Build Something Big

Back in my days at Overstock.com, Patrick Byrne and I would spend hours hanging together, I learned so much from this guy on business, life, and creatively solving the world’s problems. While Patrick and I were developing this cool friendship, I was having some incredible business successes following some of his teachings, which he learned from the days he spent as a child with Warren Buffet. There was, however, always some tick in the back of my thoughts to kick ass in my own start up. It’s in my genes. I attempted several times to leave but was held back over and over again by more compelling offers within Overstock. My career and capabilities were growing, and so was the money and prestige. All of this, on top of my loyalty to Patrick, kept me there for longer than I originally thought, but it was all worth it when in 2007, I took the leap and started CommerceInterface.

My wife and I had been working on growing a small portfolio of properties in Salt Lake City, UT in an area that was booming. We had 6 apartment units that we rented out. The way we got started was we bought two units, lived in one and rented out the other.

I remember the first one… the place was a dump. Friends would come over and they would say, "Oh, my God, Ivan, why the hell did you buy this place, why the hell are you living here?" This place was in Salt Lake City on 9th and 9th. "This neighborhood is really bad."

We kind of looked at each other knowing better; this neighborhood was on the up and up, it was going places and we're going to make this place look really nice. We spent 2 years remodeling it ourselves, and not being very handy, you can only imagine the quality of the work. It looked really nice in the end after getting my work fixed by some very handy people. We ended up keeping that place and buying a few more.

I didn’t want to pay a company to property manage for me, but when the calls would come in for me to go out and fix something, all I could think about was how much I needed to get out of this business. I really suck at fixing things that make a house work, like when the sink breaks and I flood the kitchen. Yeah, that bad.

During that time, I had this grandiose view that I would buy hundreds of these units, though, and I was just going to become this real estate mogul. This was a great growth phase and even though I really cannot say it would never happen, I may never be a huge real estate mogul, but if I do decide to take that path one day, I will be smarter about the business so I can have all the right people in place to succeed. Some properties I lost money on, some I made really good money on.

In 2007, after selling the properties at the height of the Real Estate Boom, I took that cash as started CommerceInterface.

With $85,000 dedicated to CI, and my wife with enough to live off of for 1 1/2 years (cause I wasn't going to be paying myself for the first year and a half), I finally had my dream. I was officially a business owner. The first year in CommerceInterface was good for business. Then in 2008, the US went through a huge financial crisis. Starting a company during that time had some positives, but had a lot of negatives... people were very cautious about investing into their businesses and we were selling those kinds of business services.

After we recovered from the economic instability, we began enjoying a newly established technology platform which took us to servicing 9 of the major retailers in the country, several hundred clients processing hundreds of millions of dollars in transactions. That’s about the time we landed Groupon as a customer and began servicing them. It wasn’t long before an irresistible offer came through and we got acquired by them.

I always had this vision I wanted to build something big. Having a great career at Overstock, to Real Estate successes, to some tumultuous years starting CommerceInterface, I never gave up on my hope to build a big company.

In good cash flow years, I would take money and throw it into other businesses, always in the hopes of creating this group, this conglomerate of companies that I could have people run. And I would support  them, make sure things were going well and continue to build more and more successful companies.

Now, I have a different thought on that. You’ve almost got to be crazy to think like I thought, but I couldn’t have anticipated it, I had to walk through it. Start-ups take a lot of hard work, dedication, and enthusiasm and you need to stay very focused. Mistakes are easy to make in those early years of a business, and in the years at CommerceInterface, certain things happened and we suffered the consequences of not having me, the founder, completely focused on the vision, driving the functionality of the technology.

Pay Yourself Last

Getting a business off the ground and selling your products is the easy part... keeping that momentum and growing your presence in the market to keep your products and services flying off the shelves for years to come (remember that entrepreneurs dream??:), while scaling, is much more difficult. Maintenance for long term profitability of a business is very difficult and requires a certain level of discipline; stay grounded when it comes to your finances. In my years of business and ventures, watching businesses come and go, a lack of staying on top of key financial metrics is the one thing that kills most businesses. Being able to manage your finances- payroll, vendors and supplies, inventory, etc.- is a difficult part in any business for someone who has never done it. Many people are just not cut out for this, but as an owner, you gotta learn it.

Here are some of the basics. Handle them, stay focused on the bottom line and watch your business grow.

Employees & Payroll

Don't pay yourself much, if anything, the first one to two years in your business... I've seen first hand, businesses that go down because the owners start paying themselves way too much. Employees are the most important part of growth and scalability, and you want to take good care of them.

Pay your employees first.

This is contrary to what we learn from leading finance or wealth building gurus or seminars out there. These pros say, "you pay yourself first." That's bull shit, you pay your employees first. As an entrepreneur, your payout is long term.

In all the years that I have been in business, I have never missed a single payroll, even when things were tough. I can't stand it when I hear things like, "My boss gave me a check that I can't cash till next week." Big no-no in my book.

I've heard stories of businesses going under because they didn't have enough money to pay payroll taxes. To me, that's poor management. You've got payroll and every two weeks you know you have to cut checks to your employees. Then you have to pay your payroll taxes, and depending on your payroll amounts, they may be monthly , quarterly or yearly; whatever your situation may be.

What should you do? Open Two Accounts- one for business and one for payroll.

Let's say you have a bi-weekly payroll expense of $10,000, with an additional $2,500 in taxes, put the full $12,500 and deposit it into your payroll account, and forget about it. Yes, I know that you may not have to pay your taxes until later in the year, but ultimately, this is a payroll expense and you owe it. So many people get into trouble with this... and I'm even referring to large companies with several hundred thousands of payroll taxes they couldn't pay. This went on for several quarters, and they had to close their doors because they couldn't catch up. Don’t be that guy.

When to Start Paying Yourself

When you start having a little bit of success, you can start to take a salary and/or increase your pay. Stay away from the mentality of spending a little bit lavishly, thinking that things will always be on the up and up is not guaranteed. Be patient with yourself, a day will come in your business where you’re making a decent profit and you will be able to rake in the benefits for your efforts.

Capitalize Your Business

Something very important that people don't realize is that you have to capitalize the business.

Throw money in the bank!

It's great to have the capital there so you have the option to take on big exciting opportunities, even acquire other businesses that will help strengthen your business, or simply help you through hard times.

Track Your Performance

I run across people in my life who don't even know how to balance a checkbook. How are these individuals expected to run a P&L or a Balance Sheet for their business and know what to do with it? Listen, this may be a surprise to many of you, but I have seen people at large corporations that don't have an idea of how to read a P&L or how to properly calculate gross profits for their business. It's a shame, but it's a reality.

Schools need to do a better job of educating our children on how to balance a checkbook, how to manage personal finances. Teach them what a P&L and a balance sheet are. Teach them the basics on how to manage personal and business finances. Until that happens, it is up to you to learn. You will find people that are amazing sales people, technologist, and amazing operators, but they will forget about the most important vital sign of a business, your finances.

Finances in your business is like the blood that courses through your veins. If you don’t know the financial status of your business, you will F-N die. Pay close attention to those dollars, make sure there is a healthy flow, and you will have a thriving, profitable business. And remember, pay your self last!

Epic Fail

Many years ago, my father gave me a book about a Latin American business man from Venezuela named Gustavo Cisneros. The son of Diego Cisneros, who's business boomed during the industrial revolution in Venezuela in the 1920’s. He is known for creating and leading what is now known as the world’s largest privately held media and entertainment organizations. By the 1940’s, the Cisneros Group were clearly established as one of Venezuela’s major corporate entities and because of this, they were able to represent big names like Pepsi and Studabaker. They owned a ton of companies in North and South America, and as a multi-billion dollar organization, the men who own and run the organization are amongst the world’s wealthiest businessmen.

I read that book with such enthusiasm. I was around 24 or 25 and was working at Overstock.com at the time. When I finished that book, I thought, “Shit, I am going to build a holdings company that will own all these different businesses I want to build.” I had found a new mentor in the pages of that book my dad gave me.

So what did I do?

I went out and had a smart friend of mine set up a company, The Zerimar Group, in Las Vegas Nevada. You may ask why Nevada? For the tax saving benefits of course. I needed a way to protect all these profits I hadn't made yet.

I look back at it now, and I laugh and think, "Man, I didn't know anything, I was clueless."

I threw $15,000 I had in savings into the business and put in place an organizational structure that cost me more then the business activities I was performing. I was thinking big, but those are things you do when you have a tremendous amount of wealth, and you want to have tax savings on all that wealth.

I started a few different businesses that were held by The Zerimar Group. My goal: I'm gonna start all these different companies, and The Zerimar Group would be the holdings company of these different companies. At some point, I am going to build out a kick-ass management team that will work for the group. Together, we will manage all these different companies. That was the plan!

2 1/2 years later, after paying maintenance fees on The Zerimar Group, we ended up closing down the company. Note to self- Maintaining and closing a company like this in Nevada costs more to close than it does to open it.  This was sort of my first shot at creating this dream organization where I owned a bunch of different businesses where I was the head of this corporate group. OK, so that didn't go very far, but I kept on working, plugging away, starting businesses on the side, as I continued to work at Overstock.com. Even though I lost thousands through the efforts, I gained real working knowledge through these efforts.

I believe that if you fail, and fail hard sometimes, as long as you're paying attention, you will always come out on top. If not financially, then through the invaluable education you can only get from rock bottom.

Run It As If It Were Successful

There is this saying… “Fake it till you make it.” You've heard it, I know you have.

This is what I have done most of my life. Fly by the seat of my pants and cross my fingers that it works out. I don't always know if things will work out, like sometimes what I think may be the best idea scares the shit out of me. But I stick to my vision, and it's worked out well so far.

There are a few obvious things you want to stay away from, like lie, steal, and ruin your reputation in the industry, but you definitely need to act like it and you need to see yourself in a certain place; See yourself with a successful enterprise and go.

Don't be one of those guys who says you need to have ‘this, this and this’ in place before you start running the business.

You have this idea for your company, and even in the early getting started stages,  you need to run it like you would run it if it were successful.

Start the company, incorporate the company, get your accounting system in place, get your business cards, set up your social media profiles, and then get the business up and running. Start the business!

You dont know how many businesses I have set up- incorporated,social media profiles, started putting a team in place, planned out how it would all go down, and then pulled the plug.

So many of the businesses I have started have gone places too, which I’m proud of. Over the years, something that pisses me off is that so many people think about starting a business, and then wait for the stars to align.

The stars are never going to align, people. If you start thinking, you will never do anything.

As Nike puts it, JUST DO IT. Just Fucking Do It!

Never give up on your dreams. If you believe in it, you’re gonna get there.

I have had times where I'm like, SHIT! I have failed at everything I have done. Now, I have to go back and get a corporate job. But, instead of that, I've kept at it. Every day is a new day that can add something positive to your life.

Never, ever, ever give up - Winston Churchhill

Gotto Keep Going

Ever since I can remember, I have always had this drive and passion for business. Not so much the details of it, although I do love the minutia sometimes, but more so the possibilities business creates for people.

As a child, our family didn’t have much, which means I went without. I didn’t have the GT, RedLine or Robinson BMX bike like the other kids in the neighborhood, or the latest Vans or Nike shoes like my classmates. Was that shiny new bike and good looking shoes too much to ask? Yes. I couldn’t get these things from my parents, as these were considered luxuries.

The WANT drove me to go out and earn my own money by starting a business of my own. A business where I could earn what I needed to obtain the things I wanted, but I couldn't have if I stayed put and did nothing about it, so at the age of 10, I started a grass cutting grass in the neighborhood.

This was my first ever venture, which started with me hitting the streets of my neighborhood, knocking on doors and asking people to let me cut their grass for a fee of $15/cut. My success was almost instant. This effort led me to land 10 clients that paid me $15 per cut every two weeks. The first 5 clients I was able to handle myself, but as the customer base grew, I had to think about hiring help to scale the business. I ended up hiring some friends to help me serve these customers. I remember getting my first payment, I was like "wow, I have actually managed to get someone to give me their money for a service I am providing, this is something that can be big!, I am building an empire here". I had employees and was making real money. At the age of 10, I was dreaming about how I was going to establish a company that had all these "employees" cutting grass on my behalf, and eventually, we would expand it to other neighborhoods.

This business venture taught me one of my first business lessons on the distributions of equity in a business and the power of entrepreneurship. I charged $15/cut and paid my friends (employees) $5/cut, which seemed fair to me, as I was the one that knocked on the doors and got the customers. It was my idea and I executed on it, so why should I split the fees 50/50 with my friends that were helping me? This was a topic of conversation all the time with my friends, they wanted to know why they only got $5/cut vs. my $10/cut. At the time, I knew nothing about business, but I just knew instinctively that this was the right approach and one I needed to hold a hard position on. After all, I knocked on the doors and was the one with the business idea. I didn't have a co-founder.

As entrepreneurs we can sometimes get accused of being greedy, paying too little, not sharing the love with others that are helping us build the company, etc. Here is my take on that, as an entrepreneur we take LOTS of risk and put all we have at risk to build something that may or may not work, YES we have others that help us build the company for a salary that we pay them, even if it's not market rates, but they made the decision to take the job. As an entrepreneur and founder(s) of an enterprise, you deserve the line share of the business and you should never feel guilty about it.

You "knocked on the door' ;)

That grass cutting business lasted for about 8 months. Within the next couple of years, I nibbled away at other business ideas in Jr High and High School. I always had this dream of being a business man.

The other day I was going through some of my things and found this paper I wrote in 11th grade. The title of the paper, 'Business Man'. It's basically a paper describing me in the future. The purpose of the paper was for us to write where we saw ourselves when we graduated high school, what we wanted to be doing with our life and what our life is going to be like. I read through the paper, which was filled with grammatical errors, aside from those, I realized that this paper I wrote in high school, described what I had created in my life. I wrote about starting a business selling CD storage cases. Back in those day, CD’s had just come out, and there weren’t a lot of options for storing this new media.

The paper described my business being a huge success, I had a hundred employees, a really nice car, and a 6,000 sq. ft. home. The teacher had encouraged us to cut out pictures of what we wanted, so in my paper, there were cut outs of the home I would live in and the car I would drive. I look back today and think, “WOW, It’s not that far from what I actually have accomplished in life.” Interesting that I could look back at a paper from 20+ years ago that actually worked out, minus the CD storage business. I actually wrote, back then, what I have become today.

I’ve always dreamt of doing what I am doing today. I've never given up. I have had many businesses failures, and I’ve never given up. Almost so much that my friends and family would think and say, “OK, what is Ivan up to this time?”

Now, I realize that you gotto keep going.

People will wonder what you’re up to, and wonder when you are going to actually “Be There”. You will get so excited about your idea, dump time and money into it, and pour all of your heart into it. You will experience great triumphs, and epic failures throughout your process. Realize, it’s yours and you gotto design your own life and keep going.