Episode 1 - Adolfo Perez, founder of Grinding Technology LLC

Guest: Adolfo Perez, founder of Grinding Technology LLC

Host: Andrey Kolesnikov, co-founder of Steersman Company

Interview topics/content:

• How did you get into this business?

• Business planning vs execution

• Unexpected events and dealing with them

• Partnership agreement clauses for the separation risk

• Outlook for success

• Learning, seeking advice, good intentions vs expertise from advisors

• On importance of cash flow

• Insights and personal connections that brought value

• Financing the start and more

• Being an entrepreneur - life, family, risks, and the long path to success

• The first hires

• Accepting self and others as they are vs pushing them forward - reconciling the boss mentality at work and at home

• Would you be an entrepreneur if you could start all over?

Interview transcript:

Andrey: This is Quenching Visions with Adolfo Perez, founder of Grinding Technology LLC and Andrey Kolesnikov, co-founder of Steersman Company. We'll discuss business planning, learning execution, restarting from scratch, cash flow and financing, entrepreneurship, creating and destroying personal life, demanding improvement versus accepting people as they are. We've known each other since a couple of months before you started working full-time in your first business. That's almost 20 years by now.

And you went through all kinds of things in life, right? Your family moved from Cuba to Venezuela when you were a teenager. Then still, while you were a teenager, you moved from Venezuela to the United States. You did a bunch of things. And then you started your own company. You had partners in there. You had a falling out with your partners. So basically, in a way, you lost your business. You worked for some other people. Then you started another great company. So well, looking at you now seems like

You do what you like, you live where you like, you are able to afford things that you like, right? You own your own plane, for example. I guess you gave up motorcycle racing, so that's a loss in there or not. But I'm really looking forward to learning a little bit of details about your journey and perhaps you could share some information about the values that you think defined some of your journey.

Adolfo: Sure, I mean that's about right. In a nutshell, that is kind of like a big picture of my story, but yeah, I'm more than glad to share anything that you want to know.

Andrey: All right, so your current company is Grinding Technology LLC. You manufacture and engineer tools to cut metal, right? So you engineer them and make them to really, really high performance standards. So you get good life and quality for your clients. And you also do it really, really fast compared to the industry. And so it seems like you haven't done any type of fancy marketing, growth hacking. No expensive CRMs or anything like that. You haven't used these types of things You've been focusing pretty much on the old-fashioned getting things done and it's been working for you So I guess my question would be How did you how did you get into this in the first place?

Adolfo: Well, Andrew, you know, when we met back then 20 years ago on general automation, I used to be in the other side of the fence. I used to manufacture components and I was dependent on tooling and I noticed that it was a void there.

Because when I needed tools, needed to wait, like you say, know, the industry standard, when you go to the big guys, you need to wait sometimes five weeks, sometimes 12 weeks to get tools. And, you know, at that time I thought that it got to be a better way. It has to be a better process and it has to be a way of being able to manufacture tools a little bit faster and give people service, a better service. And I started thinking about that and that's why I put the first business and like you say, you know, I had a fallout with my partner and you know, that's water under the bridge. And I don't regret anything that has happened in my life because number one, you can learn from your failures. And number two, your failure sometimes when you look back, they're actually benefit you.

Like for example, if I didn't had a fallout with my partner, I would probably still be living in Illinois. And as you mentioned, you know, because I came from Cuba and then I moved to Venezuela, I'm kind of like a warm weather guy. So I wouldn't have been happy in Chicago all the time with all the snow and stuff like that. So life can throw me a curve ball, but at the same time, it gives me an opportunity that since I didn't have the business anymore, then I could pick and choose where did I want it to move. And that's why today we're here in Texas.

Andrey: Yeah, it's 70 degrees instead of approximately 45.

Adolfo: Yep, I'll take that any day.

Andrey: Got it, I understand. When it came to creating your business, So planning the business. You told me earlier that you think that 80 % of a plan is what's needed, right? So if you try to plan the business 100%, then it just never happens. And I completely agree with that. I think that, well, there needs to be some kind of sound basis for a business, right? So you need to do some kind of math where it makes sense in general. The revenues and the expenses that are viable in there. Does it make sense to start? Then you kind of have to start at some point and then you have to just prepare to, well, prepare for things to be a little bit worse than you anticipated, I guess, right? Prepare to struggle longer. And I think that a lot of businesses specifically fail because the owners, they didn't prepare for this, right? They didn't have capacity to deal with setbacks or maybe they're intimidated by some setbacks or maybe they just decide that because of the setbacks, they just don't feel like it anymore, right? And they just kind of stop. So in your business, it seems like you had different things happening. So could you say something about a few unexpected events that happened on your path, either in this business or your previous ones or previous one? And then

How did you deal with those things? What went wrong? What happened? How did you react? Sure.

Adolfo: So first let me tell you, yes, I did mention to you previously that you have to plan, but you don't have to be a hundred percent all the time perfect because then you kind of get paralysis analysis. That's kind of what I call it, right? But you want, you're planning every detail and you want everything so good that you never launch your business.

So you have to get, obviously you have to plan for contingencies, you have to plan for problems, but you can't just don't expect the perfect moment. you can just don't say, okay, I had to find the perfect place. The economy had to be booming. Everything had to be perfect for you to launch your business because then you'll never launch your business. So I'm a firm believer that you have to be more like a doer. I mean, you do plan for the stuff.

But once you have kind of like the big picture put together, then you just go for it. You want to make sure that you have obviously a small amount of money in the back for the things that you didn't plan or the nags that you're gonna get along the way. Like for example, when I start this business, I plan, I build a network of people that promise me business.

If I started my own business and, one of the things that happened is that, the amount of business that they thought they could give me and the amount of business that I thought I could get, the word totally different or what in reality happens. so at the beginning, when I first started this business, my, my whole idea was that I was going to, sell my products to distribution only.

And I wasn't going to go direct to a customer or anything like that. But the couple distributors that told me they would give me business, they did give me some business, but it wasn't a lot. And then I find out that other distributors, were really hard to get in there and get them to trust me or buy from me.

But again, since I was determined to succeed on my business, then I had to regroup the way that I was thinking that I was going to be able to have the business running. And I realized pretty quickly that I needed to go and start selling direct to all the customers. So we did that and we did that for a few years. And then the distributors came around.

Andrey: I see. So, in the end, after you build trust.

Adolfo: Right once they saw that our product was getting into the hands of the end customers and the end customer was happy and all that stuff then they realized they

Andrey: So they didn't quite help you build the business, but they wanted to partake, in a way. It makes sense.

Adolfo: Yeah. So you have to plan, you know, I have contingency for that kind of stove because not always everything is going to go as planned.

Andrey: Of course. Okay. And then in your first company, you had a falling out with the partners. So could you suggest some kind of maybe specific clauses into a partnership agreement or shareholder agreement that you think would have helped you in your case?

Adolfo: Yes. So the first time I did that, obviously I was very naive and my dad was from like very old school where people would shake hands and you know, your word was your bank. And I was raised that way and I didn't think anything of it. Right. And the father with

The partner that I have, was because a lot of stuff didn't, didn't get put in writing. so it was a lot of, right. was a lot of assumptions, you know, that, that you assume that, well, you know, this is part of. I'm going to responsibility. This is part of this. And then you come to see that if you don't specify everything, you know, people may have a different thinking of what you're thinking about each person responsibility. But regardless that, I would say that you have to, if you go into business with a partner, you have to think, and this sounds bad, but trust me, it needs to be that way. It's kind of, say when Jeff Bezos, Elon Musk, or somebody like that, they go on and they're going to marry somebody.

And before they get married, they do like a prenup. Well, with business, you have to kind of plan for the divorce, even if you're not thinking that you're going to get divorced, because it's almost like a marriage. So that's what I'm saying. You can't assume that everybody knows the responsibility. You have to put it all in paper and you have to plan. Like if tomorrow, you know, this will be broken up, who's going to get what. And who's going to do what and who's going to keep what. And if you do that, I guarantee you, you're going to spur yourself a lot of headaches and a lot of litigation. So that would be the key thing that I would tell everybody. mean, and you have to be detailed even to the point that you have to even determine ahead of time, how you're going to evaluate the business if you split.

Because when it comes at that, then somebody could say, well, I'm evaluating the business with this X multiple and you think that it should have been this X multiple and then the numbers don't jive. that's where the arguments start. So when it comes to the contract and partnership and stuff like that, that will be my advice. The other advice, and some people may not like it, but, the other advice I would tell you is like, if I got it, if I would have to do this all over again, I probably would never partner again with anybody. I think people partner sometimes for the wrong reason. Like, like I know for sure I partnered for the wrong reason. I partnered because I wanted to share the risk because I didn't have enough confidence in myself thinking that, you can do this on your own.

So I was looking for like a safety net, well, if I cannot do this, maybe this person can do it. I think that's the wrong reason because, well, obviously, you know, I had a fallout with him. So again, for me, my personal recommendation, because of the experience I have, is I wouldn't partner again with anybody. And if I would do that, I would make sure that I own at least 51, 52%. So I still control the decisions. I mean, everybody's free to do, you whatever they feel, you know, it's best for them. I mean, it's, I think partnerships sometimes it's harder to keep the partnership than actually running the business.

Andrey: It could be. But I guess one of the suggestions you would put out is to establish valuation of company, the specific formula.

Adolfo: Right. So different business and different industries, have multipliers. So basically, I mean, just to give you an example, you you can get into an agreement and saying, hey, you know, whatever the profitability of the company is, we're going to use a four multiplier. Right. So meaning that, you know, if you profiting $250,000 a year, well, the business is valued at a one million because you take the $250,000 profit and four multiplier, that's one million dollars.

And if you do that in the country and you say the multiplier we're going to use is four, then there is no discussion. Everybody agreed, you know, that it was going to be four. So now they kind of just don't come and go like, the business is worth two million. No, it's not because we only had 250,000 profit and we say the multiplier was four. So it's one million.

Andrey: Right. I think it becomes harder when the business has some kind of a spool up time, right? Maybe you have to work for a few years and then there is no profit, but you're kind of building into the future and then that makes valuation in the early stages harder. Yes. And also that's where a lot of stress comes into while you're not making any money, kind of building for a future. Somebody could run out of money and then what do you do? So I'm guessing that in a way, writing up some kind of equity splitting that's contingent on work, right? Contribution might also work. That's hard. You didn't have this type of problem though, right?

Adolfo: Right, well, yeah.

We didn’t have those type of problems. Lucky, I guess for us, we were profitable pretty quick. I would say that at that point, if you put it in the contract, whatever assets there are or whatever liabilities there are, then they should match the percentage of ownership that you have. So if you're 50, 50 and you have a $100,000 on asset and $50,000 on liability, well, that leaves you with that with 50,000 on assets, you divide it by whatever percentage you own. And that's the part that you get on the company. If the company need to be breaking down because you're not profitable and you're going to close it.

Andrey: Right, right. That's in case of closing. I mean more like in case of just deciding to split up.

Adolfo: Well, you could do it that same way. You could put it on the contract at the beginning, you know, that as long there is no profit yet, then, you know, you're just going to divide the assets and the liability. And it's kind of hard to start putting sweat equity in the middle of it because think about it. When you're to put a business, you should know that you have to that you're to have to contribute sweat equity.

If every partner has already determined what the role is going to be in the partnership. That should be in the contract too, but it should be very easy to say, okay, you're not doing your part because you're not showing up to work or something like that. But the sweat equity is kind of like a given and if you're not making any profit, then you're not really making any money. So there is no money to split. The only thing you're going to be able to split is whatever assets you bought it, you put it there at the beginning, you know.

Andrey: Okay, clear. So moving on from the unhappy stuff and the problems, what do you think led to successes in your business and I guess life as well?

Adolfo: I would tell anybody out there that, the main thing that you had to have for success is you had to have an idea, you had to have a plan and you have to be relentless. You had to persevere and you had to go get it no matter what. And you cannot quit. If you do whatever you want to do long enough, you succeed.

Uh, because every business is going to have up and down. I mean, there is no business that goes down in a straight line, but there is no business that goes up in a straight line either. business go up and they go down depending on the decisions you make. Sometimes you make a wrong decisions. Hopefully you make more right decisions that the wrong decisions, right? And your business goes up. Uh, but.

Andrey: As long as you don't suffer some kind of a critical mistake.

Adolfo: Exactly, exactly where you've ruined yourself, right? But even if you do that, if you start all over again and you keep persevering and you persist, you're eventually going to get it. Because two things happen when you're running a business. Just like I told you that you plan for like 80 % and then you launch your business. Well, when you start a business, nobody knows everything.

Uh, you, may have a strong point where, know, I, I'm to say maybe 90 % of what you need to know, maybe less 80 % because you really never get to know everything. I mean, I consider myself that I'm a pretty strong engineer. But when you look at all that industry and all the people and stuff like that, uh, you gotta get humble and realize that, okay, you don't know that much. There is a lot of people out there that know a lot more.

And there is a lot of people that if you put all that knowledge together, then your knowledge is like this little bit compared to all the knowledge out there,

Andrey: It's this thing where the more you learn the more you know how little you know

Adolfo: Exactly. So, but the good thing about it is like when you're persisting and you keep doing it, you look back and then you get amazed how much more stuff you had learned. Like when I first started, you know, I was a strong, my strong point was in machining, but you know, my weakest point was in sales. And then you have the finance aspects and you know, the booking and all that kind of stuff. And you start learning on that.

And, you know, I tell you after three years over there in Chicago running my business and now 15 years here is total 18 years running businesses. You learn a lot. And that's why I say you look back, you know, to like the beginning and you were like, I didn't know anything, you know, and I still went for it. But like I say, I think the success come by you persevere and keep consistent and putting and going to set for every day, and being humble and keep your mind open. Because I think that's the problem with a lot of people. They get to a level where they're good at something and then they get cocky. They start thinking, I know enough and I don't need to learn anymore. And that's basically what dooms them. But if you keep your mind open all the time about learning more, you're gonna realize that every day, every month, every year that pass by, you look back and you go like, man, I'm a better person, or I'm a better business person than I was last year. And you just keep growing.

Andrey: Right, little by little every day. So it looks like one of the defining things in your life in general is that you never stop learning. Would you be able to recommend some strategies for learning or perhaps how do you seek out insight or advice and in what cases perhaps you should be kind of careful about getting advice or what type of people?

Adolfo: Yeah. So one of my, like my number one rule, if I see that I have a deficiency in something, I want to learn something. going to try to find number one, a person that is better than me on doing that. And I know this may not sound really good, but I will give you an example. I have no doubt in my mind whatsoever that my parents and my mom always wanted the best for me. But when it came to finance, you know, I could not ask my mom for financial advice because my mom didn't have the knowledge. Even that I'm pretty sure she had the best intention that anybody else in the world will have because you know, the connection that is from a mom to a son. And the love that is there, her advice would probably guide me through the wrong path. You know, I probably would have keep working a job nine to five and saving couple of dollars in a saving account and don't getting my dollars work for me.

Andrey: You wouldn't have a plane.

Adolfo: And I wouldn't have a plane, you know, and I wouldn't have race motorcycles because she told me that that was going to be a killer and dangerous. So you, you had to kind of figure it out. You know, you, you can just don't go blindly and listen to everybody's advice because that that's something that unfortunately everybody has an opinion. Everybody has an advice, including me. So if you want, you know,

To learn about businesses, you want to ask somebody that has a business, somebody that has been successful in business. If you want to ask about financial advice, find somebody that knows how to invest and that has a proven track record investing and getting a good return out of it. If you want to fly a plane, find somebody that knows how to fly a plane and been flying for a lot of years without any problems and so on, right? So.

I think that that's the main thing that people have to realize. They don't want to take the advice from the neighbor unless the neighbor is an expert on what they're seeking advice.

Andrey: So basically good intentions and usefulness of advice, it's not the same thing. But in general, in terms of learning from what I understand, you kind of learn by doing, right? You get into things, just repeat.

Adolfo: Yeah, humans learn by, I think like three ways, you know, because, you know, we got senses, right? So we learn by seeing or watching, right? We learn by listening and we learn by doing.

So if you can combine the three of them, you're going to learn a lot quicker. Me personally, because here's the other thing, different people learn different ways. There is a lot of people that just by watching something, they learn a lot. There are also other people that they need to hear it and read it to comprehend it. And then there is some people that they need to do it.

It doesn't mean that you can just do things without reading or seeing it first and same thing. Doesn't mean that you're going to learn just by seeing it. But what I'm trying to say is that. Don't people learn the bulk of it by one of them. You still need the other two. So for me, you know, if I don't do something, I don't learn fast enough. I have to read something or somebody had to show me something, but then I have to do it. And if I do it and I repeat that, that kind of, you know, it transmits to my brain and it gets engraved in there. And now it's there forever. Now I can't remember it because I'm more of, I need to picture, you know, and do what is supposed to be happening to really get my brain going and remembering that. So if I look at something 20 times and I never do it, I still probably wouldn’t know it. But some people are different. Some people, they may look at something 20 times and do it once and then they're good.

Andrey: Right. I think it depends also on probably on the thing too, but I'm, think that I have a similar learning method to you. I have to read about it, but then if I try it, then my retention of the thing is way, way better, pretty much for any, any topic almost, I think.

So in our prior conversation, you told me that you believe cashflow is one of the most important things in business.

Could you tell me a little bit more about this and perhaps also describe this situation you had where you purchased some equipment and then you basically miscalculated a little bit and brought bunch of risk on yourself.

Adolfo: Yeah, so I'll give you two examples. I'll you a sample of the equipment and then I'll give you the example of 2008 when the housing market went down and the economy went down. bad like maybe 12 years ago. I'm sorry, I should not say 2008. Let's use 2020 with the COVID.

Back like 12 years ago when I first started growing the business, the shop was a little bit like the bottleneck, because I didn't have enough capacity. I could have fixed the capacity maybe by working Saturdays or working Sundays and bringing people longer hours and stuff like that, but I didn't want to do that because I didn't want to burn the people out. And I decided I was going to buy another machine. And what happened is, you know, once you buy a machine, and you sign a contract with the bank. That contract is for three years, for five years, whatever you signed a contract for. The bank doesn't care. The economy goes down. The bank doesn't care. If the customer walks away, the bank doesn't care about anything. They all they care is like every month you got to make that payment. You cannot fire the bank. cannot fire the machine. you have, you basically stuck with the machine now for five years. So I bought the machine and.

As you know, our equipment is very sophisticated and expensive. So it's not a 50 bucks type of thing. It's $350,000, $400,000 piece of equipment. So you buy that and you have a big monthly payments now that you had to make. And for the first three, four months, it was going good because I have all this work that...

Andrey: Kind of like a backlog or something.

Adolfo: Yeah, that in my mind is like, okay, well now I'm getting all this backlog out. Right. Uh, but then, uh, they were kind of slowed down and then I didn't have enough to fill up the machine and the machine was working only like 10%, 20 % of the time, but now I had to pay a hundred percent of the payment. Right. So that put me in a very difficult moment and I started seeing, uh, my cashflow, you know, go down. But lucky for me, I had enough. That's why I'm telling you, it's very important to have enough cash flow to be able to survive and and fend you know any curves you know that get thrown at you so that that was one time and and then as the time passed by like you know six months later seven months later we got busy again and the machine got you know running at 80 85 percent all the time and then we were good and then the other example is when covid came in it was kind of like the same thing you know a lot of restaurants here in Texas and I'm pretty sure over there in Chicago, but, a lot of business went out of business, because they couldn't stay open. Didn't have the cash to stay open. Well, it didn't affect us that much, because we had enough cash flow. We had enough cash accumulated, you know, and the business was producing enough cash that even when things have slowed down. Yeah. mean, your bank account goes down, but you know that, okay, I got enough there, you know, to be able to stay in business for another year or year and a half while things get better. And sure enough, then things got better and you know, and we were okay. it's unfortunate because I don't know exactly the statistic, but if you look at it, a lot of small business, they only have like couple months of reserve. So if anything goes wrong, you know, and they cannot recoup in two months, they're off. I mean, I know it's hard and I know, you know, people may think, well, how are we going to get there or whatever? But, I think the way you get there is, I think a lot of business, they, they take more risks than what they should.

And they leverage themselves too thin. And that's why they have so little cash because everything is reinvested in the business. And this comes out because a lot of business owners, they, and don't get me wrong. I don't think that you should not be greedy. I mean, you should be a little bit greedy, but you should not be that greedy when you leave yourself exposed to extreme risk. if you try to grow a little bit slower. You you can manage better your cash flow and you can have a lot of more cash in the bank sitting for that rainy day. If you use all that and reinvest and leverage it, then when that rainy day comes in, then you don't have anything to fall back.

Andrey: So it's this great unforeseen risk if you don't plan to have some kind of an event and it happens then all at once you're out.

Adolfo: Yes. I see a lot of business owners too, that they start and every penny that they make, you know, they spend it. They just go and they buy this nice car and they buy this plane and they, you know, and I'm not opposed to that, but you, you have to do that when you really can afford it. You had to do that when you have enough cash, right? You can just don't use every single penny that you take out of the business and invest it on something for you, you know, your life enjoyment.

And then leave the business basically naked because then when something happened, then you don't have a way to save the business.

Andrey: You know, it's interesting. I have bootstraps to companies pretty much. And so I'm so used to this frugality, you know, just not spending anything ever. It's hard for me to even allow myself to buy something for myself. It's an interesting thing. I guess it's good in a way because, you know, the companies live and I live. I just don't have too many fancy things.

Adolfo: I mean, every extreme is bad, But yes, if you are always too frugal, it's going to come to the point where you're going to be burned out and you're going to ask yourself, why am I doing this when I don't see any benefit? So the way I usually do is I like to reward myself with the small things every time I achieve a goal.

So if I say, you know, if we're going to get to this amount of money in sales or this amount of money in profit, then I'm allowed to take this much and treat myself to something. But like I say, always thinking about I need to live enough in the business so the business can keep operating and then hopefully keep giving me more money. It's an act of balancing, you know, what is too much and what is too little.

There's got to be a balance.

And that's part of running a business too that most people, may not understand, you because I have seen both extremes, you know, I have seen people where they just go at it and every single penny that comes in, they spend, you know, on something, and then I have seen people that are very fruit well and they don't want to spend it.

Andrey: Makes sense. So then could you share some insights, knowledge, or perhaps connections, perhaps some kind of people that have enabled you in the past, right? Maybe enabled your business, enabled you to do something, or perhaps saved you from some pain or some expense or hardship. Some kind of people or insights.

Adolfo: Well, I mean, I don't know if I can precisely answer that question, but I'm going to try the best. Like for example, I tried to surround myself, with people that are business savvy and that they have their own businesses to stuff like that. That way, when we have a conversation, because here is something every business owner, if you're in business, it's because you like it. Not everybody can have a business. If you don't like what you do, if you don't have a passion for that, you're probably gonna fail. So guess what happened? When you go to dinner with business owners, the conversation almost always ends up about business. what are you doing in your business lately? What have you done new? this and that? So it's good because then you can see what other people think and what other people do on their business. A lot of businesses, believe it or not, a business, they're very similar. Even that they're different, they're very similar. The structure is similar. They all have balance sheets, they all have profit and loss, they all have cash flow. So when you look at that, then you can see how other people are managing that. So I try to surround myself with people like that.

Again, same thing. I try to always get advice from people that know more than me or they're higher up than me. I would say that I am very grateful when I was in General Automation. My boss, you remember Max Star?

Andrey: I think that he was before I came in. So I heard so many stories. Yeah, there were so many stories about him. He was like this phenomenon in there, but I haven't actually ever met him.

Adolfo: You were already with Ed.

Andrey: Yeah.

Adolfo: So I'm very grateful to this guy because he owned the business, his father founded it and he took me under his wing. you know, he basically was my mentor. I mean, I learned so much about business and, you know, ins and out of the finance and the books and all that stuff from him. Because the technical part I knew, right, from the engineering and stuff like that.

Everything else, every moving part of the business, he was willing to teach me, you know, and I asked and I asked and I asked questions all the time. And if it wouldn't be because of him, I probably would have never started my business because I didn't know how. So I gotta say that part, you know, he saved me probably from a bunch of failures before as you said.

Because I was lucky that I got that shortcut, right? That somebody told me, hey, this is what you do. This is what you don't do. And he didn't do it because I told him I was going to open a business or anything like that. mean, at that point, I didn't even thought about opening the business, but he did it because he wanted to make sure that I knew how to run general automation. But that saved me a lot of headaches starting my own business later on in life.

So that was a good thing. And now I mean, I got a couple of people that they own businesses and the businesses are bigger, you know, that mine and I try to hang around with them as much as I can and learn from them as much as I can.

Andrey: Got it. And when you were getting a loan for this company, what type of bank did you end up getting a loan from? And do you think it actually mattered? You know, what type of banker, what type of bank?

Adolfo: So here is the thing, I cannot recommend you a bank, per se, a name, because what I find out is that different banks have different appetite for things. And what I mean for that is like, for example, I did my toast to Unreal Estate, right? Well, to make the whole story, for example, when I first went to start this business, I went to like six different banks. went to Wells Fargo, went to US bank, went to Bank of America, and I went to Chase, and I went to a credit union. every time I went to a bank, I basically got rejected. I went like, no, we don't do those loans. No, we don't want you here. And then finally, Chase said yes. But where I'm going to is...

Eight years later, I got a lot more money, a lot more success and everything. I went to Chase and I told them, Hey, you know, I want to buy, you know, these properties and Chase told me, Oh, we don't have any interest in financing real estate. At least not that type of property. You know, I was looking for apartment buildings, right? But then I went to Wells Fargo and it was just like that. It was a breeze. You know, they went like, Oh yeah, sure. Here, fill up the application and here's your loan.

So what I'm trying to say is like for all those people out there that are going to go to a bank and ask for a loan. One thing you do need to have a business plan because every bank, even the one that want to give you a loan is going to ask you for it. And you need to have some type of track record. know, I mean, you have to think about it. The bank is going to take a risk on you and either you have enough money to pay it back. And usually if you have enough money to pay it back, then you wouldn't be asking for a loan.

Or at least no for that big of a loan. So they are going to take a risk on you. So you have to put them at ease by showing them that you're capable of taking that money and transforming that money into more money. So when I went to Chase, you know, I had to take my business plan. I had to take projections for the first three years. I had to take my resume. I went through an interview, you know, with the bankers.

And once I convinced them that, you know, that their money was going to be, you know, I don't know, 90 % say 80%. I don't know what percentage they were measuring. But it was sufficiently safe for them to give me the money. Then they approved my loan. Because sometimes the bank is taking, you know, a leap of faith with you because sometimes you don't have the assets to back up the amount of money that you're asking for. So, you know, I would tell anybody that make sure that when you go and apply for that loan, you go in there knowing that you had to have resumes, had to have experience, had to have that kind of information available because they are going to ask you for

Andrey: Got it. Okay. Sounds good. So the next topic - often in media, entrepreneurs are portrayed as these brilliant visionaries, you know, because in reality, most of the time when we hear about somebody on the news who is an entrepreneur, it's when they made many, many millions or they raised many, millions of money from investors, right? They're something amazing. But in reality, for the majority of people, including those ones that are raising a lot of money or making a lot of money, the path to this or in general entrepreneurial path is filled with struggles and hardships and sacrifices. So there's a lot of work that needs to be done before you get to success. So in your story, there are plenty of ups and downs. Well, starting the business, you have lost the business, started another one, a lot of things happen.

So can you tell me your thoughts on how entrepreneurship, your choice to pursue entrepreneurship, affected your own life and perhaps your relationships with your family and friends?

Adolfo: Okay, so let me me say this first. You're right. The media only portrays the guys like Jeff Bezos, Buffett, Elon Musk, extremely successful people. And I don't want everybody to feel like you cannot succeed unless you get to that level of success. You don't have to be an innovator. You don't have to be an inventor. You just have to be good at what you do and monetize it, right? And be persistent and do it over and over. I guess what I'm trying to say is you really don't have to reinvent the wheel in order to be successful. You just have to improve the wheel. You just have to take some process or something that somebody else is doing and figure out, okay, how can I make this better? And you can figure out how you can make that better. So in a sense, yeah, you had to be a little bit of an innovator, but you don't have to be an inventor. You don't have to have the unique ticket or the unique item that nobody else has done ever again. Right. Now with that, you do have to be prepared to have a lot of hard work, long hours. you know, people, have here, people sometimes saying that it's an exaggeration, you know, that Elon Musk works 14 hours a day or that he sleeps at his Tesla factory. And I will tell you, it's not an exaggeration. I have done stuff like that when, when I need to get something done because you have a deadline.

That's another reason why a lot of people, I think they don't succeed because they get into the business world for the wrong reasons. A lot of people, and this I will blame the media for it. The media glamorize all the success, but they don't put all the efforts that you had to go through and all the problems that you had to sort out.

So a lot of people think that, being a business owner is going to have, is going to be having all this money and having the plane and having the boat and having the expensive car and having all these vacations. but they don't see what's going on behind the scenes. Right. Right. And I will tell you for sure, there is no balanced life. I hear so many times people talking about like, I want to have a balanced life. You want to have a balanced life. You find a job nine to five.

So you're to have your weekend off and your nights off and time with the family. When you first start a business, you're going to have to have a family that understands you and that supports you. Because if not, you're either going to have the business or you're going to have the family. You won’t have both. If your family doesn't support you, you don't want to have both. You're going to have to choose because you're going to have to spend a lot of hours, you know, feeding and making the business work for you. And you don't have enough time to do anything with your son or your wife or whatever. So that is something very important that people had to realize and they have to have in their mind. And yes, you know, I mean, there is going to be few and far examples where somebody invented something on the internet and he does two hours work in the day, and the rest of the time is having fun and he still succeed. But those are going to be the few in between. The typical entrepreneur, the typical business owners of a factory, of a manufacturing facility, of a restaurant, of a hardware store, of a clinic, of a dentist practice. Those guys are going to put a lot of hours at the beginning. For the foreseeable future. And then yeah, once you get established, when you have your clientele, when you have a good team ensemble and you can start delegating in your team and stuff like that, then yes, then things get easy. But you have to realize that probably for the first couple of years, it's all on you. You're the executor, you're the planner, you're everything. So you have to, even if you have employees, you have to supervise those employees and you have to teach employees the process and the way you want the business to grow before you can let them go and then, you know, by themselves. So it's going to be a lot of work on your part if you, if you do it. So you had to have the commitment because it is not easy. It's doable and a lot of people do it. I think a lot of people succeed, but you have to have the commitment.

Andrey: Got it. So I'm guessing that in your case, your family supported you.

Adolfo: Yes. I'm very fortunate that my wife and my kids, they were all in, you know, was countless hours where, know, we barely see each other, maybe half hour a night when I came, I was tired. went, you know, half hour and take a shower, eat something, go to sleep. And then the next day I would have get up so early that, you know, everybody still was asleep.

Andrey: There must be significant trust in the partner to go with it for a year or two. It's not like it's a month. It's a marathon.

Adolfo: Yeah, it's a marathon. A business is a marathon, it's not a sprint.

Andrey: Next question kind of follows what we were just talking about. How did you go about starting building your team? So what would be your recommendations for the first few hires? How do you approach it?

Adolfo: Well, obviously you have to, you come up with a job description of what you want that person to do. And then obviously you, you go and hire people or, or maybe you get somebody that it gets recommended by somebody that you know, whatever. but the one thing I would tell you is like, you will be very, very lucky if the first person that you get is the perfect person. So you have to keep an open mind. And this is something that I don't think anybody likes to do. You know, I, I've been in business and management for 30 something years and they still don't get used to, and they still don't like it. You know, when they had to let somebody go. Again, if you're running a business, a business is a business. Can't just be sometimes the nice guy that you want to be. You can't keep a person that is not giving you a hundred percent or that it doesn't have the skillset that you need. Sometimes people, you know, put a stuff on the resume that they don't know sometimes, you know, and then you hire them, they're with you for, you know, a couple of months or whatever. And then you realize, man, this is not a person that I thought it was or that attitude change or, know, whatever. And then you just have to let that person go and find somebody else. But you should never settle for less than what you want. So, and sometimes, you know, I mean, I think attitude have to do a lot too. If you find the person, for me, I'd rather have the person with the right attitude and a little bit lack of skills, than have a person with a lot of skills and not the right attitude. Because the skills are teachable. The attitude is very hard to change. So if the person doesn't have the right attitude, it doesn't matter how much you teach them, that person is don't want to be a fit for the company or the environment that you're creating. But if the person lacks a little bit of a skills, you can compliment that. You can teach that and bring that person. And as long the attitude is good, then you have a really good employer or a really good manager, know, that you can use.

Andrey: Okay. And then a follow-up question on that. So how did you choose who to seek first, second, your first employee and your second employee? What did you hire for?

Adolfo: Well, when I first started, you had to realize that as a business owner, is going to come the time where you cannot do everything. what I did is you have to think, okay, what is the first person or what are the first tasks that I want to delegate? And then you hire a person based on that.

So like for me, it's not that I wanted to delegate that task 100%, but I needed it. I knew I could only run up to a certain amount of machines by myself. And at the same time do the books and do sales and do everything else, right? So for me, the first person that I needed, it was somebody that eventually could take over running the job. And in the meantime, while I was teaching him or you know, whatever I'm training him, you know, that he could help me with certain amount of equipment. So that way I didn't have to run everything. and I was lucky because I had a guy that it was working with me on corporate while I was working here in a corporation, that it was a programmer for CNC. And that's kind of like what I was looking for. He never programmed a grinding machine to make tools before, but he programmed lathes and mills and stuff like that. And, and I thought, this person is worth to have. We talk about stuff like that, he came on board and he was with me for 14 years, he left last year. He had better things to do, nobody lasts forever. But that was the first person I had. And I was lucky, because I didn't have to go through multiples.

Andrey: But I guess being in the industry kind of helps because you already have contacts.

Adolfo: Right. Right. Now, one thing I would tell you that I have a struggle a little bit is finding good salespeople. That one has been more of a revolving door. You know, so that's why I say it depends. if you ask me what the take is on this is you have to do whatever it takes to get the right person in the right place. You never settle for something less.

So if your standard is to be up right here, don't go and hire somebody that is here. And if you cannot bring them up to there, you have to let them go. You either bring them up there or you have to let them go. But don't settle for being at that level.

Andrey: Makes sense. Sounds good. My next question, I think, follows up on this expecting more from your team. So there's this idea that you should accept yourself and others the way that they are. And when it comes specifically to setting standards and goals for self or loved ones, I'm not sure I believe in this idea all the way. Well, that is, if they're not pushing themselves, if they're not trying to achieve something more, I think that it's not okay to accept. Because I can't reconcile this idea that in my company, I would not tolerate a situation where somebody in any kind of an important role was not growing, was not trying to make themselves better. If they weren't doing that, it would be unacceptable. And then it feels like accepting it in loved ones is basically enabling them in a way to have a higher risk of just being unhappy in life, having an unsuccessful life. So I think that pushing your loved ones or yourself obviously and trying to get them to aspire for something, try to persevere, I think it's really beneficial. So there must be some kind of accountability.

If a loved one sets a goal, you keep them accountable, you push them, you really support them in pursuing that goal. So I believe that this is necessary. As you know, my children are two years old and just a few weeks old. So my children are really small, but this type of topic for me has been on my mind because my children are going to get bigger. So I will need to be raising them. So my question to you is, how do you motivate your friends and family? And how is it different from the way that you expect things and motivate your employees?

Adolfo: Man, okay. I'm going to break that in like two different parts because here is the thing. My friends and my employees. Well, there is a difference first. When you're running a business, the business portion of it, that's what you control.

For me, my employees, they can do whatever they want out there. That's their life, whatever they choose to be or do out there, that's their problem. And I only can control the part that is when they're basically selling their time in exchange for money, you know, for the hourly pay. But just like I don't accept substandard people as an employees, I try not to accept substandard people as friends. And what I mean by that is like, there is a saying around, you know, somewhere there, and I don't know exactly what the number is, but basically it goes like, show me the three people that you hang around with the most and I will tell you who you are or who you're going to become. And I truly believe on that.

And I don't mean this in a demeaning way. know, like if I have, if I meet somebody and I realized that those person goals are way different than mine, I'm not saying that that person is a lesser person or human being or anything, but it's just, doesn't align, you know, with my likes or with my goals. So, that person and I, I don't want to become best friends. They don't want to be in my circle. I mean, I'll talk to them and you know, whatever, but it's not a guy that going to go to a dinner in a restaurant with me because obviously we don't have anything in common. If you will be the person that all you do is thinking about partying and going to the club and all I'm thinking is about my business. Well, there is no common ground in there.

I'm not saying that one thing is wrong or the other one is wrong. For all I care, I may be wrong. I may be the one workaholic or whatever.

Accepting somebody, it doesn't mean that you need to be friends with somebody, you know? So I accept everybody for what they are. I mean, I have no input on what you want to be or what the next guy, you know, wants to be. But I do have a say on who I want to hang around with. Right. Right. And that, like I said, that doesn't mean the other person is a lesser person or I'm a lesser person, but, you know, I just want to line up myself with people that have something in common so we can talk. I would say that when I was racing motorcycles, I had a lot of friends that all were racing motorcycles because that was the denominator there. So if you have somebody that all you think is about going to the movies, nothing wrong going to the movies, but let's say I don't like going to the movies. Well, I don't want to hang around with that circle of people just because the fact that they're going to be talking about movies and I'm going to be talking about racing motorcycles or about running a business. So you have to hang out with people that, that give you more than take away or at least that are, that they have a common denominator. And like I said, and like when I was racing motorcycle, I tried to hang around with people that were faster than me so I could learn how to go faster.

So if your interest is businesses, then try to hang around with people that are into businesses and hopefully people that are far ahead on the race of how to build a business.

Now, I say I was going to break it apart because with the family is different. You can't just don't get rid of the family. You cann’t just fire your son, right? Well, I mean, I guess you could, but it's a lot more difficult. Or is a lot of more problematic. So you try to motivate them by setting an example. You try to help them. And I say, want to be clear on this. You try to help them, not entitle them or enable them or help them. Because I think when people struggle a little bit, they learn.

If you give somebody everything without any effort, they take it for granted and then they don't learn. So you have to, you have to kind of manage your help in a way that

It doesn't burn them. doesn't make them fail completely, but at the same time, it keeps them hungry. At the same time, it keeps them motivated. And you have to make sure that if you're going to help them, have to be sure that whatever goal they have, they truly have that goal. Sometimes, you know, especially your kids, you know, when they're small, they change their mind all the time. They could go like, Hey, I want to be an astronaut.

And then let's say you start paying for a school for them to become an astronaut. Then six months later, they go like, you know what? I just want to be the best gardener. And then you go like, my God, you know, are you kidding me? But that's going to happen. So you have to first let them struggle a little bit for them to decide what they really want to be.

For me, for example, one thing that I have never done because I think that that's the first and probably most important decision that a kid have to do on their own is decide what they want to be. You don't want to influence that because you want them to really pursue their passion. So if I would tell my kid from the day that he was born that I want him to be a doctor, for example, right? He may become a doctor.

But he may be miserable the rest of his life because he really never wanted to become a doctor. He just became a doctor by default because he hears so many times, you need to be a doctor, you need to be a doctor, you need to be a doctor that he thought that's the only way, that's the only path to success. And that's the only way I'm to make my dad proud. And then he becomes a doctor and the worst case scenario, he doesn't even practice because he hates it. And the best case scenario is he becomes maybe halfway decent.

But he doesn't explore his full potential because it's not something that he was really pursuing. He did that for the wrong reasons. So I don't believe that you should give your kids or anybody by the matter, like input on what they really want to do. I mean, it's okay to try to steer somebody away from a mistake. Don't get me wrong, I mean, if my kid would have told me, hey, I want to be the garbage collector. And I don't mean this in a demeanor way either, I mean, every, every job to me, as long as legal is a decent job, right? But unfortunately in today's society, you have to realize the scale and the cost of things and living. So, what I mean by that is like, if, if this job here only pays 15 bucks an hour and the person wants to have that job for life, I don't think it's wrong to. But I can I have a talk with the person and say, look, you know, there is nothing wrong with you trying to be this person, but do you realize that this is going to be your lifestyle for the rest of your life? Because you never going to be making, let's say $250,000 by working at McDonald flipping the burgers. If you're happy with that because you like that and that's all your aspiration, then that's fine with me.

But I think, know, as parents, especially, you know, we, we should have at least a conversation, you know, like painting the whole picture. I'm not going like, hey, you are getting this job because you're getting to eat free free burgers, you know, but I mean, is that all you want with your life to be able to eat a free burger twice a day? You know, wouldn't you want more out of life? And then if, if you kid has to say, yeah, all I want is my two burgers, then so be it, that's fine with me, you but once you know exactly what the kid wants or what you've family member wants, then, you, if you a hundred percent sure that that's the goal, you should be able to help them to achieve that goal. And like I say, it's help it’s not enabling because you don't want to take that goal from up here and bring it and put it on their hands right away because then they don't realize and they don't learn.

Because getting to the goal, it should be a journey. It should not be like, I just landed here and I have it. Because then you don't know how to keep it.

Andrey: It's a good exercise in general, right? This exercise of going for something? So when the child is smaller, you can try to have them do something that's challenging, but achievable. They do it. We see that, okay, they spent five hours trying and they got it. So then the next time they could try eight hours and the next time more. And at some point they will be open and ready to try for a year to achieve something great.

Adolfo: And that's part of teaching people how to be successful. Because to me, success, I mean, I don't say this, I say it, but it's not my phrase. I have here a hundred times from a hundred different people. Success is a journey. It's not a destination. So if you want to learn to be successful, you have to learn how to go through the journey. You can just don't get to the goal without going through the journey. Because what happened, with really successful people is that that goal, it keeps moving. That post, it keeps moving because once you get close to that, you go like, well, this is doable. I want to fight double that or about if I triple that. And then you put yourself a goal that is more distant because you see that, I'm almost, I'm, I'm almost about to achieve this. So if you know that now you're almost to achieve that, then you go like, I just going to move the goalpost a little bit farther to see if I can get farther, you know. So now you have a longer journey. you have to learn, you know, to enjoy the journey, not to get to the goalpost.

Andrey: I guess you could also just shift gears on what type of goal you pursue. So you could be pursuing some kind of a financial goal and then when you reach it, I guess if you extend that specific goal forever, it's kind of, it's potentially not the best unless that's really what you want, but you could achieve a certain level of earnings, for example, and then you could say, okay, well, now I'm going to be trying to get back some time. Right. So, and then you could say, okay, well, then now I'm going to be making sure that I don't work more than 40 hours or 30 hours a week. That's my goal now. And then you get to that so you have more time with family and so on and so on.

Adolfo: Precisely. And that's exactly how you do achieve life balance by achieving your financial goals and then moving your goal and going like, okay, I got enough here because everybody gets to a point where they got enough. know, some people have a really high goal and some people have a very low goal, but everybody gets to a point or they should be able to get to a point where they go like, okay, I'm comfortable now. I achieve what I wanted to achieve financially.

So how do I balance my life now? Yeah. You know, and then you go on and you say, okay, I don't want to work more than 40 hours. I don't want to work more than 20 hours, you know, and you set that goal to you. you, financials goal are very important because even the people that say, I would love to help other people. Well, you cannot really help other people unless you have the means.

So if you're sitting in the chair, where you're the one needing the help, how are you going to be able to help somebody?

It's like, so you have to, I think always you have to first achieve some degree of financial independence. So that way you can better use your time and your money to help people for real.

Andrey: Right. You know, there's a new book by this guy, Sahil Bloom. It's called Five Types of Wealth, I believe. I just read that, just finished it like a week ago. It kind of goes over this specific topic of, you know, pursuing the goal and then focusing on different types of, well, he calls it wealth in there. Very interesting book, but it gives practical advice specifically on these things. So it's very interesting to hear you basically say the same general things that he was writing about.

Adolfo: Well, good. I'll have to read the book. never hear it.

Andrey: Check it out. Yeah, it just came out like a month ago or something. Anyway, I follow him on LinkedIn. That's how I know about it.

But I guess it comes to my last question for this conversation. You told me that if you had a chance to live your life again, you would definitely pursue entrepreneurship again. It would definitely be a thing you would do. So can you maybe share some of your reflection on entrepreneurship in general? And perhaps are there some kind of pitfalls that you see that people have when they pursue entrepreneurship?

Adolfo: So, yes, I did tell you that I would do it again because I think it's not only the financial rewards, but the emotional rewards, the psychological rewards, the, the fulfillment that you feel, once you achieve something, and by the way, everybody's no cut out to be that way. Okay. I think entrepreneurs are people with very high standards are people with very hard work ethics and are people that are willing to take certain amount of risk. If you're very risk averse, business are not for you because you definitely take a lot of risk. You put a lot of stuff on the line when you start a business. So that's something else that people have to kind of ask themselves, I am cut out to do this because I'm pretty sure everybody's not cut out to do that. But with that said, I mean, I would definitely do it again because I have so much fulfillment on all my journey of all these years, that I think that is, for me, it's imperative. I'm so grateful to God that I have been able to experience this, because it's an amazing experience. It builds character on you. It makes you resourceful.

And yeah, I mean, it's stressful and you go home sometimes and you don't sleep because you're thinking, what am I going to do tomorrow to fix this problem that I couldn't fix today? You know, stuff like that. when you put everything as a whole, as a package, and you had to make a decision, do I want that package again? Or do I don't want to be part of it? I would tell you 90 % of me say I want that package again. You know, I would do that again.

And that's the reason why, you know, when things didn't went good on Chicago, you know, I came here to Texas. worked for three years for a corporate and I put my business again because I miss it. There is nothing like, you know, that feeling when you accomplish something and you help some of your customers to achieve something. And then, know, that meant, you know, if I wouldn't have been there, you know, that guy maybe wouldn’t do what he was set out to do, or at least not as fast anyway. He would have to wait 12 weeks for the right tool or whatever. But because we helped that customer, he was able to do that in two weeks or whatever the delivery time was at that point. And that gives you a lot of fulfilment. The other fulfilment is like, the way I see it too is like, all the people that work for me, know, they're supporting their family and their homes, came to the business. So I feel responsible and I feel like, okay, I'm not only providing for my family, but I'm helping all these other families, you know, to, have, to make a good living for the business. it's a very fulfilling thing.

Andrey: Do you think that... Well, it sounds like you have a lot of emotional attachment to your business, which is very natural for pretty much all or most entrepreneurs. Do you think that has a flip side to it?

Adolfo: The only bad side I see about it is like if you get very, very emotionally attached to the business, you may make wrong decisions when it comes the time to exit. Because you have to realize, I mean, obviously you're much younger than me, but when you get older and older, eventually you're going to start thinking about the time that it comes to exit the business.

And if you're emotionally attached, you may not make the right decision or you won't take the decision at the right time when it's the right time to exit the stuff like that. So that would be the flip side of that. Hopefully it doesn't happen to me. I try to remind myself all the time, it's just a business. But unfortunately you do get attached to a business because you grow it. it's kind of like, I mean, I know it's an inanimate thing, it's an object, but you start feeling as the business grows, stuff like that. It's just like a little kid that you see growing. So you go through so much suffering and so much stress and so much different stuff every day, especially if you have the same business for 15 years like I have or whatever, that at one point that whole inanimate object kind of comes alive. You feel like you're intertwined with the business itself. But again, I don't regret that. I just have to control my mind, control my impulse, my emotions. And when that time comes, that time comes.

Andrey: Sounds good. Well, I think that it's about time for us to wrap up now. We've been talking for some time. Thank you very much for taking the time.