About This Episode
At a young age, corporate innovator, bootstrapped entrepreneur, CEO of JBKnowledge, and our guest for this episode of Brilliant Thoughts, a SUCCESS magazine podcast, James Benham has been trained by his father, his greatest lifelong mentor, in the entrepreneurial principles of innovation and bootstrapping.
By the age of 21, he started his technology consulting and development company, JBKnowledge, from his dorm room, with just a couple of ten thousand dollars in capital and a credit line.
More than two decades later, he’s done a multi-million dollar SaaS product exit and continues to innovate, build, and invest in innovative tech products as CEO of JBKnowledge, successfully developing and launching ten of their own software products on behalf of their clients in the insurance and construction industries.
Everything he learned through decades of bootstrapping capital-efficient, cash-generating businesses he wrote in his book, Be Your Own V.C., where he teaches entrepreneurs across the globe some principles on how to build successful, sustainable businesses that generate recurring cash with low overhead.
What are the secrets to building sustainably successful businesses at scale? Here are some of the things that stand out.
Building a sustainable and successful business with limited capital requires a lot of innovation.
In his experience keynoting for a lot of conferences hosted by CEOs of million- and billion-dollar companies, he would often hear them talk about being innovative and disrupting themselves. “They would say the right things,” James shares. “[But] there’s a lot of companies that ask employees to do a lot of things in their spare time. They wear a lot of hats, and it stresses them out.”
And, according to James, innovation doesn’t happen in our spare time.
“I'm a believer… that if you're serious about something in business, you hire dedicated people in dedicated seats with a dedicated budget and a dedicated space,” he says. “…if you sit in two seats at your company, it's a pain in the butt, right?” he adds.
In many industries, like construction, for example, you want your workers to prioritize safety. But in order to get a better outcome, you want to have a safety manager dedicated to focusing on making the workplace safe and directing, maintaining, and improving the safety protocols in place.
The same is true for innovating. You can’t ask your people to spend ten minutes a day working on coming up with innovative ideas to pitch. If you want to be deliberately innovative, you need committed innovative leaders who are focused on carrying out the innovative work. You also need to give them a dedicated space, both mentally and physically, with financial resources they can use to efficiently complete the tasks.
Innovation isn’t an accident, a stroke of luck, or the result of inspiration, although it sometimes happens that way.
When consultants examine current internal and external solutions, develop and review potential solutions, and match existing market solutions with internal problems, intentional innovation occurs.
Without dedicated people in dedicated seats, with dedicated spaces and resources, innovation is held back.
James believes that the role of CEOs in innovation is to be the chief evangelizing officer.
“It just means you need to be giving speeches. You need to be talking to prospects, you need to be talking to people, you need to be talking to vendors, be out around where your competitors are. How the hell else are you going to find out where people's problems are if you're not talking to people who aren't your clients yet?” James says.
Leaders need to do the work and be “archeologists of pain” because, as James says, “if you're not solving painful things, people aren't going to buy your stuff.”
CEOs are the visionaries in the innovation process. But you need to have dedicated integrators who are focused on making that vision happen.
What sets sustainably great businesses apart are their values. And we are not talking about those one-word, nice-sounding bureaucratic values we see on company websites. It is crucial that everyone in your organization knows what your company values are, understands them, and believes in them enough to actually live those values out and stick with them.
We hear the word "culture" thrown around often, and it is basically the culmination of how your organization functions day-to-day. Your values serve as the operating system that dictates how you work as an organization—with your individual tasks, with each other, with the market you serve, and with the world at large.
That’s why it is crucial that everyone in the company is aligned with the organization’s values. “With us, the phrase I use internally is ‘If you can't repeat it, you don't believe it,' ” James shares.
Values aren’t just a set of words you put on your company website to make it look good. Are those values guiding how you hire, retain, and fire your employees? Are you using them in the acquisition or disposal of customers?
What makes or breaks a business is the quality of relationships it builds, both internally and externally. “[If] it's not a good value fit, it's not going to be a pretty relationship,” James says. That’s why he believes that values come first, second, and third in building sustainably successful businesses.
“It doesn't mean you don't mess up. It just means that 90% of the time or better, you're really adhering to those values, and that other 10% of time, you're trying really hard,” he shares. “Like, we give room for grace. You have some room for mess up here, you know, but you need to avoid the really big integrity violations… because those will kill a business and they’ll kill you professionally.”
It is important to be aligned with those values, to stick to them, and, when you mess up, to be really good at apologizing and making things right.
“Look, I would like for us to all enjoy working with each other,” James says. “I mean, I intend to work with my group of leaders. I'm 43. I intend to work with them until my late 60s, maybe later. I mean, I've got at least 25 years left in me, if not longer, maybe 35, I don't know. But you know, when you think multi decade and you're like, ‘Yeah, I want to work with this group of people for the next few decades,’ you better be aligned on values or you're going to be really unhappy,” he adds.
Geek out and enjoy the ride
Work will always be work, but that doesn’t mean you can’t enjoy life and geek out with your passions both inside and outside of work.
James is a self-proclaimed compulsive hobbyist. He is obsessed with flying, plays the piano and the guitar, and he also loves to sing and dance. He encourages his employees to do the same and pursue passions and hobbies outside of work that will energize them and make them happy.
But it doesn’t mean that they don’t geek out at work, either. There are aspects of your work that get you excited. For James, it is doing demos and product reviews. For Sebastian Costa, his high school friend, right-hand man, and Chief Operating Officer of JBKnowledge, does codes. What James might find fun at work won’t necessarily be what Sebastian or other members of his company find enjoyable doing.
That’s why the EOS tool, the delegate-elevate charts, is a helpful exercise for them.
We all have things we love doing that we are great at. We also have things we don’t enjoy doing, whether we are good at them or not. What James tells his folks of 280 employees is to stay away from doing the tasks that fall under the bottom-right quadrant: the things they don’t like doing and they are bad at.
“Because we typically do this exercise as a team,” James shares. In a team of any size, you will find someone who finds joy in doing the tasks you hate doing and are bad at. By giving his folks the freedom to swap those tasks with other people, everyone is able to focus on doing things they enjoy 80% to 90% of the time and doing tasks they don’t particularly love doing but have to do because they are good at them with the remaining 10% to 20% of their time.
“I think that we can geek out more if we do that,” he says. “…you can trade tasks with them and you can actually both end up being happier and more productive.”
It also allows for higher retention, as their numbers show. And it helps keep burnout at bay.
We all need mentors in our lives, inside and outside of work, and you need different mentors for the different stages of your professional life. Some of James' early-stage mentors, aside from his father, are his clients.
Later on, when his business started to grow, he joined the Entrepreneurs Organization and the YPO, where he was mentored by his peers and fellow CEOs in the industry he sells in and in the industries he serves.
“You're always trying to get mentored by someone who's been at your level and is at the next level because there are different challenges to scaling,” James shares.
The people you surround yourself with are crucial to your growth; they are people you can tap to stay on top of new trends, bounce new ideas off of, and test new things out—and you want people who will tell you the truth, not just the things you want to hear to make you feel good.
Know when to let go
Bootstrapping your business can be tough. Aside from having limited capital resources to work with, you need to be super self-motivated. “We have no board, we have no investors, and I have no banks. I have no loans; we have no debt… no one tells us what to do other than our customers,” James shares.
When you reach a certain level of success where you have more financial freedom and security, you need to be good at finding new motivation beyond survival. It is also important to keep in mind that you will exit a business at some point, no matter how successful or attached you have been to it.
“I think it's important as well to recognize when a business is played out and it's time to sell it. We reached what I call optimum value point with Smart Bid. And we sold it five years ago,” James says. “And that provided capital. It provided a return on a huge investment we had made internally with our own capital. And it also freed us up to think about what was a bigger problem we wanted to solve than just this.”
Knowing when to let go of something in order to chase new opportunities is a crucial part of being an entrepreneur. It can be exciting, but it is also scary. The bets you’re making might not work out. There’s the fear of the unknown. But beyond the fear is the excitement—of starting something new, or starting all over again, but this time, with the benefit of all the lessons you learned the previous time.
Follow James Benham
Connect with James on LinkedIn or visit his website, JamesBenham.com. You can also learn more about his mothership company at JBKnowledge.com.
Get a copy of his book, Be Your Own V.C., on Amazon today!
DISCLAIMER: The people interviewed are well-trained experts and highly skilled in their areas of practice. They take many safety precautions prior to attempting the activities described. The activities or research discussed in these podcasts should not be attempted without qualified supervision and training with professionals.