95 percent of the hands go up in every audience I've spoke with, employees or otherwise.

And I say, okay, how or what percentage of the environment are A players? And the numbers come back three percent, five percent. The most like 10 percent. And I'm like, isn't this interesting? We're all A players in this room, yet we think less than 10 percent are A players. This must be some kind of statistical anomaly happening here. What's going on? And I say let me reconcile this. I believe everyone here is an A player because you have control and authority. You're doing what you want to do. I believe everyone has a potential. If we give the opportunity for people to express their true selves, to give them control, intimate knowledge, personalization over what they do, they will be A players. If people can express some truths, their true selves.

Going back to Eddie Van Halen, what if I hired Eddie Van Halen to be an administrator here? Would he have been good? I don't know. He may have even sucked. I don't know, because his true potential was in playing guitar. A great leader is listening very closely to where someone's potential directs them there, and then they become that rock star that they always were. So my argument to new business is everyone you're considering is an A player in waiting. They may not be an A player for your organization and that's where fit comes in, but they are. So go in with that consideration and it will open your eyes, I think, in a much greater way.

Chris Dixon:

It's interesting that there's this concept of A player's impact. Players is another way it's been described and book about it and it's shifting your mindset a little bit in your opinion, from some people who are going to be impact players and others that are not or A players or not to everyone is. You just need to make sure you're pointing them towards the place they're going to lean in and become that player.

Mike Michalowicz:

Yeah, yeah, that's exactly right. That's exactly right.

Chris Dixon:

Okay, great. Well, if you could have our listeners take away one thing from the conversation today that would help them in the development of their business or anything, what would that be?

Mike Michalowicz:

Great leaders are the heartbeat of a great organization. And I think we can all step into it. We all have leadership roles, but particularly if you're a small business, particularly if you're a startup business. I talk to entrepreneurs all the time, and I say that the number one job of an entrepreneur is not to do the job. It's to be the creator of jobs. And in the beginning, we have to do the work. But there are people looking for good jobs with good companies, and that's what you can do by being a great leader.

Chris Dixon:

It's awesome. If listeners want to check out your book or listen to you, I think you have a podcast too. If they want to listen to your podcast or just find you in general, where can they hunt you down?

Mike Michalowicz:

Yeah. So the podcast is called Entrepreneurship Elevated. To get the book, go to allinbymike.com, allInbymike.com. You can find at any bookstore too. I have a copy of it somewhere behind there. It's over my shoulder there. But allinbymike.com. At the website, I have free resources for the book, some other bonus material for free, and you can also purchase the book through the site.

Chris Dixon:

Awesome. Mike, thanks so much for having this conversation today. There's so much great stuff to take away. And for you guys listening, go get the book and check out the free resources on your website. I'm sure you have a lot you'll take away from it.

Mike Michalowicz:

Chris, thank you very much.

Chris Dixon:

My pleasure. All right. Bye, everybody.

Outro:

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