Anxiety Patches, Unlimited PTO, and When to Switch to an S-Corp

In this episode, Alicia shares her surprising results using a new anxiety patch that actually lowered her daytime stress levels, backed by data from her Oura Ring. George gives it a try too and opens up about his own high-stress moments managing life solo with the kids. The couple also breaks down what it really means to be "busy" versus just living a full life, and they reflect on techniques like tapping, supplements, and biohacks for managing high performance without burning out.

Then they shift gears into startup strategy, including:

• Why George offered unlimited PTO at his company—and how it played out
• How to handle accrued liabilities when preparing for an acquisition
• Whether mandatory time off is actually a smart idea (spoiler: yes)
• The business case for S-Corps vs LLCs and when to make the switch
• George’s favorite analogy for understanding different types of outside capital

The episode also explores the impact of agentic AI on customer service, the evolution of corporate perks, and why leveraging debt might be smarter than taking VC money.

Highlights

• 03:00: Alicia's unexpected results with Restore Patch and why George is now a believer too
• 08:30: “Busy” as a conversation killer—and how to change the narrative
• 15:45: The logic (and liability) behind unlimited PTO
• 20:00: Mandatory summer PTO and how it’s shaping modern work culture
• 31:00: When to switch from an LLC to an S-Corp (and what George wishes more founders knew)
• 35:00: The best analogy you’ll ever hear about the difference between debt, VC, and private equity

Product Mentioned

• Restore Patch: Alicia’s go-to for anxiety and sleep support. Use code LIFT15 for 15% off. This isn’t sponsored—just a product she genuinely loves.

Takeaways

1. Stress management doesn’t always require massive lifestyle changes—sometimes it’s as small as a patch or a five-minute technique like tapping.
2. “Unlimited PTO” isn’t just a perk; it’s a strategy for reducing liability and staying competitive in hiring.
3. Don’t wait until it's too late to think about entity structure. LLCs work until they don’t.
4. Not all capital is created equal. Learn when to borrow, when to raise, and when to just bootstrap smarter.
5. Corporate culture is shifting, but your business model needs to support those values if you want them to stick.

Resources

• Restore Patch
• Learn more about S-Corp vs LLC: IRS.gov Business Structures

Transcript

George McKenzie (00:00.066)

When you accrue PTO, then you're accruing a liability on your balance sheet, right? So you owe these people this money, this time off. And most of the time companies will reset to zero at the end of the year, or they'll let you carry X amount over at the end of the year. And that's kind how you true it up on your balance sheet. But when you're looking to sell, you don't want that gigantic liability on your balance sheet because that's their money. They quit, owe them the money. So we wanted to get that off of our books to be clean.

So it makes it easier on the acquisition that you don't get penalized for having this liability on your balance sheet.

Welcome to Married to the Startup. I'm Alicia McKenzie, a wellness entrepreneur and digital creator. Alongside me is my amazing husband, George, the CEO who's always ready for a new challenge. We've been navigating marriage and running startups for over a decade, and we're here to share the real, unfiltered journey with you. Join us for insights and candid conversations about integrating love, family, and entrepreneurship. This is Married to the Startup, where every day is a new adventure.

All right, we are back for episode. So are you. You have like a billion tabs open.

must suck because you're

George McKenzie (01:11.726)

3, 6, 9, 12, 15. 18, 21, 22.

Keep going.

Why don't you have your screens categorized by business? Maybe that's what's wrong with you.

Because that's not how I work.

there's nothing wrong with me. I'm perfect in every way. It is what I tell myself all the time.

Alicia McKenzie (01:32.146)

Is that what your mommy told you?

All right, welcome back to episode 40 after some technical difficulties. you in here?

It starts 40, it's not 41.

Why do you question my ability to keep track?

I thought we did a whole dialogue about 40.

Alicia McKenzie (01:48.908)

No, we We didn't.

Maybe in my head we did.

You have conversations with yourself a lot, don't you? Bullshit. I have like a whole two years before I turned... If I told you I spent...

You're about to turn 40.

George McKenzie (02:00.172)

I have like a whole year and 10 months.

Don't use that

If I told you I spent $80,000, how much would you tell me I spent? You're so foolish. You'd be like, you should go now and an honored grand and stuff.

$80,000.

George McKenzie (02:16.128)

Exactly. That's what I'm saying. You're 40. It's the roundup.

I'm 38. Whatever. Anywho, back to this. Episode 40. And I want to start with a company sent me a package, which happens a lot. I get a lot of packages.

Anywho...

Episode 4-0.

George McKenzie (02:36.472)

What was in said pack? Yeah, you do. Mostly from me. Hey, that's disgusting. Don't make that face.

Anyways, so a company sent me a PR package and it was full of a bunch of different patches and I'm like, okay, more patches, what is this shit, blah, blah, blah. It is called, the first patch that I tried was an anxiety patch and apparently it is a bunch of different vitamins like GABA and whatever, but they also have a little piece of copper.

play along.

George McKenzie (03:11.66)

Was it Yo Gabba Gabba? that was funny, come on!

You're killing me. And you know what's sad is that nobody's even gonna know what that show is because it is so old. That's like circa 2008. That's not true. Yes, it is. That's when Ava was watching it. Yo Gabba Gabba is not on YouTube. It's not? Anyways, so it is an anxiety patch and you just took yours off. No, it's been on for three days.

think it's still on YouTube or something.

George McKenzie (03:38.296)

has been on for like a week.

But you're supposed to change them out every three days. And I'm like, okay, this isn't going to work. Everybody claims that they can cure some form of stress, anxiety, whatever. I put it right over, you're supposed to put it over your trap muscle. I put it on there. And you can pinpoint on my aura ring via the stress levels of when I put it on, because it took my stress levels from super high to...

almost a restored level, which is really unusual for me during the day because I function at such a high capacity. Like I'm doing a lot. And if I sound like I smoke a pack a day, it's because I'm getting over a cold. But you can pinpoint on my aura ring when I put this patch on. And I don't know how to describe it, but I almost felt like it gave me a sense of calm and a sense of ease. And I was still able to do all of the things that I normally do, but it just didn't feel

as difficult, which is really strange because it's not like my life is hard. just do a lot and I ask myself to do a lot and it gets done, but it's usually, I'm kind of high stress, right? Like I'm stressed during the day, but this thing lowered my stress levels and I was really surprised that it actually did what it said it was going to do. So naturally I'm like, okay, well this worked for me. Let's lap it on my husband. So I put one on you, tell me your experience.

Yeah, so unfortunately I was having some aura ring trouble so I don't have the data that I'd love to have to see. I forgot to charge it. It's a technical difficulty. Anyway, so I didn't have the data feedback that you did.

Alicia McKenzie (05:09.452)

What were your aurora ring troubles?

Alicia McKenzie (05:22.232)

So it has nothing to do with the aura ring. has, it's a layer eight issue.

Yeah, but Orwing was involved. Anywho. Yeah, no, I think it worked. I don't have the data to back it up. whether it was a psychosomatic response to, you know, knowing that it worked for you, but you went out of town for a night, which is a high stress for me because I have to deal with the children. Deal with. It's a, it's a, it's a dealing. It's a, you know, make sure everyone survives and get through the day. There's

Okay, anyways.

Alicia McKenzie (05:47.224)

with.

George McKenzie (05:56.214)

low expectations on achievement. It's really just getting through, but you know, I can. I could feel the difference though. I wasn't as stressed. We went out, went to the store. We went out to get food, did things that are highly stressful for me of trying to corral these children when we go out, but it was noticeably different. So whether that was the patch working as intended or me thinking I had some help which made it less stressful, but.

In aggregate, you know, whether the ingredients worked or it worked on my mind, either case, the result was good. So I continued it for the rest of the week.

I am a believer. I've used it for probably a little, I would say two weeks now. I'm on my second week and I'm really sad because I actually left the patches at our South Carolina house. So now I just had to order some more. Which means I actually paid for this product because I...

Got some for free. Yeah, now you're buying them. Yeah, they converted you

They did. They converted me. They made me a believer. also, I mean, if you're listening to this and you want to try them out, it's Restore Patch and they gave me a 15 % discount code to share with listeners. You can use the code LIFT15 to save 15 % on your purchase. And this isn't sponsored. Like they're not paying me to do this, but I actually truly believe in the product. Like I use one for sleep and my sleep score shot through the roof again, checked via data, right? Or a ring is telling me that, oh,

Alicia McKenzie (07:27.66)

this whole week you've been sleeping in the 80s because you've been doing too much. But when I put this patch on my sleep score was 97.

what the active ingredients are for the stress relief because I noticed it did have a metal component.

Yeah, it had a little copper component in it to which they're saying that they're performing like a transfer of energy I don't know the science behind it. All I know is that it worked for me So did the sleep patch and then they gave me the energy patch, which I haven't really tried because I feel like I have enough energy I don't need to be I could Could you okay? I'll let you try it

use an energy patch. Yeah, I think so. Yeah, let's do it.

But I really wanted to touch on this because as founders, as parents, we are all doing a lot. And when people ask me like, how's your day? How are you doing? Or I'm like, you must be so busy. My response is always that I am as busy as I want to be. Right? Like there are things that I do that I don't have to do, but I do it because I like it, because I enjoy it, because it fulfills a certain part of my life.

Alicia McKenzie (08:28.046)

Like, I don't have to get up at 7 a.m. and go play tennis. You don't have to go play pickleball at 8 o'clock at night, but you do it because you enjoy it. Right? So, we're at a level of busy. I hate that word, like, oh, I'm so busy, oh, so busy. Everybody's fucking busy. Yeah, we get it. But we're as busy as we want to be, as we feel like we should be.

Yeah, I don't know if it's, I mean, I guess busy is all relative. If you had an amazing day on vacation and you went to breakfast and you went to the beach and you went here and you went there and you did this and did that, would you say you were busy? Or would you say you had a fun filled day? Yeah. So I don't know the difference really. mean, busy for me has a negative connotation. Like I was busy doing things I didn't want to do versus I had an awesome day. I did all these things.

Yes. I don't know. So how would you describe it? Right? Like

Yeah, I think people use busy. It's just an easy escape for getting out of a conversation and saying nothing. Like, oh, how you doing? Oh, staying busy, staying busy. What does that mean? Right?

I fuck the trend whenever somebody asks me, like, how are you? I'm like, yeah, 7 out of 10. Yeah, that's not Just to make them think.

George McKenzie (09:38.712)

Well then you also get a question like, why not 10 out of 10? What's taking the three points away?

Depends on the day. My answer varies, dear, depending on my day.

Okay, well that's good. It's an honest opinion. We can have a real discussion about your day versus the superficial, I'm busy. Because if I say I'm busy, then you won't ask any more questions. Or you'll think I'm super important because I'm super busy all the time. So in either case, I'm putting out into the world this persona of awesomeness.

Indeed. But back to the reason why I wanted to try these patches and why I feel like, I don't know if you would necessarily classify it as anxiety or is it just that we're very high performing, right? Like what's the difference? what point do you draw the line between, we're super high performing, we're really accomplished, we're doing a lot of things versus we have anxiety?

Yeah, and I think anxiety is kind of the negative of high functioning or, you know, highly successful. So for me, get anxiety would be like, I get anxious when I'm not doing stuff or I get anxious thinking about what I'm about to do, which is probably a negative. Like I just talked about, like when I was, you know, when you went out of town and I took the kids to McLean hardware and we went out to eat, like I was anxious about going because I get stressed in that environment of trying to keep my eyes.

George McKenzie (11:02.9)

I don't want to swivel to watch all these kids. I know it's challenging. It's challenging for me.

You only had three. You had the three last

It is. You had them by yourself. There it is. With no nanny. I know. No outside support. Like you were outnumbered.

I was severely outnumbered, but now it works fine. know, I think that's the anxieties when you start to build up situations or you're stressing about something that hasn't even happened yet versus being at a functioning at a high level of stress because you're getting a lot of shit done.

Maybe, like, yeah. And I think that's really why I wanted to try it, because I don't like feeling stressed, obviously high stress levels lead to high cortisol levels, which just lead to high off-sex hormones, like all sorts of like bad sleep and bad sex drive and all sorts Early death. Early death, right? Like I don't want to be stressed. I don't want my stress levels to be super high. So what can I do to just help? What's the word I'm looking for? Offset. I want to offset my stress levels.

Alicia McKenzie (12:04.568)

whether naturally or if I can take certain supplements, like I started working in an L-theanine supplement. What other supplement did I start working in? There was two others.

So do you think it's just a time in your life where you're doing so much that your stress is gonna be there regardless? But it's something you choose to do versus, I wanna de-stress my life.

Yes.

Alicia McKenzie (12:31.928)

Exactly, it's calculated. I feel like I know that the next year and a half is probably going to be a stressful one, right? Where I'm building a company, I'm launching a book. You and I are going to start doing more and more. Like it's a high stress time of our life. But I also feel like with all four of the kids going to school, like that's going to help offset it, right? Like I think I'm stressed because it's trying to do all of this and then making sure that Mai is here and then managing the household.

But like any any any high performing engine or whatever like you can't be overly stressed. You can't RPM it and run it new 9000 RPMs for long.

Exactly. Yeah. So I think my working in these things is to kind of just balance out those stress levels, but also what was that one technique that we saw?

Tapping?

So we were watching a show, I think it was, what was it? was- The Better Sister. The Better Sister. If you haven't watched it, go watch it. It's Jessica Biel. She has a special place in my heart because of Seventh Heaven. Do you remember that show? You never watched Seventh Heaven? man, I think she might've been like my first girl crush. Like she was so cool in that show, Jessica Biel. And in it, the Better Sister, she's doing this like tapping and-

George McKenzie (13:36.13)

No, I do not.

Alicia McKenzie (13:49.496)

George is like, what the fuck is she doing? I was like, that's tapping. That's like an actual technique for anxiety and stress relief, right? And there's a whole protocol where you like tap, your head. You tap like under your chin. There's a bunch of different points at which you perform this tapping motion and it helps to alleviate stress. Don't knock it till you try to.

I was gonna make a crude joke and I decided not to.

Thank you. I appreciate that. You know, one of your old HR managers used to be really big into tapping. Uh-huh. She's the one that had the baby. I'm not going to say her name. Okay. Right? You met her through me. Yeah. Yeah. She was really, really big into tapping. So that's like one technique that research is showing that actually works to help regulate stress levels.

yeah?

George McKenzie (14:35.854)

Interesting. Maybe I should work on that. I'm at a phase where I wanna not stress. I wanna de-stress, remove stressful.

I know you

Alicia McKenzie (14:47.15)

What stresses you out, dear?

Everything. Life. Life is stressful.

Life is not stressful. Do you know what helps with stress? What? Reading books. Yes.

Does it? Do you think? I don't know. I could name five other things that help us stress. Not appropriate for the podcast.

Like what?

Alicia McKenzie (15:06.744)

I thought we

Sex is number one. Exercise. That's three. Yeah. And then hanging out with your friends.

I was only three.

Alicia McKenzie (15:18.336)

I don't think that works for you. Your friends stress you out.

Some of them do, yeah, but some like, you know, having, you know, going out for drinks or we go to the wine layer, we go other places, it's fun. Okay, yeah. is stressful, it's just chilling.

Okay, moving on. All right, I want to talk about mandatory PTO. No, and I think you have a unique perspective because when you were growing, I don't remember which company it was, you had unlimited PTO, right? Why did you use that approach and how did you see it play out in the workforce?

My favorite subject.

George McKenzie (15:51.47)

Well, there was two reasons. So one, it was to try to attract better talent. And, and that's too, toward the end, right? With COVID and everybody being virtual and telework, it made no sense to give people PTO and count it as hours and have them accrue it because people, when they work from home, all the things they would use PTO for outside of like a vacation. let's say when you used to go in the office and needed to go to the doctors, you would take four hours of PTO to go to the doctors or you'd take a day.

eight hours of PTO to do all your things, right? And once you started, people started working from home, it became, hey, you know, between 12 and two, I'm going to the doctor's and no one takes PTO for that. They just do it and they figure, hey, I'm going to work my hours throughout the day. won't matter. So, you know, it just didn't make sense. Like there was no real way to track it. So the only time anybody ever took part of that unlimited PTO was, you know, they'd put in the request.

and they'd have like a full week off where they wouldn't check email or what have you because they were out. Yeah. You know, that was kind of one to address the market conditions that had changed that we went unlimited PTO and, you know, keeping up with, you know, the corporate entities, like, you know, in cybersecurity, we were trying to recruit and maintain people that were working for Sony or Google or Microsoft or whatever. And then that's the kind of policies that they had. So we want it to be, you know, competitive with

with them, but in the government marketplace where most of the things are time and materials based contracts, that didn't play very well. So, you know, it was basically a dance of you have unlimited PTO, which means you don't accrue it. So you can use it for a second week of employment. doesn't really matter, but your PTO had to be approved by your manager. So that's kind of how we had some constraints on how long you would take off and how frequently you would take off so that we could keep, you know, our, our billings.

maximized and maintained profit. The second part of that was financial engineering, right? So when you accrue PTO, then you're accruing a liability on your balance sheet, right? So you owe these people this money, this time off. And most of the time companies will reset to zero at end of the year, or they'll let you carry X amount over at the end of the year. And that's kind how you true it up on your balance sheet, right? But when you're looking to sell, you don't want that gigantic liability on your balance sheet because that's

George McKenzie (18:16.45)

their money, they quit, you owe them the money. Or if they decide, I've got all this leave, I want to take a week or two weeks off, then you could have a HR battle about not giving it to them. if they quit, you owe them the money. So we wanted to get that off of our books to be clean. So it makes it easier on the acquisition that you don't get penalized for having this liability on your balance sheet. So that was the other prong to why.

The selfish reason why you were offering on the minute.

It was a selfish reason. Yes, but it was also like it just became really hard tracking it Yeah, and then you get you know people come at the end of the year and then everybody wants to take off like most of December so your December billings look like shit because everyone's trying to take time off because they have use or lose or yeah, they don't want to roll yeah, and it just became Much harder to manage than you know, we wanted it to be

So now if you were to do it all over again, let's say you start a company tomorrow, what is going to be your PTO offerings?

I would still do the unlimited PTO. Would you? Just try to make it clear that it's not, hey, you can take as much time off as you want, which is how some people interpret unlimited PTO into PTO upon request. There's no accrual of PTO. so in a accrual based PTO system, if something were to happen, you need two weeks off or a week off and you didn't have it, you would have to go negative or you wouldn't get paid. Yeah. And yeah, so creating a policy that fixes that where, the PTO is there, you can use it.

George McKenzie (19:41.612)

everybody can use it, but you know, don't abuse it.

Okay, so there's companies like Alipop and they're mandating a week of PTO during the summer for their employees. So they're calling it like the, it's called the summer recharge program and it includes a thousand dollar vacation stipend for four employees each month. So, and then they're also, they're offering remote work, unlimited PTO, and then plans to, they have plans to expand their perks. Yeah. Right. But it's requiring its staff of 220 to take at least one full week of PTO during the summer.

Right. To help with birth.

So the question would be, yeah, I mean, think in an altruistic way, that sounds great. So kudos to them. So the secondary question would be, do they accrue PTO or is it uncapped PTO?

I think it's uncapped. But if they were crying, them to take it a week during the summer. Right.

George McKenzie (20:34.254)

So if you're accruing it, then I require you to take it. Then I know I get it off my balance sheet at the end of the year. The secondary part of that is I know there are some people like Deloitte and some others that force two weeks off at the end of the year. Everyone takes two weeks PTO. Why? One, helps them close the books. So they use that time to get the financial books closed. it could help with some call savings on some things.

But it's really, so if you're not an employee of Deloitte, you're a 1099, you're not getting paid for those two weeks. Or a subcontractor, you don't get paid for those two weeks. But it's also a financial way for them to close the books. The only people that are working are financials. And they get everything cleaned up and closed out.

And I also like there's a company we are going to invest in a restaurant company. They were going to close the restaurant for two weeks in July because it's like dead in the city. Right. Nobody's in D.C. during these two weeks. And I think it was just an easy way to offset the minimal sales that they were going to have during those two weeks. It's just cheaper to be closed.

In an industry like that where when someone takes vacation, really hurts the restaurant. Giving them that window of, this is where everybody's going to schedule their vacation. That the restaurant will be closed these two weeks. This is when everyone will go on vacation.

That does sound nice. I feel like that's something I could do in the startup. Yeah. Right, just take like the month of July off or at least like the second half of it, two weeks in July.

George McKenzie (22:03.49)

Yeah, you just have to have a structure that supports this. if your customer calls you July 16th, who are they going to talk to? Sorry. Right. mean, maybe that's one approach.

Yeah. Out of the office.

No, I'm kidding. Slams laptop shut. Yeah, exactly. You will get no response until August 1st. Yeah. But at least make that known.

My agentic AI will answer on my behalf. It will be programmed with my responses and it will act as if it were me.

Work smarter, not harder, which is okay. Let's talk about really quickly because you just said agentic AI. When we were in South Carolina, we had some issues with our air conditioning and I had to call the AC company. Somebody picked up the phone and talked to me like a human, right? Like it sounded like I was talking to a guy and I'm just, having a conversation with him. I want to say it took me like 45 seconds to realize I was fucking talking to a robot. And then I got so tripped out. Yes, babe.

George McKenzie (22:58.934)

Yeah, they're getting so much better. mean, it's better than talking to someone with broken English, right?

Stop.

I'm just pointing because most call centers are done by non-native English speakers. it becomes challenging. Right? get upset. It's challenging, right? Even when the person on the other line, like that's saying it's a technical thing, the person on other line and I both know what we're trying to say. We just can't connect because of the language barrier. So now if you had a Gentic AI, which is a native English speaker,

It does, my mom gets-

Alicia McKenzie (23:32.633)

my gosh, I had no clue I was talking to an AI agent.

think they could have programmed you could have been talking to Jason Momoa the AI agent would have sounded just like Jason see missed opportunity

it is a missed opportunity now, but it was really, it was so trippy. I'm like, wow, this is really good. Really good. Like he scheduled me and he was using the correct pronunciation of my name and like, was just so strange. And I'm like, holy hell, this is the future, right? You're going to be on the phone and you were have, you're going to have no idea.

Yeah, no more call centers based out of Bangladesh. It'll be a call center of an AI computer, just tokens and CPUs running.

Yeah, that was the first experience where I was like, wow, okay.

George McKenzie (24:21.068)

But the fact that it can then look at the calendar, put you on the schedule, do all those things live versus like, hang on a second, my computer's acting up. Let me check. Would you say Thursday? I only have nine to 12. no, nevermind. It's two o'clock. that work? Like it's, it'll be boom, perfect. Like here's your appointment time. Would you like me to text that to you? Yeah.

It was mind-blowing.

Yeah, and like when I explained to him the issue he's like, that sounds really frustrating. I'm like, right? Wait, I am literally having a conversation with

Yeah, and then you should have been where were you located?

I should have. It just, didn't hit me until like I was getting ready to get off the phone and like this motherfuckers are over.

George McKenzie (25:04.75)

I always ask people where they're at. Like, what's the weather like where you are? then, it's the wave. Like, imagine there's a startup now. If you have an agentic AI, you don't need to invest in a call center. You don't need to have people on the clock 24-7. You just have a number that gets answered by your AI help desk. I mean, it can do base function, but kind of like your scheduling and stuff like that.

Where are you located? Yeah, where are you located?

Alicia McKenzie (25:28.545)

wild.

Alicia McKenzie (25:33.89)

mean, the hour, like he's like, okay, well somebody will be at your location between 8 a.m. and 5 p.m. I'm like, okay, whatever, like someone will be here.

Yeah. And then the text updates, your driver's in route. Here's your picture of your driver. Here's the name. nobody's doing that.

No, it's so wild. It's kind of amazing. It is. But also very scary. Right? Like we could have somebody call like our elderly parents. Yeah.

How about Chat Companion? It's an industry that's underserved, There's a lot that people try to volunteer for, but there's a lot of people that don't have anybody to talk to. You know what I noticed the other day, and maybe I'm the last one to do it, I dig the new voice of Siri. I think it's been so long since I've interfaced with Siri. This voice may have changed five years ago for all I know, but I do like the voice.

That's sad.

Alicia McKenzie (26:10.904)

Yeah.

Alicia McKenzie (26:17.059)

I haven't even listened to you. I've given up on Siri.

Alicia McKenzie (26:23.256)

fucking suck

Alicia McKenzie (26:27.266)

How did it come up?

Yesterday driving home, like because CarPlay picked up for some reason that when I was trying to give direction, I was trying to put directions in, I was typing it while I was driving and it didn't want me to type. it said just you Siri and it kind of highlighted and Siri came on and just said, Hey, where are you trying to go? But it's a woman's voice, but it's more, yeah, human. Maybe it's ethnic. Now I wished it does not. It sounds.

Interesting.

Alicia McKenzie (26:51.64)

human.

Does it sound like Scragio?

George McKenzie (26:58.808)

Yeah, it sounds like an American, probably. Maybe... Yeah, an ethnic American, maybe. Yeah. Maybe it's a black woman. Maybe it's a... It's not a Hispanic woman. Maybe. I just... It's not robotic and it doesn't sound... It sounds like an American accent. You should listen to it.

An ethnic American.

Alicia McKenzie (27:10.642)

Sassy

Alicia McKenzie (27:17.91)

Interesting. Okay. Noted.

Because every time I hear of Cereal, I think of that one Big Bang Theory episode. Krutha Pali falls in love with Cereal.

Yeah, I remember that. Well, okay, so I think that the trends are showing a real world shift in corporate culture, right? Now that everybody's back to the office.

Yeah, you can't unring the bell, right? So people need that time. yeah, the mandatory PTO and there were some, yeah, that's been around for a long time, the forced vacations and trying to get people to see.

And I don't remember it because it was never, that was never a thing when I was working. I guess I worked for a company for like maybe four years before I decided I wasn't doing this shit anymore. Yeah. How's that? Yeah. I don't, I don't like, I don't, I don't think I've ever experienced it. I think you see a lot of major firms like your Amazons and your HPs and like all these people that they're forcing those extra.

George McKenzie (28:01.57)

Nah, but that's been around for a while.

Alicia McKenzie (28:16.95)

wellness days or like mental recovery because they're trying to help ease return to office. People are eased.

I know, it's interesting.

It's like you have to coddle this generation to go into the office and do their work.

Yeah, that's been the Gen Z. was, that was the kind of the narrative on Gen Z, right? And it was in the millennials where you have to change your approach to management. I remember my big corporate life for two years of doing that, trainings. And then it was, you know, talking about balance and work life and all these things. And I just found it, I found it to be the most, not patronizing, but it was very thinly veiled, right? So you go through this management training to talk about all these things and

Don't bring your phones to the office. Don't bring your phone to the meeting. When you're in the meeting, be in the meeting and maximize your time. And in meetings, five minutes early and don't over schedule meetings. Leave X amount of time in everybody's day so that they can do what I'm doing. And when they're off hours, unless it's a critical emergency, don't call, don't email, schedule emails for the next morning, do all these things. And we all go through the training together and you get the CEO who's kind of.

George McKenzie (29:29.102)

prophesying this and saying, this is where we're going. I didn't bring my phone to this meeting, blah, blah, blah. So you take example for me and this is, I'm trying, we're going to do this. And then the next meeting, the COO, the next guest, part of the meeting, the COO comes in and talks about how, you know, we need more billables and we need this and we that. Like all this shit that just basically says, I can't do any of that.

Exactly. Like come the fuck on. Yeah. Really. It doesn't work like that. It doesn't work like that.

If work in like Alipop or some of these that are super high margin businesses where your revenue per employee is gigantic and employees aren't driving revenue, then sure. Because what drives revenue is the soda cans. That's what drives revenue, how many soda cans you sell. it's not really a correlative to an employee being in the office outside of the distributors and manufacturers that are bottling those. And I guarantee you those aren't taking a week off because those are...

contractors outsourced.

Absolutely. I wonder what the profit per employee is for a company like that.

George McKenzie (30:30.35)

Tons. Imagine they're probably making 80%, 90 % margin per can. Maybe higher.

Lord. Consumer goods, that's where it's at. Liquid gold. All right. Last thing I wanted to touch on, and that's only because this is a situation that one of my companies is currently going through, and it's the possibility of switching from an LLC to an S-Corp. When to do it, why to do it, how to do it. And I know you've done it. And any company that we normally start is an LLC, which eventually turns into an S-Corp. And there's that growth phase.

Liquid gold.

Alicia McKenzie (31:04.152)

Do you suggest that you do it, that you hit that sweet spot right before the growth phase or do you?

It all depends on what's necessitating a switch from an LLC to an S-Corp.

Yeah, like I think you did it pre-exit.

I know we and in the first company we did it right away because of the how we wanted to compensate owners. So because we weren't equity wasn't distributed equally. Yeah. But you know, we wanted to compensate everybody equally. the work you the compensation you got for the work you did a your paycheck, we wanted it all to be the same. But your equity like what you got at exit would be different. Yeah. Depending on the value and you know what you brought into the company when we started it.

And when you came into the company. So to make it fair, we had to be an S corp. So everyone could take salaries versus distribution. So an LLC, obviously I'm not a tax professional, so run anything I say by somebody else, but in an LLC, you can't draw a salary. You don't pay yourself a paycheck. You take distributions, right? And you can do guaranteed payments to make it seem like a salary, but it's just distribution. just a different way of accruing it. And distributions are prorata to your equity stake.

George McKenzie (32:15.598)

So if the company makes a hundred thousand dollars and you own 50 % of it, then 50 % of the proceeds are yours to be able to take in the distribution throughout the year or leaving the company. you're going to pay tax on that 50,000 no matter what. And the other guy who owns 50,000 will pay tax on the 50,000. But if you pay yourself a hundred thousand, the other guy gets paid nothing. At the end of the day, when you file your taxes, it's still 50,000 to you, 50,000 to him. You just took a hundred thousand, so you're negative 50,000 in your

you know, kind of a couple of accounts. But the other guy's going to pay tax on 50,000 of it, even though he didn't get it. So that's kind of why we had to do that. And then C-corps are needed when you take outside capital. But C-corps are cash on a cruel basis, not a cash basis. So that becomes a big barrier. So obviously there's more legal requirements for C-corps. Like you got to have documented many minutes. You got to do a lot of things. then it used to be double taxation. know there was

Your capital account.

George McKenzie (33:14.52)

changes the foot on changing the double taxation rule with C corps because you got taxed the C corp got taxed on the profits. Then you got taxed on your shares, your share of the profits that you get taxed twice. So I know they were trying to get rid of that. But I think there was, yeah, I don't know if that passed in the bill or not. The big beautiful one. Yeah, they were trying to put that in. I don't remember if that stayed or not. But

Witch Bill.

Big beard off a bill.

George McKenzie (33:39.8)

So the C corp is more of that, it's that accrual basis, which really helps when you're investing dollars because you're ingesting capital and you're losing money. So you get to take those losses and you can accrue losses over a period of time and apply them in future years, which helps.

Yeah. In my mind, I'm running through a scenario of what it would be if I were to switch.

Yeah. mean, yeah, I mean, you can run through why it would be required outside of, you know, ingesting outside capital or having any uneven ownership percentages and trying to do distributions and people wanting to keep it equal. Yeah. I don't know why you would go from an LLC to an S tax as an S corp.

And I have a hard time wanting to ingest outside capital when I know I could just.

Yeah, if you don't need it, right? If there's not a burning thing of, if I don't get $50,000, I can't do X and X is pivotal for my business to grow. If you can't solve that with either more time, like, hey, if I had more time, we would get more capital, we'd grow it. Or if we put more sweat equity in, we could go from here to there.

Alicia McKenzie (34:48.105)

Yeah, or if I sell a bargain.

Well, then you're in just, you're putting your own capital in. It's the same thing.

Exactly. Yeah, yeah, I have a hard time visualizing a situation in which I would want to adjust outside capital.

Yeah, it has to be like, can't, you I can go from a thousand, a hundred thousand dollars a month to a million dollars a month if I had it. And the only thing that stopped me. And if that's the case, then yeah, go get the money.

Yeah, exactly.

Alicia McKenzie (35:14.158)

I think if that was the case, you and I would fucking bankroll it. Right, maybe. Right? there's, if you're telling me I can go from a hundred K a month to a million a month, you wouldn't bankroll that?

Yeah, I probably would, but it's a screws McDuck approach.

I know you're stingy. No, you like to swim in your millions.

Yes. It's a great idea. Other people will invest in it. Right. Use other people's money. Don't use your... You invest your money so that your money makes money and then you leverage other people's money. I would leverage debt first. Always leverage debt first. Someone told me that once that, you know, and I took, I did not take his advice, but... So debt is like there's a guy standing in your front yard asking you, Hey, how are things going?

Exactly.

Alicia McKenzie (35:35.733)

You're my other people.

Alicia McKenzie (35:50.63)

No, well here's-

George McKenzie (35:58.478)

And it's great. You can talk to them when you want to, you shut the door and you don't talk to them again. And then like VCs, they're like on your front porch. Like, Hey, how's it going? You know, what's going on every time you leave or come in, they say, yeah, ask how things are going, check in. And then, you know, like Mesdet is kind of, Hey, they're in the house, but you know, they're like a crazy uncle. Put them all on the side. You talk to them when you need to once a month or whatever. And then like private equity, they're, you know, they're at the dinner table. They're in the kitchen. They're trying to cook.

They're trying to help you cook. And I thought that was a great analogy. Yeah, it was great. At the time, I couldn't convince the other guys to do the debt play.

Yeah, that's so true.

Alicia McKenzie (36:37.462)

Yeah, and I think you have a personal hang up with debt. Like you fucking hate debt. I do. You hate it with a passion, but I think that stops personally. that for personal finances, like you cannot stand debt. Anytime I have anything on a credit card that we don't pay off right away, like you have a fucking fit.

Yeah, that still makes no sense because if I'm paying more than I would earn with that cash, that makes no sense. But on the business side, you're like, you know what? I'm leveraging the proceeds of the business to grow the business. Yeah. It sure makes perfect sense to me. Definitely. As long as my cost of capital is less than my return on capital. When? Keep going.

Yes, dear.

Alicia McKenzie (37:07.0)

Sure.

Alicia McKenzie (37:17.098)

Indeed. All right. think that is all we have for today. Thank you for listening to Married to the Startup. We'll see you. Am I? Yes. I'm Elise DeMckenzie. I don't know if you can tell by my voice right now. Yes. And that's George McKenzie. Out. Okay, bye.

You are Lucy McKenzie.

George McKenzie (37:31.448)

Jorge.

Bye.

Alicia McKenzie (37:38.53)

Thank you for tuning in to Mary to the Startup. We hope you enjoyed today's episode. If you did, please take a moment to like, rate, and subscribe to our podcast. Your support helps us reach more people and keeps the conversation going. If you have any questions or topics you'd like us to cover, drop me a message. I love hearing from you guys. Until next time. George out.