Decisions That Kill Your Business

In this episode of The PAX Hospitality Podcast, hosts Leon Kennedy and Michael Bascetta tackle the invisible force that's quietly killing hospitality businesses: governance. Despite being statistically correlated with long-term success, only one in four Australian businesses have any conscious governance function - and most aren't doing it well.

Leon and Michael unpack why reactive decision-making compounds into business-breaking pressure, how governance builds trust across teams, and why founders need protection from themselves. Michael shares candid stories from his decade running venues, including what went wrong without proper governance structures. The conversation delivers practical frameworks for implementing governance at any scale - from sole operators finding trusted advisors to groups building effective advisory boards. This isn't corporate bureaucracy; it's the system that sets you free.

For more information on PAX , visit pax.melbourne

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Podcast produced by Posterboy Media.

PAX acknowledges the Wurundjeri Woi-wurrung people as the traditional custodians of the land on which we operate. We pay our respects to elders past, present and emerging and to all First Nations People.

Transcript

SPEAKER_04 0:00

Season two of the PAX Hospitality Podcast is brought to you by Open Table. Welcome to the PAX Hospitality Podcast. I'm your host, Leon Kennedy, and with me today is my business life partner, Michael Bushetta. Nailed the pronunciation on your surnap. Killed it. First time.

SPEAKER_02 0:16

Only took a season.

SPEAKER_03 0:18

A season and ten years. Season and ten years.

SPEAKER_02 0:21

Hey, welcome to season two, man. Amazing. How do you feel? Awesome.

SPEAKER_04 0:25

Yeah, it's like season one was great. Really excited about what we're going to do in season two. Um should also point out that we're stepping it up this year. Yeah. This season, I should say.

SPEAKER_02 0:35

Yeah, we're in the studio. Yeah, going video, going to YouTube.

Why hospitality businesses really fail

SPEAKER_04 0:39

Got a shout out to Poster Boy Media. Yeah, amazing. Yeah, legends, absolute best in class in the game. If you're looking to do some video content or make a podcast, hit these guys up. Just make sure your podcast isn't as good as ours. Make it just like just one rung. Yeah, guys. But no, massive props to them. Um, and yeah, I think it's gonna be really exciting what we do this season. So today's episode is a topic that I think is really prominent, but kind of this invisible hand in most businesses. Um, it's the topic of governance. Um, and I think a lot of people are just gonna like get pretty bored or their eyes are gonna glaze over. And I'm just gonna call you out. I'm just gonna say if you think governance is a boring concept, you don't know what you're talking about. And it's alright, most people don't, but you need to listen to this shit today because it could be the one thing that is literally killing your business and you're not even addressing it. Amazing. Let's get into it. Nice. I'm gonna start with a hot take. Hot take. Yep. Alright, so think of this, right? Hospitality businesses ultimately don't fail because they've got a bad product or their marketing sucks. Alright. They fail because their decision making is reactive and the people that are in charge aren't really in charge at all, right? So if you're making decisions reactively, no one really knows what's going on. Okay, so I think in this sort of climate, right, those suboptimal decisions stack up, right? And bit by bit they start to mount until the pressure starts to make things crack. What do you think?

SPEAKER_03 2:15

When you started off, I was like, this is gonna suck. Because I'm like straight away, like, yeah, but if your product's good, even if you make bad decisions around a good product, you're gonna be okay, but all the back end's gonna suck. We we know that, right? And the marketing's gonna kind of suck and all that sort of thing, but you kind of recovered pretty well. You're right. Like I this this morning, I told you about the the coffee experience this morning I just had uh and the cafe I was at. I was very clear what was going on. There was an owner who was in the business um on the floor, there were four other people on the floor, and I sat down, wasn't seen for 10 minutes, and then he finally came over. He's like, You've been looked after, and he clearly knew I hadn't, and then he just freaked out. Right. And you could see like he was just like running, he went straight to a table over there, and he was just freaking out. Okay, and you could very clearly see he's the owner. And I had just had this picture of how that business was being run outside of service, and I was like, this guy's struggling. What's happening in those management meetings and exactly if they're even having him? Yeah, and usually it's in those settings that people are are reacting like like you're saying, like that quick, we've got to fix it, let's try and fix it without thinking of the bigger picture.

SPEAKER_04 3:26

Think a bit more critically, right? Like I think if your product is not good, it's like, yeah, you can solve all those things, right? And if your marketing sucks, you can fix all those things, but yeah, get to the root of the problem, right? Like you can hire the best product person to come in and help you with your product strategy.

SPEAKER_01 3:40

Yeah.

SPEAKER_04 3:40

But if the governance in the business is not productive, yeah, then everything else is gonna, you know, fail downstream, or you've kind of hit this ceiling on what you can do.

SPEAKER_03 3:50

So Yeah, I mean, we've seen it time and time again, right? Um, in the past. When when you you go in some with some pretty clear strategies, whether it's product related, marketing, marketing related, whatever, and you'll have spot fires of success. Yeah. But with poor governance, people aren't following it through in all aspects of their business. So you might have a great product strategy, but governance is really bad. Therefore, something like HR will be really bad. Yeah. And you aren't able to retain the great people to execute on the product strategy. Yeah. So then it drops off a cliff.

Defining governance as the invisible force that either helps you run well or runs you into the ground

SPEAKER_04 4:19

Yeah, you're swimming against the current. So I think the way that I kind of think about it is that you know, governance is the invisible force in your business, right? And it's either helping you run things well or it's running things into the ground. Sure. All right. And if you aren't even aware of governance as a concept, right, like the the thing is, right, governance is statistically correlated with long-term success, right? It forces you to make more responsible decision decisions, so it's therefore kind of shaping your future. Right? It it it you could argue that it therefore makes the world a better place, and it's not that fucking hard to get your head around, right? So I think for people out there that think of governance as a boring concept, like you just don't know, right? Like that's all and that's okay. Like most people don't know, but this is literally the thing that could be surreptitiously killing your business slowly day by day, and no one is talking about it.

SPEAKER_01 5:13

Yeah.

SPEAKER_04 5:14

So I think we unpack it today.

SPEAKER_03 5:15

Yeah, that sounds great. I think people might find it boring, but also they don't really understand what it is that you're saying, but they also see it as a very corporate thing. Yeah, yeah. In in Australia, where I think the numbers are around 90 to 95% of the industry is independent, um, we're not we're not full of groups, we don't have the size, then you have a lot of independent operators that see governance as this thing that just the big groups do or chains do or whatever. That's not really for me. Yeah, even though they might be at 20 million and don't really have a strategy and don't have a board and all that sort of stuff. You know, a small operator would see them as the big guys, and I think there's a this this huge gap when people are growing that stop thinking or keep thinking about them being as a small business rather than actually you're pretty should be pretty sophisticated by now.

SPEAKER_04 6:05

So I see your point about you know, we're not ready for that. Yeah. And I'll raise it right with people that have also been burned. Okay, so sometimes there's like, you know, you'll s see someone come in a little bit keen, yeah, all right, and then they try to um implement this probably overly corporate structure into a business that isn't just ready for it. Yeah. You know, and what happens in that scenario, right? The the decision making becomes more rigid, okay, everything becomes a little bit harder, and then it just becomes noisy, it's not productive, and that can actually be counterproductive, right? Like that's an example of governance being implemented wrong and therefore having an adverse effect, right? So to me, governance is two things. It's like you've got to implement a system, and then you've got to really refine that system. And in those instances of people that have been burned, it's like they they implemented a system, but they never really refined it. Yeah, and then they just went, it's not for us, or this doesn't work, you know. It's like this is too corporate, so I'm never doing it again. Yeah. Um, which is kind of crazy because it's like, you know, I I like as you know well, I think about everything according to motorcycle analogies.

SPEAKER_02 7:08

Oh no, but in my mind, it's like, you know, you've got like a a Ninja 300 and you go, All right, I'm gonna put like the engine from a BMW S1000 double R in it, it's not gonna go.

SPEAKER_04 7:20

And then you go, Well, engines obviously don't work in motorcycles.

SPEAKER_02 7:23

It's not the way to look at it. Okay, but it is the most niche reference, even for you as going deep on motorcycles. Everyone's like, damn, that was good.

SPEAKER_04 7:35

But no, there's like, you know, in my mind, it's about finding the right engine for the right vehicle, right? So that's that's making it making that metaphor a bit simpler. I think people do one of two things. They either go, oh no, we're not big enough to worry about that yet, we don't need it, or they've just had a bad experience with it in the past. Either of those positions are dangerous, yeah, right. They're risky positions to take when it comes to running your business in the best, most responsible way. And I think what would be really good today is to just lay that out a little bit and maybe just you know, to set it up for a little bit of context, right? Like, I don't think it matters, right? So if you are, you know, on one end of the spectrum, right, where you're in maybe a group, you're doing, say, over 10 mil at least a year in in annual revenue, you got a few venues, that sort of that sort of jazz, right? I mean, at that juncture, you should at the very least have an advisory board with someone who chairs it, you know, with an ops team that are putting a lot of elbow grease into that agenda, you know, and and and probably a monthly cadence, right? Or six-week cadence, right? That you need to be playing that game, right? But you could also just be a single owner operator, right? And governance is still for you, right? What that probably looks like though, is not an advisory board, but you still need a sounding board. Okay, so you need that trusted advisor that you ring every week or every couple weeks where you just talk about the business, right? And maybe it's a regular who comes in who knows heaps about, you know, scale, or maybe it's someone you went to school with or someone in your family. As long as you are just ringing someone who is external, you know, to the business and you know, you're getting some advice, that's governance, right? Like that's kind of helping you think things through. It's helping, it's increasing your standard of decision making. So in my mind, right, whether you are a single owner operator or you're talking about potentially putting together an advisory board or running it better, everything we talk about today is going to be fitting, right? You just got to position it from that perspective, right? From that example. And I think within that, it's also important to note like how you connect those ends of the spectrum, right? Like in my mind, whether you're presenting to a board, whether you're just casually ringing a mate for advice, you're trying to accomplish the same things. All right. And what that is, is you're basically trying to portray the headlines of your business that relate to operations, culture, and finance. Okay, you need to be able to portray what are the most important things that are going on in your business right now to a stakeholder that is at least half a degree of separation outside of the business. Yeah. That could be an investor, it could be someone who's doing it, but they need to just be at least half a degree of separation outside of the day-to-day option. It's about getting out of the echo chamber, right? Exactly. It's a really good way to put it, right? And you're just having a conversation, you know, with whatever that sounding board is, whether it's an advisory board or it's just a phone call, that's the goal, right? So today, I think for people that are listening to this that are probably conscious of it, right? Like they hear that statement of like, yeah, decision making could be killing my business, and think, fuck, I want to fix that. This is kind of like the the how-to, right? So what I thought we could do is let's actually talk through some of the main points around um governance and like what it sort of comprises of. Sure. And then maybe talk a little bit about uh how could you set this up, or if you've got it, like remember I was saying it said set it up and then refine it. Yeah. So we'll talk about each of those two things and and maybe give some give people some tips. Yeah, great. Something that is also interesting to note is you're quite nicely suited to this topic. I was just thinking about that this morning because you've kind of been through every stage, right? Like you've had the world on your shoulders in small businesses where you've had to run, you know, a sense of governance. Maybe you didn't call it that, yeah. But in your businesses, but then you've also run it in bigger businesses. So you've reported to boards, you've also sat on boards. Have you chaired one? No, I never will.

SPEAKER_03 11:29

Never will never will. Why?

SPEAKER_02 11:31

Because I'm the least detail-oriented guy you know. So and I'm really bad at keeping cadence. Okay, fair. So you're not a good chair.

SPEAKER_04 11:38

I mean, look, it you know, maybe we'll talk about it later when we get to that section, but chairing is a you need to be a specific person to do that. Totally. Yeah, and that's often why a lot of um, you know, some people will set up, they'll get step one done, they'll set up a system, yeah, but then the second part of refining it doesn't happen, and then the person who's chairing it isn't doing it well enough, and then everything kind of falls apart. Um, but yeah, anyway, I thought that's just how we should structure this today. Any thoughts on that? No, that's good, let's get into it. All right, cool. So, first and foremost, right, if we did a little bit of an overview on, you know, governance as it exists in small business, I think we we did a good job of explaining it from that lens that like, you know, why people don't look at it. Anything you want to add to that?

SPEAKER_03 12:20

No, I think I think the biggest thing is people's okay, kind of adding on to what we already have discussed, is people's understanding of governance and the scare factor of it. And ensuring that it's they're the same people that would speak about HR always in a negative tone. Right. And they're the same people that speak about having to speak to their accountant in a negative tone. It's just like there's this layer in business in hospitality that people tend to steer clear of as much as possible, and it's nearly like it's just a chore, it's a constant chore with all these parts of governance. And I think for me it's just like the the classic idea that um by getting these things in place that it kind of sets you free. Yeah. Rather than put more roadblocks in front of you.

SPEAKER_04 13:07

Yeah, it doesn't create the headwind.

SPEAKER_03 13:09

Yeah, exactly. And I think that's I the point we we need to get across today is that by doing this in the right way at the right time with the right structure will actually completely change the way you operate your business and therefore your day-to-day life.

SPEAKER_04 13:22

Yeah. I think it's gold. And I think, you know, so I'll tell you a really crazy stat is one in four businesses in Australia even have like a cognitive or conscious governance function in the business. I totally believe that. One in four. Yeah. And that that's not even saying that they're all doing it well. Yeah. Right? That's just like one in four have something. Like, yeah, yeah, we meet once a month or we we you know, we have a board meeting or you know, we track minutes or something. But out of that 25%, imagine what the stat would be about people that are doing it productively. It's gotta be less than half. Yeah, for sure. So that's like fuck all.

SPEAKER_03 13:58

Maybe to 20%.

SPEAKER_04 13:59

Yeah. Like hardly anyone is doing this well. You know, you then you hear all these other stats around like uh, you know, the closure rate and hospitality and how you know over-indexed it is versus other industries and whatnot. And you kind of go, okay, are we anyone connecting the dots here? Like, you know, I think what what is ironic, right, to go back to that example of the businesses that are just like, oh, we don't we don't need that because we're not ready for it yet. We're not big enough yet, we're not whatever. Ironically, so many of the problems that occur that would be the downfall of some of those businesses could have been prevented if they were doing some type of governance. Yeah. Like doesn't have to be, hey, we meet in a boardroom and wear suits and smoke cigars, right? Yeah. But even if it's just, hey, once a month, we have dinner, you know, as an ownership group with maybe another trusted advisor and we just have a yarn.

SPEAKER_01 14:48

Yeah.

SPEAKER_04 14:48

You know, like I think I think that's the biggest misconception out there is that governance has to be this all-in corporate, you know, overly engineered mechanism when in reality it can just be a simple sounding board where you just have a consistent conversation. And I think a really good culinary metaphor for that is like, you know, it's better to marinate the meat for five minutes than no minutes. Like some marination, even if it's two minutes, is better than no marination, right? So even if you're just thinking about governance and it's like, yeah, okay, you're never gonna you know what? You're probably never gonna do a TED talk on it.

SPEAKER_02 15:22

That's okay. Yeah.

SPEAKER_04 15:23

As long as you're thinking about it and doing something, like that's better than nothing. Totally. So I think the other thing um that I would point out with this is like it's a very, very important topic. Why the hell didn't we cover this in season one? Probably for the same reasons that we spoke about before.

SPEAKER_03 15:39

It's like people just do want to be boring. Yeah, or perceived to be boring, yeah. But you know, people perceive finance to be boring. We did that and it went really well. That's true. So I think for us it's just being able to show that it it's not boring, it's really important, and it there's some things you can implement that are easier than the full board structure or whatever it is.

SPEAKER_04 15:59

Look, full disclosure though, like when we first you know came up with the pyramid model, right? Governance wasn't on it. No. All right, it it it it kind of was, but it just wasn't like clearly articulated, right? And within identity product consistency promo, it sits firmly in consistency. Totally. Right. But but when we actually turned it, it was just something that we would do through the audits, we'd do through the recommendations, but it wasn't like a conscious, oh, you need someone advising you on this. Yeah. And what actually prompted us to do that, I'll tell you something kind of crazy, right? Like before we even started PAX, if I'd have said to you, hey, you know, once we get to the 20 audit mark, right? Like we've done once we've done 20 audits, what do you think would be the number one constant in our observations and recommendations, right? Like what would you what would you have guessed?

SPEAKER_03 16:46

Uh mine would usually probably be something around HR people. Okay. Would probably be the number one. Yeah. Closely followed by product. Yeah. Marketing. Market. I mean, every man.

SPEAKER_04 16:58

I mean, I'm always going to think strategy. Yeah, yeah, you always go there. But I feel like you could flip a coin on all of those topics, right? Yeah. The truth is, you know, 20 audits in, and the and it's it's literally governance is number one, and then it's daylight, and then it's everything else. Yeah. Right. And it is just constant, man. Like every single audit, it comes up. You know, that the that the ownership group are not doing anything in the way of governance, or they're doing something and it's not productive. Yeah. And it was like, okay, this is big. And so I think, you know, Do we need to change the pyramid? Well, we added it in. We had, but does it need to be further needs to be lower? No, I don't think so. Yeah, I thought about that. And I think the reason for that is because you don't also um you used a really key term before, right? Like you need to use the appropriate model at the appropriate time. I believe, right, that if you've got a really uh solid or well-organised governance function, yeah, but you don't even have a business yet, yeah. That's not necessarily going to help you ideate and take the right risks.

SPEAKER_03 18:00

But you could all you could also argue that there's a s could be a sprinkling of what we would call governance in identity. In terms of like how you set out it's it's like to me, a great governance structure can be born out of identity.

SPEAKER_04 18:14

I I I don't disagree. I think you're right, but I think it's not necessarily that easy to articulate until you've got some runs on the board. Totally. You know, like I think if you sit down, like think about it for most business owners, no one sits down, writes the mission deck, and then goes and launches it. And even if you did do that, I think within a month or so you'd you'd render a portion of that mission deck redundant because it wouldn't fit, right? You've got to pivot. Like business-I mean, the market will tell you.

SPEAKER_03 18:39

And exactly at the end of the day, like I've always said, even even doing like short-form business plans is like write it, open, yeah, and then go back and look at it. And I guarantee 80% of it you're gonna adjust. Yeah, exactly. So that's okay.

SPEAKER_04 18:53

Well, that it's you need to start somewhere. There's unforeseen circumstances, yeah. Literally cannot foresee them, right? So it's like all the planning in the world won't give you perfect execution.

SPEAKER_01 19:02

Yeah.

SPEAKER_04 19:02

You know, but that that's why I think governance needs to sit as an administrative function.

SPEAKER_01 19:06

Yeah.

SPEAKER_04 19:07

Because it's like, okay, you know, you're gonna go out there, you're gonna do something, and let's face it, right? Most people that open businesses are kind of psychotic. It's like you are doing something highly illogical, it's pretty irrational. Yeah, you know, I don't know of many businesses out there that your very conservative accountant is gonna back you in for. Yeah, mostly lawyers and accountants are gonna tell you not to do it. Mostly everyone in your life is probably gonna tell you not to do it, and then what do you do? You just do it anyway.

SPEAKER_03 19:32

I mean, I'm 10 years into owning businesses, yeah. And you are a psycho. I am a psycho, and people still say when I say, Oh, we're gonna do this now, they're like, What? Really? I'm like, how is this a surprise? It's been 10 years, right?

SPEAKER_04 19:46

So there's a so what I'm trying to say is that there's a level of irrationality that comes with um ideation and execution of never before done, you know, concepts, right? Yeah. So I just think there's a level of like, you know, freedom and maybe almost irrationality is not the right word. Maybe it's almost irresponsibility. Yeah. You know, and so I don't mean me wrong, I'm not saying that.

SPEAKER_03 20:10

I think there should be a streak of irresponsibility always.

SPEAKER_04 20:13

Yeah. In the right thing, in the right way. And I'm not trying to say that like governance and irresponsibility are like trade-offs, right? Like it's all about having the right like I think governance is like the right engine, but if you haven't built the vehicle yet, you don't know what engine that is or what it needs to look like. Yeah. And and I would also argue that even within those really nascent kind of periods of a business, that governance is happening informally. Think about when we launched PAX, right? We had our very first day of full-time work at the fucking Greensboro Library. And we're sitting in that room going, all right, what if you guess we should get an office? Yeah. But if you think about it, since that day, there probably hasn't been many days past where we haven't talked. Yeah.

SPEAKER_01 20:58

Correct.

SPEAKER_04 20:58

Right? Like we don't have an advisory board, we don't have any of the corporate governance structures existing yet because it is so new. But governance is very much there. Like we're constantly talking about stuff, we're constantly challenging each other on things. Yeah. You know, we're constantly we do get advice from the right people when we need it as well. Correct. So I think in all businesses this happens, right? It could just be two mates that open a wine bar. They're constantly talking about it. When are they not talking about it? Yeah. So governance is kind of happening, right, in a way. So I just think in the startup phase, there is always gonna be this organic element of steering the ship in a in a collaborative way. But then as the business starts to get busy and things start to happen, and suddenly you don't get that face time together anymore, or you're a bit sick of each other, or there's just too many competing factors now, then you've got to switch that approach. Yeah.

SPEAKER_03 21:45

Or you start growing, you open a second venue, third venue, and suddenly those two or three owners, whatever, aren't interacting every day face to face like they were, and they start to get stretched, and because that governance, formal governance layer hasn't been put in yet. Then it there's no governance.

SPEAKER_04 22:02

I think it's a nice way to to put it, is it is just a system, right? Yeah. Like when you first start business, not that I'd ever recommend this, but you could get away with not having a zero setup, right? And you can do your bookkeeping on a spreadsheet to a point. Yeah. Right? Then you're gonna get busy, and then that is not gonna cope anymore. No. So think about governance in the same way, right? Like when you're just starting up and it's just you and a mate or you and an ownership group, it's like great, you're gonna have constant conversations, you're gonna be talking about it, it can be pretty informal, but then as the needs of the business grow, your system for working through those things and making decisions needs to grow with it.

SPEAKER_03 22:36

Totally. I mean, I'd take take that down to another level of you know, you would open a restaurant and put systems in place for how your order of service and how the bar setup and your mise en plus and all that sort of stuff. It's like it's just that with a bit more formality.

SPEAKER_01 22:55

Yeah, right.

SPEAKER_03 22:56

Just think about it as another checklist to get through. Yeah. And at each at whatever juncture, it's like every month we need to clean the light fittings. It's like, well, every month we need to meet as owners. It's just a simple thing that's in your your monthly checklist.

SPEAKER_04 23:10

Yeah, it's a it's a it's a hygiene thing, and and that's why it sits in consistency so so perfectly. Again, you know, case in point, why we need to do an episode on it. Because once you start thinking about it, you can't unsee it as well. And the other thing that I think is so important to note is it doesn't matter again if you're in that bigger group thinking about how you can report to a board in a better way, or you're just one person on your own. Think about like the risk that comes with decision fatigue.

SPEAKER_01 23:38

Yeah.

SPEAKER_04 23:39

Like, man, I just think about so many owner operators out there. And, you know, even I would say a lot of the clients that we work with at PAX that would just like, you know, ring me at 6 30 at night to just talk, right? It's like, man, I'm picking up that call every single time. And it they'll just be like, hey, can we you do you have five minutes? And I'm like, yeah, and you know, an hour later we're still talking, right? And I'm just like listening to them, and you know, it's it's always a really productive chat. And I'm just thinking to myself, man, they really needed that.

SPEAKER_01 24:08

Yeah.

SPEAKER_04 24:08

And you know, I can just hear it in their voice because it's like, man, you're just holding on to all of these decisions that you haven't thought out loud. Yeah. At the pressure you are putting on yourself to nail every one of those decisions, you will never be able to do it. No. And every time you make a decision that's a bit suboptimal, like I said, right, that is just building up more and more pressure until things start to crack.

SPEAKER_03 24:30

And I don't think it's all a lot of people would attribute that to not having the time to think about making the right decisions. Right. But I actually don't think even if that owner got a day a week just for ownership stuff, management, governance, whatever, if they're a sole operator, they'll still really struggle to make those decisions. Sure. Um, and purely because that echo chamber idea. And I've had um PAX where there's a PAX client or a mate who's a sole owner, same thing, call me and they're like, I just gotta talk through this thing because I don't feel like it's maybe not appropriate to talk to my manager about because I don't feel like they should be, they should know about it, or stuff like that. And just like they've got no one to talk to. And their partner at home is probably fucking sick of doing the same thing, and they're like, You gotta talk to someone.

SPEAKER_04 25:13

Well, they're just not even qualified, right? Like that's one thing. It's like you can have that conversation with just a mate, but if they don't really know your industry or don't know much about business, it's just it's really gonna know how to challenge you, right? Yeah, okay. So really interesting. I think like one of the things that I think would be really good to talk about with this is what are the main components, right? So if you go and read all the literature and all the rest of it, you know, I'll try to sort of like summarize it, you know, a little bit. And I think the first thing that, you know, like say you pick five articles and you read them all, right? The one thing that'll be represented in all of those articles is the concept of decision making and how governance applies to that. Sure. So maybe if I lay that out a little bit, like I'll give you a little bit of context, but then what I think would be cool is share with us an experience that you've had in one of your businesses or whatever, where um you saw decision making working well or not well as a result of good or bad governance. Sure. All right, so decision making's really important, okay? And again, like I said at the start, if you're just doing it reactively, you know, you're you're pretty much just like setting yourself up to fail. Okay. So how do you do it in a way where it's not reactive, right? And what it requires is a fair bit of like critical thinking, you know, and and I think where this gets um particularly interesting is say we'll stick to the smaller side of the scale, right? You have two people that start a business together. More than likely you complement each other pretty well. Sure. You probably have a lot in common, right? You know, even personality traits, all that sort of stuff. And that's good to a point, right? Like it's really good in the sense that you're gonna basically be um agreeing on a lot of stuff, you'll gather a lot of momentum, you know, you double down on the things that you should. That's awesome. But there's not a lot of diversity in that decision making.

SPEAKER_01 27:03

Yeah.

SPEAKER_04 27:03

Right. And that can be a real trap, right? Because, you know, I feel like in those environments where everyone's really complimentary, all right, um, not maybe to the extent that, you know, um decision making is completely based on consensus, but there is just a high level of organic consensus in the discussions. Um, on top of that, you know, I'd notice it in sometimes in leadership environments that are um quite authoritarian, okay, or um, you know, it's it's quite like you know, there's one leader who's calling the shots and we just like go with it.

SPEAKER_01 27:35

Sure.

SPEAKER_04 27:36

These are the environments where decision making can really, really, really fuck you up. You know, and before I actually ask you for an example, one thing I just wanted to touch on, I just I just forgot to mention it before, is you know, you're saying it's like, you know, just speaking things out loud, you know, and um, you know, asking, you know, a friend for advice or your partner for advice, whatever. I just want to say to like all the people out there that are doing that, fucking good work. Yeah. Like keep doing that. Right. But if we were to kind of yes and them, like have those conversations, but just do your best to add a little bit of structure to them. Sure. All right. So just maybe sort of say to that person who you ring every now and then, like, hey, you know, I'm gonna give you a call on Thursday night, right? And here's the things that I want to talk about.

SPEAKER_01 28:25

Yeah.

SPEAKER_04 28:25

Or even if you don't tell them, but you just do that yourself, yeah. It's just structuring the conversation a little bit better to protect you from that um, you know, uh what's the word? Reactivity, reaction, or drifting as well. Reactive thinking, yeah.

SPEAKER_03 28:39

And drifty when you do speak to them and missing the three other important things that you wanted to talk about.

SPEAKER_04 28:43

Yeah. So then if I loop that back into the decision-making bit, right, like that's ultimately what you're doing. You're gonna speak to someone, you're gonna think out loud, you're gonna use it as a sounding board, and then ultimately you're gonna make a decision. All right, so if you're not even having that chat, you're really, really risking a lot of bias creeping in.

SPEAKER_01 28:58

Yeah.

How poor governance slowed growth despite creating successful venues

SPEAKER_04 28:59

Um, especially in a really founder-led organization, there's probably gonna be, you know, a compromise in this in the quality of decision making because you haven't done that dialectical inquiry, you know, around what we should do. So tell me how you've experienced that. A lot in a lot of different ways.

SPEAKER_03 29:17

Um I think does one example jump out? Uh I think I'd probably say, you know, working uh when I had all the the venues um and was still part of part of the group um made well. I think like we never had a clear governance structure. Okay. Um we had I think it was kind of like monthly catch-ups that would sometimes slide. Were they productive meetings? No. Oh right. It was the biggest thing, like no one we'd have kind of very, very loose agendas that would just be texted to each other. Um half the time we didn't get through it, notes would be rarely taken. Uh if they were, we really did lack were very lax in then following up the next on the next one. Did that get done? Did this get done? How are we going with this? And I think um the biggest issue with that is I think I felt a bit of a waste of time.

unknown 30:14

Yeah.

SPEAKER_03 30:14

Because to me, it's like we're already having that owner conversation via WhatsApp and when we see each other anyway. And it was kind of just it was like doing that, but sitting down. Yeah. So it's just like, do we really need this? It's like, yeah, we do, but we need it to have it really well structured. Yeah. And because there was no clear leader within the ownership structure that was the chairperson, no one grabbed me. The CEO or the general manager or whatever, we never had that. No one grabbed me and said, I'm just gonna do this. Right. All right. Yeah. And the result of that is slow decision making, bottlenecks, all this sort of stuff that then starts to trickle down into venue manager level and head chef level and affects the running of the business.

SPEAKER_04 30:57

So talk talk me through the cost of that though, because it could be argued that you know, that was one of the more successful restaurant groups of that era. So no governance at all, but you still had a bunch of hits.

SPEAKER_03 31:10

How did that work? I mean, hits from a product delivery perspective and in venue and brand and that sort of thing. Absolutely. Like I'm still super proud of the venues that we created and of course um still exists, all of them, right? And I think for me, is the the points of growth is probably where it slowed it slowed down because of that, right? Right. So yeah, exactly, and done the right things more quickly. So whether it was growing Falco a bit more quickly or putting it in a different spot or things like that, it was just like slow decision making meant that those things did happen. Got it. So now I feel like the effects are starting to show. Um and those venues are still great, like 100%. But could there be seven Falcos? Absolutely. Rotto, right oh got it. And also I'd sort of take a step back, and this is what I was kind of alluding to before about there's there can be having your mission set talking about the pyramid um really concisely, and that everyone understands when you're going into running the business makes governance so much easier. But when you haven't set that, which we didn't as a as a group, we didn't, we didn't really know what we were trying like what was the gov like the governance layer in consistency. It's like where how are we growing?

SPEAKER_01 32:24

Yeah, sure.

SPEAKER_03 32:25

Like, how do we do we want 10 Falcos? Never had that conversation. Right, wow, never had that conversation. No, it was always just about like, oh, you know, we'll grow it. Okay, it was cool, right? Which is a a lot of people take that track, yeah. Um, and in my head, I'm like, oh, it needs to be these locations, production facility here and here, all these opportunities, have one at the MCG at one day, draining, blah, blah, blah, that sort of thinking. But when you don't set that mission together and don't understand what your goals are, then the governance layer becomes really difficult.

SPEAKER_04 33:00

So this so what you're talking about right now is going to resonate with a lot of people, right, that are in this almost exact situation, right, with their ownership groups. Like, why didn't you become that person who led the charge and started chairing the meetings? Like, what got in the way?

SPEAKER_03 33:16

Um, what got in the way? I think for me, it was probably the idea, like when we started Bar Liberty, I was 24. Okay. Right? Fair excuse. Fair excuse, right? Then it was a fair excuse. Yeah, sure. Ten years later, right? Not a fair excuse.

SPEAKER_02 33:31

Fair, yeah.

SPEAKER_03 33:32

And I however, I feel like in that business I always felt like the 24-year-old.

SPEAKER_02 33:37

Okay. Right.

SPEAKER_03 33:38

That was the dynamic. Yeah. And it was just like, hang on, I feel like I can do this. But you guys probably see me as the 24-year-old.

SPEAKER_04 33:46

Okay, so is it so personal dynamic?

SPEAKER_03 33:48

I think just personal dynamic and again, like misunderstanding of what um each person's role really was in the business and what my role could be and all that sort of stuff. And I think if you haven't got that dynamic right, no matter what you put on paper from a governance perspective, if you haven't got the dynamic with those founders right, then the governance layer is gonna kind of suck.

SPEAKER_04 34:10

This is good. So so can we keep pulling on this thread? Yeah. So at the at that time, at the age of 24, as you're working through this stuff, there was a personal dynamic in place that that created a bit of a barrier for you for doing what you intuitively thought should happen. Yeah. If you knew then what you know now. Let me ask you a real video podcast question. Yeah, great. If you could go back and talk to that 24-year-old version of yourself, what would you say? We're not clipping this. Please don't cry. Yeah. Now, for real, what would you what would you do differently than knowing what you know now?

SPEAKER_03 34:46

I think first of all, I wouldn't say don't do it. Like I've learned so I learned so much across those 10 years.

SPEAKER_04 34:51

Don't do what?

SPEAKER_03 34:52

Like open the venues and do like go for it. Yeah, yeah. Um, I think for me, I would have been more forthright and just been like, I'm the guy that wants to do this. Yep. I need to be allowed to do this. Yeah.

SPEAKER_04 35:05

So go past, overcome the personal dynamic barrier.

SPEAKER_03 35:08

Yeah, exactly. And I think for me, I've always been in a lot of relationships in business or personal or whatever. I've always been the guy that tries to bridge worlds, right? And try to bring people together and be the mediator and be like that guy, right? I was definitely that guy in that business where I was always just like trying to help everyone, but also not push anyone too hard because I felt bad. Whereas I think now ten years later, I would have been talking to younger me. I mean, like, it's okay to tell people this isn't working.

SPEAKER_01 35:42

Yeah, right.

SPEAKER_03 35:43

It's okay to be like, you know what, for me to be fulfilled in this business and for the business to grow in the way I think it should, I need to be that person. And having the confidence to do it.

SPEAKER_04 35:52

Yeah.

SPEAKER_03 35:52

Whereas I just felt like I didn't have the confidence to do it for so long.

SPEAKER_04 35:55

Sure. So it's yeah, that's a great word for it, right? It's the confidence. Yeah. And it's just having that ability to go, fuck it, I'm gonna rock the boat a little bit.

SPEAKER_03 36:02

Yeah, and the confidence that to say, I'm gonna do it, I'm gonna rock the boat a bit, but also saying, I'm gonna have a crack, I'm not gonna always get it right. And you don't need to label me as like, you know, you're trying to be the GM CEO, but you've never done it before. It's like, yeah, but no one's doing it. Yeah. We need to try.

SPEAKER_04 36:19

But but also it doesn't you you don't have to um resort to one of the people at the table taking on that role either. No. Like at whatever stage you're at, right? It doesn't matter whether you're a couple months in and your business does 10 grand a week or if you're you know 10 years in and you're doing 20 mil, there is always gonna be people in your network that you could go, hey, I'll shout you dinner. Can you just come and chair this meeting for us?

SPEAKER_01 36:42

Yeah.

SPEAKER_04 36:43

And they'll be like, Yeah, hell yeah. I'd love to see what happens in that chat and I'll come along and do it. And if you don't know anyone that can do it, call us. Yeah.

SPEAKER_03 36:50

I'll come and do it. Right. Well, I think it comes back to that idea. There's there's certain people that even though they want a better, healthier business, will always look at that and be like, I don't want outside people rooking in my stuff.

SPEAKER_01 37:00

Right.

SPEAKER_03 37:01

I think this is all this big tension in hospitality, well not maybe not big tension in my head, it can be around IP. And I've always kind of laughed at it. Yeah, it's pretty funny. Yeah, because it's like we cook for people, yeah, and we make drinks for people, and we take food and drink to table, right? And there's a lot of complexity around that. Yeah, but in essence, that's what we do, yeah, right? Is there IP in that?

unknown 37:25

Fuck.

SPEAKER_03 37:25

Like someone's gonna copy me. Yeah, exactly. So I just feel like there needs to be the the unshackling or deshackling, like just let's drop that. Yeah, totally. Like there's so much help out there that will completely change your world. Yeah. And if you let go of that idea of I don't want people in my business looking at IP and that sort of stuff, get them to sign NDA. Yeah, exactly. Comfort, it's pretty easy. Do that, yeah. And get people in to help.

SPEAKER_04 37:50

It'd be pretty funny though. It's like, hey, can I shout out your dinner to come and chair this meeting for me? And just on the way in, can you sign this in? But also, like, I also agree with that, right? Like, it's it's a bit of a fallacy to be like, you know, showing external people, you know, what's going on in my business. Like, are you not having your like financial accounts supported to this?

SPEAKER_03 38:09

This is I literally spoke to someone the other day about this where I was like, you have probably a lawyer, you've got an accountant, you've got maybe you've got a HR advisor, like you've got people that are already looking into your business. Yeah. And then on top of that, you have managers, general staff that know a lot about your business because they work there. Yeah. And guess what? They leave. And the first thing they do when they leave, they tell people what the business is like. Yeah. So inevitably, that IP or info gets out there anyway.

SPEAKER_04 38:40

Yeah. So I'll I'll jump the gun a bit because I think it's a good segue, right? But so decision making is one part of governance that is like, you know, and I think we'll we'll end up circling back to it, you know, though, because there's crossover here. But one of the other big things that governance achieves in a business is trust. It builds trust. And it's not just for the internal stakeholders, it's for the external stakeholders too, because people outside your business that see you making decisions in a very deliberate way build equity in your brand. I mean, it's why it's inconsistency, right?

SPEAKER_03 39:12

Yeah. It's like repeatable, sound decision making. Yep. That you that bleed through into the experience you have in the venue to what they see online on Google or on socials or whatever else. It's like it's obvious that it's it's governed. Yeah.

SPEAKER_04 39:27

And and and it gives you that faith to get on board with brands that go out on a limb. Like you think about um Nutilex, right? Like the the unofficial vegan product, right? Replacement to butter.

SPEAKER_01 39:40

Yeah.

SPEAKER_04 39:40

You know, and you know, I was vegan for a bit, right? So loved that shit. All of a sudden, they come out with alternative milk.

SPEAKER_01 39:47

Yeah.

SPEAKER_04 39:48

All right. And it would be easy for people that that don't trust that brand to just be like, the fuck, stay in your lane. Why are you doing that for? But but if you do trust that brand, yeah, you're like, oh, why wouldn't I buy that? Perfect. Like that makes a lot of sense. Yeah. So I think you know, governance helps you build trust outside your business because it's ensuring that you're doing things strategically, that you're not just, you know, uh flying blind or freewheeling it. Um, but that goes even more so for the people inside your business. So when you can show people, like, okay, I can see how that decision was made and why it was made, I trust you. Totally. That is the inevitable outcome.

SPEAKER_01 40:24

Yeah.

SPEAKER_04 40:24

But if I'm just told in the monthly newsletter that we're doing this now, and it's like, okay, but there's no context around it, like it's a bit harder for me to get on board, right? In some capacity. I'm not saying that it is like the be-all or end all, but it moves the needle. Yeah.

SPEAKER_03 40:40

And trust builds trust.

SPEAKER_04 40:41

So yeah, yeah.

SPEAKER_03 40:43

When when people uh feel trusted um both ways in in business, then when things come up that are bad in business and a staff member sees it and they want to talk to someone about it, they trust that something's going to be done about it. Yeah, there you go. Whereas when you have poor governance and there's low trust, something bad happens in front of them, yeah, it's really unlikely it goes up the chain.

SPEAKER_04 41:03

Yeah.

SPEAKER_03 41:04

So what that's why things fester and get really bad, as we've said.

SPEAKER_04 41:08

And and really political, really quick. Exactly. So what you're talking about is again another thing that governance is statistically correlated to, which is trust.

SPEAKER_01 41:16

Yeah.

SPEAKER_04 41:16

So it's it's literally correlated to success, or I should say long-term success. Yeah. Um, and it's also correlated to trust. So like it's kind of wild that you know, there's statistics on this that prove it, but even just intuitively, right? Like if I ask you again, how have you experienced trust being built in either a a board that you sat on, a project you were involved in, a business that you owned um as a result of good governance, or the other way? Where was it eroded through bad governance?

SPEAKER_03 41:45

Uh I think through probably I wouldn't say great governance, okay, but say a high level of communication through through the ownership team. Yeah. Um but that is a version of good governance. Yeah, exactly. Um, and I would say probably the longevity of the team in the particular venue that I'm talking about, um, and how we're able to essentially pick out when spot fires happen, we're able to douse them pretty quickly.

SPEAKER_01 42:14

Yeah.

SPEAKER_03 42:15

Rather than in the alternative to that is when spot fires are popping up and you kind of look at them for a while and you just kind of watch them burn. Right. And in the in the the business I'm talking about, it's it was the ability to constantly see things pop up and be able to communicate back to the team in an effective and fast way. Yeah, yeah. I I just feel like what I see a little bit and what I've been involved in as well of when things something bad happens is the idea of like, all right, we need to meet about it and then we need to think about it, and then a week later, still something nothing's been done. Yeah, right. Yeah. And that just erodes the trust in that team or person or whatever else. And it's really hard to come back from. Yeah, for sure. And if you do that on repeat, you end up in a pretty bad spot.

SPEAKER_04 43:01

Okay, I'll give you a great example, which is purely anecdotal. But when COVID happened, I was like very immersed at um Melbourne Business School. And so what was really cool, um, or what was I was you know, something to be really grateful for is what you got all these leaders in a you know pretty small cohort that are all trying to navigate this. Um, and so I was having all these conversations with everyone about, hey, how are you dealing with this in your organization? And just an observation that I could make is in the businesses that had, you know, really good governance, right? So the businesses that had like no real conscious governance at all, like fucking good luck navigating that.

SPEAKER_01 43:39

Yeah.

SPEAKER_04 43:39

The sense of fear and anxiety across your team is just gonna be so high that even if you're calling them every day, you haven't got the track record to just make them feel like, you know what, we're probably gonna sort this out. Yeah. Okay, then there's the the organizations that had governance, but it either was really productive or it wasn't really productive. Those leaders, right? Like it was just so obvious the ones that had productive governance functions because the type of comms they were putting out, the type of buy-in they were getting, the discretionary energy that their employees were putting in, just the culture that they had throughout this period was fucking unbelievable. Like it brought people closer together. It gave them a real sense of connection, right? They had that that trust was there because these people in the organization had experienced their leaders go through adversity and make sound decisions that were clear, that were explained, right? So they go, okay, well, we've experienced this before. This is another one of those.

SPEAKER_01 44:36

Yeah.

SPEAKER_04 44:37

So they're going to keep the communication open and we don't know what the solution is, but they're working on it, right? We're going to figure it out, right? And I can have faith in that. For the people that were in businesses where, you know, they had governance, but it was really not productive, nightmare. Yeah. Like it was just, they were so stressed out. They would just found it so hard. Like every time, you know, their phone rang, it was just going to be like, oh man, what is this going to be? Yeah. Who knows where it's going to go? And yeah, it it didn't, it wasn't a moment of adversity that brought the organization closer together.

SPEAKER_03 45:07

Yeah, I mean, I saw don't want to harp too much of them about COVID, but when when that shit hit the fan, um there was I was hearing things from past staff or friends or whatever that some of their leaders and bosses didn't say anything. They literally just didn't communicate. Just hit any sand. They just went phone off. Oh wow. Like that's the extreme level. Okay. And I just think I mean who knows what they were going through, but of course. Yeah, but we all went through it. Yeah, yeah, yeah.

SPEAKER_04 45:34

Sure, sure. Um, but you know, specific circumstances, but but still, just for whatever reason, it's not, yeah, however you justify it, bad governance decision to just not say anything. Yeah. In hospitality, you plan for a full house, but no shows still happen. Regulars walk in and go unrecognized. You're running blind on who's actually coming through that door. Open table gives you the visibility you're missing. Guest profiles, so your team knows it's Sarah's third visit this month. Real-time insights, so your staffing's smart, not guessing. Automated confirmations that help reduce no-shows. The result? Help to fill more seats. Service that feels personal and a team focused on what they do best. Learn more today at opentable.com.au slash restaurant dash solutions. So the other thing, I mean, it that there were sort of five points, right, that that sort of sum up why governance is important, right? So it's decision making, strategy, um, protection from people, it builds trust and it's correlated with success. I think we've done decision making, building trust, and correlated with success reasonably well. I think strategy is pretty straightforward. Like anything you could any examples you can share about how strategy worked well or didn't work well on the back of governance performing well or not?

SPEAKER_03 46:52

Uh strategy, yeah. I think um at a board level, being able to like I've sat on boards in different ways, whether it's my own board in in different businesses or um through non-profit, um, also uh advising a tech startup and that sort of thing. So I've been able to see pretty wildly different setups from a board perspective, and then what just sort of success correlation is. Um I think for me the the example is probably when I was advising a board and showing that when we're able to have clear strategic days, meetings, whatever that looks like, and then having an outcome in mind before you go into that meeting and when you come out. And I think a lot of people, because we're so well, hospitality is so hard for this, and this is probably a big definitely a big reason why governance generally isn't done well in an industry, is because we're on the clock every day. It's like service starts at eight at noon, service starts at 6 a.m. Service like service is always on, right? And it's really rare to be like, you know what, for four hours we're gonna go in a room and do some strategic work. Yeah. When you do say that, and like let's have a couple of hours of strategy for 2026, it's usually done quite informally. Yeah, I think I'd probably stress here is like what I've seen work extremely well is you know, saying three months out or a month out, hey, that date, block it off, we're all gonna have a half day, right? And the outcome of that half day is a six-month strategy, a quarterly strategy, a 12-month strategy, whatever that looks like, know what you're going in for, yeah, and then doing it, and then coming out the out the other side with some clear actions to get on with. And it doesn't have to be a fancy deck, it doesn't have to be a crazy 40-page thesis like you would write. It just needs to be something that you go, you know what, we're all come together, we've thought about this, we've agreed on these actions, and we're gonna come out the other side and execute. And by doing that, I'll be watch it happen time and time again is the success on the other side of it. Because you've you've created something that's trackable, yeah, and you're someone's accountable to it, or a group of people are accountable to it.

SPEAKER_01 49:07

Yeah.

SPEAKER_03 49:07

And then being able to do that and then repeat do that repeat on repeat is always gonna yield success for the business.

SPEAKER_04 49:14

For sure. And I I think the only thing I would add to that is that like you know, strategy can be like the 40-page document, it can also be written on the back of a napkin. So right, as long as it does one thing, which is that it galvanizes the focus of of everyone, right? If it creates a collective focus, it creates a sense of collective prioritization, it's coherent. Yeah. So back of a napkin, whiteboard, 40 page fucking essay, whatever, right, it's all gonna do the trick.

SPEAKER_01 49:42

Yeah.

SPEAKER_04 49:42

Um, but what I think is the biggest pitfall is running into a specific year or quarter or any type of just period of time without a strategy is wild. And the amount of people that do it is crazy. That having that governance structure in place means you'll never do it.

SPEAKER_01 50:00

Yeah.

SPEAKER_04 50:01

Like it doesn't allow you to go into any period of time without a clear plan.

SPEAKER_03 50:05

Yeah, well, I mean, having the cadence on those meetings and strategies is the most important thing because you might do it, like everyone gets, you know, for first of January fever, and it's like new, new year, new me, sort of stuff. Um, and you want to dive right into it, which is great. But then how like what can you do to make sure that at the end of March or at the start of March, you're starting to talk about what does the next quarter look like? Yeah, for sure. Rather than doing the it's why like gyms do sales in December for membership because no one starts a membership, right? Right in January, no saleship because everyone starts a December and guess what? By March, they're gone. Yeah, so January gyms suck. Yeah, got it. By March, it's quite again.

SPEAKER_04 50:48

It's quiet again, classic. Yeah, so but we're we're getting um dangerously close to the how to do it bit. And before we get there though, I don't want to miss uh protection from people. Sure. That like that's one thing that governance does really well because this is a really protection from people. We talk about like my cousins like helping us out here, or like what's protection from people with it's it's it's a well, it's funny, right? Because you can interpret this a bunch of ways, but what it what it specifically speaks to is that a lot of articles skirt around this and they put it quite politely. Sure. But ultimately, good governance protects you from the founder. Ah, sure. So this would be a really good discussion because I think our career paths, yeah, you we've kind of had similar experiences in similar size entities and whatnot. I've chaired a board though, so I've got that up on here. But you um have predominantly done it as a founder, sure. And I've predominantly done it as an executive, totally, yeah. So it's pretty interesting which pool thing. So if I was to put that out there and be like, cool, a really good governance structure is going to protect you from the founder being a founder. Yeah, how would you defend yourself as a founder in that? Oh fuck.

SPEAKER_03 51:56

Um if I'm trying to think of I mean, in terms of our dynamic, like I feel like Oh, you mean for packs? Yeah. Oh fuck, all right. Yeah, just do it for packs, go for it. Um bit dangerous here. Uh I think for me it's having someone that puts the guardrails up. Yeah, sure. Because I'll say some crazy shit that I want to do. And um I think you're quite good at going, great, but right? And I think it just like kinds of brings me back down to earth a little bit.

SPEAKER_01 52:26

Sure.

SPEAKER_03 52:26

But you also have a bit of a crazy brain as well, so you can kind of go off the other way sometimes. But I think um like we said before, founders need to have a streak of being a bit irresponsible in a way, um, to come up with crazy ideas. There's like 90% of the amazing shit we have in this world wouldn't happen without having founders, it would just be like how Ben and be like, this is the thing, and we need to build it this way. Yeah, right. We wouldn't have Apple, right? Exactly. Those sort of you know, legacy brands. Um and I however, there's a level of governance that needs to be set around that founder to make sure they don't do the crazy, real crazy stuff, yeah, and the things that are gonna really risk the business. Yeah, right. And you'll read the Apple story or whoever, whatever the Nike story, and you'll be like, oh my god, that's the way to run business. It's like that's the 0.001% that you know did went for the moonshot and made it. Yeah, right. We're not talking about all the fucking rockets that died like along the way. Like I and I think um in the absence of someone like you and a business, that can happen because you just get a little bit too carried away without coming back and being grounded all the time.

SPEAKER_04 53:40

I love the way that you put that, and I'll give you a a different way of looking at it. I for the life of me, I won't be able to point to the literature. Sure. So I'll just say this isn't this is my own observation.

SPEAKER_01 53:51

Yeah.

SPEAKER_04 53:51

Um, but something that happens in businesses that is pretty easy to identify is think about it as if it's like a maturity journey. Okay, so just think about the way a business kind of grows up, okay? And if you and if you block it out into say um revenue and time, okay, so let's just say duration of the business is like zero to five years, and in that time, it's zero to ten mil. All right, does that give you a scaling point? Totally. All right, so in that first block, right, those that's the most nascent period of business, right? That is full-on bootstrap mode. It's the start-up period. It is where you're not really writing anything down because the systems are changing every day. Yeah. Right. And in that environment is where founders do their best work. Definitely.

SPEAKER_01 54:37

Yeah.

SPEAKER_04 54:37

Because they are just taking risks that most people wouldn't.

SPEAKER_01 54:42

Yeah.

SPEAKER_04 54:42

Right. So what you need, right, the petrol that you need, the fuel to get that off the ground is a really, really high appetite for risk. All right. So in that first few years, when you're trying to gather that momentum, man, you need to have those inputs, right? You need that foundry who's going to come in, be like, we're doing this now because I'm just passionate about it, and let's all fucking drink the Kool-Aid and go for it. And that energy gets you to that 10 mil, five year mark.

SPEAKER_01 55:05

Yeah.

SPEAKER_04 55:06

Okay, but it won't keep you there.

SPEAKER_01 55:07

Yeah.

SPEAKER_04 55:08

Okay. Once you hit that 10 mil, five, that five year, 10 mil mark, roughly around those sort of you know, milestones. A business has to put on the big kid pants. All right. And at that point, there's there's actually too much to risk now. You know, like before you get to 10 mil, the stakes are probably just a little bit different.

SPEAKER_01 55:25

Yeah.

SPEAKER_04 55:25

But suddenly you get to a certain, even if you just think about it from a certain head count, right? If you're like, fuck, we're hiring, we've got more than a hundred people now that we're responsible for, risk appetite has to change. Yeah. And so this is where governance really helps with that, right? Because you can get this right and you can get this wrong, right? Like what I've often seen traditionally, and there is definitely lots of literature on this, is a great article in HBR called The Founder's Dilemma, which talks about this really well. And you can get this wrong. So what tends to happen is a lot of organizations they scale to this point where now the business is worth a lot of money and it's doing all these great things, and then the executive team come in, the board come in, and what do they do? They yoke the founder. Yeah. It's the first thing you're getting in the way, yeah. See ya.

SPEAKER_01 56:07

Yeah.

SPEAKER_04 56:08

And it doesn't always work out.

SPEAKER_01 56:10

No.

SPEAKER_04 56:10

Right. So um you can go too far that way, yeah, or you can go to the point where it's just like the founder is the narcissistic leader and we'll just do whatever. And and then it can, you know, you're right. They can, there's not enough guardrails around them protecting themselves. Yeah. The way I think about it is the founder is a really, really powerful battery. Really powerful battery. Right. And what governance needs to do is they need to plug it in in the optimal way. Because, you know, if you don't plug that battery in in a safe way, what's going to happen, right? It's either going to the battery's going to come along and fry the fucking mainframe. Yeah. You know, or it's not going to be getting that feedback loop and it's going to drain itself.

SPEAKER_01 56:48

Yeah.

SPEAKER_04 56:48

Either of those scenarios is bad, right? Like you want to be able to take that energy that only a founder can bring, right? That inspiration, that backstory, that vision, and you need to plumb it in, right? Plug it in in a way where it's actually getting you the best risk to reward ratio in an optimal way. And if you get that counterbalance wrong, it can be pretty detrimental. So without a governance function, man, what chance have you got?

SPEAKER_03 57:12

Yeah, it's crazy. I'm literally having this conversation um a few weeks ago with someone that's about to start their first business. Okay. And they're like, oh, what do I, like, how do I start?

SPEAKER_01 57:21

Right.

SPEAKER_03 57:22

And I've always had like the idea of like set the bridge on fire and work out how to run across it. Yeah. Pretty sure I said that to you when we started Packing. And you're like, bro, sure. I'm like red flag. We've got six, we've got six kids between us. We've got to chill it. Um but when you're just starting and the the risk is low, essentially. It's like that's the mentality that I really want people to push and understand. It's like that's that's what you need. But eventually you need to work out how to build the bridge again. And that's where governance comes in. Totally.

SPEAKER_04 57:50

Yeah, well put. I think just and let's get to what I think is gonna resonate the most, right? How do you do this? So, like I said, right, think of it in two ways, right? Number one is just do something, right? Just set up some type of like deliberate, consistent process for governance, right? Whether it's just phone call to a mate every couple of weeks, or whether it is like putting together an advisory board that you shout dinner every month. Whatever it is, just do something. Then refine it. Yep. Those are the two bits, right? And I think anyone listening to this who has never done it before, to just do something is gonna be working really well. So anyone who is kind of doing this but not getting the productivity, they're gonna probably be like, Well, yeah, I did just do something, it hasn't worked, you dickhead. Yeah. So it's like, great, well, let's talk about how to refine it.

Practical first steps for sole operators: Find someone external to the business and create regular cadence

SPEAKER_03 58:37

Yeah. I I think it's like I always use like a fitness analogy here where people are like, again, new year, new May, they're like, I'm just gonna go to the gym. If they don't have the perfect session, you're like, I failed. Yeah, totally. And then they drop off a cliff really quickly. And I'm really bad for that because if I wake up a bit late, well, I was, I'll be like, well, I'm just not gonna work out because I didn't get the right time. Instead of 48 minutes, I trained for 30, that's not gonna be good enough for me. So I just won't do it. As opposed to just do 30 minutes, just do you know, like going for a run. Yeah, 5Ks is better than zero Ks. How about one K? One K is better than zero K.

SPEAKER_02 59:14

Honestly, just do it. Yeah, for real.

SPEAKER_04 59:17

All right, so um let's stick to that, right? Let's go to the the the just do it section, right? Um, if we start there, I think there's a spectrum still. So maybe let's let's go at both of these from the um extreme ends of the stakeholders. Yeah. One's gonna be owner operator who doesn't even have a good relationship with his head chef or her head chef. Um, and then the other end is gonna be so so pretty isolated. Yeah. The other one's gonna be um running a pretty big group, doing a fair bit of annual revenue, there's a leadership team, you know, and no real governance. Sure. Which one do you want to do? Let's pick. Um as the example. Yeah. Uh the small one. You want to go the small one? Okay, I'll go the big one. So then let's talk about if you're if you're processing that, the just do it, just do something. Yeah. You're the small owner operator. What what is the best next steps to take after listening to this podcast?

SPEAKER_03 1:00:09

If I'm a sole operator, the the definitely the best step. If you're gonna do, I'm gonna say two things, right? Number one being what you have a loser and spoken about already is find someone external to the business.

SPEAKER_01 1:00:22

Yeah.

SPEAKER_03 1:00:22

Again, like if you're in the industry, chances are you've got friends at all. So owners, yeah, or um being successful in other business, hit them up. Find a trusted advisor. Yeah, I think a lot of people are really nervous about asking for help as an owner. Sure. Because you're like, you're owners think they're just meant to know. Yeah. And so it's okay not to know. Yeah. And just being like, hey, can I get a hand? I think it's probably what has led to some sort of success for me is I've always been like, I have no idea what I'm doing. Yeah, can you give me something? I'm so fine with asking. Yeah, totally. Um, so do that, yeah, definitely. Yep. Um, and get some find a s a sounding board. Find a sounding board and get some cadence in that. Yep, and do it regularly. And do it regularly. Yeah. Number two, and we haven't used the even uttered the word AI. Oh, dangerous. But I think it could be a whole other episode in terms of how we use it.

SPEAKER_04 1:01:14

Yeah, I just think it risks like uh emphasizing or enhancing the echo chamber.

SPEAKER_03 1:01:21

No, no, no. Like, this is the important thing for me. It's like do the external, find the external person, real life person. Sorry, sorry, you've done that because you've done that.

SPEAKER_04 1:01:28

Okay, got it, got it.

SPEAKER_03 1:01:29

Step two is refining it or yeah, step two for me is like the tools that are available to us now that weren't available 10 years when I started in business are wild. Yeah, that's true. Right. And just take AI for example, and I'm gonna talk specifically about the usage of it to keep your own cadence, right? Because when you get to that meeting with that person that you've chosen and has said yes, you've got the right material. Yeah, got it. Right? Yeah, and AI now, you can use it in a way that is really simple. You don't have to geek out about it. You can all you need to do is once a week is voice record yourself. Yeah, sure. And just rant at it. Yeah, it doesn't have to be coherent. Yep. It's the most important thing. People think the input needs to be perfect. So TED talk. You can blabber for 15, 20 minutes. Yep. Do that once a week. When you have that month with that person, all you need to do is go into Chat GPT and say, summarize the last four weeks. The most important headlines. Exactly. And there'll be stuff that gets pulled out you've kind of forgotten about it that is important, and there's your agenda. Yeah. Just there's very simple things. Love that. And you I think being organized, going into it and knowing what you're talking about, yeah, means you're just gonna have a much better, more optimized meeting.

SPEAKER_04 1:02:37

Yeah, I love it. So find someone to soundboard with, do it regularly, yeah, and then um prepare for it. Yeah, prepare for the chat. Totally. Yeah, no matter what that looks like. Simple, pretty solid. Yeah. Okay, so going to my end or the higher end of things, which is um, you know, bigger group, you know, effectively need to put a better, more responsible governance structure in. Start by building an advisory board. Yeah. Okay, and that can sound daunting. It's really not, right? You put up one social post, you put up something on your LinkedIn and just say, Hey, I'm looking to build uh an advisory board for my group. Um, sing out if you'd be interested. And what I think a lot of people mistake is that they think, oh, no one, no one who's worth being on the board is gonna have the time for this, you know. And it's it's actually so, so not true because anyone who's really good at what they're doing, right? Anyone who's trying to like excel in the leadership space, man, everyone needs, right, not just wants, board exposure. Totally.

SPEAKER_01 1:03:34

Yeah.

SPEAKER_04 1:03:34

It was like, hey, well, you can get in on the ground floor here. You know, we're not gonna pay you so we don't have money for that, you know. But here's a seat at the table, right? We'll shout you dinner once a month, right? Come in, and you know, here's what we have to do is just weigh in. All right. So building an advisory board is massive because you know, you're always gonna find people that will put their hand up to join you in that conversation. It's it's not like just open slather and just grab the first best in, you know, first in best rest or whatever it is. It's like you've got to actually have a bit of curation. Yeah. Okay. So it's an interview process, essentially. Yeah, but you don't you don't necessarily even have to go to that length, provided you nail one role. Okay, so so in that group, so let's just say the the ideal amount of people is probably four to six, right? Anything more than six is a bit, it's just gonna be a logistical nightmare. So even if it's four, right? Like that's totally fine, but you have to have a chair. There has to be someone who chairs that meeting for the group. Yeah. That person you might have to additionally incentivize. Yeah. Yeah, but that person is absolutely critical because they are gonna be the conduit between you and the rest of the board. And I was gonna say it can't be you. It can't be you, right? Because you'll game it.

SPEAKER_01 1:04:46

Yeah.

Building an advisory board: Why nailing the chair role is the key to everything else working

SPEAKER_04 1:04:47

Right. So you you have to, and like I said, that stakeholder has to have at least half a degree of separation from the business. But they have to be able to curate the agenda. So how can they do that if they don't have a really good line of sight into everything that you're dealing with as an operator? So you've got to find, you've got to make sure that if that chair role is nailed and you are doing the work, you're meeting with them once a week to keep them informed. You know, there's a monthly meeting, so two weeks out, you're planning the agenda, you're nailing it before it happens, you're following up with them afterwards and making sure the minutes were all good and the decisions were all blah, blah, blah. As long as you nail that role, it takes pressure off everything else. And I'll tell you why, right? Because then if you say you're dealing with an advisory board of four people, but you nail the chair role, the other three have a crack, right? Go with whatever you think. And if it's working really well, awesome. If it doesn't, the chair will sort that out. Yeah. Right. And they will let people off the board and bring people on, and you've got someone that's not you looking after that. So absolutely, step one is build an advisory board. It's not that hard, right? It really isn't. These aren't a group of people that can get sued if things go wrong, right? It's just advice. That's it. Yeah, yeah. And there's definitely a lot of like other intricacies that you can put in. play there around like you know a charter and understanding group dynamic and whatnot but again if you just nail that chair roll then everything else will work really really well so the last bit I'll give you on that and actually maybe I can take this into the refinement of it so so first step just how to do it get a group of people together and just meet every month right and within that nail the chair roll you'll be absolutely laughing anything you'd add to that to that I think around the people like I f feel like experience in different areas is super important um that then correlate directly to your business and if you can having someone that is just not in industry yeah I think is quite great okay so so in that point I mean I'm trying to like set it up in a way where there's no um it's not laborious to go and find and recruit. Yeah. So but if you did have the ability to be a bit picky and choosy then I'd say the best thing to do is build a bit of an org chart. Not not like a hierarchy but more from the sense of like what are the roles that we want on the board.

SPEAKER_01 1:07:00

Yeah.

SPEAKER_04 1:07:01

Because say the the foundership team are just all amazing marketers. You probably don't need a marketing person on the board. No. But you probably do need a culture person.

SPEAKER_01 1:07:10

Yeah.

SPEAKER_04 1:07:11

Right. Or maybe you do need an impact person. Yeah. You know, or whatever that is right. So you you sort of curate and go okay here's the roles that we want to get and then you go and recruit for them. So if you have that luxury amazing but if you don't and you just need to get something going just get everyone in and as long as you nail the chair role then you'll be looking pretty good. Okay so that's that's setting it up pretty pretty straightforward. I just think that covers a wide spectrum because for the people that are kind of in the middle where they're like well we're not gonna build an advisory board and I'm probably too big now to just be randomly ringing someone every couple weeks with even with a prepared agenda. How can you hybrid that? You know and and what I'd say to those people in the middle is man you can just literally you don't have to put together a full advisory board but maybe you can take that trusted advisor that you would call maybe you can take someone who's you know been a part of businesses that have scaled maybe to two scaling points of where you're aspiring to be and maybe it's just you and your business partner and these two other people having dinner once a month.

SPEAKER_01 1:08:09

Yeah.

SPEAKER_04 1:08:09

Simple.

SPEAKER_01 1:08:10

Yeah.

SPEAKER_04 1:08:10

Right? And then of those four try to eventually get someone to chair it you know and be like hey would you be willing to be responsible for you know running these meetings within the second one someone's going to surely put their hand up. Yeah. And if they don't get someone else in. But it's just that sort of takes away the some of the stigmas or the uncertainty or even the cynicism around advisory board and you know board charter and all that sort of thing. It's just going, hey, if you're somewhere in the middle just make sure there's a frequent chat yeah with a group of people from outside the company. Okay. So let's just say you've done that. How do you optimize it now? Let's go small scale end again. So you've you've you've started ringing that person every fortnight you're asking chat GPT you know to curate the agenda for you. Yeah. What if it's still not working why wouldn't it be?

SPEAKER_03 1:09:01

Uh why wouldn't it be? I think because it might be the wrong person. Yeah. Yeah is the probably the number one thing. Yeah I think people in this situation might make the mistake of finding someone that is a bit too much like AI where they just pat you on the back all the time. Oh yeah right halo effect that's right Michael that sounds right you're amazing you're awesome and yeah you just don't get the feedback harsh feedback okay like you need to get the right person that's gonna just kick say it straight yeah right yeah and if you don't have if you find those conversations with that person are just a little bit like a sounding board and there's no one nothing coming back the other way then like you should be challenged. Yeah and it should be a bit uncomfortable sometimes. Totally I think the idea of um not having hard conversations is a good thing is a bad thing. Yeah it's just like you need to have some challenging conversations in in in this so um I think yeah definitely look at someone else to to come in and help you. Yep so switch it up yeah and when you're doing that vetting or that casual vetting of people think about people who be like oh that person always pulls me up on shit. It's like when that person comes in for a a bad coffee they'll tell tell me and they'll let me know about it. Yeah that's who you want that's who you want yeah yeah so pick it up a bit yeah exactly increase the um discomfort level definitely yeah okay that's definitely a big one love that um and then so solid in terms of the preparation like amping that up just do more voice dumps okay and get feedback from other people as well yeah so get your managers or your head chef or whatever it's like start getting them to do it and feeding it to you. Yeah and it's about for me creating communication layers upwards and if you start to do it with yourself to this person you're soundboarding with and then get them to do it as well to you, your managers then you're just gonna have a a bigger representation of data to then work from. And you're gonna learn things that you didn't know.

SPEAKER_04 1:10:56

Yeah. Really good. Love that um if we go to the other end of the scale where it's like okay you've got an advisory board and and you know you guys are meeting once a month and you've even nailed the chair position um but it's just not working.

SPEAKER_01 1:11:08

Yeah.

SPEAKER_04 1:11:09

It's like you're going to those meetings and you're feeling a sense of like I don't know if that was very productive.

SPEAKER_01 1:11:14

Yeah.

SPEAKER_04 1:11:14

Okay, then there's a really really clear toolkit for this. Okay so the the the first thing there's there's a few elements of it right number one is you want to monitor the um information that's going in. Okay. And one thing that can happen in really unproductive um boards or where the chairperson isn't nailing their role is that the conversation just quickly goes into day-to-day problems that we want to fix. Yeah. And they get really granular and then everyone's trying to chime in and the dynamics all wrong and you just go around in circles and you're solving the wrong problems. Right? And you can fix that with a really good agenda template, right? So an agenda template that clearly shows where the decisions are that need to be made. It can be we need decisions on these things in this meeting these things are just I just want your input these things are just an update like that's really really important to set that up right. It's also really important to make sure that people have all the information they need to make a decision. Yeah sometimes you're not providing that ahead of time and then what happens right yeah well you get into the meeting and it's like okay great we've got 17 minutes now to go to this next agenda item but it needs 16 and a half minutes of background explanation you know so so things like that are just really basic right look at the agenda look at the information going in figure out how to optimize that um but the the thing that no one spends enough time talking about is group or team dynamic and assessing that and going how effective are we being as a team right and how do we know when we're being like that yeah right these are these are really important. So sometimes you know you can put a board together and everyone just wants to get stuck in. Yeah. But the first meeting you have should be talking about no business. Yeah. It should just be talking about what are our roles here? Yeah. Okay, who what are you what's your social role and what's your functional role? They're really different things. All right what's your personality type like let's figure out what all our any ground types are and then see who where we're light or where we're heavy. Where are we going to be predisposed to bias, right? So the group dynamic thing is massive. If you run a really good session and it's hard work because it's it can be quite confronting yeah but if you run that session it doesn't even matter if you don't facilitate it well you will increase the dynamic of the group right you'll make it better right you'll make the harder conversations easier to have and you'll create clarity and galvanization. So that I think can be um create so you an artifact of running that well is that you'll come up with a charter. That's effectively what I'm driving at right it's like you put that advisory board together create a charter. It doesn't have to be a 10 page document that everyone signs like it's a constitution it can just be a couple of paragraphs. This is who we are this is what we're trying to achieve this is what good looks like this is what we do when there's conflict this is how we make decisions whatever right just keep it generic but if you can put together a bit of a charter that sort of guides everyone on the board as to how we're going to be a successful team you're laughing. Right? So then the other bit from that is like just going deeper into the role thing right like as the as the founder or the person who's you know reporting to the board, you know, you need to be really ensuring that you're reviewing your relationship with the chair. No one else can really do that. You know other people can point it out they're like you know I feel like these meetings aren't as productive as they could be guys talking enough but you're the only one that can really assess it. So always be scrutinizing that I think is a really really important piece of it. And the last bit is just thinking about that dynamic right sometimes it's hard for executives that have just you know had their own way for a long time or owners or founders to actually deal with that dynamic of oh I'm actually reporting to someone. Yeah. It's a bit of a weird one. Yeah. Be able to take off that hat where it's like I'm the one making all the decisions to oh now I'm actually reporting to people you need to find a level of comfort with that.

SPEAKER_03 1:15:03

That's a huge leap for a lot of people I understand why it's like you you've been the person for a long time that is the buck stops with you. Yeah. And suddenly you're like hang on I own this business. Yeah now I report to someone.

SPEAKER_04 1:15:14

Yeah and they're telling me I shouldn't do that. Yeah. How about I just do it? How about you give so you need to you need to be managing your own shit when it comes to that you know and and being willing to go now it's the whole reason I've put these guardrails in place is to feel that discomfort. And the last thing I'll say is if it if you're not the founder you're you're like an executive man involve your team. Yeah right you it's one of the dumbest mistakes you can make is to go I'm the conduit I I gather all the information from my leaders push it up and then I go and talk to everyone in the book. It's like mate bring them in get them involved they don't have to be there for the whole thing. But if you can get them comfortable reporting at the board level with certain items it's just going to increase the amount of um you know insight and information that comes through which increases the level of decision making yeah the last last thing I'll say on it is review the decisions that get made yeah incorporate that into your meeting to go this was the decision we made last month here's how it went yeah let's score it out of 10. How do we feel like it went? How do you think we went as a group making that decision? Oh it was a seven okay what do we need to do to get it to an eight yeah you know and constantly be reviewing it and I think it makes a massive massive difference. Yeah 100% all right that we'll wrap that up there. Thanks for listening everybody thanks for being on Michael and sharing some of your experiences got to say real quick to everyone that's written to us that's emailed us thank you we love hearing from you. That's kind of why we do what we do. We're trying to help people with businesses so they can enjoy their lives more and enrich the communities around them. So hearing from people and helping them troubleshoot is awesome. So please hit us up whether you've got feedback input an idea something you're working through you know like we'll we might even read it out on the show. But uh hello at packs.mel is the email. Correct. So hit us up anytime keen to hear from you. Thanks for listening. We'll see you again soon