Dylan Jones on Building Sustainable Businesses, Scaling, and The Myths of Entrepreneurship (#11)
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The Episode
Dylan Jones has 10 years of entrprenuerial experience in start-up leadership positions. He was the founding CEO of Terra CO2 technologies a mining technology company. As well as, the founder and CEO of Coast Protein, Canada's first cricket protein company.
Dylan obtained his MBA in the clean energy economy and focuses on products and technologies that either help people or help reduce negative impact on the environment.
In this episode we discuss:
How his Mom, a teacher, helped him in succeed in business
How to build sustainable business models
How and when to seek investment
How companies use social media to pull on our heart strings
And much much more.....
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Show Notes
Shaun Pepper: [00:00:00] Today on the podcast, we have Dylan Jones. Dylan has 10 years of entrepreneurial experience and startup leadership positions. He was the founding CEO of Terra, CO2 technologies, mining technology company. As well as the founder and CEO of Coast Protein, Canada's first cricket protein company. Dylan obtained his MBA in the clean energy economy and focuses on products and technologies that either help people or reduce negative impact on the environment.
Dylan, can you provide us your journey up until this point as an entrepreneur?
Dylan Jones: [00:00:30] I honestly never thought of myself as an entrepreneur, even though I've always been pretty entrepreneurial.
I never put my stamp label on myself, so I always, I've always just pursued things I've been interested me and I found.
For my first company, the tech company , I real need for the mining industry to move towards sustainability and , for, along that same track with coast, definitely move towards sustainability in our food systems. My, my one kind of benchmark, is everything I do tries to have something around sustainability.
I'm pretty, pretty much always just trying to find or looking for new solutions to old problems and working on how to fix them. And then if the entrepreneurial journey does exist around it, I'll pursue it. But if not, I, partner with some of my business partners that I have now or other companies to, to get those things out there as well.
Shaun Pepper: [00:01:25] That's awesome. What grew that from you from childhood? Where do you think that itch comes from?
Dylan Jones: [00:01:32] My dad was an entrepreneur. So he was in tech.
He started as a carpenter and went back to school in his thirties. To do computer engineering and got into the tech game, pre the.com bubble in 99, 2000. So he was in robotics and innovation. So I definitely saw that as a viable lifestyle viable career from the get go. My mom was a school teacher.
Who basically funded our family for many years, as my dad ground his way up to running a fairly successful robotics company that he sold to Ford , I'd say that's pretty much it, right?
Shaun Pepper: [00:02:11] Of course
Dylan Jones: [00:02:12] not much more influence from there.
Shaun Pepper: [00:02:13] Yeah, cool. How do you think being raised by a teacher played into the way that you approached. Business?
Dylan Jones: [00:02:19] Yeah, I don't know my mum , my mom's a pretty unique cat. She , she's always shirked the. The traditional kind of motherhood , stereotypes. So even though she was a school teacher , she was the one who led the way when we went hiking and we did a lot of backpack camping as kids, even, I remember like being like four or five years old, carrying a little backpack, little bottle of water or something that my mom was definitely the one who led the way on that.
Also her being a school teacher, I have to credit her in a kind of a backwards way is she was actually a school teacher in the district that I went to school, both elementary and high school, so you like, you get in trouble and she knows before, your homeroom teacher does thing. And , it made me really good at being a sneaky and figuring out, creative solutions to problems. It also gave me the gift of gab because as soon as I knew I was in trouble from an administrator teacher, I always not always, but typically would figure out a way to talk my way out of them telling my mom
nice.
Shaun Pepper: [00:03:28] outdoors is a big influence. Is that something that's still part of your lifestyle now as you're an entrepreneur and how do you find a balance between getting outdoors and work?
Dylan Jones: [00:03:39] So I'm a pretty fortunate. We're, we both on the West coast, we're both from the West coast. I live outside of Vancouver. , five minutes away from a place called Burnaby mountain. And , so I can walk there every morning and I do every morning for an hour and a half with my dog. We're both leave about six, six, 15 every morning where we go for kind of a run hike , on the mountain.
And it's pretty much up in the wilderness as much as you can be in an urban setting. Pretty much every weekend. I'm out in the Bush in some capacity, like a lot of guys who chase this kind of entrepreneurial or grind through the entrepreneurial dream are going after nicer cars.
I'm going after greasy old Jeeps with big tires and rooftop tents and, big roll bars and stuff like that. That's really my goal. My goal for work is this more work equals more time outside. I did lose that for a few years when I was so busy with , coast protein, as we scaled and went into , international groceries and things like that while I was working so much , that I really lost that focus and , unfortunate kind of led me, I think ultimately led me in the wrong direction, which, since I've closed coasts , I've really gotten back in a big way and really made my life back again about being outside and.
doing What I enjoy and letting that bring the creativity. I need to be successful in business.
Shaun Pepper: [00:05:00] That's awesome. You mentioned led you the wrong way , what advice would you have for somebody that, it doesn't necessarily have to be outdoors, but part of their life they can feel slipping away too, not enough time in the day. What advice would you give to that entrepreneur?
Dylan Jones: [00:05:17] Yeah, there's no such thing working more long-term per and providing value. Just a preface in add contexts.
There's definitely times when you got to grind through, 24 or 48 hours of no sleep and work to get a deadline. That's really important. Maybe you get a last minute proposal for a big client. You really got to nail it, by all means, stay up all night, work your ass off, get that shit done, but doing that for months , There's this like real pervasive notion within the entrepreneurial community, that grinding is somehow valuable.
It's not, you're exhausted. Robotic people don't bring creative solutions to real-world problems. They don't add value. They don't create money. Like they just don't. I went through it. , I, failed because of how exhausted I was, because I thought if I worked my way through my problems , they would be solved its not true.
You need creativity, you need sleep, you need exercise. You need a healthy balance. Like it doesn't mean you can work four hours a day at the start of a launch of a company, but it does mean when your company on the right foot and you put it to a cashflow position or positive cashflow position.
It means we work six, eight hours a day, get paid a little bit at the start and take some breaks. It's something that I learned, unfortunately, the very hardest way. But I feel I do see more of that in the kind of the entrepreneurial literature too, is a lot of people are recognizing that and starting to shift away from it as well.
Shaun Pepper: [00:06:44] Yeah, I can definitely see that , for myself as well and starting this entrepreneurial journey , with now soon to be two children, , it's an interesting, issue in that. I really want to watch my kids grow up. I really want to spend time with them on the playground. And I want to make sure that, the lifestyle or the company that I build will afford me that, and I don't become a slave to the company.
I think that's a really big distinction when you're starting, or if you're the president of a company, because you feel responsibility. And obviously as you add employees, then you have more responsibility because now you're worried about these guys eating and paying rent and doing that.
And so it can be, it can lead to, wanting to keep going or working really hard or pushing through it just so that you can provide, not only that. Money or that cashflow for yourself, but also for the people that you're providing a living for,
Dylan Jones: [00:07:46] yeah, I think it all comes down to, it's your goal, right? My previous two businesses, one was successful. One wasn't, was to get VC money, was to get that big, get the push hard.
Did the big valuation take on investment get a big valuation, then move to the next big round of money. And it's flawed as a flawed way to thinking like, people have made a shitload of money doing it, but it's a flawed way of thinking. That doesn't create sustainable businesses.
Doesn't create long-term wealth. It doesn't create happy employees. It creates, I don't know what it creates really in the end. Even look at some of the unicorns are going through that right now. Uber is not doing so well. Airbnb is on the ropes. Snapchat's never made money, like you just look at these things.
And go, wow. Is it really worth it to burn billions or in my case, it's burned hundreds of thousands and millions on the chance. And instead of looking at me, looking at businesses at cashflow and saying, I want to be positive cashflow from month three. So I'm gonna invest in this business idea, test the market, make sure it's a good idea.
Validate it. Go forward. It is, now we're positive and cash and we're always gonna be positive cash. And if we see a scale point that we cannot reach, be due to lack of , revenue or lack of cash, then think about investment, but it's this, that mentality of chasing unicorns, I think, is very damaging to people, financially, there's a lot of ruined entrepreneurs down there, but it's also emotionally and health wise. It is as well.
Shaun Pepper: [00:09:22] Yeah, that's a fair point. How does somebody take a business? So you started the business out of your basement you're making protein bars and cricket bars, and then they started selling them at farmer's markets?.
Can you take us through a little bit of the journey of the cricket business?
Dylan Jones: [00:09:35] Yeah, sure. So we actually never, we never did. Farmer's markets on purpose. Not that I don't like farmer's markets. I am I'm a West coast millennial. I love my farmer's market to low pain, $10 for a bunch of four carrots.
But no , when you go to a farmer's markets, you look around and it's living in a bubble. And sure. I recognize that. Immediately, if you have a head on your shoulders, you go to a farmer's market. This is a bubble. It's a super fun bubble, like an amusement park, but it's not a place to build a business. So I started online, first of all, which is a great way, the best place in the world is e-commerce to validate a business quickly. And then I, for brick and mortar, I looked at things like. High-end coffee shops , high-end food stores, health and wellness stores, progressive food stores, things like that, that do high turn of highly valuable products.
Shaun Pepper: [00:10:35] I'm just going to stop you there and inject here. So how did you go about doing that?
Dylan Jones: [00:10:39] Yeah we do pretty like standard marketing stuff. Like we created our buyer personas that are mapped out our customer journey, but then we would, I honestly, I take bars. I'd walk into the store and or phone beforehand and talk to the manager and pitch them and just do the old shoes.
He burdened, I burned a lot of parents pounding pavement, burning rubber. Going in talking to many people, learn you will, what they were looking for in progressive food, learning what the niches were all through, speaking to customers and to proprietors. And then e-com, we would take those learnings and put them into our ad campaigns right into our marketing campaigns.
And. Learn on, I don't know, basic stuff, right? Go on Facebook, build an audience, do lookalikes plus fives and really test the shit out of different ideas and see what works. I can't say we wrote the book on marketing. We use pretty simple stuff and it was really successful. Our niche was very successful.
Shaun Pepper: [00:11:39] How did you calculate your expenditure? So there's a lot of people that are, they want to go commerce first and maybe they don't have a food product that they need to go in. But they struggle with, how much money do I spend on advertising to get it in front of customers to attract the right audience?
What was your CPA? So CPA for those people listening it, because I might alienate some listeners in the audience. It means the cost per acquisition, but yeah, and then there's also another metric, which is a customer lifetime, which I'm going to ask for in a second.
Yeah ,
Dylan Jones: [00:12:18] We calculate our CPA , in two different ways. On e-commerce we did it the standard way of looking at conversion rates from advertisers. So looking at how many or how many click-throughs we got on ads and engagements before that customer , purchased and that's, you use your pixel and figure it out that way.
It's pretty simple stuff. Especially if you're using a platform, like we were a Shopify with brick and mortar, it's a lot harder. You're you know, brick and mortar. If anyone wants to go into the food or beverage industry and have their food and beverage in grocery or any retail like you're demoing, right?
Like you're in store , you're cutting up product or sampling it. You're talking about it for hours on end and that person might buy five, $6. Whereas you CPA in store is like fucking 80 bucks, man. Like it's very expensive. However, When you go to the food and beverage item, there's no better value than a customer tasting your product.
Like you can't beat that. If you're going to move next question, how to LTV, which is lifetime value. We got better LTV from grocery than we did from e-com, but it costs a lot more to get that LTV
Shaun Pepper: [00:13:36] makes sense. I think it's also the personal relationship, right? Like you go in e-commerce. You don't feel like you actually know the person. I know that guy, like now I'm fighting for him. Like he's in my corner, I'm going to order, I'm going to try to support that business.
I really liked him. I liked our interactions. Like I'm going to buy from him,
Dylan Jones: [00:13:52] Sure! That was hugely helpful in our launch days. And you can replicate that on e-comm as well. Good businesses do that with highlighting their customers. They highlight their employees and talk with their employees and like what cool things they're doing.
They have founder profiles and do fun , Instagram highlights or stories. If you ever see a business on your Instagram feed in there, they're highlighting their dog or something like that. They're pulling on your heartstrings for a reason. It worked really well to build that relationship because you think, the people like, Oh, I love their dog.
At the same time, not that I got my dog for Instagram, but when I got home, he was definitely a highlight. Is Eddie the kosher? Here you go. Yeah, you pulling on heartstrings as well. Smart.It's also part of your life if though, it's an insight into you as a founder and as the person who's , who's now , doing this, right?
Like you now have insight into, Hey, you're not just. This person, but you're actually this person who also has a life outside of that. And I want to connect with bill Dylan as a person and Dylan as the company or as an coast as the company, because I like to know, it's that kind of farm to table feeling that you can get from online, knowing that, Hey, this guy has a dog.
I know a little bit about him. I can now support him. I think that's actually really meaningful for a lot of people , to think about, , I know a lot of people through Instagram and stuff , they create businesses and then they don't really give insights into the founders or insights into the people because they're so worried about marketing, the branding or the brand image or stuff like that.
Shaun Pepper: [00:15:29] And , a lot of people that are in that kind of market are saying , well, you kno I was watching a video recently about why it makes sense for them to give away free cars and things like that. And so you watch this YouTube video and somebody gives away a free Tesla to 10 of them to their friends, and then they pay that guy to do that.
How does that make sense? And that's all based on our ability to then share that story with, th the virality of those types of stories and that feel good moment and thinking about how that would feel if somebody just came and shot $10,000 at a cannon at you, we can relate to that.
Dylan Jones: [00:16:06] Your modern consumer. You or me, I don't want to speak as a consumer as like this entity, right? We are with social media and the internet and the, the pages we all visit. We were hit with advertising constantly. I can't remember the statistic is it's like 2,500 pieces of advertising a day. The modern consumer , Is so sophisticated in recognizing bullshit when it comes to marketing, advertising, branding, et cetera, that, I've always argued this, the modern consumer.
If you went back to the mad men era, they'd be better than those ad guys that created an ad campaign, just a regular personwho's not as no involvement in business at all because of how exposed they are. It's just experience.
Shaun Pepper: [00:16:56] Yeah, I would agree with that.
Dylan Jones: [00:16:58] You have your companies that are your megas, you're huge companies, but then you have your companies , that are, you call them your small businesses, your cashflow businesses, your lifestyle, businesses, whatever you want to call them that need to build that niche and that following of loyal customers through trust.
The funny thing is, in my consulting days, working with a lot of small businesses, a lot of founders are like, trust goes one way. They're like, I need to make my customers trust me. I'm like, yeah. But you also need to trust your customers to support you.
Trust is a two-way street and you do that through building a relationship and it's no different than building friends. Then building that, that niche market and new, if you expand to something. Massive, the, a great example is Gym Shark, right? Gym Shark is now a billion pound company, $1.5 billion company, us dollars.
But they built that through building relationships within the fitness community and providing high quality products, supporting, people doing their own thing, like raising money and such. And continue to do that and they've become a massive company. So it's from the smallest company to the biggest company nowadays. If you're trying to be different, you have to build that niche.
Shaun Pepper: [00:18:17] Yeah. And the customer has to feel like you're their friend. I feel, as a consumer, I want to see , the journey. I want to see the behind the scenes now as a consumer, which wasn't something that I necessarily wanted to see before. I want to, I want the company feel real.
Do you know what I mean? Absolutely. I think I want it to feel vulnerable. I want it to feel authentic. I want it to say, listen, you know what , we haven't gotten any new products out because we're just working on X and I'll be like, you know what? Wow, that's amazing. That's a very real statement that almost would make me support the more.
I think at some point businesses we're always projecting this kind of idealistic image. And I feel like because of social media and everybody now being part of the marketing campaign of themselves, people get the bullshit. And as a result, now they want companies to get vulnerable and see the behind the scenes because.
We're not getting enough of that. Really. We're getting this perfected thing all day long. And we understand because now we're part of that content creation of marketing ourselves, quote, unquote , we want that vulnerability from companies. We want them to feel, like our friends to, to reach out and say, Hey, we're not doing well.
Or Hey, could you help support us by doing X?
Dylan Jones: [00:19:25] Yup. For sure. For sure. And that's where, that's why now more than ever that customer service is the most important thing, because people just want to know that they've been heard. Like sometimes it's an impossible fix, but at least you tried.
And that was , that was one of the reasons we with coast expanded and scaled so quickly was we treated every area who knows it might've been our downfall eventually, but , Yes, every customer, we took every customer's issue very seriously and worked on it to fix it and spoke like a founder would phone them and try to fix that problem. Our referral business was out of this world, man. Like we, we lowered our CPA on e-comm massively because of that referral business. And in store we had, the stalkers. On the aisle, people that would recommend people, Hey, what bar should I get? Oh, we get this one because the people were really cool.
They come in here all the time and talk about it and it's really good. I know it tastes really good, but they also really believe in it. So that was really important for us.
Shaun Pepper: [00:20:28] Yeah. We talked about this before we hit record, but like how do you see mission driven companies, being able to spread their message and still then try to scale?
I'm interested to hear your approach because I know you studied sustainability and I think most people generally want to build businesses that are sustainable and that have these long tail practices. I think people are just really short on how to make it viable and scale that business.
Dylan Jones: [00:20:56] It's Oh man. There's a lot of questions in there. Yeah. Sorry.
Shaun Pepper: [00:20:59] I think to hit the first one to, when you're talking about scaling and scaling is a different beast.
Dylan Jones: [00:21:09] Almost anyone who has that entrepreneurial spirit or who believes in a product can make a company like can make a six figure company. It's not that hard anymore. If you're fairly savvy with digital advertising , not even fairly savvy? I learned so much from YouTube. You can make it a very good six figure business, mid even mid six figures to scale above that you need either operational gumption. So you need to really dig into and learn. Or, you need to have experience or skills , scaling. And this is the thing I talked to like with a lot of entrepreneurs. And as I said, I consult with a lot of small businesses who are moving from $600,000 in revenue to 1 million, 2 million, 3 million sort of thing. That's my niche that I work on. That position you need to put yourself in is you need to go from an owner or from the entrepreneur to a business like runner.
That really is You know what I think in the past you could run brick and mortar store. You could make like $8,000 a year a year at retail and it was just you working and you can make yourself a nice lifestyle for yourself. Now its impossible. You have to be aggressive. Youpreneur.
Ism is not easier than it ever has been, but it's easier to be access, it's easy to get into is gurus telling you bullshit. And there's YouTube videos on how to do things that like,
Shaun Pepper: [00:22:39] I'm going to coach you up from my Ferrari on how to do this. It's easy. You can just work three hours a day and you will become rich too.
Dylan Jones: [00:22:47] Yeah. And like a lot of their, those guys, they have basic knowledge and. They got above average marketing skills and people pay him a thousand bucks for their course. And I paid for those courses just to see what's going on, to compare against what I teach my clients. And I'm like, Oh man, this is trash.
I should be, I should put a course over a thousand bucks.
Shaun Pepper: [00:23:06] Hey man, if you need to do some , online course development, I got you covered.
Dylan Jones: [00:23:10] The shit people put out as trash, but there is good stuff, right? There's things like a affiliate marketing, I just recently got into affiliate marketing. That's actually how I'm going to plan on funding. This podcast, not funding it in the way that like, I want to make it rich. I just want to pay for new equipment gear and get better mix. And so this type of thing. So when people mentioned, tools or things like that, I'm going to use affiliate marketing.
Shaun Pepper: [00:23:33] If they choose to click, when they read their Apple. Podcast review or whatever, then they can choose to click. And if they don't and that's okay. I'm not upset about it,
Dylan Jones: [00:23:41] but in the terminology of entrepreneurship, Yeah. In , over the long-term like imagine telling an entrepreneur like an old school, white guy in Midwest America wanted to make auto parts in the fucking fifties or sixties that you can create a blog or website and review stuff that you don't own.
And then if you're good enough with SEO and you're good enough for the bit of ads. That then you can put back links in those reviews and you pump out say a few dozen of them in a few months of a camping gear. And every time when it clicks someone clicks and buys on that you get five or 10% commission.
You don't ever talk to anyone ever create a product and you can make a couple hundred thousand dollars a quarter , honestly, Jack shit like , that's the competition.
So I tell my clients who want to sit still on projects and saying, buddy it's pretty much impossible to sit still in this climate, Eddy. We know you exist. Stop howling at me.
Shaun Pepper: [00:24:52] Yeah, no, that, that's the thing that I think is the hardest part. I'm writing a book on technology and education. I'm using the analogy of an ecosystem and then a learning ecosystem, and it's very similar to thinking about a business as a sustainable, design cycle or sustainable developed product developments.
That cycle is just this idea that, you know, if. You're not going to have this closed system that exists anymore. Like you're not going to be able to protect that for five years. You're not gonna be able to do things the way that you did for five years and just keep doing them that way. It needs our systems or the way that we think about things need to have some area that areas that are closed systems and closed loops that can be automated by technology.
And then we need some areas that are open systems to be able to integrate through API APIs or through other things that are human driven and that are, little. Sort of small projects or little small things that we can slowly iterate to then solve maybe a supply chain problem or to solve, these smaller problems and then put them back into that closed loop system.
But it isn't the case now that you can just have a business model and not keep reinventing it, it just doesn't exist.
Dylan Jones: [00:26:04] Yeah, exactly. , there's a big world and we'll continue always for proprietary information and technology, but. There, there's also this kind of middle ground right now where people think Oh, my idea is perfect.
And it's the only one, there's a million people already doing this. It's just, what value do you offer your niche? It always makes me laugh. Right?, because Canadians say niche and American say niche and Americans have that great saying that the niche, the riches in niches, like the Rishi is in the niches.
I guess it's our French background, but it really is you can offer the exact same services, someone, but if you've niche down and you found your blue ocean within your niche, then you can make an easily, a seven figure business running with a few people just because you found your position globally, because there's so many people and that's something that I focus on a lot right now is.
If I have a brick and mortar business, which I have one in a big general contracting world, I build a very strong local network, but my distribution company that we sell CBD products and other cannabis products through. And I have contracts in Trinidad, UK, Japan, Eastern Europe, and the us.
Like I don't, I look at opportunity. I don't look at. One locality.
Shaun Pepper: [00:27:24] Of course. And that's just the thing when you w you can be a one product skew now. You're able to have these globalized connections because of globalization. Are changing the way that businesses run and the way that they can grow outside of their own country or their province or their, little town , Yeah, that's fascinating.
What advice would you say , from your experience of taking on investors and you don't have to mention any sort of investors or, you can tread lightly or we can delete this entire conversation, but , what would you say to founders when they're negotiating or they're dealing with getting money coming in?
So I think a lot of founders have a real hard time trying to understand. I don't want to give away the bank. I don't understand how to get those costs numbers. I don't understand how to project my company. I want to project a strong position, but I don't know how to make that formula up. What would you say in terms of getting investment when you're are at that 600,000 to $3 million range?
Dylan Jones: [00:28:20] First of all, there is no formula.
Shaun Pepper: [00:28:22] That's the funniest thing, because I've had people ask me about will and I'm not in this position, so I'm not like I'm a school teacher. Who's now entering at this point, I'm jumping into the ocean of entrepreneurship. So I've been an entrepreneur on small little business, lifestyle businesses, like you said, it's never scaled to six figures.
, I've always kept it under six figures , and, and they've been really simple because I just noticed that there was a need and it was niche and it was local. And now I'm trying to figure this all out and entering this world. It's just a, such a. I mean to one person will give me one advice.
Another person will give you another advice. Somebody will say , you need this metric in order to calculate. And if you go pitch this VC, you need to say this. And if you need , it's just a, it's a crap shoot. How can entrepreneurs try to figure that out?
With, in entrepreneurs, which is a pretty lonely place, to be honest , there's other entrepreneurs. But their businesses might be different or whatever. And you're trying to explain this, maybe to your friends, if you're going to do a friend or family round or you know how this all works. Yeah.
What was your experience?
Dylan Jones: [00:29:26] Oh, man. I'll speak to you. There's a lot there again, , You're talking to a guy who's the lowest amount. The money I've taken for investment in a friends and family round is 2,500 bucks. And the most I've ever raised for a large mining project was 12 million.
So I've been from the smallest to pretty big, 12 million is pretty big. It's obviously not as big as it gets. There's a lot. It goes a lot higher than that. But for the, the majority of the people listening to the podcast, I think that's a pretty big one. Friends and family rounds are much lamented, but extremely important places.
So let's start there. If you're going to take money from your friends and family. And this is how I took money from friends and family. On top of majority of my own capital for coast, I did my best to talk all of them out of it. I showed them the business as honestly as I could. I showed them the potential for the business to grow and where we'd gotten so far.
And then the people who. Wanted to continue. I did my best to talk them out of it. I told them every inch of you're going to lose your money, the chance, startups like this were at higher risk of a 95% chance of failing. It, as a founder, as an entrepreneur, it will make you feel a hell of a lot better knowing that people believe in you and they want to give you money.
Regardless of knowing when you're probably going to fail and failing in an entrepreneurial sense is not.
Shaun Pepper: [00:30:50] I agree. It's a fall forward because of the experience.
Dylan Jones: [00:30:56] It's a fall forward, right? There's lots of guys who burn through capital and just be dicks about it. And it's typically VC money. So I'm not even really going to address VC money because anything we're talking about right now is never going to be within VC money VCs.
The, if for anyone who is listening, VCs typically invest in companies, and
Shaun Pepper: [00:31:15] BCS is a venture capitalist, by the way , sorry. VCs venture capitalists. So this is a series, a round series B round, which is usually something like Facebook. So you have this big idea. It needs to really scale quickly.
It's within a small little niche, but now it's growing that. That's what a VC is. Sorry, Dylan.
Dylan Jones: [00:31:30] No, it's okay. It's good verification. And so those guys are going to be looking for. You're over a million in revenue pretty much is the most that's like your Teletubbies Sesame street level benchmark is you're over a million in Rev.
That you're cashflow positive is a big sign of a valuation. And they value in many different ways. So there's this thing called EBITDA, which is earnings before interest tax depreciation and amortization in the tech world. They're going to give you a four or five X on your revenue on EBITDA.
You gotta look at what you're earning before, all those things I just mentioned, and then times it by five. And that's probably what your company is valued. Now, if you don't have any revenue, that's pre-revenue is a way different situations. So you can raise money pre-revenue but you're, that comes down to how good of a pitcher you are, or good of a paint, a picture you can paint or An image you can draw or for that type of investor VCs probably won't go for it. If you're a first time CEO of first-time entrepreneur, if Mark Zuckerberg stepped down from Facebook and said, I'm done with Facebook, Now I've started this new company and he's done it for a year and it's created no revenue.
I guarantee you, he could raise $200 million. Of course it's all about who you are at that point. You have to have the narrative, and then you have the advisors and you have the board and then you have yourself and how well you can build that story is incredibly important.
So being a good salesperson comes on top, which is why I've been fairly successful. I am a pretty good salesman.
Shaun Pepper: [00:33:01] It has something to do with, , talking your way out of that's why I asked that question for .
Dylan Jones: [00:33:07] I credit my mum sometimes more than my dad, even though he was the entrepreneur.
There's a lot of sources of capital that art, these traditional sources. So there's angels out there, right? There's angel meetings. Oh, sorry. What an angel investor is a person of high net value , who invests on their own. Into individual companies they believe in. You can go to angel list.com is a great resource.
You'll find lists of people who are literally angel investors. They don't join funds. They don't invest in funds. They invest in companies that they vet themselves. They typically take a board seat or they'll install someone they trust on the board. They're all over the world. They're is locals people who put in $20,000 once a year, and they're as global as people who invest billions.
They're a massive resource and that is straight up grinding. You need to meet them at networking events. , and this world of COVID when networking events are few and far between services like , lunch club dot. I E or AI or IO I can remember, but if you just type in lunch club in Google, you'll find it.
, it's a great service. It partners you with people in your locality or maybe globally, and you can choose between interests. So that's a great way to meet people. Meetup.com is a great way to meet people and just being open to all sorts of. Walks of life, working your network hard.
You'd be surprised how many people who are mentors or maybe the owners of the businesses that you work for, who have a little bit of money stored away for opportunities that they see as good investments. And you need to be open and honest about your company and ideas and how , and how you think they'll be successful in and , How would that person can benefit from that?
And that's, that's really, I first started raising money, friends and family, because I started traditionally with VCs in the mining industry. We raised our institution only VCs, institutional capital. So PI financial, goldman Sachs, big investment banks. That's where I started raising money from.
So it was very, I was very like methodical and scientific about it. I started raising money from angels and friends and family. One of my mentors told me, when I was feeling a bit trepidatious about asking him, and said, Hey, listen, do you think you're going to be really successful? Do you believe in this?
Do you think you're going to make a lot of money? And I said yes, to all three. And he said , why wouldn't you want your friends and family to share in that bit? And I was like, Hey, you know what? That's a really good insight on why.
Shaun Pepper: [00:35:30] And if you don't, you should probably not start the company.
Dylan Jones: [00:35:33] Yeah. And that was the big thing. If you don't really believe in this, then why are you doing it? And , I did really believe in it and was able to offer them. My first company offered your, my, some of my close friends and family made a lot of money on my second company with coach. Not so much, but that's the gamble.
And that's, again, going back to that, first thing I said is I do my very best to talk to my friends and family out of investing in me , to ensure that they're eyes wide open. I don't want them to. Everything that I've tried to scam them or make them feel pressured into investing.
That's not who I am and it's not how I get people to invest in my businesses. It's I show value. I show success. And I show trust. Okay.
Shaun Pepper: [00:36:15] And those people that are looking for maybe additional funding, so maybe they've put in their friends and family, and now all of a sudden they need funding, but they don't want to give up equity.
What are the options for them? From your experience? , in a non-covid year you could talk to , there's lots of accelerators , small loan provision companies. If you're in the space County, you have provincial or state funding, you have banks that will give you loans. A lot of people put debt financing, which I don't think is fair.
Yes. If you take that, you typically have to personally guarantee it, which means you're on the hook for it, which is why I always know , this is a hard rule, no debt to finance operations ever. If you are negative cashflow business, if you are, if you are in any way, negative or net, no non negative or non positive growth.
Do not take debt to finance operations. It is a, you will end up having to pay that back. If you are a positive business and you have a very good opportunity, there's no such thing as a guaranteed opportunity, but a very good opportunity to grow. And you can't afford it through your own cash.
That's the time to go to the bank and take a loan, and you take a big loan. They want to give you 50, 50 grand and take a hundred. They want to give you a hundred, take 500. If you can scale an opportunity on cash, take as much cash from debt as you can fucking get.
And why is that? I'm following your logic there, but why take way more?
Dylan Jones: [00:37:56] Because if you can actually scale the business, I guarantee. You'll run out of money before you've really scaled it. And if you can continue to scale it, and this is doing your due diligence, but if you can continue to cause to scale it with cash injections, then you've got, you possibly can get right,
Shaun Pepper: [00:38:15] because the alternative would then would be giving up equity. And obviously people that are in that position, you can give up a lot of equity too quickly.
Dylan Jones: [00:38:24] Yeah. And if you're in a positive cashflow business and you're in a position to scale , you can take debt like right now, debt is so cheap, right? Like you go to the, you go to right now is actually really tough to get financing, debt financing, because a lot of the banks won't lend anymore.
But if you're positive cashflow and you have a growth trajectory and you put that in a business model and you go pitch to the bank, I'm pretty sure you could probably still get it. But if you can get your debt at three, 4% , man, if you're selling on Shopify or you're like Shopify takes 2.7%.
EBay takes 10% of your sales. Amazon is anywhere from five to 25% of your sales. If you put it into those kinds of categories , and you can take , four or five or six or even 7% loan from an institutional bank, then. You're getting a great return on capital because all these other places take these massive percentages anyways.
And so while a lot of one thing that a lot of people don't realize as well is that you take a, you take a few hundred thousand from a bank and you scale really well. And maybe you hit a slow period, or maybe you hit a point where maybe your receivables and your payables in a little bit of an upside down.
So you owe more. Then you receiving for a month or something like that, go to your bank and you can say, Hey, here's the paperwork. Here's the projections. Things are going well, we just have a little bit of a cash injunction point. Let's give, gimme a break for a month. Banks, give it to people all the time.
There's a reason when you watch CNN and you hear about these like massive institutions writing off a billion dollars in debt it's because they worked the system, right? The banks have a fail rate. And they work the system within that. And you just gotta be on that, right? That's that's when you become, like I talked about with these contractors earlier, you go from an owner or from an artisan or an innovator to a business owner.
That's the first step is understanding that no price is static. All your relationships should be negotiated and banks are, if you borrow enough from the bank, they shit themselves. When you say, Hey, I can't really pay you back right now. Let's work out a deal because now that's their money.
So there's a lot of things to know when it comes to debt financing. I would recommend any first time entrepreneur don't do it yourself. Find a mentor. Find a partner, talk,
Shaun Pepper: [00:40:57] is there any good literature or any good things that you have found throughout your navigation through the sea of this?
Dylan Jones: [00:41:05] On debt financing? That's a great question. I'll have to look at some of my resources. Maybe we can offer them like in the show notes after. I just can't think of anything off the top of my head on debt financing.
Shaun Pepper: [00:41:14] When we talk about taking that low note do so I know that some companies will then put that so the company will then have that money in the bank.
Then they, maybe they invest some of that money and then use some of the , the interest to be able to repay the loan. Did you guys do any of that with coast as you took capital out? Or was it just , emergency runway or how did that work or how ha how do you know that other companies have done that?
Dylan Jones: [00:41:39] So I took money out for coast on a debt to finance a marketing program and inventory purchasing. For my previous tech company , we actually didn't have to take much debt, but we took a little bit of debt. To finance some , equipment purchasing. So I, again, that's, if you're taking out debt to pay payroll or.
Pay rent, you're in a, it's a real bad spot. You don't want to be in that spot. They'll, you're chasing the dragon at that point, right?
Shaun Pepper: [00:42:07] Yeah, of course. No , that's totally true. And how did you pay yourself? So a lot of entrepreneurs have a little bit of trouble with that one.
Since we're on the topic of money and financing, did you incorporate the company where you a sole proprietor? Did you start paying yourself a living salary right away? What did that look like for you?
Dylan Jones: [00:42:25] So I always incorporate, I have , I actually incorporate all my companies and then I pay my private holding company, which then issues me a dividend.
I do that for layers of protection. Yes, of course. I also do that for a bit of tax protection, although that loophole was closed a few years ago where you're still paying income taxes, doesn't really matter.
Shaun Pepper: [00:42:46] sorry, just for the listeners listening. So when he's mentioning incorporation, essentially functions as a new human.
So just in, in this most simplistic terms , possible if I am Sean pepper and I'm a sole proprietor. I am still Sean pepper. If I am now incorporated into my company, that company now owns everything in all the business operations. I E if I go bankrupt or the company goes bankrupt, I still have my house and my protection, and I can pay myself as an employee of the company.
Dylan Jones: [00:43:15] Exactly. But , if you're planning on using a corporate corporation, like I do is a tax Haven, then definitely go talk to a tax planner because you're going to have your world rocked a little bit.
But paying yourself as really. So you need to be honest with the company with yourself.
Whenever I started a company , I'm not really in that position anymore, but when I, I used to yeah. I would write down all my finances. So all my costs. And then, but not just your baseline , not like subsistence, but like how much to take my girlfriend note once per week on a date night to a decent restaurant, not spend $50 - $100 sort of thing.
And then, you know how much to go on, have one. No weekend vacation, whether it's like to maybe drew ski Hill per quarter, something like that, nothing over the top, but enough to have that break. I built that into my wage and when you live on that, like you're paying yourself almost nothing, but it's enough.
If you stick to your budget, that you are not in need of money. I've been in the position where I've been living off credit cards. Because I'm not paying myself anything. I can tell you right now, it doesn't provide any benefit to a company and it doesn't provide any benefit to you because it really comes back.
He's like I had my first company, I was living off credit cards. We became very successful. We raised a lot of money. We started making a lot of money and because of that, , and I was a lot younger. It was like almost 10 years younger. And I am now, I had a very, quite a high amount of, , entitlement towards that money that we raised because I live so spartan for so long that I was like, okay , we raised a million bucks.
I'm gonna make $200,000 a year. And you pay yourself that absurd amount of money. You pay your debts off you and your credit card, but then you're like I'm making 200 grand a year. And that's I'm burning a lot of money and then you start cutting it down. It's just it's this kind of peaks and valleys system that I think is very pervasive within entrepreneurs.
It's like I would pay myself as much as I can for the short time I can get it rather than building it in and being like, you want me to pay myself a good living wage, good, strong wage. And , And then when that, and stick with that and have a lot longer of a runway than I currently do.
Shaun Pepper: [00:45:41] Yeah. Yeah. I think that's, I think it's tricky for a lot of people because, if you're paying yourself the living wage, then you also have to get the finances and financing in order to pay yourself that way. And I think starting from that point is probably a better situation than starting the other way around, because you can, like you said, you can get into a situation where you're not able to pay your rent and you cannot operate as a business operator.
That shift between being, an artisan to a business operate, you can't be a business operator and make those type of decisions in the systematic thinking with no sleep and being stressed about paying your bills. It's just not, it's not possible
Dylan Jones: [00:46:19] Can you hear me? Yeah. Can I give two here's one real like nugget for anyone who needs to raise money?
Shaun Pepper: [00:46:26] Yes, I am. That's what I'm trying to tease out of you right now. So as many nuggets as possible.
Dylan Jones: [00:46:30] Okay. Never raise money. Never try to raise money in August ever try to raise money in December, your best reason, times and the spring and the fall.
In August older, all the rich people are on vacation with the kids in the fall. All the kids are back at school and they're around. And that's the same thing with January. And , the early spring is everyone is gone for Christmas and everyone's gone for August.
Shaun Pepper: [00:46:57] That makes sense. That's a very , very common sense thing, but probably, yeah, you have to live it to know it.
Dylan Jones: [00:47:04] The other one is , If you're gonna build a pitch deck, follow guy, G or guy Kawasaki's pitch 30, 20, 10, 10 slides, Sequoia capital stick to a script, but also don't memorize it, know your shit, but if someone interrupts you in the middle of your pitch, which they will. Listen, active listening, engage with that person.
Always have a ask. I cannot tell you how many pitch sessions I've been to with 20 guys pitching. And like half of them didn't have asks, like they literally would pitch and they would not ask for money. Like you are there to ask for money. So have a, I need $200,000 for it, or 5% or whatever, but not just for 5%.
But, and this is what we're going to do. So how about use of proceeds or UOP under Google that understand what that is? Understand how you're going to spend that money? Because nobody will give you money. If you're like I need 500 grand and what for , I need it. For growing my company. , , no.
What do you need it for? People who are rich do not become rich by being stupid with their money. There's, there is the billionaire Instagram, models of the world who just are rich and don't know what the fuck to do with their money. But the majority of your angels are savvy business.
People who are better at business than you, and they will take a chance on you if you are honest and hard working.
Shaun Pepper: [00:48:38] For sure. Those are all really great points. That gave me the time and space to think about the next question. how do you create systems in your life in order for your life to be easier and automate decisions?
Dylan Jones: [00:48:52] That's a great question. I think , for me, when it comes to systems building for personal, I'm actually not a. I'm not one of those type of people. Who's here's my routine. Yeah. I do have so every morning I walk my dog on the mountain. That's how I start my day. And , I , protect that point extremely hard. So if someone's like hey!, can we have an early call? Or Hey can... no, I just don't do it.
That forest walk , Which like the Japanese, I can't remember the Japanese word, but they call it forest bathing. So, I know my dog is been trained. I know he's been exercised and I just really covet that time with my dog. I love dogs so much. And sometimes Steph, my fiance comes with me, but not all always be once a week or something like that. That's very important to me.
I also block my work day up. So are you Prius identify my tasks that I need to get done that day.
Shaun Pepper: [00:49:57] And how do you do that? Sorry. Can you be specific?
Dylan Jones: [00:50:00] Yeah, so I, I kinda, I. If I'm starting a new project with a business or a client or whatever it is I make like essentially what is a Gantt chart?
If that is just Google,
Shaun Pepper: [00:50:10] I know what it is, but just for listeners, essentially, it's like a process chart of when things are starting and when they're going to finish with a client or it comes from the world of engineering and where you have a bunch of different people that have to work on a project at one time.
And therefore you need to know when certain. People are going to be taking over the project or starting to work on it so that everybody can get a timeline for when it's going to be finished.
Dylan Jones: [00:50:32] Exactly. Yeah. So there's a very good explanation. So I break my Gantt chart down into hours and then I give myself hour blocks.
And so I'll identify a pro a task like this is a two hour task. This is when our task is a four hour task and I break my day into three blocks. So I actually don't break my morning to block my mornings my morning, and then I have morning work, afternoon work, and then I have my evening and my evening can either be leisure or work.
It depends on the need, but morning and afternoon is work. And , so I, aside four hours in the morning and four hours in the afternoon, so I have four blocks in the morning, four blocks in the evening , or the afternoon. And so if I have one four hour task and then, one, two hour or two hour task, that's it.
That's the day. I won't, I will not try to force more into my day because you will never do it. So there's, I can't remember who someone said this on some podcasts I listened to a while back was like, I always overestimate what I can do it in a day. But I always underestimate what I can do in like a quarter or a year.
So I take that very seriously now and say maybe I'm only going to get one thing done today, but then that one thing is done. And then I follow my kind of my like more subjective thing that I follow very closely is the principle of swallowing the frog.
Shaun Pepper: [00:52:08] Yeah. Brian, Tracy, for those people that are there that are listening.
Dylan Jones: [00:52:12] Yeah. Very famous principle is. The, the way it works is if you had to eat a frog, would you chop it up into little beats and suffer through it? Or did you just grab that frog and shove it down your mouth and swallow it as fast as you could. So wake up, do what you need to do for your morning routine.
If you have one the idea of having a cold shower, first thing as you walk into bed to me is absolutely important. It's like, how would I ruin my day and make my days start on a really shitty foot and it'd be to have a fucking cold shower. I like cool showers. I always have these. I'm a like pepper here.
I've had, like I've played lacrosse and hockey my whole life. So usually the dressing room you're in, you can get very hot water. So I like cold showers, but the cold shower nonsense , But yeah. And then you sit down at your desk or you stand at your desk or whatever you do for your work, you, the shittiest worst task that you don't want to do, you do that as hard as you can first and then your days easy.
Yeah. Yeah.
Shaun Pepper: [00:53:12] I would agree with that. It's usually the thing that you know, that you need to do.
Absolutely. It's that it needs to be done. You don't want to do it. It's been, it's just been the thing that I love about that method is that it's usually the thing that causes a lot of mental Ram.
So it's the thing that you're constantly thinking about anyways. And if you don't do it, you're still going to be thinking about it when you do the next thing. It's just , do you use any Pomodoro timers or like anything like that? Do you have a way of, so for me I do pretty much the same actually, as you , in that I create these chunks a little bit different in that when I started the day, I identify how long the things are going to take.
And then. I chunk them a little bit differently, because I have a family, so how that fits into our family day. But , similar in that, like I'm going to get an hour here, an hour there or wherever, but then I also one step further to use a Pomodoro timer, which is a 20 minute timer.
And then I say in this 20 minutes, this is what I'm going to do. Cause I found when I tried to chunk something, that's a four hour project. I can get distracted and then this is just me. I'm a distracted person, but I can go Oh, like maybe let's say I'm working on a marketing campaign. Oh, the design of this.
And I can spend so much time on a design of something without actually like pulling my head up and be like, you just need to move forward on this next, like this next 20 , this is a 20 minute task you need to move forward. Or this is three 20 minute tasks, but just that time to have five minutes to get my head up and being like, am I doing what I need to be doing here?
Or am I getting distracted has been extremely helpful for me. And it might be helpful for listeners. I'm not saying that everybody should do it, but just something to add on there.
Dylan Jones: [00:54:46] Yeah. I think that's your nail there, right? Like you got to figure out what works for you. I don't do the Pomodoro technique because I am not a, I can't go from zero to work.
It takes me a good 15 minutes to really get my zone in. So if I'm on like a 20 or 30 minute timer , like a quarter or half a quarter of my time is just getting like into that zone. But once I'm in the zone , like I can work for six hours straight. Yeah, I do my four hours. Like my four hour blocks are always in the morning.
I never four hour block in the afternoon. It's always short block stuff. And that's because in the morning I sit down and I, I cut out all the distractions and that's another thing. Like I typically work from home, but lately I've been working at an office with my new job. What is it?
Shaun Pepper: [00:55:38] Sorry, what is your new job? Just out of curiosity for those people listening?
Dylan Jones: [00:55:41] I took a, what I would call a brake job. So I facilitate, I worked with two general contractors as your, as my clients , to help them scale their businesses and actually facilitated a merger between the two companies.
And they are doing so well scaling so fast that they were hiring a general manager. And I was actually helping them hire a general manager and realized I enjoyed their company so much. And the speed of the growth, , the type of work, the working atmosphere environment that I took a fairly ridiculous pay cut to go be their general manager.
And I'm loving it. Like I absolutely am just loving it. It's not something that I'll do forever. But it's something I'm going to do for at least six months, maybe longer, depending on the growth and trajectory of the company where I can get it. But it's a it's back in the office and it's, I'm not like I'm not really built to be a consultant.
I'm a real team player. Like I said before, I'm a team sports guy. I love teams. I love groups of people. I don't like being by myself. So sitting in a basement in my house for the last nine months as a consultant was not, the most fun I've ever had. And of course, At the end of the day for me, work is a combination of, value or finances or capital or payment or money or whatever you want to call it and fun.
Totally. I don't want to do a job. I hate, I've never had a job. I hate. Ever. Even my, like I started working when I was 12 as a food stalker in a grocery store, and I loved learning about all the fruits and vegetables. And then I was a carpenter. And then I worked in mining. I did sales jobs through a university for Molson and for monster energy drink, never had a job.
I didn't like. Probably because as soon as I didn't like it, I just quit. But yeah, I can't imagine, that idea of Oh man, I'm just going to sit here and do this for 10 years or 15 years. I think it's always it's if you're enthusiastic and if you're , driven and ambitious, there's always a role for something you want to do.
Shaun Pepper: [00:57:47] I completely agree with that. In fact, that's probably one of my frustration in the whole teaching field. I always felt like it's one of, many industries where people get. Brought to certain positions of power based on time or experience, but not necessarily based on the skillset for the role.
I want to be mindful of time. I'm going to ask you the question that I ask everybody on the podcast, how would you like , people's lives to change as a result of your interactions at work at home or online?
Dylan Jones: [00:58:19] Wow. That's a great question, actually.
Shaun Pepper: [00:58:22] Thank you. I spent a long time thinking about it.
Dylan Jones: [00:58:26] That's fantastic. I think the way I approach work and I just alluded to it and I understand that not everyone's in this position , but is being, Hey, what's your impact? , so many people go to work as zombies and I think.
It's so much more interesting if everyone doesn't like, if you take real interest, even in a job you hate , taking real interest and really, and bringing your passions, like I can tell you I've had about nine clients in the last, Oh, about a year that I've empowered people at those jobs to bring like sustainability or, diversity worker quality work to the workplace because it's something they're passionate about.
And I think for whatever reason , as Westerners, we're really like shy about bringing ideas forward because we think people think they're stupid or whatever. And I got to tell you , so many people are out there looking for great ideas that if you just are passionate and pitch someone, like you're going to have years of listening to you.
So just really I'm big on sustainability and environmental ism, but it doesn't mean everyone else needs to be, or has to be, or is so whatever, if you have a cause or something, as long as it's not something like, if you're not seeing, maybe shut the fuck up and don't say anything, but everything else, get after it.
Yeah. Yeah. That's great advice. Pursue your passions and find the tribe that will then support you to do that. Yep for sure. Awesome. Thank you very much for being on the podcast and where can people find you if they want to work with you? We just talked a little bit about consulting. If they're starting a business and they want to , reach out and find them find more information, , you can email dylan@guidedbrands.com.
It's a good place to start. I unfortunately have been too lazy to launch a website just because most of my businesses referral what, maybe I'll do that. I can help you with it. No problem. That'd be dope. All right, buddy.
Shaun Pepper: [01:00:32] Take care and thanks again for taking the time. We really appreciate it. And I think you provided a lot of value , to the audience today. So we really appreciate it.
Dylan Jones: [01:00:40] Yeah, absolutely. Man. It was a lot of fun
