189: He Escaped Bankruptcy—Then Built a System That Changed Everything with Michael Erath – 8FE

What if the framework you’re using to grow your business is the very thing holding it back?

Today’s guest, Michael Erath, founder of Next Level Growth, reveals why systems like EOS and Scaling Up, while helpful, often become a cage for elite entrepreneurs. Michael grew a $45M company, lost it all to fraud and a financial crisis, and came back stronger with a custom-built framework that now helps other businesses scale without the chaos.

In this episode, you’ll hear how Michael bounced back from total collapse, why most entrepreneurs are aiming too low, and what makes his Five Obsessions of Elite Organizations framework a smarter, more adaptable path to sustainable growth.

You’ll also learn why effort is your responsibility, how to rethink coaching ROI, and why pricing strategy should never be an afterthought.

If you’ve ever felt boxed in by traditional systems or know your business is capable of more, this conversation will show you how to build the kind of company others can’t compete with.

Listen in and learn what it takes to grow a business that’s not just successful, but elite.

Inspiring Quotes

• “What would it look like to earn a meaningful return on life, not just a return on investment?” – Michael Erath 
• “If you enjoy playing golf and want to get better, you don’t hesitate to hire a pro and take lessons. In many areas of our lives, it’s natural to engage someone to help us improve. However, in the entrepreneurial world, we often view seeking help as a sign of weakness and resist reaching out to others. Mentally, it’s important to overcome this mindset.” – Michael Erath 
• “You have to take ownership of your own outcomes.” – Brad Weimert 
• “There’s always a negotiation to be had.” – Brad Weimert 
• “We can choose to be average, or we can choose to be good—and most people are satisfied with being good. But you can also choose to be excellent or elite. If you make that choice, it requires a different level of discipline, focus, drive, and commitment to consistently meet high standards. Without that, you’ll never rise beyond good.” – Michael Erath
• “Effort is your responsibility.” – Michael Erath 
•  “If you’re not changing it, you’re choosing it.” – Michael Erath

• 00:00:00 Michael’s turbulent business background
• 00:02:47 Advice for aspiring entrepreneurs 
• 00:05:28 Investment returns on coaching 
• 00:14:46 Growing a family business to $45M 
• 00:20:43 Bank fraud, embezzlement, and the 2008 collapse
• 00:23:51 There’s always a negotiation to be had 
• 00:34:02 Starting over and building a new business
• 00:41:39 The EOS framework 
• 00:44:59 The five obsessions framework 
• 00:59:24 Michael’s book and its AI companion 
• 01:01:51 AI and business
• 01:04:13 Acceptance of mediocre performance 
• 01:08:48 Outro

Michael Erath 0:00
Most people are satisfied with being good. You can also choose to be excellent, or you can choose to be elite. But if you choose to be excellent or elite in something, you have to have a different and special discipline and focus and drive and commitment to do things to a very high standard

Brad Weimert 0:14
all of the time. Tell me about the five obsessions framework.

Michael Erath 0:18
Five obsessions are based off of five principles. If you truly want to build something elite, I believe you need to have an obsession about these five principles, an obsession around filling your organization with great people. Second obsession,

Brad Weimert 0:33
Congrats on getting beyond a million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine and even 10 figures. I’m Brad Weimer, and as the founder of easy pay direct I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week as I dig in with experts in sales, marketing, operations, technology and wealth building, and you’ll learn some of the specific tools, tactics and strategies that are working today in those multi million, eight, nine and 10 figure businesses, life can get exciting beyond a million. Michael Erath, let me see if I’ve got this right, you jump into your family business that’s at 8 million in revenue. You grow it to 45 million across six different continents. The 08 recession hits, along with some crazy fraud company collapses, you find yourself obsessed. It’s seemingly obsessed. Digging into business operations. You get certified as an EOS implementer and a scaling up coach, and then you build your own framework with your new business, your current business, Next Level growth. Is this somewhat accurate so far?

Michael Erath 1:44
Yeah, that is there’s one thing. One key piece missing is after the collapse of the $45 million business, when I first discovered EOS and I had been doing bits and pieces of different tools from different things I had read and studied in the past, but I did start another business out of the ashes of that family business collapse. That business we grew from basically from zero to 7 million over about four years, and I did that by self implementing EOS. And that was kind of my first really dive into the systemization of business and how really building better systems leads to better results, but I did it in a way that was a very hybrid approach. And so I wasn’t doing EOS purely where I felt like there were different tools that, for me were a better fit. I was swapping things out and customizing it, and that is when I that’s what kind of really helped put me on a trajectory to get on the path of coaching through Eos, scaling up, and then eventually deciding to blow that up and focus on building my own framework.

Brad Weimert 2:47
I love it. Okay, so I have 1000 questions about that. Sure we’ll get to and for anybody that doesn’t know, EOS is the entrepreneur operating system, scaling up. These are two different frameworks that people can run their business by. Many entrepreneurs today, even those that are printing money, are overwhelmed. If you had 30 seconds to give advice to the entrepreneurs that are growing but are in the chaos of growth, what would it

Michael Erath 3:15
be really zoom out and think about life as a whole, and what you want out of life. And I try to frame it as what would it look like to earn a meaningful return on life, not just a return on investment, and get clear on that, and then use your business as a vehicle and a tool to both create financial freedom, but at the same time to make sure it’s serving that bigger vision you have for return on life.

Brad Weimert 3:43
But how do you keep up with the Joneses? If you do that,

Unknown Speaker 3:46
right? Sorry,

Brad Weimert 3:50
we like the word fuck on this show. Fuck the Joneses.

Michael Erath 3:55
You know, let them be stressed out and miss all the family stuff and grow up and regret you know that their kids don’t really know them and you know all that stuff. I

Brad Weimert 4:03
love it. What to date? So you’ve been through a bunch of different business journeys at this point. What is the best investment that you’ve made in yourself, personally and professionally?

Michael Erath 4:16
Honestly, it’s been in finding my own coaches and mentors in areas where I need to be more proficient in things that I just don’t have the background and skill sets for. I work with a public speaking coach, because that’s not a skill set. When I first started coaching, I worked with a business psychologist as a facilitation coach to help me learn techniques and things to do to help me be a better facilitator. And I think as as entrepreneurs, it’s interesting. You know, if, if you enjoy playing golf and you want to get better, you don’t think twice about hiring a pro and taking lessons and getting help, and I think a lot of things in our lives, if we want to get better, it’s very natural to engage somebody to help us. But I. In the entrepreneurial side of things, we often feel like that’s a sign of weakness, and we resist seeking outside help and seeking help from others. And I think that’s something that mentally is important to try to get beyond, because everybody has their own, you know, as Dan Sullivan calls it unique abilities, or their own zones of genius. And it’s actually a little bit foolish to think we can be, you know, in all of those at once and all those zones of genius.

Brad Weimert 5:28
Yeah, I agree with that, and I very much like internally tell myself that that all makes sense. And then I get to the plate, and somebody quotes me twice or three times or four times what I would expect for coaching in a given area. How do you think about the dollars associated to something like a performance coach or somebody to guide you through the process? Yeah,

Michael Erath 5:52
that’s such a great question, and so it’s interesting. So my company is called next level growth, and we have a policy that all of our partners and business guides offer what we call a 10x guarantee when we start with a client. So we we basically have two stages to how we work with clients. The first we call base camp. The second is the climb. And we use a lot of analogies around mountain climbing that grow in a business is like climbing a mountain. So in base camp and each of our each of our partners have their own fee structure as far as what they charge, because we’re basically our calendars are inventory. So the 10x guarantee we don’t get paid anything until after the work is done with the client, and only if they can see a path to at least a 10x return on what they spent to work with us. If they don’t see that at the end of the first day, they can keep the check. We can end the engagement and stop right there. So we end up because of exactly what you described, we take all of the risk, and we also don’t do contracts with clients I had. We had one client that recently left because they thought they needed something a little bit different that was deeper in the business, and so they signed on with a different coaching group, but they had to enter a 12 month contract. About three months in, they realized that wasn’t exactly what they thought it was going to be, but they can’t get out of the contract for another nine months. And then I think, you know, in a case like what you described, like, I think if you’re looking at possible coaching, ask them what the guarantee is, talk to References, see if they have any any data, any case studies, on results people get, what are they willing to guarantee? And are they willing to do it outside of a contract so that if you’re not getting value, you can quit?

Brad Weimert 7:39
Yeah. I mean, I think best case scenario that’s true. I think pragmatically, there are a lot of situations where you’ve got the risk reward question, which is, you don’t know, right? And so you can say guaranteed, right, but you don’t know what the outcome is going to be. Some of that’s based on you as an individual and your performance, and can you hold yourself accountable? And some of it’s based on the coaching, guidance, interaction, etc, that’s always a question that you have to ask yourself. And in some situations, that’s very clear, and in others, it’s not so clear. Let’s look at groups. Let’s say that you’re a part of YPO, right? Yes. So something like YPO, there’s no guarantee, right? There’s no like, money back exchange of I’m going to be in YPO, and my business is going to get X amount bigger or better, or my life’s going to get better. So when you think about that, do you have $1 amount or threshold or some sort of mechanical reference point people can use for it’s it’s worth investing at this level?

Michael Erath 8:38
I don’t. I personally don’t look at that with YPO, for example. I don’t look at it as trying to prove myself $1 for dollar ROI. What it really is becomes about being part of that network like I’m also a member of I’m also a member of Genius Network. $35,000 a year to get. Is it? Now it is, yeah.

Brad Weimert 9:04
When did Joe bump it up? Joe is Joe’s the good old 25k guy forever?

Michael Erath 9:08
Yeah, it went from 25 to 35 literally about three months before I decided to awesome. You know, it’s one of those things where so I’m in my second year now with Genius Network as well, and that’s something I look at, that I’m willing to take the risk on the front end to be in the room, to build the relationships and get connected with the people that are part of that group, and then at the end of the year, I just kind of evaluate, do I feel like I got enough value out of this to Keep going? And in my case, absolutely, and so, you know that it, I think a lot of it comes back to what are the terms of how we work together. And if it is a, you know, if you are pre paying for a year of something, which you do with YPO, you do that with EO, you do that with with with Vistage. I believe in groups like genius. Okay, am I willing to. You, am I willing to make that investment? And am I willing? I think the more important key and you you hit on this, am I willing to do the work necessary to extract the value that I believe to be in that group or with that coach, or whatever the case may be, because you’re right. I mean, at the end of the day, efforts, your responsibility. It’s not on the coach, right? You go take golf lessons, but if you don’t go to the practice range and practice it’s not going to help.

Brad Weimert 10:26
Yeah? I mean, I think that that’s the, you know, I think the one of the few absolute truths is certainly for entrepreneurs, but I think everybody is, you have to take ownership of your own outcomes, right? Yeah, there’s always, always have some influence on it, not full control, but some influence on

Michael Erath 10:44
it. Yeah, yeah. No, you’re, I think you’re absolutely right. And that’s actually a quote, there’s a, there’s a fitness group out here. I think it’s called mountainside fitness that I where I saw this. But that’s the big, the big sign that got on the wall. It just says, effort is your responsibility, right? So we’ve, we’ve put that in all of our meeting rooms now, because it’s 100%

Brad Weimert 11:03
true. I love that. Sorry, I had to double click on that because I think about this stuff all the time. Like, I just ran into a, sort of a, I’m gonna call him a health coach, but kind of like a quarterback for health and like somebody that just runs point on, you know, everything from stem cells to diet, to everything, all your nutritional things, medical things, but 60 grand a year, maybe. And so I’m thinking about it. I’m like, that seems expensive, and I don’t know why that seems expensive to me, and it’s because I have no anchor for it, right, right? And so I’m trying to I’m trying to find other people that have some semblance of a framework to say it’s okay to spend five grand a month on a health coach, or that thing is worth 10 grand a month, or that thing’s worth two grand a month. Because I think as entrepreneurs, we’re good at rationalizing lots of things. So these frameworks that show you a path are very

Michael Erath 11:58
helpful, right? Yeah, exactly, because it goes thanks for no

Brad Weimert 12:03
framework for health,

Unknown Speaker 12:05
right?

Brad Weimert 12:09
But yes, okay, so the guarantee on the front end, with some coaching is some way you look at that, and then others, it’s just a risk reward, deal with it and assess it later.

Michael Erath 12:17
How many references do they have? Are you able to talk to references. I think that’s worth doing, because, again, it’s you need to do a little bit of kind of your own business intelligence before you run down one of these paths. And then, you know, we, for example, one of the things that I think is very important that a lot of our prospects and clients focus on is long term, whether they have, you know, a specific plan for liquidity event or exit or, you know, they just want to really get the business in a stronger position to hand it off to the next generation. We’re, they’re always looking at what’s kind of the estimated enterprise value of my business. And so we did a case study of the first it was, it was the first case study we did was 20 clients that had been with us for five consecutive years, and we looked at from the time we started until where they were after five years. We looked at lots of different financial data, and the they basically on average across nine different industries, 20 companies, they were doubling revenue every three and a half years, but doubling dollars of profit every two and a half years, and estimated enterprise value based on common market multiples, on average, those companies grew their enterprise value 5.9 times over the five years. So that starts to give you something where you can look at your current estimated value and start to extrapolate if I if I perform at the average level of the clients in this study, then this is where I could expect to be. Again, you’ve got to do the work, but it’s another way. We’ve tried to create some data to help people wrap their minds around because I think going into any of these investments, it’s even like investing in people like, what’s, what’s the marginal value gained relative to the marginal cost, and as long as that equations in your favor as the buyer, it’s for it’s essentially free. I mean, I like to say a players are free, and they come with interest free financing, which kind of gets into some of what we teach. But if you think about in an organization, anytime you upgrade from a mediocre performer to a true a player, the marginal value is so much greater than the marginal cost you had to spend to upgrade to an A player that they’re free. And if you pay them over 24 pay periods at 0% interest, you’re financing the investment, but you’re getting a lot of the value in those first the first one or two quarters.

Brad Weimert 14:46
So there we go. That is a good framework. So I think that most of the time, first of all, what like 2% of entrepreneurs think about the enterprise value of their company, because 2% of the entrepreneurs are actually thinking about the. Exit and structuring things for the exit or sale, right? So I think that that’s a in general. That’s a really good takeaway and good thing for people to think about. And then the other is the reality that these aren’t expenses, they’re investments, and the the rate of investment can be pretty dramatic if it is the right investment? Well, let’s back out here. So the starting point of your journey, in my head, is jumping into your company’s family when it’s company family business, when it’s at 8 million and growing it to 45 million. Global Enterprise. Tell me how you got to the point of jumping in, what experience you had to jump in and take over the business, and what you did to grow it? Yeah,

Michael Erath 15:44
so, so I started, gosh, I mean, in high school and college, working summer breaks and spring breaks and things like that, just, just working in the business. My wife and I started dating at 15, so I needed money for my girlfriend, so I so I needed a job, and so I worked in the business, but really enjoyed it. And there was a in all in all honesty, I think I mentioned this in my first book, but there was a point in time in college I was really fascinated by anatomy and physiology, and thought about possibly going into medicine and possibly being an orthopedic surgeon or something like that. But in all honesty, when I looked at the path it would take to do that, versus I can go party and have fun in college and family business, that was really the easier, more logical route. But in so my so I mentioned my wife earlier. We got married at 22 right out of college, and we had a management change at our manufacturing facility in Virginia. We lived in North Carolina at the time, which is where our sales offices were. We manufactured hardwood veneer, and so I’m we decided we didn’t have kids yet. We moved to Virginia, and I got involved in the manufacturing part of the business, which I fell in love with. But that was also that was in the by that time, it was the late 90s, and that was a time where a lot of the furniture manufacturers were moving offshore. So when I first started, most of our customers were big furniture manufacturers, and they were in North Carolina and Virginia, so we were right in their back door. When they started all moving to Asia, we had to reinvent ourselves and become more of an export business versus a purely domestic business. And so that started the process. And then one of the things that I started to realize, sourcing the raw material was a big challenge for us, so I wanted to vertically integrate the business and get closer to the raw material so we had more control over that. And that’s when I brought on this business partner who had a background in timber merchandising. And so part of that vertical integration, we set up a subsidiary company that he was the managing director of, and we began buying standing timber, managing all of that. And as we would harvest timber, he would merchandise through the company. He was running all of the all of the logs that we did not want to produce into veneer, and then we would keep the best logs to produce for ourselves. So that’s kind of the vertical, vertical integration that led us into lots of Yeah.

Brad Weimert 18:09
So you went from manufacturing, is what you’re manufacturing, the basics of furniture at that point and selling them to furniture

Michael Erath 18:18
companies. No, thank you. So So in hardwood, in furniture that’s finished with hardwood veneer, the veneer that we would produce is the higher end face grade veneer that goes on the surface. It would be laminated to plywood or other oriented strand board or other substrates, and then that would be used. So imagine like, if you go into your kitchen and you look at the end panels on your kitchen cabinets, those are likely panels that are covered in veneer, and inside those panels is plywood. So we took hardwood logs, and our manufacturing process actually sliced the sheets of veneer. And so we were slicing sheets anywhere from 1/50 to 1/42 of an inch thick, and we were selling that product to companies that would then use that to make furniture, to finish the surfaces their furniture

Brad Weimert 19:07
crazy. Okay, so you’re you’re slicing logs into tiny pieces, selling them to people that are manufacturing furniture, correct, right? And then you decided that you wanted to vertically integrate to go get the trees and cut the trees down and get the logs

Michael Erath 19:22
right to give us more control over our raw material inputs.

Brad Weimert 19:26
Okay, so this is, I mean, vertical vertical integration, super common amongst businesses, specifically manufacturing, but tons of businesses also somewhat crazy, because I imagine you had not been chopping down trees in your past so far right?

Michael Erath 19:44
And that was, that was an area that was not an expertise of ours, which is why I, which is why I brought on a partner who had expertise there, who ended up being the partner that I became best friends with that ended up embezzling over half a million dollars. That ended up committing bank fraud, and both both businesses were working with the same lender, so when we discovered his fraud and embezzlement and went to the US Attorney’s Office and to the bank with that information, the bank immediately froze all accounts in both companies because they needed to protect themselves and figure out what the heck was going on. And that started to lead us down that whole path, which was, this was in November of oh eight. So if for those of you who remember the that housing market collapse, it was kind of the summer of oh eight was when the first pains of that started to hit. And so we were going through this right as it was starting to really, really unravel.

Brad Weimert 20:43
Wow. So I want to ask some questions about, how about that situation? But first, why don’t you tell me kind of where that led? So the oh eight housing collapse was the underpinning of that collapse was a super messy financial market, right? Was so all the banks are in dire straits. Some got bailed out. Many collapsed. So for this to happen, as that’s happening, is would explain the banks being freaked out and not being very compassionate, right? Options for that matter?

Michael Erath 21:18
Well, and it’s interesting you say that, because the way I got through that was was pretty fascinating, and this is what I wrote about my first book, rise that came out in 2017 but when, when we discovered all of this on the manufacturing side of the business that I was running about a year and a half prior, we had taken out a $6 million dollar term note with the same lender to add some new equipment expand the factory, because in Oh 607, the economy was cranking. Things were great, and so we were building to increase our capacity. The dynamics of all of this, my father had passed. He passed in 2003 my mother had she was part of the company when we took out the term note, but between that time and when this collapse happened, we had transacted her out of the business as part of our estate planning. So when this happened, she was hung on the guarantee of the term note, but no longer had equity in the company that she was stuck on the note for. So my mother, fathers passed my wife and I, my mother, are on this this guarantee, and we find out that my business partner has been committing bank fraud. So I had to figure out, number one, how to try to avoid bankruptcy, because I didn’t want them going after my mother. I didn’t want to put her in that position. And I, of course, didn’t want my wife and I having to deal with that. So because of the chaos the banks were dealing with, I went to the special assets group, and with all the brand new equipment we had bought, if they had forced bankruptcy and auctioned us off, they would have gotten nothing, literally nothing, because our industry was so small, the equipment was so expensive. So I offered if they would give me just enough liquidity to keep the doors open, I would stay on board and unwind the business over time for their benefit. And while I couldn’t guarantee what we could do with that, it would definitely be better than bankruptcy. And I think because of the chaos they were dealing with at the time, we were viewed as one less fire to fight. So they they allowed us to kick the can down the road, and it took about 18 months, and I had some incredibly fortunate breaks. I had luck on my side for a little while, and was able to get the bank and the creditors made whole. My wife and I took the haircut, but I spent 18 months meeting twice a month with the special assets group of SunTrust Bank, which is now part of truest and that was an amazing it was painful lesson dealing with special assets, but it was an incredible lesson in terms of what I what I learned and went

Brad Weimert 23:51
through, through that, you know, I would say, like, one of the immediate lessons that’s relevant for entrepreneurs is there’s always a negotiation to be had, And sometimes people think that, you know, a huge corporate bank, you can’t talk to them, you can’t negotiate. But the fact is, in in life, there is a human at the other end of everything, and so there, and there’s a win lose for everybody. And so the question is, what’s the lever and negotiation to have?

Michael Erath 24:19
Yeah, yeah. Lever is the right word, right? Word, right? I like to say leverage is a great thing to have and not need to use, you know? And so I was in a situation where we didn’t have much leverage, but what I was able to find was kind of that, that one lever that we we owed the bank enough money that if they wrote basically the whole thing off, it was going to hurt. And because of the amount of chaos they had going on, my leverage was if I can remove from them one more fire to have to deal with, then that may give me a pathway. And at the same time, because this guy was my business partner, you know, the first 24 hours. Everybody thinks, Okay, everybody that’s involved is in trouble here. And so through the efforts we made, and like one of the very first things we did is we hired a gentleman who was a former FBI forensic accountant. He spent 20 years in the bureau and was now doing private forensic accounting investigations. He came on board and spent three days working with my CFO. So the day that we did go to the bank and the special assets group, I had a retired FBI forensic accountant on my side. We had our legal team there, and we were very quickly able to make it clear and get the bank and the US Attorney’s Office on board that I had also been duped and defrauded in all of this. And so they, they quickly got to a point where they realized that I was on the right side of this. I was working to try to help them cooperating in all the investigation and helping the bank try to recover as much as they could. And so I think it’s also, it’s one, you know, what are your points of leverage? But also, you know, really trying to do the right things for the right reasons, and trust that in time, while that may be difficult in the short term, it does often work in the long term. Yeah,

Brad Weimert 26:20
I love that. I think that my personal experience has been that when you focus on the return on relationship, even when it’s in a very difficult situation, and it looks like you’re going to lose your ass as a result, focusing on the relationship as opposed to the finances, often yield a better result.

Michael Erath 26:44
It’s a great point, right? You said it earlier. There’s a human on every side of every transaction. And we are emotional creatures. We’re relational creatures. And there’s something powerful at play there,

Brad Weimert 26:54
yep, and sometimes it the benefit happens in the short run, and sometimes it’s a very long horizon, right? When you play the return on relationship game. But for most of us, life is long, and there are a lot of cycles of life, a lot of lessons to learn, a lot of chapters, and people show up again,

Michael Erath 27:14
right? Yeah, and to your to your point, where that left us was when we started the new business. In the wake of all of this, we were able to maintain our home, so we sold our home. We moved to Ohio because there was a contract manufacturer, so we started to outsource our production, but we were able to save our home and move into an apartment and take that equity and use that to restart a business. Also because we had avoided bankruptcy, my credit had not been affected. So we were able to get a small business loan. We got $100,000 line of credit, and were able to restart. We were able to pull together enough capital to start a new business that’s big.

Brad Weimert 27:55
Well, speaking of return on relationships, the other side of this is you have Who was your best friend business partner committed fraud? Yeah, and this is correct me, if I’m wrong, but this is fraud that put him in jail

Michael Erath 28:07
to took four years for him to finally be prosecuted, but the wheels of justice grind. Grind slowly, but they grind very fine, and so he did spend two years of a two and a half year sentence in federal prison as a result. Yeah,

Brad Weimert 28:26
I wanted to put a point on that, because people throw terms like fraud around, and there’s a difference between, you know, some sloppy bookkeeping and even malicious intent and prosecution and landing in federal prison as a result of your actions. Right? Exactly. So What lesson did you learn from that experience in picking that business partner and doing business with somebody that ultimately yielded that result?

Michael Erath 28:56
So he and I became friends very quickly. He was a few years younger than me, really gregarious, fun guy, and so one of the things that was a was a weakness and a blind spot for me at the time, was things that in terms of how I structured the reporting relationships and the leadership of the business, what was logical and what I should have done versus what I did as a result of our friendship and me overly trusting Him, for example, because we had two separate operating entities in the manufacturing business, the family business that I was that I was running, we had a CFO in the business that he was running, we had a controller, but at his request, I had the controller directly reporting to him as the Managing Director, not reporting to my corporate, CFO. And so it started to create a little bit of a curtain between the companies and one. Of the things that was uncovered in the investigation. So he was what originally, or what initially got him caught, was he was signing falsified borrowing based certificates to a federally chartered bank. So that was the fraud that they eventually got him on. But prior to that, the controller was signing those and in the investigation, we realized they had two sets of financial statements, and every month, they would play games with the numbers to determine what they would send me versus what was actual. So as part of that investigation, right if, if the controller had been reporting to my CFO, I think we would have had a check and balance in place that would have made this very difficult to pull off, if not impossible. And one of the things that came out in the investigation, it was it was alleged, and there were witnesses alluded to this, that the two of them were having an affair, because why would the controller do something she knew was fraudulent and a felony for his benefit when there was no financial interest or no gain for her. And so, I mean, it was bizarre the way all the pieces started to kind of come together when, in hindsight, we we were able to look through the investigation and and unravel all this. Do you

Brad Weimert 31:18
remember what the FBI forensic encounter, account accountant cost you,

Michael Erath 31:26
I don’t, and I it, it was immaterial at the time, because this guy was so good, and because of his FBI background, he had deep relationships with the US Attorney’s Office. And back to your relationships, right? I mean, as part of our legal team, my corporate attorney advised me to pay for an ad to the legal team a criminal defense attorney, because that one, the criminal defense attorney, also had a relationship with the US Attorney’s Office, but also he would be able to guide and predict what my business partner and his legal team were doing in terms of how they were trying to position things. So I know it was in all I’m sure it was over, well over $100,000 in the grand scheme of things, but I had a corporate attorney who was also a friend. I had a criminal defense attorney. I had an FBI forensic accountant, a retired FBI forensic accountant, as part of our legal team guiding my CFO and I. And to me, it was again, it was like I had no idea how to navigate this. I’d never been through something like this before. I was terrified as to where it was going to go and what was going to happen, and those are the right people to invest in having around me. Yeah,

Brad Weimert 32:51
that makes total sense. You’re also, at this point, at roughly 45 million here in revenue. What’s margin like on a company like that?

Michael Erath 32:59
So we were in that business. It’s very much a high volume, low margin business. So if we were operating on, you know, three to 5% at the end of the year net operating income, that was not a bad year, which really went, you know, you didn’t have a lot of room. You know, you catch a cold and you’re losing money fast, yeah.

Brad Weimert 33:23
I mean, anytime you’re looking at three to 5% you have to have things running very well, right? Yeah, I like businesses where if I fuck up too much, there’s still margin,

Unknown Speaker 33:34
right? Exactly.

Brad Weimert 33:42
Yeah. Insert funny advertisement here, or just check out easy, pay direct. It’s epd.com, forward slash, bam, and you can find out about credit card processing for your business. Lots of our guests use us for credit card processing, and this seemed like more fun than writing a scripted ad. Okay, so this, this company collapses. You move to Ohio apartment, you have some equity, you take out a line for 100 grand, and this is where you start the next business that you get to 7 million in four years, right? What’s that business? And where did EOS fit in in this process? If it does

Michael Erath 34:21
so, it was the same industry, manufacturing veneer. We didn’t do a lot of timber trading. We weren’t buying timber. We didn’t have the resources for that anymore. But there was a contract manufacturer outside of Columbus, Ohio, and so I kept I kept one log buyer on the procurement team. I kept one sales person, and my wife and I, and basically, kind of bootstrap from there. And so we would buy logs, we would have the production of the veneer outsourced, so we were only paying a unit cost for that. And then we were, we had a small warehouse, and we’re selling product. I had done some things when I was in YPO, in the manufacturing. In the family business. We had been through mastering the Rockefeller habits, which was kind of the precursor to scaling up. I had done top grading. I had implemented that in our business. So I done bits and pieces of different things that were components of but not a holistic operating system. And I, at that time, I didn’t qualify for YPO anymore, so I transitioned to EO in the form that I was in. We read the book traction together, which is the book that really explains EOS. And I felt like it was something I could understand and I could customize, but I liked the holistic approach, and it was pretty simple. So I decided to self implement that. And that’s where as I was going through the self implementation i There were, for example, there were people tools from top grading that I felt like were much better than the tools EOS offered to help you get people right. So the concept I loved, but I decided to swap out some of the tools, because for me, it was a better fit. And so what ended up happening is, as we were scaling from zero to 7 million, and that was when we made the Inc 5000 when I made it for the first time, I was just building this kind of customized, built for me, version of Eos, versus taking the prescriptive route and just doing exactly what pure EOS would be. So by 2015 I was just at a point where I was really getting burned out on the industry that I was in after everything I had kind of endured through that, and it was still a very low margin business, even outsourcing the production the way we did. And I just wanted to get out of that. That space. One of my EO colleagues had a furniture business that happened to be in Columbus as well. He was trying to self implement Eos, but was just all over the place as a visionary and couldn’t really get it done. So he asked me, since he had seen me doing it, well, could I help his team? And so I just kind of offered to start working with his team a little bit, and fell in love with taking everything I had learned up to that point and being able to be on the other side and teach and coach and facilitate. So that’s when I decided, You know what, I’m going to exit this business. So I exited that company in Ohio and started, initially working as an EOS implementer, and was very successful in that, in large part because of my background. People wanted to work with me, specifically because of what I had been through. And in 20, I think it was 2019 I’m sorry, a little bit earlier that Gino Wickman, who the founder of Eos and the author of traction, sold to private equity company. And as often happens, things change when private equity gets involved. And so few years later, I think it was 2020 EOS transition from a license agreement with the the implementers, which allowed me to paint outside the box and teach other things if I wanted to. They didn’t like it, but they couldn’t control it. They transitioned to a franchise model, and the franchise agreements precluded any of that. And so it would have significantly devalued me, because a lot of what I was doing to help companies go beyond just Eos, I would have had to stop. So that’s when I decided I’m out. We’re not values aligned anymore, and that’s what was originally the birthing of next level growth and these five obsessions of elite organizations

Brad Weimert 38:15
Awesome. Well, I want to dive into that, but before I do, as a human, going from, you know, 45 million in revenue being a part of YPO to going through near bankruptcy, starting over, functionally being kicked out of YPO, right? Not, not qualifying anymore, right? You, you go into a group down is the perception in that hierarchy, emotionally as a person, how are you going through that? And what’s your mindset in that, in that situation, and how are you tackling, hey, I’m going to start a new business.

Michael Erath 38:54
So we, I think the first, the first several months, when things started to unravel with the family business. It was just shock and just trying to, trying to find some equilibrium, because everything was just just upside down. But I got pretty clear early on, and my wife and I were very aligned on this, that we just we took the approach that we needed to live, to fight another day. And that really got us through those early days. And it was interesting the conversation I had when we moved to Ohio. I was talking to a couple of the YPO board members in the chapter there, and there was a, there was a grace period by which I could have re qualified, and at this time, I’m really focused on this, you know, this small business that I’m starting outsourcing. But one of the so I was pretty confident I would get to the revenue number I needed to to re qualify. But the other side of that equation was a minimum of. 50 employees. And with the new business model and outsourcing our production, I had no interest or no desire to get back to 50 or more employees. It wasn’t necessary for the business. And so that was the reason that I wasn’t going to qualify. And so that made it a little bit a little bit easier to transition out. And the Columbus chapter of eo is a fantastic chapter. It’s a very strong chapter. And so I was able to get into a really good form group, and made that transition in it. There were parts of it where, yeah, it felt like, I mean, I’ve got my tail tucked a little bit after everything I’ve been through. But what I started to find was, the more I shared my story, and this is why I ended up writing my first book, which was all about this. The more I shared my story with entrepreneurs, the more people said, Man, I’ve never told anybody about or I don’t talk about it, but I had a similar thing happen. Here’s my story, and it literally is, like four out of five entrepreneurs I talk to, if they’ve been doing it for more than 10 or 15 years, like they have similar stories, maybe different scale and things like that, and I started to realize that there was actually a lot of power in being vulnerable and open about what I went through, and sharing those details. And that actually gave me, I think, a lot of momentum and positivity, because I realized it felt like a weakness to me, but in reality, it wasn’t perceived as that by others. That was that was just my own negative self talk. And so the more I could embrace that and communicate what I’ve learned from it and how it’s helped me grow, the more it actually became a strength in the long run.

Brad Weimert 41:39
Yeah, what a good lesson, man. Yeah. I mean, look, I think that. I mean, I don’t think it is true that we have no idea what’s going on in other people’s lives, right? And most of the world doesn’t put their heart on their sleeve or, you know, turn all their baggage inside out. But you better believe we’ve all gone through our own issues, right? Yeah, that’s great. So let’s dig into the EOS stuff you went through. And are a certified EOS implementer and a scaling up coach. You articulated before that you did some alternate version of Eos. The first time you went into it and started using it, I think that basically, every single company I know that runs on a framework does some perverted version of Eos. It doesn’t follow it to the letter. What are the fundamental flaws in EOS and scaling

Michael Erath 42:37
up? I think, I think what this really boils down to is it’s a fundamental flaw with anything that is a highly prescriptive system. So if you think about a lot of business coaches, they’re they’re tied to a specific system or product, and so that’s kind of the thing they’ve got to sell. And when you leverage a prescriptive system by default, primacy is always put on the system and trying to force fit you into that system and into that mold. And that’s what we started to realize, is if we want to flip that on its head, and we want to put primacy on the user and on outcomes and on the goals they want, and we want the system to be a secondary byproduct, we’ve got to think more in terms of principles and less in terms of I need to come to you with a system. I need to give you. Here’s 20 tools I’ve got, right? And you got to use these tools, because these are the tools that are going to help you. It’s really about backing up and looking at a principled framework. And so these five obsessions are based off of five principles that if you truly want to build something elite, I believe you need to have an obsession about these five principles. And if you do that, it doesn’t really matter what tools you use to be excellent in these five areas. It doesn’t matter what systems they come from. It doesn’t matter if you created it yourself, if you borrowed it from somebody else, or that’s irrelevant. It’s about the it’s about executing that principle to a high standard. And so we we’ve curated over 100 different tools. I think there’s 20 in the Eos toolbox, but there’s so many different things in the public space that can be helpful and valuable, and so many thought leaders have written so many great things. We really focus on how to take a lot of these concepts and find ways to operationalize them in a way that’s custom fitted to the individual company, the culture of that company, the industry that they’re in, and that creates something that will scale with an organization as it grows. Because it’s not there’s not just one tool or one way to do things. Yeah.

Brad Weimert 44:59
Yeah, okay, so let’s, let’s talk about the five obsessions framework. So this is your framework, which, by the way, it takes some goal to say, Hey, I’m going to create a better framework than the other people that businesses should follow. Now, what you just said, I think, is an interesting way that I would internalize and rationalize it. Because what I think you just said is, I don’t have the prescription for you, what I have is, are the fundamentals that I think will help you build your business? Okay, so that that’s, I think that that’s a, like, a very interesting difference between, hey, I have a better system to run versus I have a better approach to take to run a business. Tell me about the five obsessions framework.

Michael Erath 45:41
Yeah. So again, if you, if you, if you don’t focus on the tools and the system by which you get there, I think. And again, the other, the other differentiator, I just want to share this really quickly. There’s a really good video. It’s on our YouTube channel. It’s less than a minute, but it’s Nick Saban talking about what he calls five choices. And he talks about this idea that we all have five choices in life. And what he says, and this is what really helped lead me to this elite organizations idea. He said we can choose to be bad at what we do. And unfortunately, some people, I think, do that. We can choose to be average, we can choose to be good, and most people are satisfied with being good. But he said You can also choose to be excellent, or you can choose to be elite. But if you choose to be excellent or elite in something, you have to have a different and special discipline and focus and drive and commitment to do things to a very high standard all of the time. And if you don’t have that, you probably never get past good. And so when, when I started to look at, even when I was was working as an EOS implementer, there were people who literally would want to hire me to help them with EOS. And their reason. When I asked them why was, well, my forms doing it and it feels like something I need to do too, like that’s not a very good reason. You’re not going to do the work. You’re not going to push that hard if you’re doing it, because everybody else is so if you really want to be elite, I think you have to have an obsession around filling your organization with great people. You know, Jim Collins writes a lot about this conceptually, but good to great doesn’t give you a path to actually go do it. And so what we’ve tried to do is we’ve tried to fit together lots of different ways that you can consistently over time, hire, recruit, hire, retain, develop people into a players, and have systems that coach people up or coach people out, both culturally around your your culture, your purpose, your values, and also performance within their roles. So really figuring out how to systemize a way to obsess about filling the organization with great people. But then secondly, the second obsession is what we call an inspiring purpose. And it’s not only about the external marketing, but it’s also about internally marketing. So if, for example, Brad, if you came to work for our organization, and you were a great alignment with our core values for the role you were hired into, you had the skill sets to perform to a high level. If we can communicate to you an inspiring purpose, that you can form a personal emotional connection to around the work that we do and why we do it, you will always bring more energy and passion and creativity to your work because of that emotional connection, and I think that’s an area as leaders we often miss, is really internally marketing to our team, our messaging and who we’re serving and why we’re serving and what we do. And even in heavily commoditized businesses, I still find that oftentimes we are able to get to a true, inspiring purpose. Sometimes it’s just more internally focused than externally, so really working through and solving for that. And then the third is optimized playbooks. So if we have great people, they’re driven and motivated around an inspiring purpose, and we give them optimized playbooks that really helps them with the systemization of how we do things. It helps free up their creativity, because we’ve standardized all of the normal, predictable things within the business. Think about any any professional sports team, right? Nobody would go on the field without having play books that they’ve studied and knowing who’s responsible for and doing what when we run plays the fourth is a culture of performance. And this goes back to that idea of, I think we have to have clear expectations with people. We have to have the right data and people, people need to know, are they winning in their role? Is their team winning based on what the mission is and what we’re trying to accomplish as a team. Do we know the score? Do we have all of that and when we’re not winning and when we are missing or underperforming in certain areas, having a system that fits our culture, that’s aligned with our values, that exists to support and coach up people who are coachable, but to coach out people who aren’t you? Which then helps reinforce the great people obsession. And then the fifth and final is growing profits and cash flow. And it drives me absolutely crazy. I hear people so many times saying that, you know, profit and cash is a byproduct of doing everything else, right. And personally, I think it’s bullshit, because if you treat profit and cash like a byproduct, it always will be. And if you’re not intentional about understanding your pricing strategy and being intelligent about it and looking at cash conversion cycles and how you leverage capital, if you’re not really focused on the financial strength and health of the business and improving that over time, that’s the fuel that goes back into fulfilling your purpose. So if you really believe in your purpose, you need to be very focused on growing profits and cash flow, because that’s what allows you to do more of your purpose and expand on that.

Brad Weimert 50:51
So, yeah, I got people, purpose, playbooks, performance, profit. Yes. Got the five Ps,

Unknown Speaker 51:02
right? Those five areas, right? I like it.

Brad Weimert 51:05
So, I mean, I just had a conversation about this, but profit, I very deeply resonate with that element. And I talked to the our team internally at easy, pay direct and also in other companies that I participate in about executing the client experience. And if we in part of executing client experience for us is our clients generating revenue. So we’re doing, you know, credit card processing for 1000s of businesses, and if they don’t ever use our product, meaning we don’t get them effectively through the client experience, they don’t have a good experience, and we don’t make any money. And if we don’t make any money, the company can’t take care of the team, and it ceases to have a purpose, right? You need that profitability to work to do that, right? But you also said in that in that section of these five Ps, it’s growth of profit and cash flow, and the focus on that whole thing as its own element. At what stage in business should you be heavily focused on your pricing strategy and optimizing pricing versus some of the other Ps, where you’re just fucking focused on growing.

Michael Erath 52:28
So I think, you know, in the very early stages you’ve, you’ve really got to be focused on, is this something that I can grow? Right? Does the market really want this? And so, you know, there’s that kind of start up to a million dollars or so, where it’s really a lot about proof of concept, and you’ve got to prove that you have something that can scale. But then I do think as you start to get beyond that point in the one to five, five to 10 and beyond, you have to periodically be coming back to really looking at that. I mean, it’s interesting. I’ve got, I’ve got companies I’ve worked with that are, you know, 50 to $100 million and I’ll ask if they can, you know, help me understand your pricing strategy. And they look at me like, I’m asking them a quantum physics question, right? It’s, and it’s like, well, so how do you determine your prices, you know? And it ends up, you know, there’s not a lot of strategy behind how they do that. You know, when you’ve got sales people who are quick to offer discounts, and one of the things that I have in the book is there’s a there’s a table that shows you, based on your gross margin, how much if you raise prices by various percentages, how much volume you could afford to lose and still generate the same dollars of gross profit, which is what you’re covering your expenses with. But then it also shows you, and it’s actually surprising, most people will never lose the volume that they would have to to not be able to raise a price. Conversely, it shows based on your gross margins, if you offer 5% 10% 20% discount, how much you would have to grow your volume for that discount in order to generate the same gross profit dollars. And there’s some wild numbers in there, I think, for example, if you’re a you know, like, I think it’s like at a 50% gross margin, if you offer a 10% discount, you have to grow your sales like 20% to not cannibalize and lose gross profit dollars. And so it’s those are some things that people just don’t often think about. And so the decisions are not, not really made through the right lenses when they go do these things.

Brad Weimert 54:34
Yeah, that’s awesome. And that’s, I think that’s another really good takeaway for people is to actually do the math, run that stuff, and you said, don’t think about it. And, yes, don’t think about it. And even if it does cross your mind at some point that most, I think, sadly, most people quickly form an opinion based on somebody else’s narrative or feedback, and don’t bother to do the math internally. Themselves, and I mean both literal math and also just the homework research study to come to their own conclusion Exactly. That’s great. So what tools and structures do you have inside of the framework that allow people to execute this?

Michael Erath 55:18
So, you know, we’ve got, when we work with clients, we have what we have found to be best practices within each of these areas. So for example, I really liked the EOS concept of an accountability chart versus an org chart, because I believe that most of our frustrations with people are the result of unclear expectations. And so if we can, you know, so job descriptions create clear expectations, but they’re several pages long. Nobody ever remembers what all is in their job description, and they never look at it after the interview process. But at the same time, the EOS accountability chart, if you read the book traction, and you look at the examples, they say things like a Director of Operations, one of their roles is make the product or deliver the service. It’s such a vague statement that it’s difficult to create accountability around that. So one of the things we tried to do is say, Okay, how do we take the beauty of the accountability chart is that it’s not overly complicated, and it creates more clarity around who’s accountable for what and how we hold people accountable. So we decided a way we could evolve that is to have three components of an accountability chart seat. So take the same director of operations. We establish what we call a mission, which is a one one sentence, a one short sentence that describes the high level, consistent deliverable required to be successful in the role. So it’s a descriptive, qualitative statement that we can begin to build a measurable around. And so every role in your company, I think you should be able to explain, if we’re going to contribute salary dollars to go hire somebody to put them in this seat, what’s the mission for that role, right? Let’s get clear on that, because then if we understand that, the second component is what we call a most critical outcome. And so the most critical outcome is a lagging indicator, not a leading indicator, that proves number one, success in the mission, but number two, something else I think most entrepreneurs don’t measure is return on investment for the person in the seat. So if we’re going to pay somebody a certain salary, fully burdened, and we know what we’re investing in that seat, what is the outcome that we can measure that, if achieved, would prove we’re getting return on that investment? Because again, I think mathematically, we need to understand, are we getting ROI on people? It’s the it’s the biggest expense in most companies, right? Is our payroll fully burdened? So once we know the mission most critical outcome, then we look at the three to five obsessions within that role. What are the buckets of responsibility they have to obsess about on a daily basis? So where EOS would say, make the product, we might say for that Director of Operations, one of their obsessions would be to own the operations playbooks, execution and outcomes. That’s how we make the product. But that gives me something much more specific. So for example, if if you came to work for our company and you were Director of Operations, and that was one of your obsessions. I can now sit down and have an intelligent conversation with you about what the expectations are. Do we have all of our operations playbooks in place because you own them. So if not, you’ve got to get that done. Number two, are they being properly executed? So have you built out the training? Have you. And so it just starts to get us down into deeper, more acute areas. We can have conversations to coach people up, coach people out, get the things in place that we need by adding that level of clear expectations. There’s lots of examples in the book, so that’s the idea of a framework. But then it gets very customized to the individual company, the individual roles.

Brad Weimert 59:07
Awesome. Yeah, I couldn’t agree more, relative to expectation mismatches being the core of most discontent and conflict with humanity.

Michael Erath 59:18
Yeah, it’s in our personal lives, professional lives. It’s all the way around. Yeah.

Brad Weimert 59:24
So one of the things that I found interesting about the five obsessions of elite organizations is that you have an AI companion that goes along with it. Tell me about how that intersects. So five obsessions of elite organizations, is the book that you wrote about this structure that walks through these things, and then you rolled out an AI companion with it. Tell me how you came to that, and what technology you used, and how you see that fitting in with the book.

Michael Erath 59:55
Yeah, no, I appreciate you bringing that up. So I got the idea. Actually, this was one of those ideas that came. Out of genius networks, you start thinking about, what’s the ROI on my investment? I would have never known about this, or it would have taken a while had I not been in that group. But Joe Polish started building an AI clone using a platform called Delphi, and that’s the platform that I used. And I learned a fair amount from Joe about it, and then what I started to realize was, with this book launching, what often happens so take, you know, you mentioned that a fair amount of your audience is still kind of in that proof of concept. They’re in the early stages of a startup. A lot of people in that stage are voraciously reading books. They’ve got a high thirst for learning, and they’re looking for things they can use in their business. So at that stage, you can buy the book, and you can try to figure things out for yourself based on what you read in a book. Or on the other extreme, you can go hire someone who is a coach in whatever that thing is, you know, or a guide in our in our case, but there’s kind of nothing in the middle. And so the idea with the AI clone was, if somebody either can’t afford to work with one of our partners, but really likes the concepts and likes what we’ve created as a framework, or maybe they just don’t want to right, some people just want to, want to do it themselves. And that’s perfectly fine. They could for a very inexpensive price. I think it’s $20 a month right now. They could subscribe to the clone, and they could take what’s in the book, and they could communicate with the clone, which has been trained on everything I’ve ever written. All of the content we give to our clients is in the training for the clone. So if they have a role that they’re trying to figure out what’s the right mission, what’s the most critical outcome I’m having? I’m stuck. I can’t figure it out. The Clone will iterate with them and help them figure that out, and it will give them suggestions based on its knowledge base and learning.

Brad Weimert 1:01:51
I mean, we’re still, you know, it’s end of July 2025 when we’re recording this. AI is rapidly changing, getting significantly better every day, it seems. But we’re all just figuring out kind of where it fits into business and where it fits into life. From a financial perspective, for you, so far, how is the implementation of the ai, ai element impacting your business? Are you selling it effectively? Are a lot of people using it? What kind of feedback are you getting? I mean, I think that the bet is that it’s going to be a good thing down the road, or it’s going to be a good thing over the course of the next year, or 235, how is it right now?

Michael Erath 1:02:35
So what I’m finding is the adoption is very low initially. I think people just aren’t used to this, right? It’s just a new thing. I have had a handful of people that have gone pretty deep with it, and I’m able to see on the back end all of the conversation. So if there’s a response that I want to update, I can update it, it notifies the user, and it updates the learning. But it’s been really good in terms of quality, but also it’s something, you know, from a marketing perspective, we’ve been more focused on the book launch. We’ve been more focused on, you know, we’re up to 10 partners and guides now helping, helping them get, get their calendars full. So it’s not been something we’ve been promoting heavily. It’s, it’s mentioned quite a bit throughout the book as an additional resource. But I think that’s something that will be more moving into next year, we’ll be promoting more heavily. And one thing that, and this is on Delphi side, they’re transitioning to a new studio. Currently, I cannot, I cannot have both a subscription model and free accounts. The new studio will allow me to have a VIP level where all of the leadership team members of all of the companies I work with, I’ll be able to give those leadership team members free access to the clone and still have a subscription for people who aren’t actually clients. And the goal there is, I think, that will create because these are people that are already going down our path and working with us, it will create a lot of engagement with the clone, and I, my hope is that then that’ll help us get testimonials and some videos and things to begin marketing it a little bit more more broadly.

Brad Weimert 1:04:13
Yeah, that makes sense. In your signature line of your emails, you say, if you’re not changing it, you’re choosing it. Which I love, what’s something that a lot of entrepreneurs seem discontent with, that they’re actually choosing

Michael Erath 1:04:31
the the acceptance of mediocre performance. It’s one of the most common things I see. And Dr Jordan Peterson made a great statement. He was actually one of the one of the speakers at the last annual Genius Network event, and at one point he was talking about his view towards his team and the people he surrounds himself with. And he just made this statement that really resonated. He said, enabling failure is not a noble cause. Things. And I think as humans, we often are reluctant to have difficult conversations around performance when it’s not meeting expectations, because those are not easy and comfortable conversations, and so we we rather avoid them. And in essence, we tolerate the mediocrity. And sometimes we do it because we want to be nice, or whatever the case may be, and it’s it’s just you will never build anything elite if you don’t have very high standards, very high expectations and live up to them yourself, but also require those around you to live up to those same standards. And that’s where it goes back to the coach ability. I think if that’s the kind of organization you want, you want. You want something truly elite that can become a category of one in its space. You have to be willing to coach people and invest time in supporting people who prove to be coachable, but you also have to have systemized within your business, how you expunge people who prove to not be coachable, who won’t take feedback, and you don’t maybe have the aptitude to level up into what you need from them. And if you have too much of that, then you probably have a recruiting problem, and you need to fix your recruiting strategy and processes and so but yeah, I think, I think the acceptance of mediocrity is is a cancer in most entrepreneurial organizations, that keeps them as organizations mediocre at best.

Brad Weimert 1:06:27
Yeah, I love that. Allowing people to be mediocre isn’t being nice,

Speaker 2 1:06:33
right, right? No. So

Brad Weimert 1:06:37
avoiding that said, another way avoiding the tough conversation isn’t being nice to those people, it’s facilitating their perpetuated media mediocrity. Right? Exactly? What advice do you have for a 25 year old entrepreneur starting out,

Michael Erath 1:06:52
try a lot of stuff. You know, 25 years old, think about what really excites and brings excites you, and brings you energy that at the same time you’re very good at, and if you can find a balance between something you’re really good at, that really brings you energy, if you are an entrepreneur, does is there something that can be created within that that the market will appreciate and that provides differentiated value. I think this balance between differentiated value and market appreciation is really important to think about, because a lot of people try to build something around a differentiated value, but the market just doesn’t really appreciate it. And so they’re passionate about it. They love it, but they haven’t really proven that the market wants it, and so they end up on this hamster wheel. And so I think you’ve got to look at both and understand how to how to achieve something within the overlap of those two things,

Brad Weimert 1:08:00
love it. Michael E wrath, I got a lot of good stuff out of that. I think the, you know, I kind of am always looking at the granularity of how to execute, yes, and I think we clicked into a couple things in the framework, and also lessons from the past that are were certainly helpful for me and hopefully helpful for others. Appreciate the time where, where should people find you? Where do you want to find people?

Michael Erath 1:08:23
So there’s a couple of places next level growth.com. Is the website. We’ve got a YouTube channel under the same name. There’s lots of great stuff on the YouTube channel. You can reach out to me through the website. The clone is at askmichael erath.com and then the book, five obsessions. We’ve got a website, five obsessions.com, you can link to the book there. It’s on Amazon. It’s on Audible as well.

Brad Weimert 1:08:48
Awesome. Michael, thanks so much for the

Unknown Speaker 1:08:50
time. Brad enjoyed it. This was great.

Brad Weimert 1:08:52
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