At 25, Netherlands-based Budi Voogt is one of the entrepreneurial wunderkinder starting university businesses that take off into adulthood. At 20 years old, he started Heroic, a record label, incubator, and accelerator for artists. With 12 people between the label and his personal business, Budi Voogt, Budi talks with Clate about becoming a young leader, capitalizing on early-stage platforms, and how dropping the option of a plan B led to over performance and success.

What does it mean to be successful? Read our report “Defining and Achieving Small Business Success” to see what other entrepreneurs think.

Mentioned in this episode:
Financial Intelligence for Entrepreneurs” by Ken Berman and Joe Knight
High Output Management” by Andrew S. Grove
Multipliers” by Liz Wiseman
Check out this and other episodes at smallbusinesssuccess.com.

025 – Overcommit to Plan A – Budi Voogt Transcript

Budi Voogt: But, yeah, it was like an opportunity for us to be able to do this without a lot of cash in the bank by just using bloggers, and YouTube channels, and SoundCloud networks, and reading about e-mail marketing strategies and funnels.

Scott Martineau: Welcome, everybody, to this episode of the Small Business Success podcast. I’m Scott Martineau.

Clate Mask: And I’m Clate Mask. We’re co-founders of Infusionsoft, and we’ve got a guest on the line here today that’s going to be so fun to talk with, Budi Voogt. He’s the CEO of a company called Heroic. Budi, great to be with you. Tell us a little bit about yourself and your company.

Budi Voogt: Hey, guys. Thank you for having me. I feel humbled. I run Heroic. We are a record label and a management company based in the Netherlands. And we operate mostly in electronic music, and effectively we’re an incubator and accelerator for artists. So that means we pick up artist – typically when they’re early in their careers.

[0:01:00]

We put out music on a record label where we’re able to sort of NDP test our music. And then best of them we’re able to upstream into the management agency, and then we really zero in. We give them the guidance and the infrastructure and we work our network in order to be able to build careers for them.

Clate Mask: Awesome.

Budi Voogt: And, yeah. Yeah. That’s the kick-start.

Clate Mask: That’s really cool. So and how long have you been doing it? And how many employees do you have? Just give us a little bit more background on that.

Budi Voogt: Yeah. Absolutely. So this is our fifth year of business. I’m 25 right now, so started when I was 19 in university.

Clate Mask: That’s fantastic.

Budi Voogt: And, yeah. And the last two years have been crazy. So right now we’re 12 people. A year ago we used to be four. A year before that we used to be two. So, yeah.

Clate Mask: Great. Sounds like the typical three years of blood, sweat, and tears at the beginning to get it going, and then it started to move a little bit and you started to have some success, and now you’re at the point where you’ve got 12 employees and things sound like they’re rocking.

[0:02:00]

Budi Voogt: Yeah. Absolutely. I think it’s a matter of hitting critical mass, especially with artists, because know where the product. So I have the educational business, as well, where I sell a book, The SoundCloud Bible, and we have an online course. And there it’s very straightforward. You know the customer lifetime value. You know what an e-mail is worth to you. And you can run advertising and you basically know what your profit is, and you skill based off that. Music is much harder because you can’t really advertize music and expect the same return.

Clate Mask: Yeah. Well, you make it sound like it’s just normal for everybody to have those metrics down, and nailed. [Laughter]

Scott Martineau: [Laughter]

Clate Mask: And to know what an e-mail address is worth to you. So it’s cool that you’re sciencing the business that way and getting it down to the numbers. And it sounds like that’s been a big part of what’s helped you to grow.

Budi Voogt: Yeah. Absolutely.

[0:03:00]

The numbers part is, I think especially on the educational marketing aspect, is really what drives the business. And like we made a transition from starting out managing artists, to building a management agency, to adding a record label. And obviously, with more overhead, more employees, it means you really got to watch your cash flow.

So in the past months I need to be really honest and say I’ve been nerding out, reading books about finance, which I actually had in university, like classes, and that I didn’t really pay attention to. And now in hindsight, I’m hitting myself over the head with it. You should have. And obviously for scaling the educational business, it’s more important than anything.

Scott Martineau: Well, I think what’s interesting is, obviously, the music industry has had a lot of phases of disruption over the past several years. I love seeing the way that you’ve also leveraged the Internet, which is core to that disruption. And you’re finding ways to use your – package up and sell your – expertise.

[0:04:00]

I think it’s a fantastic strategy that we see in a lot of different industries. And it’s great to see that.

Budi Voogt: Thank you. Yeah.

Clate Mask: It’s –

Budi Voogt: It’s – sorry. _____

Clate Mask: I just, yeah. I was just going to say so what are some of the books you’ve been geeking out on with finance that have been helpful for you?

Budi Voogt: Well, right now I’m reading Financial Intelligence for Entrepreneurs, second edition.

Clate Mask: Okay.

Budi Voogt: And so it’s basically, it’s a recap for me. So we run the business’s own cash flow, right? So basically cash flow statement drips into your profit and loss, drips into your balance sheets. But more than anything, right, when you’re scaling up you’ve got to watch your cash, and especially when you’ve got to make sure that your invoices actually get paid.

Clate Mask: Yep.

Budi Voogt: And we recently on the educational side of the business added a payment plan to the course. And what that did for us – so the course is called The Music Marketing Economy. And what that did for us is we have two plans: basic and advanced; which originally used to be $399.00 and $499.00 as a one-off price.

[0:05:00]

But then we noticed that obviously music producers and artists, a lot of them are in the younger demographic, and so $400.00 is a lot of money. And a lot of them were like, “Hey, I’d love to buy the product, but I simply don’t – this is like a month’s rent. I can’t afford it.”

Scott Martineau: So you turned it into a payment plan and sales went up and cash went down?

Budi Voogt: Yes, exactly. So we’re hosting this on peachable, who have been amazing, but they only launched that functionality in like March this year. And in adding that it meant exactly that, right? So cash went down. But profit went up. But then there’s a big difference between profit on paper and cash flow.

Scott Martineau: [Laughter] Yeah.

Budi Voogt: So that’s been a ride.

Scott Martineau: Many a payroll has been missed by that difference of profit on paper. So, yeah. I hear you. We understand that. We’ve seen that. And payment plans are, can be a beautiful thing. But you’ve got to be able to finance your way through it or else you have a big cash problem and you can miss payroll or other critical things.

[0:06:00]

Budi Voogt: Absolutely. But the recurring aspect is very interesting, though, and it creates a baseline that we can count on for the business that’s really good for scaling our overhead on.

Scott Martineau: Yeah. We remember the first day we had some form of recurring revenue in the business, and it felt like we were cheating.

Clate Mask: It was magic or cheating. We weren’t sure which. But, yeah. That was a glorious day to look at that bank account and see those recurring payments drop in. So I hear what you say when you call it a baseline of the business. It really does do something amazing for you, and you just got to be able to work your way through it from the cash flow standpoint.

Budi Voogt: Yeah. Uh-huh.

Clate Mask: So Budi, take us back to you’re in university and thinking about starting the company. What was the chain of events that got Heroic started?

Budi Voogt: Sure. So I went to Erasmus in Rotterdam, the Netherlands. And I knew that when trying to pick studies I wasn’t fully convinced of one particular study.

[0:07:00]

Rather, I knew that I wanted to start a business at some point. So I picked the most general thing I could, which was business administration. And like I said, my best friend started making music. And this track that they put up on SoundCloud, that got like 10,000, 20,000 plays in a week or something, whilst they had no fan base at all.

And so SoundCloud was super early stage then. And that made them like top one, Justin Bieber level on that platform back then. And that was really an opportunity. It was sort of the opportunity that I needed to commit to a business and get my feet wet. And at the same time it was really an opportunity for them to take this music thing more seriously. And that led to me finding a more experienced partner, signing more acts for management. He was more from the old style of the music industry, but taught me a lot.

[0:08:00]

And after two years of trying to work these acts who had a lot of talent and were super young, we figured out that we’re basically playing the game wrong. So historically in the music industry being able to get a record deal, for example, or radio play is really predicated on you being vouched for by a big label, big artist, and so forth. And that was the one thing we were missing in order to get these guys traction.

And then at some point my partner and I split and I had been thinking for awhile about, “Okay. Why don’t we double down all the way on the one thing that was like our point of entry into the market at the beginning, which was SoundCloud and digital marketing?”

And so that’s exactly what we did. So we started a record label with the idea of turning the tables because what’s better validation than one million plays, right? And –

Scott Martineau: Two million.

Clate Mask: [Laughter]

[0:09:00]

Budi Voogt: But yet, it was like an opportunity for us to be able to do this without a lot of cash in the bank by just using bloggers, and YouTube channels, and SoundCloud networks, and reading about e-mail marketing strategies and funnels.

Scott Martineau: Mm-hmm. Well, that’s cool. It sounds like you kind of got the digital marketing connection was critical for you as you began to get some traction and get the business going. And what I’m hearing you say is you recognized that you didn’t have to do it the old way, the normal way of getting the business off the ground because you could leverage digital marketing to actually get the audience, get the following, and begin to build a business off of that, and not requiring sort of that blessing from a particular artist or a particular backer. You were able to go create it yourself through digital marketing.

Budi Voogt: Definitely.

Scott Martineau: And a good product at the heart of it, right? You had to have something that the people wanted and passed around.

Budi Voogt: Yeah. Absolutely. I feel in every market you’re probably only as good as your product.

[0:10:00]

And I just finished the Elon Musk biography by Ashlee Vance, and Elon is reputed for saying no marketing for Tesla, just PR, right?

Scott Martineau: Mm-hmm.

Budi Voogt: For his press announcement. But instead what they do is they just make the best product and it will sell itself.

Scott Martineau: Mm-hmm. Yep.

Budi Voogt: And in music, being a manager, you’re really only as good as your artist is, and then as an artist, they even say that you’re only as good as your last record.

Clate Mask: Mm-hmm. Right.

Scott Martineau: Sure.

Budi Voogt: But what you’re saying is completely true, and I think in hindsight the lesson from that experience for me was that SoundCloud was a point of entry. It was the one thing that was working really well for us. And we should have realized to double down on that much sooner.

Clate Mask: Yeah. Interesting. Well, I know Scott’s going to ask you about the dark days, because we love to ask that. I want to ask you this. This is a little different way of looking at it. I heard the first three years, you’re trying to kind of get things going. It’s you and another partner.

[0:11:00]

Have you taken a step back and looked at that? Because it’s so – this is so common for us when we’re talking to business owners. It does take a good two or three years before people get into a place where the business is starting to be successful and they start to say it’s actually worth it, the hard stuff I’ve been going through. Why do you think that is? Why was it for you that it took three years, and have you reflected on why that seems to be the case for so many business owners that get started out there?

Budi Voogt: I think for myself those first years were partly personal maturation. Like I just needed to – well, I was relatively young. And at the same time I was –

Clate Mask: Yeah. You were 19. We’ll call that “relatively.”

Scott Martineau: [Laughter]

Clate Mask: [Laughter]

Budi Voogt: Yeah. And at the same time, I was completely green in this industry. I just knew I wanted to start a business. So the learning curve had to be steep, and it was through basically just doing it, winging it. But I think – and right now I’m actually personally in a phase where I’m noticing –

[0:12:00]

I like to read a lot, listen to a lot of podcasts, consume a lot of information to find basically gems of information from people who are doing specific things right and to apply for my own business and for my personal development.

Clate Mask: Yeah.

Budi Voogt: And what I’m noticing is that this used to be very big for me, especially when I was younger. But now I feel like I’ve probably consumed the majority of the business books, self-help information and it’s really all about execution. And I think a fallacy – and maybe it’s necessary. I’m not sure whether you could skip this phase. But I think a fallacy is that in the early days, you were sort of searching for your own path, and I think maybe because you haven’t had a success yet you don’t have the confidence to believe that what might be your concept of what should work, or your idea, right, that that’s actually going to work.

And instead, you are way too reliant on looking at competitors, –

[0:13:00]

or looking at people who are more experienced, or reading a ton of books, and reading 20,000 blogs about people who attracted a ton of venture funding but who may not have made a profit, but that looks really shiny, so you use that as sort of the model to mirror after.

I actually think that’s probably not the healthiest way to do things. But you need to go through that stage potentially to get to the point where you could then say, “Okay. I think I know what we need to do. Let’s not be distracted by all this external stuff, and instead just zero in on what we feel is going to be the right direction.”

Scott Martineau: Yeah. There is – that really rings true. Clate and I talked about the concept of emotional independence. I think when you lack confidence as a business owner and you let go of following your instinct and you listen to all the voices – which, they will always be there – it can lead to a lot of problems. I want to call out one thing that you talked about earlier, just for our listeners who may not understand the specific model of music.

[0:14:00]

I want to draw an analogy. So as we all know, it seems like every two or three months there’s a new technology that comes out, and some come and go. But I love the way that you recognized – in a world where an entire industry is being turned on its head, you recognized, for example, the SoundCloud platform and opportunity. And I’m just imagining how many managers and record labels and artists were completely, were fighting against some of the trends that were happening.

I love the way that you say that early on, and I think – I like the recognition of it, and I really like just the focus and understanding, “Hey, this is where traction is being created with this new technological advancement, and I’m going to focus on it.” I see a lot of business owners who will take a different approach. They’ll have sort of a general anxiety that technology is progressing and kind of feel like, “Well, I kind of feel like I should have my toes in the water of all of these things,” but not really watching to see what are the early signs of traction in their particular industry.

[0:15:00]

So I think that’s just – I just wanted to point that out as a great thing that all of us can be doing is watching where we’re getting traction and then having a focused effort instead of a general anxiety around technology.

Clate Mask: Well, and I love that. And kind of taking Budi’s point, what I heard you say, Budi, was that you didn’t – it took you a period of time to have that confidence in yourself to go after it. And you were watching the trend and you were seeing the volume grow on SoundCloud. But you, as you said, you kind of had to go through your own self-discovery as an entrepreneur to say, “You know what? I trust my instinct. I see what this is. I’m going for it.”

And it’s that combination of your own – of spotting the trend, as Scott’s pointing out, and having your own self-confidence to just go after it, which is pretty cool. And who knows? Maybe it always takes two or three years for that to happen for an entrepreneur. But I think that you’re right. We can accelerate it through learning and by pushing ourselves in our own self-discovery of what we care about and what our passion is and really being in tune with our instincts, and then when we spot the trend, we jump.

[0:16:00]

Budi Voogt: Yeah. When you can spot the landing. Absolutely.

Clate Mask: Yeah.

Budi Voogt: I feel, also, that what happens is when you look at competitors – and I could give a very practical example of how this happened to us is so when you think about the major labels, right, and you think about digital marketing of music, what they do is basically they focus deeply on radio, right, and they’re slowly picking up to digital marketing now and they would bring on a PR agency, right, to service a record.

And there’s all these little independent record labels on the Internet and managers, including ourselves. And what we do when a record comes out is we push it to blogs. We push it to Hype Machine, which is an aggregator of blogs, so to say. And then you have all these YouTube channels, like let’s say Majestic Casual or Trap Nation, which are channels which just upload music, they put a piece of artwork just behind the track and that’s it.

[0:17:00]

But through doing that, through curating, they’ve built audiences of like 4, or 5, 6, 7 million subscribers. And these are relatively new media verticals for us to promote to, but what we’re noticing now already – and I was having this discussion with my team – is that for us now hitting those verticals is basically the foundation of our marketing strategy.

But I’m already noticing that there’s a sort of complacency that sort of drips in after doing this for too long where we may now be the frontrunners as opposed to a major label, right, who’s adopting these new mediums very slowly. But we need to keep thinking about, “Okay. What else can we do now?” So for example, we’ve been thinking about, “Okay. How can we get the YouTube taste makers, like a girl who runs across her channel? Or someone who’s doing singing videos on Instagram, or funny videos on Vine? How can we get those people to be ambassadors for music?”

[0:18:00]

And that’s like something we need to be reminded of. Because I do think that once you have that trick that works, it’s also super easy to get stuck doing that.

Scott Martineau: Budi, that’s – I want to go back to Clate already gave the foreshadowing of my question – but I want to just hear what has been sort of the lowest point in the business where maybe your confidence was shaken the most and you question whether you should be in this business at all?

Budi Voogt: I think that’s a very hard, hard question that I could really only give a very personal answer to. And this is roughly two years ago – a year and a half, two years ago. And this was really – let’s say a few months before we hit the revenue tipping point where we could start hiring people and like the business was really validated.

Scott Martineau: Yeah.

Budi Voogt: And there’s a record label and a sister organization in Canada that we’re very close with. And basically they saw we were doing interesting things, and they said, “Hey, Budi, maybe you want to come over to Vancouver and potentially see whether you’d be interested in working with us.”

[0:19:00]

Scott Martineau: Mm-hmm.

Budi Voogt: And I have a partner over at Heroic. And back then we had our first employee. And basically as I was, of course, I was humbled by the opportunity, but at the same time, it was also an opportunity to really go and check out how these guys were doing things. But at the potential risk of, okay, hey, maybe we’re just playing around with this music thing and this is a tremendous opportunity. And so I spoke to the team then, and we committed collectively to me going there to really give that a serious chance if only to see what it’s like and how they’re doing business there.

And it would be a test at the same time to see whether the team here, my co-founder and our first employee, whether they’d be able to keep things running then. And I think we were also working with some remote contractors at the time. And I remember going to Canada and like I learned so much in those few months.

[0:20:00]

But at the same time, within a week I knew 100 percent I want to do my own thing. I can’t have a boss as a partner.

Scott Martineau: [Laughter]

Clate Mask: [Laughter]

Budi Voogt: But like that was such a big thing, because in doing that, I just graduated from university. I had been doing a side job which basically allowed me to create runway to kick-start. the record label and the management company. So I was basically postponing pulling out a significant salary for as long as I could. I was doing this thing. I was working as a facilitary manager at like an elderly home on the weekends, which meant I got to come in and – I was 20, right? – so it meant Saturday, Sunday I got to come in, pour them coffee, say, “Hey, what’s up?” And sit in the office, work on the business.

And I quit all of that. I just graduated university and then first week I’m there, I realized, “Okay. Yeah. This is amazing. I’m going to learn and watch and then go back and we’re going to kill it.” And then from there, we came back, we got an office, and things have just really been growing very quick ever since.

[0:21:00]

Scott Martineau: That’s awesome. So many good things there. You know, one of the first things you said was it was right before you started to get the revenue that you needed to hire. And a lot of times the tough spots, those pivotal points, they come just before – it’s darkest before the dawn, they say. And sometimes you hear the reference of being three feet from gold. And that’s where people stop. And we hear it so many times, and so it rings very familiar when entrepreneurs talk about when they begin to have success, it usually comes just on the heels of a lot of tough times. And that’s one of the biggest things is for people to recognize they could just push through it, because on the other side of it it gets a lot better.

Budi Voogt: Mm-hmm.

Scott Martineau: There were several things that you said through that process, though, that I think are just critical for entrepreneurs to hear. And I appreciate you sharing your story because we’ve got a lot of listeners that are in that spot where you were a couple of years ago.

[0:22:00]

Clate Mask: So take us to the other end of the spectrum. Tell us, maybe, what’s the most amazing thing about your business? When was the time when you sat back and said, “Man, this is what it’s all about”?

Budi Voogt: Yeah. But may I touch on another point of like –

Clate Mask: Of course.

Budi Voogt: – that experience? You know, what I think in retrospect being Captain Hindsight again is –

Clate Mask: [Laughter]

Scott Martineau: [Laughter]

Budi Voogt: – is that full commitment.

Clate Mask: Yeah.

Budi Voogt: Like the way I did it is I knew – and I had just launched – no, actually I was going to launch the second edition of The SoundCloud Bible whilst I was in Canada. And back then, I didn’t have the course. So I just had a book with a $19.00, $49.00, $99.00 price point. And I was very consciously not taking money out of the record label and the management because because I wanted to use that to pay my co-founder, to pay our employee and the contractors. And I knew that when making that move I basically had a month and half of cash in the bank to make do.

[0:23:00]

And then when going to Canada, right, not only did I go there, but also I was sort of forced to launch the second edition of the book and crush it because otherwise I wouldn’t have been able to make do.

Clate Mask: Mm-hmm.

Scott Martineau: [Laughter]

Budi Voogt: But then having come back, I still just had that one-month buffer. So I think that was even more, it was like because I had dropped the plan B and the safety web, it was like I had to over-commit to making it happen, and that actually led to the over-performance that led to the cash flow boost that then started the whole growth trajectory.

Scott Martineau: Yeah. It’s amazing how resilient we are when we sit there and think about what it would be like and can’t get ourselves to go to that place, but when it’s there it just comes, right?

Clate Mask: You burn the ships and there’s only one outcome, right? You got to go make it work.

Budi Voogt: Yeah.

Clate Mask: Very cool. Great job on the commitment.

Budi Voogt: Yeah. And I don’t know. I guess the takeaway would be –

[0:24:00]

And I think this is very difficult for people to listen to and then make actionable yourself, right? Because it always seems more dooming and apocalyptic than it really is. But I feel in retrospect maybe I’m more willing to take that kind of risk now because I know we’ll probably be able to push through.

Clate Mask: Yeah. Yeah. Totally. You proved to yourself and you proved to everybody around that you can do it. You can get through those hard things. And it takes a lot of courage. That’s the fortitude of an entrepreneur to just say, “Okay. We’re going to go for it.” And it can be unnerving for everybody, but when you get to that point where you can see it, and you’re close, and you know that you’ve just got to push through it, you go make it happen. That’s exactly what you did. So congratulations. That’s awesome.

Scott Martineau: By the way, I think it’s critical because it’s not as if as the business grows and becomes larger with larger revenues, more employees, it’s not as if those things, those needs, those times where you just have to go dig deep at a company ever go away. They really don’t.

[0:25:00]

Clate Mask: Yep.

Scott Martineau: And I’ve heard Clate many times stand up in front of our company and say, “Hey, this big hairy goal we’ve got in front of us right now today, let me tell you where my confidence comes that we’re going to accomplish it.” And we’ll talk about a story of where we sat five years ago, and we looked at the thing and said, “I don’t know how on earth we’re going to get that accomplished.”

Clate Mask: [Laughter]

Budi Voogt: [Laughter]

Scott Martineau: But here I stand today saying it felt no harder now than it did then.

Clate Mask: Yeah. And the cool thing is I think it actually – this is kind of what you were saying, Budi. I think we draw so much confidence from those wins of the past. When I look at the challenges that the company faces over the stages that we’ve got, I always feel like the hardest challenges ever were in those first couple of years when we were trying to make it. And so when I look at whatever our goals are, I think, “That’s nothing compared to what we had to get through at that stage.” Or a few years later we had another stage. We’ve been through three or four of those really tough times –

[0:26:00]

and it’s like each time you look at it and you’re like, “We can totally do this because of what we did the last time, or the time before, or the time before.”

And so I think one thing that Scott and I are saying, and I think that supports what you’re sharing is there are always going to be tough times, but when we prove to ourselves, and to our employees, and to everybody around us that we’re able to get through those, it just makes us more confident and more capable in the future. And so yes, there will always be some challenging times. But it’s the track record, and those wins, and the things you learn from it that actually give you the confidence to take on those bigger challenges.

Budi Voogt: Mm-hmm. I could only imagine. And obviously, the responsibility becomes bigger with a bigger company, right?

Scott Martineau: Yeah.

Budi Voogt: Yeah.

Clate Mask: And the dynamics change, right? You’ve got different sort of core challenges you have to overcome. But the place you have to go is very similar.

Scott Martineau: Yeah.

Budi Voogt: Of course.

Clate Mask: Okay. So take us –

Budi Voogt: Do you find you go as deep still?

[0:27:00]

Scott Martineau: Yes.

Budi Voogt: Or is basically is the error margin, is the buffer bigger now?

Clate Mask: Great question.

Scott Martineau: I feel like it requires the same depth. If you’re asking about me personally, I think it absolutely does. But the dynamics change because now there’s a need to enroll – for example, enrolling a team of 20 people is very different than enrolling a team of 600 people and getting alignment. And you’ve got layers of management built in there, so there’s leading through leaders, and so forth. But, yeah, I think it requires a similar depth.

Clate Mask: Yeah. I think it does require a similar depth. I think the interesting thing is that as the company gets bigger – and I think that you can see this if you’re a one-person company versus a ten-person company – it requires a different level of sustained diligence. In order to move through challenges as the company gets bigger, you have to have a certain patience combined with work ethic and urgency that are –

[0:28:00]

It’s not like it is when you’re small and you’re first getting going. But as the company gets bigger, you have to develop that willingness and that capability of just sticking with it, being diligent, working hard, for long periods of time. I’ll be really candid. About five or six years ago, we were going through a churn problem. And in a recurring revenue business, churn is everything. If you’re not retaining your customers, it kills you. And I remember just thinking, “You know, we’re just going to throw a burst of energy at this thing and we’re going to solve this problem.” Because that was kind of the MO. That’s what we did.

But now we were 125-person company, and it was like we worked at it, and worked at it, and worked at it, and the dang problem wouldn’t bend to our will, you know? [Laughter] We were like, “What the heck, man? Why is this not changing?” And I remember driving home. I remember this thought just as crystal clear coming to my mind. And the thought was, “Clate, this is going to take a level of patience and diligence that you have not ever shown in your life.” [Laughter]

[0:29:00]

Scott Martineau: [Laughter]

Clate Mask: And I was like, “Ah, crap.” I know that’s true. And it was. It was absolutely true. And now what I would say is, five, six years later, it’s only more true. And that’s one thing I frickin’ love about entrepreneurship. It just teaches you lessons. It teaches you how to get better, how to improve. I think if you aren’t as – if you don’t have a certain personal development like gene in your – bone in your – body, you have to have a certain amount of that because business ownership, entrepreneurship, it just requires us to get better and to learn about ourselves, how we can improve.

And that’s definitely true, I’ve found, as the company’s gotten bigger. Challenges come and go, but the skills required to push through those challenges change a bit. And yet, by winning in the prior challenges, it gives us confidence we can do it.

Budi Voogt: I’ve very curious – and this is a question out of self-interest. I’m very curious whether if you don’t need to motivate a team to tackle an urgent issue.

[0:30:00]

For example, do you then let the direct manager do that, or would you get as involved as you would maybe five years or ten years ago? Or do you think that is actually counterproductive, to motivating those people to eventually tackle something?

Scott Martineau: Yeah. I think that’s a difficult question to answer as a general blanket statement. Yeah. The answer is it depends. [Laughter]

Yeah. And I’m trying to think of what scenario to focus on that would be most beneficial for the listeners. I think, in general, the idea of saying, “I’m going to just go around a leader because I don’t feel like they’re capable of doing it,” is a damaging thought process to get into. Because, number one, it just means you’re still holding on with that white-knuckle grip to everything in the business, really, if that’s kind of the perspective you take.

Budi Voogt: Mm-hmm.

[0:31:00]

Scott Martineau: It’s demoralizing and de-energizing, I think, to leaders. And so I think that’s part of some of the patience that Clate’s referring to is getting alignment with leaders. And I think that maybe if you sort of charted this, alongside the line that is trending up in terms of the patience required, you also have to get much better and better at sharing context. When you start with the assumption that you hire amazing people, and then context becomes essentially the nitro fuel for a smart person to understand what’s going on, and then to go and deliver. And that might look like getting their team enrolled. So if you think about maybe your first manager – which everybody who hires a manager, they have this exact challenge.

Budi Voogt: Yeah. Yeah.

Scott Martineau: You’ve got to go. By the way, and usually what happens is it’s a feeling of impatience, just like, “I don’t have time. Why would I take the time to give the context when I could just do it and we could get there so much faster?”

[0:32:00]

But that’s just the wrong – that’s you’re robbing Peter to pay Paul a little bit, and you end up creating this sort of debt in the relationship. So I would say all that said, I do think that there are times where as the leader of the company that certain things will require you to be giving your full passionate self to a conversation to get people enrolled. And I would just say you do that in partnership with the leaders, versus as a solution to the problem that you have a leader that you don’t think can get it done.

Clate Mask: Yeah.

Budi Voogt: It’s interesting one of the takeaways that you get is that like you shared a vision, but then you leave them autonomy. I was reading High Output Management by Andy Grove, which everyone raves about as being one of the best management books. And he talks about task-specific expertise. So like if someone’s new to a specific job, right, you’re really on top of coaching that person. But then especially with managers, right, once they’re very competent at doing something, they just need to understand the vision, and then you got to have the self-control to sort of let them go.

[0:33:00]

Clate Mask: Yeah. Yeah. That’s a great point, Budi. And that book in many ways has been digested, consumed by big companies. But the principles that you’re talking about is actually so critical for a ten-person, 15- 20-person company. You know, when you’re five people in the same room, it’s not as critical that you’re sharing that vision, you’re sharing that context. Everybody kind of wakes up in the morning and knows it without saying anything.

Budi Voogt: Mm-hmm.

Clate Mask: And you’re in the same room, or whatever. You’re close enough in proximity that you tend to all get it. And you also tended to know each other before you came together in the business. So there’s just sort of a communication, a vibe of understanding. But as the company gets bigger – and you’re right at that point with 12 people – when the company starts to get bigger, there’s a level of communication, of vision and context setting that Scott’s referring to, and really that Andy Grove is talking about there –

[0:34:00]

that you’ve got to provide that why to people, that understanding so that then they can go do great work within the sand box that you’ve laid out for them. But a lot of times as entrepreneurs, the reason why I say entrepreneurs need it so bad, they need this principle, is because we’re moving very fast and we tend to expect people to read our minds, even though we don’t realize we’re expecting that.

And then we’ve got good people around us who want to help and want to be part of the solution, but they don’t really have the context or the understanding, the background to be able to contribute. And that creates frustration for everybody, including the entrepreneur. And that’s where as you – going back to your question – do you get involved? Do you not get involved? Well, like Scott says, you try to empower your manager with as much context and understanding as possible and help them to teach and lead the person that they’re managing.

Scott Martineau: I think this is a topic we need to spend a little more time on.

Clate Mask: Yeah. Totally.

Scott Martineau: – on the podcast.

Budi Voogt: Yeah.

Scott Martineau: Because it’s such an important part of leading and growing a company.

[0:35:00]

Budi Voogt: I appreciate you guys sharing this. One of the takeaways from the Andy Grove book also was he talks about Intel employees spending 10 to 15 percent of their time either educating or being educated. And we didn’t have the necessity to do that, right? Like we didn’t need to at the early days, because like you were saying, everyone already knows because they already have all the context.

Clate Mask: Yep.

Budi Voogt: And what we did – and this is actually, it’s even harder to share the vision with half of the team that’s remote, which is the case for us. We have someone in Seattle, and in Vancouver, one in Toronto, and so forth. And I think that book made us realize that we needed to standardize our team meetings, for example. And one of the things we did is we took that course infrastructure that we have in which we have the music marketing academy – and this is actually an actionable takeaway for listeners – and what we did is we created a bunch of different sections where we reported with a screen flow app.

[0:36:00]

We basically reported and overview of the business and the separate divisions. And we did that on a meta level, right, so that our designer would understand what our label manager is doing. And not like the day-to-day operational tactics. But like what’s he focused on? And what’s that person trying to achieve? And why? And what is a traditional day look like?

And we mapped that out, and everyone basically got an assignment to do that for his or her own field of responsibility. And then we actually went one deeper and did the very task-specific stuff. So for example, distributing of release to a store like Apple, Apple Music, or Spotify is a very, very complicated, step-by-step process with 25 different steps, and one mistake means you may not get your publishing royalties, or the release is not tied to the right artist account.

Scott Martineau: Oops. [Laughter]

[0:37:00]

Budi Voogt: And we also had everyone basically record the specific paths that they would use. For example, we had two new interns start in the past, I think, month and a half, and they were able to basically go through that course and consume everything, and they had the context that you would want them to have to then really be in full force within maybe two weeks after being in office.

Clate Mask: Yeah. Yeah. Yeah. That’s awesome. Your point, you started that by the statement that Andy Grove made of 10 to 15 percent of employee’s time learning and teaching, and then gave a specific example of that. And I would say, Scott and I have talked about this a few times, but when I look at the 14, 15 years of our business, and I look at the ups and downs, if someone said to me, “Clate, in one word what was it that defined the ups and the downs?” I would say teaching. When we teach our employees, our customers, our prospects, our partners the business is up.

[0:38:00]

When we’re not teaching and we get away from that and we get lazy and not sharing and giving that context and just teaching, then the business is down. And it’s almost as simple as that. It’s really about teaching. And so you look at the companies that do well, and from large companies like Intel or Google to solopreneurs – you talked about this. What did you do, you’re learning like crazy, reading all of the books, listening to podcasts, doing everything you can to learn. As the company gets bigger, you keep that in place and the teaching, and it’s a magic power that drives success in a small business.

Scott Martineau: Well, Budi, we are coming up on our time and really appreciate your begin with us today. We like to ask every guest kind of as a wrap up for all of our listeners out there who are in various stages of getting their business started and growing their business, what if you had to kind of boil down all of your experience to the characteristic you think is most critical for small business success, what would you say that would be?

Budi Voogt: Persistence.

Clate Mask: Nice. [Laughter]

[0:39:00]

Scott Martineau: Yeah. We hear that or something like it quite a bit.

Budi Voogt: Yeah.

Scott Martineau: That’s a great one.

Budi Voogt: It’s so cheesy, isn’t it?

Clate Mask: [Laughter]

Scott Martineau: [Laughter]

Budi Voogt: But at the same time –

Scott Martineau: No.

Budi Voogt: Actually, can I expand on that _____ word?

Scott Martineau: Sure. Go for it.

Budi Voogt: Like persistence, right? And then persistence mostly in the sense of okay, so you commit to a general sense of direction, but then within that sense of direction you just try stuff. You don’t know what you’re doing when you’re starting out. You try stuff. You see what works. You go deep on that, which was the SoundCloud thing for us. And you keep trying, and trying, and trying, and then at some point, okay, so we add the record label.

And one thing we haven’t even touched upon is one of our artists, San Holo, is basically, he’s our biggest success case. And in September 2014 we put out an EP of his and he was in a 2000 followers on SoundCloud. Right now he’s like almost 300,000. He’s done Coachella, Ultra, Tomorrowland. We’re about to do Tomorrowland again this Sunday. And that’s been over the span of less than two years.

[0:40:00]

Scott Martineau: Wow.

Budi Voogt: And so we, at some point with the label we’ve locked down specific strategy for doing marketing, but it took us X amount of releases to have that right artist at the right time for everything just to click into place. And if we didn’t have the persistence to do that, he wouldn’t have basically gone into that growth spurt. And that allowed us to really build a lot of things as a result of that. And like that’s the more elaborate explanation of persistence, is keep going, find what’s working, go deep on that, and then keep iterating.

Clate Mask: Well, that’s awesome. Budi, congratulations. Thanks for expanding on that persistence and I know a lot of people are listening out there. Keep going. Keep pushing for it. You’re three feet from gold. Just keep going. You’ll find it. Follow that entrepreneurial nose and stick with that persistence. You know, we just, we appreciate you being on here. Congratulations on the success that you’ve had. We’re excited for you.

[0:41:00]

I love hearing the learner that you are, the books that you’ve mentioned. We’ll put those in the show notes. Scott and I were referring to a little bit to some principles in a book called Multipliers that we are big fans of. It kind of goes to the question of how do you empower and help your leaders and they’re trying to lead them and not diminish them through some kind of process of stepping on their toes? So we’ll put that in the show notes, as well. It’s a great one and it is full of some of the principles that we were sharing on that hot topic.

But we appreciate being with Budi. Congratulations again and thanks for being on the Small Business Success podcast.

Budi Voogt: Thank you for having me, guys. It’s been a pleasure, and loved hearing about your experiences and the takeaways, and I’ll certainly be getting Multipliers. I think that will be an interesting read.

Scott Martineau: Great.

Clate Mask: Thanks everybody for tuning in today. We’re going to call that a wrap for this episode of the Small Business Success podcast. Go out and do great things in your business. Take care.

[0:42:00]

Scott Martineau: Thanks for listening and don’t forget to rate us, write a review, and subscribe to the podcast on iTunes. And if you’re looking for more ways to grow your business, check out our knowledge center at learn.infusionsoft.com. That’s learn.infusionsoft.com