The Best Bad Option with Al Elliott (1/2)

Welcome to episode 235 of the Nerd Journey Podcast [@NerdJourney]! We’re John White (@vJourneyman) and Nick Korte (@NetworkNerd_) – two technology professionals with backgrounds in IT Operations and Sales Engineering on a mission to help others accelerate career progression and increase job satisfaction by bringing listeners the advice we wish we’d been given earlier in our careers. In today’s episode we share part 1 of a discussion with Al Elliott, detailing his experience as an entrepreneur and owner for two different business, how the experience of going bankrupt give him a unique idea for a new business, and we’ll discuss whether entrepreneurs make great leaders.

Original Recording Date: 06-10-2023

Topics – Meet Al Elliott, The Young Manager, The Entrepreneur’s Vision, Thoughts on Investors, The Best Bad Option

2:43 – Meet Al Elliott

  • Al Elliott is a business owner and one half of the Truth, Lies, and Workplace Culture Podcast crew. His background is mostly marketing consultancy and building businesses, but Al tells us over the last year his focus has been on building up the podcast along with his wife.

    • You can hear some other background on Al relevant to this discussion from episode 16 of the Truth, Lies, and Workplace Culture Podcast.
    • It’s been interesting for Al to learn the podcasting world, and he feels it has opened up the opportunity to meet many people he might not otherwise have met.
    • Right now Al might say he is a podcaster moreso than marketer or business owner, but he remains all 3 at once.
  • Al went to university in the UK and failed his A-levels except for math, and the only thing he could do after that was teaching math.

    • After teaching math for 2 years, Al found he hated it.
    • Al recounts gaining some practical experience teaching and a conversation with the schoolmaster that followed. The schoolmaster told him he could be making over 38,000 pounds per year…after 25 years in the role. This was enough to make Al want to seek out alternatives.
  • Next, Al pursued pub management (or bar management). He studied through a program in this field for about a year before taking a job at a pub in Manchester, England that would bring in about 80,000 pounds per week. This was around 1999.

    • During this experience Al learned about management, recruitment, and dealing with drunk people.
    • He would later get a job running his own pub in Leeds, England. Al took the previous marketing experience gained from his boss in Manchester to make this pub turn from the 27th worst pub in the area to 3rd best.
      • At some point money went missing from the pub, and though Al pointed this out, he was fired (despite not having been the one who took money from the pub).
  • At age 22, having achieved a degree in pub management followed by some great results in the business, Al wasn’t sure what to do next. The only job that would take him was commission only door-to-sales.

    • Al did this for about a year and calls it the best and worst thing that has ever happened to him.
    • “You learn lots of ways in which people can tell you to go away….most of which I wouldn’t be able to repeat on this podcast.” – Al Elliott, on doing door-to-door sales
    • This experience taught Al a great deal about sales and working with people, including how to knock on someone’s door and get their attention.
  • After a couple more sales jobs, Al started a company called GimmeSomeBeer.

    • It was essentially Uber for beer in 2002, and they would bring people beer at 3 AM, for example.
    • At first, you couldn’t get alcohol after 11 PM in the UK (meaning Al’s company was the only one who could do it), but the license laws changed. Stores were remaining open 24 hours per day, and Al’s business folded.
    • Al had borrowed over 100,000 pounds for the business, and when the business folded (around age 29 for him), he went completely bankrupt (including repossession of his houses).
  • After this experience Al went on to start a property company.

7:50 – The Young Manager

  • When Al was working at one of the pubs, he was a deputy manager. There were two deputy managers and a manager.
    • Al had done some of the theoretical stuff at university but not actually “properly” managed someone prior to this.
  • If you intend to become a manager of people in some way…
    • Don’t treat the people you manage as friends. They can be friends, but that is not your primary objective as a manager.
    • Get comfortable asking people to do things without needing to give a reason or lengthy explanation every time. Al tells us he was very awkward doing this and lacked self-confidence to just tell people what to do because it needed doing.
    • Al tells us it has been a while since he has managed people like this, and he has learned so much from his wife Leanne (a business psychologist and someone very experienced in people management). Al thought for a long time bosses were there to tell people what to do / boss them around.
    • Al’s advice for the young manager now would be…
      • Learn about coaching, and learn about people.
      • Learn what it is you are doing. It’s so much more than telling people what to do and sitting back in your chair and playing games.
      • “Being a boss isn’t just telling people what to do. Being a boss is understanding human psychology. It is caring about people who you lead…and just being someone who people want to be around and want to follow as opposed to standing at the back shouting at them to go and do things.” – Al Elliott, on advice for the young manager
    • John says giving context is nice, but we might need people do to things and may not have time to give them context.
      • John says Al was hinting at the idea of not only role power but also building a relationship (i.e. trust) and credibility with the people you lead.
      • Al points out people who work for great leaders try to think of ways to help get the team closer to where they need to be (i.e. help execute on a vision). Working for a great leader with a clear vision (which they have communicated to employees) can empower people to make decisions that clear impediments in the way of achieving the vision. In the example of working behind a bar, people working under a great leader (whom they believe in and want to follow) would know they need to go and clear tables without being asked to do it.
      • Listen for what Nick calls “the John White effect.” As podcast hosts it is our job to reflect back what guests say and help extrapolate the lessons learned for consumption by our listeners.

13:07 – The Entrepreneur’s Vision and Leadership

  • Having a clear vision that you can articulate well sounds like one of the qualities of a decent entrepreneur in addition to having people who want to follow you / help you achieve that vision.
  • Al is curious about whether entrepreneurs make good leaders? Here’s how someone explained what an entrepreneur is to Al:
    • If you can spell entrepreneur is, you are NOT one.
    • Entrepreneur comes from the French “to take from between” (see this etymology listing and follow the link to enterprise for further reading)
  • “I see an entrepreneur as being able to say ‘there is a problem. I think we can fix it using X.’ They know in the back of their mind its probably going to be Y that fixes it, but they won’t get to Y until they’ve done X. And so they go out there and fix things. And as soon as it’s fixed they lose interest…. When there is no pain, when there is no problems, when they’ve gotten to a certain level they say, ‘ok, I’m out. I’m off to go and do something else…because I’m bored.’” – Al Elliott, thoughts on what an entrepreneur is from his experience
    • Al thinks about the point where the entrepreneur is ready to go and do something else is where great leadership would come into play. This would be where an operations director would come into play and be able to help, for example.
  • “If you solve a problem and you go, ‘great, everything’s working well,’ then you go and try and start another fire so you can put it out, which is the worst thing you can do as a leader…” – Al Elliott, an observation on entrepreneurs that he saw in himself
    • Al feels that entrepreneurs are just problem solvers at their core.
    • John mentions this speaks to the constructs of pioneer, settler, and town planner we spoke to Chris Williams about in Episode 229 and gives a quick review of the differences. These come from Simon Wardley.
    • A good pioneer (which would likely fit an entrepreneur well) might not make a good town planner like an operations leader would to take an example. The settling phase is that transition phase between pioneer and town where if you get it wrong you may not have a town at all. Someone may be well equipped to handle multiple phases but very well might not be. Each phase in the model has a specific set of skills and is important.
    • Al had read that Disney would not allow the Imagineers to meet the accountants because the pioneering types and the town planner types do not mix well sometimes.
    • John posits that a good entrepreneur is not by default a bad leader. But, they do need the mentality and skillset to cross the phases we discussed. Not everyone may want to do this, and it’s possible a pioneer may not be motivated to stay if things get too settled (i.e. wanting to go blaze new trails).
    • It’s possible someone could cross all 3 phases, enjoying each along the way and being quite good at each.
    • Al mentions Steve Jobs, who was no doubt an incredible visionary. According to his biography by Walter Isaacson, he was apparently a very unpleasant person to be around.
    • The person who takes a company from $0 to $10 million might not be the same one who takes it from $10 million to $100 million. You probably need the CEO instead of the founder for the latter phases (i.e. needing a Tim Cook at Apple eventually, etc.).
    • Nick thinks this may come down to whether you like to build things, maintain things, or do a little of both. He describes a session he saw at the RSA conference 2023 which was focused on the career path of a CISO (Chief Information Security Officer). After 3 years the CISO has a unique choice to go faster (accelerate their progress), keep at it (maintain the same pace), or to slow it down a little (i.e. the organization cannot keep up with the pace of changes). The presenter in this session encouraged attendees to determine if they like to build programs or if they like to maintain programs. If they prefer to build and are at a company that has established security programs, for example, it might be time to go elsewhere.
      • Al says we can see this play out with all types of people (sales, marketing, developers, etc.). There are extremely talented developers who might take a weekend to create a MVP (minimum viable product) for an application and then lose interest. They only want to create and don’t really want to maintain.
      • Al talks about flow states when we are doing work and completely lose track of time. If there is work you enjoy that causes you to lose track of time while doing it or be in some type of flow state, that may be the work you were born to do.
      • “Don’t try and be Charlie Munger if you’re a Warren Buffett….Just understand what you’re good at. Just embrace it. Stop trying to be good at everything. In my opinion, I don’t think you ever will be.” – Al Elliott, taking the opinion that we will be exceptional at only one / a few things and should accept we will be adequate at everything else
      • Al thinks if we are amazing at something, we should lean into it.
      • Nick says we cannot develop the level of expertise that will make us stand out from everyone else if we focus on too many things at once.
      • John says this comes into tension with the idea of generalist vs. specialist. If you specialize too deeply and things change in the world, it will / could be difficult to survive. A good generalist will be able to adapt to a changing technology landscape, a changing economy, or a changing set of circumstances.
      • John agrees we should find out what we’re good at and that it is not the same as developing such a deep specialization that we cannot adjust to changing circumstances.
      • Al was reading about the programming language COBOL and how many banks still use it. If the only thing you’ve ever done is program in COBOL, you might be in trouble from a career perspective. But if you understand software architecture and some of the basics of programming and COBOL happens to be the language you use, likely you can make a move to PHP, Rust, Go, or some other language.
    • If we go back to entrepreneurs and consider the reasons for them creating lots of different things (not all of which work)…
      • “What they’re good at is looking at what the problem is, listening to what people are saying…and then creating an MVP to go out there and satisfy that need , and just test it.” – Al Elliott, on entrepreneurs
      • Al tells about a an idea for a book he wants to write called Be Rich not Right. When Al talks to people who want to be entrepreneurs he finds they seem to want to be right even though most entrepreneurs are not right when they have an idea to test. Listen to Al’s story about a family member who created a new product by accident that ended up being extremely popular (now sold at Wal-Mart).
      • Many entrepreneurs are good at identifying problems and then recognizing they haven’t quite solved it. Al shares the story of Instagram and how it initially was not a social media platform.
      • “Their skill was looking at what people want and then recognizing it and pivoting to give people what they want. And I think that’s where the most successful business owners and probably leaders are.” – Al Elliott, speaking to the skill of the Instagram team in changing from its initial goal and pointing out similarities in entrepreneurs and leaders
      • Al tells us great entrepreneurs and great leaders converge in the sense that each look at what people want, what is stopping them, and spend a great deal of time on removing the obstacles so people can get what they want.

26:40 – Thoughts on Investors

  • Getting investors to say yes to the problem you want to solve as an entrepreneur is also an element one must consider.
  • Al says he’s not done investments / investors in the way that silicon valley startups do (and would not really be qualified to speak to that). His investment was institutional and was from a bank.
    • Al says he got minor investments from 3 places – friends, family, and fools.
    • Getting an investment from a bank is more transactional and not as much in the realm of relationship building.
    • Al tells us he went into a bank with a cheesy grin and a business plan, and when they would not give him a loan, he went back and stated his business was now called Since the bank was investing in .com businesses (around 2002), they gave him the loan.
    • “When someone with money meets someone with experience, the person with experience gets money, and the person with money gets an experience.” – Al Elliott, a popular saying in the area of investments
      • Al says this explains very well how people can win the lottery and be bankrupt in 6 months time.

28:31 – The Best Bad Option

  • Al reiterates his skill wasn’t in building a company that delivered drinks. It was in finding out there was a problem people could not solve.

    • At the time of the drink business, there was no way to sell alcohol in the UK after hours legally. Al was able to find a way. They would gather credit card information from patrons who ordered beer in the middle of the night but run the financial transaction the next day.
    • When Al went bankrupt from GimmeSomeBeer, both of his houses were repossessed.
    • “It was quite an eye opening experience going bankrupt, having your house repossessed, losing all your money, and then not knowing what to do. But, it was also informative because I was like ‘this is interesting. I now know more about repossession, bankruptcy, about not having money than the average person. I wonder if I could start a company that helped people who were getting repossessed….’” – Al Elliott, on how the experience with bankruptcy fed a new business idea
    • Al mentioned there would likely also be people getting repossessed whose houses he could buy at a lower rate and rent back to them for as long as they wanted with the option for them to buy it back eventually.
      • There were people doing this kind of thing at the time, but what Al was proposing was to do it in an ethical way. Listen to the examples of “sharks” changing prices on people at the last minute or time boxing offers.
      • One of Al’s co-workers from the GimmeSomeBeer venture was the one holding all the mortgages in the types of scenario above (buy the house and rent back to people) because Al was not mortgage worthy after bankruptcy.
      • Because of Al’s personal experience, he could help people “stuck in the mire” who felt there was no way out of the situation when facing repossession.
      • “The worst thing you can do is sell your house at a discount to us. However, if there is no other option for you at this point in time, then the only alternative is it gets repossessed and you never have it. So if this is right for you, then you should do it…but just bear in mind it’s not a good deal for you.” – Al Elliott, on his approach to helping people out of a house repossession situation
      • This specific approach changed the way things happened in an incredible way. Al and his business partner would go to the repossession hearing with people who were days away from having their house repossessed and ask the judge to delay repossession for a short time because they (he and his business partner) intended to buy the house.
    • This was once again looking at the problem / what people want and what was stopping them from getting there. Al was considering whether he could create a product or a service that could remove the blocker / get people over the obstacle. And the answer was yes!
      • Despite giving his customers the option to at some point buy the house back at the full price (not the discounted rate for which Al and his partner bought it), Al says no one has ever bought a house back from them.
      • Al made the process as fair as he could to ensure it was commercially viable to do.
      • They bought 39 houses in 18 months using that methodology.
      • They also helped around 250 people with a re-mortgage, a debt management plan, or advice on what going bankrupt would do during this time because that was the better solution for them instead of selling the house to Al and his business partner.
    • Al says first thinking about the problem creatively in a way that doesn’t limit how you would solve it helped him design the service.
      • “…And then just creating something that people wanted because it was designed to help them, not help me. And of course it helped me…. It was never about becoming millionaires. It was about how do we help someone who’s got a massive problem, who can’t sleep at night? How can we find the best solution for them?” – Al Elliott, on solving a problem by giving people what they want
    • From a business model perspective, rent comes in each month and mortgages are due each month, which creates a surplus for Al and his business partner. The real value he says is the equity they have in these properties. But Al tells us at the time of this recording it’s not an ideal time to be a landlord with taxes making it difficult to make much money.
  • John points out this was not the specialty in doing the mortgage and renting but more having the general experience across several different aspects of being in trouble with a mortgage. John calls what Al was offering people the “best bad option.”

  • Nick mentions building a business based on a previous experience Al has was an example of applying relatable experience. So many people overlook how the experience they have now might transfer into something they want to do later.

  • Al agrees and mentions entrepreneurs tend to dogfood ideas.

  • “It doesn’t matter what you’re doing. If you have experienced the problem you’re trying to solve for other people I always think you’re going to win.” – Al Elliott

    • We talk briefly about David Heinemeier Hansson founding Basecamp.
    • Al also points out the difference in experience when we compare someone whose home has been repossessed and someone who is getting calls and letters telling them in a few short weeks their house will be repossessed.
  • Mentioned in the outro

    • The discussion of persevere and pivot from our chat with Josh Duffney in Episode 233 fits very well here with the discussion of entrepreneurs getting bored.
      • See also our discussions with Chris Williams about getting bored every few years in Episode 229.
      • If you aren’t giving some thought to it regularly, you might not know if you’re bored.
    • In the trimodal IT model John mentioned in the interview (pioneers, settlers, town planners), many entrepreneurs fall into the pioneer category. But you don’t have to be an entrepreneur to figure out which of these is most interesting to you. In a technology career, you can be a pioneer without starting a business, and as one you might be looking for some of the most bleeding edge technologies and tools to solve problems, for example.
      • Maybe the creative iteration you enjoy is optimization of something that has already been built.
      • It’s important to recognize which mode we like to be in of the three mentioned above (pioneer, settler, town planner). The mode in which we are most successful may not be the same as the one we would prefer to be in (i.e. someone may want to be a pioneer but excels more as a settler).
      • The area of destiny concept from Episode 20 is very applicable here also in that you should determine the intersection of where you excel, what you like to do, and the market’s need for it.

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