S2E17 - Knowing Your Numbers w/Daryl Ching

Subscriber-only episode

This week in The Biz Dojo, we're joined by Daryl Ching , Managing Partner at Vistance Capital Advisory.

We talk to Daryl about his path to creating his own business, and how his previous work shaped his journey. Then, we'll dig into entrepreneurship and talk about everything from what makes a great entrepreneur to Daryl's advice on partnerships and more. Of course, we'll also spend some time talking numbers - and you'd be surprised just how much you might be missing out on (or putting yourself at risk!) if you aren't properly setup.

Then on the Podium - brought to you by Beyond a Beaten Path - Seth and JP share some mysterious and paranormal stories as we celebrate National Twilight Zone Day!

You're going to want to connect with Daryl after listening to this one. So get ready to take some notes, and grab yourself a Biz Dojo Coffee (Masters Medium - OR - Dojo Dark) as we spend an hour with a CFO for hire!

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Transcript

Seth Anderson: 0:00

Welcome to The Biz Dojo with Seth and JP season two episode 17. Powered by our good friends at dq airdry. This Week in the dojo we have Darrell Chang, founder of distance capital. JP, I thought this was a great build off of an episode that we had a couple of weeks ago. And extremely insightful in terms of, you know, some of the mechanics behind starting a business and some great tips and ideas that Darrell shared with us.

JP Gaston: 0:29

Yeah, if you're looking for anything for a business that you've started or thinking of starting, have gone really far down the path and maybe need to rethink a few things. Everything in here for Vokes. It was a very eye opening,

Seth Anderson: 0:46

I think the other thing is Darryl, his experience is very relatable to a lot of folks, right, he had the the large corporate job, took a job with a smaller firm, and then ended up venturing out and doing his own thing, starting his own venture.

JP Gaston: 1:00

I feel like that's where everybody,

Seth Anderson: 1:03

everybody's,

JP Gaston: 1:05

like, we talk about the hero's journey. I also feel like that's, and sometimes it's not corporate, for sometimes it's mom and pop shops first, and then you go the corporate route, and then you're like, No, I've done these things. And I kind of feel like, there's a gap that isn't being filled. And I have the knowledge and experience and will to go and actually fill that. And I think that's something and he did some interesting things along the way to like he, you know, took the time to really think out his business name and their marketing strategy and all those things. And not always the thing that people do when they start a business, especially if they've got some sort of product or service that they've they've built out they think about the product or service, not necessarily the all of the little things that go around with being an entrepreneur and running a business.

Seth Anderson: 1:49

Yeah. And you know, you touched on it there, in terms of, you know, taking branding very seriously and marketing it much like last week, in terms of I'm on his website, you know, I'm on Gerald's website right now, and just really well done. different tones, blues, grays, you know, we had that we had the yellow love that

JP Gaston: 2:08

you're into the color theory, because that's it. Like I listened to a lot of podcasts. I've done a lot of kind of marketing, studying. I didn't take marketing, but I've done a lot of, you know, random certifications and courses and all sorts of things on marketing and colors important color is very important.

Seth Anderson: 2:26

Yeah. And you know, what I love is he hits you right up front, with, you know, a few different questions. So what stage are you in? And then it sort of answers, I want to raise capital. So let's get a little bit of info of how they can help you with that. I want to attract investors, they read a little bit of info that can help you with that. I want to merge or acquire another business. I'm ready to sell my business for maximum dollars. So there's sort of like the four points in which you may be, you know, coming to their website in and they give you some context on how they can help and then, you know, they take it even deeper and share with you what are four typical weaker weaknesses of investor presentations? What's my small business worth? What some questions you should ask a business accountant. So if you haven't already left the podcast to go check out their website. You know, head there, Mr.

JP Gaston: 3:22

Subtle, we can help with you being able to listen and check out a website.

Seth Anderson: 3:29

You should do both. Like, listen, you want to be present you want to be in the moment. Yeah, you can just hit pause, come back. We'll be here.

JP Gaston: 3:39

We'll wait. We'll wait for you.

Seth Anderson: 3:43

Vicens, capital.com Darrel chain, they're doing amazing things. I think the coolest thing, you know, not the coolest, but one of the coolest things that they offer is CFO services.

JP Gaston: 3:55

Yeah, that's neat. I never really thought about the importance of a service like that, because so many people like my, when we talked about it a bit in the episode my my mother was an accountant and and corporate controller when she was working, and I appreciate how difficult that role is. And it's one that nobody wants to do when you start a business. You're not you're usually unless you're an accountant, starting an accounting business, you're probably not sitting there going, Oh, I'm so excited about filling out the books, doing my taxes and figuring all that stuff out. That's not top of the list.

Seth Anderson: 4:33

Well, no, and he made some great points around most people hire that sort of in and out once a year accountant. Nothing wrong with that per se but you don't get the full benefit of having a CFO and on the other side of that it's not usually terribly cost effective to hire a CFO, it's usually one of the last positions that gets hired. So you know, the service they offer is sort of that in between, you know, where they're a little bit more than, you know, your average In and out,

JP Gaston: 5:00

once he talked about not like, not only is that in and out, gonna cost you some money and maybe not be the most relevant but like he could actually be missing some things and causing yourself more work and more investment later later because of you know tax purposes and having to go back when when the CRA comes a knockin having to go back and figure out the last, you know, few years of all of your sales and what they actually mean. And it's, it's important that you do it right up front. That's really what it's all about. The other thing that came up a fair bit in this wasn't just about being a financial services provider, it was a lot about leadership, we talked about how he has to run his business and be a leader to his team, and how he works with leaders and what they do for their team. So it wasn't all about, you know, running the financials, we actually got pretty deep into some leadership tactics and books and podcasts and all sorts of things.

Seth Anderson: 5:58

Yeah, I definitely appreciated that. He definitely brought, I was gonna say, well rounded perspective, you know, it wasn't just about financials, it wasn't just about starting a business. He talked about, you know, things you should look for in a partnership, how, you know, different leadership mechanisms that make make companies successful in the first place, how to how to evaluate, or how to put a proper valuation on your company, how angel investors look at a startup and what criteria they might have. So he's a leader in a business.

JP Gaston: 6:30

That's an entrepreneurial venture, who works with other leaders and other businesses to fill a gap that they're missing. Like, he just got this interesting perspective because of what he does, and because of the people he works with all the time.

Seth Anderson: 6:42

Yeah, it's just real. We talked about that. You know, last week is sort of top of mind, but all of his stories were real, they're relatable. And, you know, hopefully you enjoy that joint as much as we did. Yeah. So save yourself the big bill later, and give Darryl and his team a call. And let's get into it. Here's the deal with the steadies to get us there.

Voiceover: 7:17

Welcome to The Biz Dojo, powered by GT. We're, here are your hosts, Seth Anderson, and JP Gaston.

Seth Anderson: 7:27

Welcome to The Biz Dojo, Seth and JP. This week, we're joined by Darrell Chang. And Darrell is the managing partner at distance capital advisory. Welcome to the dojo. Darrell, thank you for having me. Yeah, super excited to have you in. And it was a pleasure to meet you a couple of weeks ago, actually, at a city moguls networking event,

Daryl Ching: 7:45

the new way of networking online is incredible, the way they've set up those breakout rooms. And I think that there's been some real innovation in the way that we've in a short time frame and the way that we network, in today's pandemic environment.

Seth Anderson: 7:56

100% I honestly have met more people in the last three months through things well, basically through LinkedIn and meeting Danny and Victoria and what they're doing is amazing. You know, love how they've pivoted in this whole COVID thing. And there's, there's lots of people that are doing that. What, so they're a little bit about your company. Maybe if you just want to explain what you guys do and, and a little bit about your, your journey to where you are right now.

Unknown: 8:24

I actually started my career in a big business at RBC capital markets in investment banking, doing large scale transactions for your typical fortune 100 companies. So we'd be doing deals for Canadian Tire for Ford motors and things like that. And what we found was that a lot of times when we were looking at transactions, deals fell through the cracks, not because companies didn't perform well. But because the information being provided by companies to investors did not click, there was a miss there was a bit of a communication gap, especially when I went smaller and went to smaller and smaller investment banks. And so I saw this huge opportunity to start my own firm and provide consulting to help small businesses raise capital, because if you think about the business owner, and in your presentation, whether you've watched Dragon's Den or Shark Tank or one of those shows, owners are typically very good at conveying their passion, their vision and talking about their strategy. But you have investors sitting on the other side with a checklist going Did you address competition analysis? Did you address barriers to entry? Did you address regulatory hurdles? And a lot of these pitches were just weren't checking those boxes. So I saw an opportunity to bridge that communication gap, to use my expertise and to help small businesses with the capital raising process. So I've been going in to help small businesses with business plans, three to five year financial projections with their investor decks. And that business actually morphed into a bit of a CFO model. And it all started with one client going Daryl, can you be our CFO? Because we You actually don't have any financial expertise in house. And by accident, I stumbled into the CFO business because it was asked of me. And I just expanded my services to accounting to mergers and acquisitions to strategic advice. Now run a full scale shop with full CFO services, I have five full time staff. And we do the full Gambit. Just because the CFO is typically the last executive position that gets hired in a small business. A lot of times, that doesn't happen until the IPO, or they grow to a certain size where they're forced to. And so that gap exists for probably the longest period of time in a small business. And that's why that that's a huge opportunity for us.

Seth Anderson: 10:41

That's super interesting, I think we're definitely going to dive into some of the work you're doing and some strategies that people can can look to. I'm curious as you went through that journey, you know, from investment banker, to running your own business. Well, what was that like for you sort of looking back on it now your own personal growth? Like does anything sort of stand out in that experience for you? Like, I noticed, you mentioned a couple times you saw an opportunity, and you jumped on it? So I'm just kind of curious, when you kind of reflect on it? What did you learn during that time about yourself?

Unknown: 11:12

Let's start with RBC capital markets. RBC obviously, was a very comfortable environment, it was structured, I had a steady job. As long as I didn't send out a racist tweet, I was not going to get fired. And, you know, it was predictable. And I think they I knew exactly what I was doing. The problem that I found was that, although they preach meritocracy, I found it really difficult to actually get promoted ahead of people that had longer tenor. And so, to me, the meritocracy aspect was a bit of lip service, where it was just pay your dues and do your time and you get promoted within this period of time. bonuses are supposed to be based on meritocracy as well. But I found them to be within a pretty tight range. And it was pretty predictable what you were going to get regardless of your performance. And but the real, the real issue for me was actually the the innovation aspects where they preach innovation, they tell us that we want you to be innovative. So you try to be in you try to come up with unique products. But working in a bank, they don't have to be innovative. And anytime that you're working on a project, no matter how far you get, if a large scale customer comes and wants to do a repeat transaction, it's dropped everything all hands on deck, doesn't matter what you're working on, or jumping back on these repeat transactions. And that's when I realized a large business environment was not for me. And I actually preferred a bit less structure. So when I went to a small, smaller investment bank, I found that my job responsibilities were not clear. They were what I make of them, I create my own path, I was able to suggest ideas to my boss about what I wanted to work on. If it was a good idea, I jump on board and I get right on it. So I started realizing that I thrive in an entrepreneurial environment. And then it came about to the point where Okay, well, if I can thrive in a small business as an employee, can I thrive running my own business was sort of the next step for me. And, you know, I think I'll talk a little bit on a personal level, but because I think this is important, but in my personal situation, I did not have kids, I did not have a substantial financial commitment coming up. And I had a wife who was supportive of my decision to go ahead and start a business and she was working a full time job as well. So we had income to fall back on. So it was it made the decision a little bit easier for me. But when I when I when I look back, I say okay, I've got about 15 years of experience already. I worked in large businesses, I worked in small businesses, I've got a pretty robust Rolodex in terms of contacts, I can draw, if I want to bring in clients, if I want to hire employees, I can bring in people that I've worked with. And I understand the nuances of working in a business, that I felt I was ready to take that plunge. But with all those aspects in place, and and I stress this because you know, I talked to some parents and they say all, I encourage my kids, as soon as they graduate from university, they should go start a business. And unless you want to teach them a lesson about failure, I don't really understand the concept because there are so many nuances in business that you just will never learn from school. In terms of you know, what happens if you have a supplier that reindex on a contract? Do you immediately sue them? Or do you try to work with them? What happens when you have employees that don't work as hard as you it's just all these things you don't know how to deal with until you have that experience. And sometimes it's better to cut your teeth in companies as an employee with more experienced people taking those lessons, and then be able to bring them to your own business. And I found that extremely valuable that that was the right time for me Where was I have that experience. I've built up enough capital that I could take a risk. I to me, I set a benchmark I said if I lose $80,000, I'm going to cut my losses and go back to a job and go back to being a one man consulting firm. So I had a fallback plan. And I had enough capital to go ahead and start so that I wasn't in a position where I knew I would have to raise capital from day one. And so all of those aspects, I think, made a perfect formula for me to go ahead and start my business.

JP Gaston: 15:21

Do you think like, you mentioned that the structured or I will say, overly structured environment that you are at, in in RBC played a played a part in having you leave? But do you also feel like it played a part in in readying you like, is that? Is that what you think would be useful for someone coming out of school, that sort of structured environment for them to sink their teeth into and better understand how things operate before they take those next steps into moving in? Or do you think it's just as valuable that they go into a small business versus a larger Corporation?

Unknown: 15:54

Absolutely. And I think what makes me unique is actually my vantage point of having been in a large business and a small business. Because certainly, when you go into a small business, especially a startup, there isn't room for much structure, because you need to be nimble. But as a company grows, and transitions from small size to medium sized, medium sized to large size, you can apply a lot of those practices that you learn from a large business in a large structured environment. For example, when you grow to a certain size a CEO cannot be making every day to day decision anymore, you're going to need some processes in place. So if you have sales people, are they empowered to set credit terms? Can they follow guidelines, so that you have managers making decisions, rather than having every decision forward up to the CEO, and these are concepts that you learn in a large business. And, you know, when I went to small business, I felt the urge to one implement all of these structures immediately. And I thought, okay, slow down. At some point, these structures make sense, but not not on day one. And there was a bit of a balance for me to figure out when it is I should start implementing some of these processes, so that I don't overburden the companies with red tape. But make sure that not every employee is flying by the seat of the seat of their pants and just making decisions and running in different directions. So there is a bit of a balance, but certainly, the large business and small business combined makes me a much better professional today, and much better entrepreneur today.

JP Gaston: 17:22

That's exactly. Not too long ago, I finished my project management, professional certification. And that's exactly how I felt coming out of that. It's like, oh, I've got all these new, fancy new tools and stuff. And I know that I'm working in this environment where that framework isn't there. And that structure isn't there. And I really want to implement it. And then I realized that you can't just implement it right away, eventually, you need to work towards it. But trying to conquer the world on day one is not not going to happen. Right?

Seth Anderson: 17:51

There. I'm curious, like, just hearing your checklist that you went through. And I think that's ideal state for anybody who's going to, you know, start their business, some, some version of that. But even with the 15 years experience, you've got the nest egg of funds, everything's sort of set in place. What were some things that maybe you underestimated, or were difficult in those early days of starting your own business, even even though you had all those checkmarks in your checklist.

Unknown: 18:18

Everybody thinks revenue is coming sooner than it ever does. So I had been in a one man consultant, I had a list of clients, I had clients coming through through word of mouth and referrals. So I said, Hey, if I drop money on marketing and branding, then it's going to be easy for me because I was already getting so much business just through word of mouth. So I actually invested about $33,000 into my marketing campaign a few years back to rebrand. So the distance, logo, distance, name, distance website are is only about three years old. And it was a decision decision I made that I want to go beyond word of mouth, I want to invest in my own brand, but hired a marketing agency to go through the whole process where they No, they actually took testimonials from entrepreneurs, and we whiteboard a whole bunch of ideas to come up with the name and things like that. So we went through the whole process. I was blogging once a week, we were doing search engine optimization. And I figured easy clients are going to come soon. I underestimated the sale cycle when I'm working with new prospects for CFO services that are cold rather than warm referrals. And I probably went about five months before I closed my first client through that process. And that shocked me a little bit because I was used to getting clients or word of mouth and referrals. So the trust was built already and closing clients within a month of speaking to them. But when you're dealing with brand new clients that are learning your brand from scratch, learning who you are from scratch, it takes a lot longer to generate that revenue to actually develop that relationship. And so, and this is not just me, but me working with other startups as well. Everybody underestimates how long it takes to generate their first dollar revenue, that there's so many things outside of your control that you have to be patient. And this is why one of the things I stress is, whenever you think your budget is when you start a business, double it, and ask yourself, what happens if I, if I go eight months with no income, what happens if I go 12 months without income, for me with consulting, so it's a shorter time frame. But imagine you're launching a b2c product from scratch, where you have to build a brand from scratch, you could be 18 months before anybody learns about you, and figures you out and buys your products. So that's one of the advice I give people is, make sure you've got that capital ready, and you've got a backup plan, so that you don't lose your house in the event that you're the revenue doesn't come in, when you think revenue doesn't come in when you think it should.

Seth Anderson: 20:50

One of the so we've hit on a couple of things there, you know, for anyone who's looking to start their own business or go down that road, touched on personal personal goals, sort of having that personal checklist, particularly, you know, what's your financial situation and that kind of thing. One of the points that you mentioned is having an exit strategy. Tell us a little bit more about that. Because I think that's an interesting. I'll call it a dynamic dynamic, because I think most people get into a business kind of thinking they're going to do that forever. But nothing is forever. So I'm curious on that point that you you sent us,

Unknown: 21:25

there are two, two different discussions on exit strategy. One is your business fails, and you have a fallback plan. And the second exit strategy is, I'm extremely successful, and I want to sell and exit my business, because I've made it and throw it over to an acquisition or IPO. So maybe First I'll talk about the first one. And I think it's more relevant only because over 90% of businesses fail. And so when you start a business, you almost have the extra to have the expectation that there's pretty high probability that it's going to fail. And it sounds pessimistic, but it's realistic. And with the exit strategy for me, I guess, I'm running a consulting firm. So it's not the same as every other business. But basically, I was going to go from a one man consulting shop, servicing two to three clients, to having multiple employees servicing 10 to 15 clients. That was my transition. And that was my expansion strategy. And I said, so I hired my employee, around the time that I started up branding, hired my second employee, so I was taking a risk and making sure that I had people trained and ready to go in the event that clients came in first, even though I was losing money during that period, because I didn't have enough revenue to support these employees. But I did say to myself, if I see my bank balance dropped by $80,000, and I don't have a client yet, I'm going to have to layoff those employees and just go back to being a one man consulting shop. And I had to, you know, when I did my business plan, there was another Boss, I had to run this by, and that was my wife. And getting my buy in from my spouse was so important, because I've worked with business partners before that did not get the buy in from their spouse, and they had someone you know, breathing over their neck going, are you generating revenue, what's your fallback plan, when you're going back to a real full time job, and having that, like, you know, in your ear all the time is extremely stressful, will force you to generate revenue quicker, and might force you to make some hasty decisions. So getting that buy in from your significant other, or whoever your partners are, that you work with, or that you live with, or that you deal with, that are important parties in your life, getting the binds important for that reason, as well. So clear communication, does this what I'm doing, here's the risk I'm taking, here's my exit strategy. And then she was fully on board and supportive of that decision. So that that was helpful for me. And so really just having that plan and budgeting out and going, Okay, this is how much I have to lose, before I become become worried that I'm going to start losing things on a personal level. Before, I'm going to start, I'm in risk of missing my mortgage payment, before I'm at risk of being able to send my kid to college. And you need to know that risk, because you don't want to get there because there's things that you just cannot lose as a result, because entrepreneurship can be the most rewarding experience in the success. But it also could also can be the most devastating if it goes the wrong way and you invest too much capital into a venture that just doesn't work out. The second exit strategy, obviously, is the fact that you know, every business owner, when you start a business, you reflect and say, is this something I'm going to do forever? Because it's a passion project, and I'm happy to do this for the next 2030 years. Or am I looking for a three to five year exit? Or am I looking for a 10 year exit. And for some people, they want to start a business but they all they want to start it grow it and a lot of people recognize that I'm good at starting businesses, but I'm not good at growing because it's a different skill set to go from small to mid size to medium to large size and I'm not going to join myself when I have 200 employees, and you know, there's a corporate structure, I just like starting things. So if you're in that camp, obviously, then you're thinking about how to make that exit. And the way to do that is to build a business so that it's attractive enough for investors. In that you have a stable structure in your company, you've got solid employees and a strong management team that can run the business that where you can go away for two months, and it continues to run, where you're generating solid revenue that's recurring. it's scalable, and you're able to generate sales through marketing. When you create a business that's attractive enough for investors, you are able to make that exit whether it's going doing an initial public offering, or selling to another business. But it's important to come to terms with what your goal is with that business. And if you have a partner, it's especially important for you to be on the same page, because I've seen situations before where one partner one to exit, but another partner thought it was a long term project. And you've got a disconnect there all of a sudden, and that can turn into a breakup and a pretty large fight. So it's important to understand all those goals ahead of time, why you're starting this business? And what is it that motivates you to start a business?

JP Gaston: 26:16

So you mentioned the entrepreneurs recognizing their own skill sets, or lack of skill set, I guess, was more The important thing to recognize, what are some of the skills and personal attributes that are particularly successful, when it comes to entrepreneurship and the experiences that you've had,

Unknown: 26:32

I have found that the best businesses are run by CEOs that are good leaders, and invest in their people, and believe that hiring the best people is the best strategy. So you know, there's a tendency, sometimes when you start a business, that to have everything, as low cost as possible. Only contractors, only minimum wage people, you know, reduce my costs. The problem is when you work that way, and you have that mentality, and you only bring in the lowest skilled people at the lowest salaries, you're going to, you're going to turn and you're going to people that can't critically think, and you're going to be making every decision. And it seems like the cheaper and more cost efficient option at the time. But it's going to turn out to be a more expensive option, because you're going to be involved in every business decision every day, and you're never going to be able to grow your business. So from my perspective, how I gauge success in a company is not how good the product is. It's not how good the bottle or the market is. It's not how good the marketing strategy is. It's the quality of the people. And when I go in, and I meet the management team, and I meet people, and I think these are wild, these are solid people that are critical thinkers, while this person could actually run marketing, this person can actually run operations. When I see the CEOs are hiring future managers, future executives, future leaders, and not looking at just short term hires are in contract. That, to me is a recipe for success in businesses.

Seth Anderson: 28:02

Of that perspective. One of the things you mentioned is when you made the transition from the big corporation to the small company, less defined roles and responsibilities. You sort of touched on, and I think that's a thing on a smaller business, you know, everybody's kind of got a pitch in and do their thing. But if you're in the CEO chair, and you're the founder of this company, and you've hired some great people, what do you do to make sure that they stay engaged and that they have clear roles and responsibilities? Any advice on that? Because I think that's, that's a road where if someone you hire a great person, but they don't really know what they're supposed to do that can that can go south as well.

Unknown: 28:38

For sure, I believe in full transparency. And I think some people believe I'm over transparent with my employees in terms of my vision for the business. My corporate goals, know what are my goals for the business. And, in fact, I even tell them, though, you know, my expectations for revenue for number of clients for profitability. So they're all on the same page. Ask them for their opinions on what the goal should be as well, because to the extent that they feel that they influence the decisions of the company. And you because, from my perspective, a good idea can come from anywhere. So for example, we had a recent discussion about Should we move into personal tax returns, and I engaged everybody in the company to weigh in and provide their opinions on whether that's a business we wanted to get into as an example. When they feel that they are part of the decision process. with them, they feel more in tune with the company and they feel like they are driving the company. The other piece is compensation. And in all my employees are received bonuses based on performance. And even if in a year that my company loses money, I will pay money out of my own pocket to cover bonuses, especially for my junior employees. Because there's nothing less motivating than to create an upside compensation structure for an employee and say, Oh, sorry, the business lost money so nobody gets bonuses. And that's very Common, and you'll hear that a lot. But guess what happens, then you please go well, it doesn't matter how hard I work, it doesn't matter, I bust my ass doesn't matter if I do, if I perform the best possible, all these factors out of my control are going to influence whether I get paid or not. And so really, when I set performance targets, I make sure that they're measurable, that they're obtainable, that they're transparent, and they're clear. And so that there is really no argument at the end of the year when we do our performance reviews and do an assessment. And they're never surprised at the bonuses they get at the end of the year, and I will pay them out. Even if my company loses money, I will take money out of my own pocket, because I want to make sure that my employees continue to be motivated, and feel that they're always rewarded, if they if they complete their objectives.

Seth Anderson: 30:50

so inspiring. Could I totally agree, everything you just said there? I'm interested on company valuation. And I think a lot of entrepreneurs get into this space, and they're trying to figure out what is my company worth? And I know, there's some pretty standard formulas like EBIT da times five and things like that. But I'm just curious, you know, from your perspective, if someone's starting a business, what's the best way to calculate your worth? Or your your value? I guess? And is there a value on what you just talked about in terms of having great people on board like does that? I don't know if that brings actual market value, but how do you factor that into the value of your company?

Unknown: 31:30

for a company that's already profitable, and mature has years of experience valuations actually very easy, because like you said, you do comparables, and you look at a multiple of EBITDA, but let's take a company that has that's pre revenue, or has cumulative revenue, and obviously not profitable, because they're still in growth mode. Applying a lot of the same metrics doesn't work. I know that people have tried doing discounted cash flow models, where they do through your projections. And then they determine what the value is based on their projections. But they don't really mean much. So I worked in an angel network, before where I was on the Investment Committee called Maple Leaf angels, and really was a lovely Angel network that works, what they do is that they have a number of categories. So they'll have management team, they'll have barriers to entry size of the market. Competition. And so you have seven, eight categories, and you wait them and everyone has different waiting, but management team is a substantial waiting for all these Angel firms. And so let's just say you allocate 30% of the score towards management team. Really what they're looking for is, does management check all the required boxes for this business? Do you have marketing covered off? Do you have innovation covered off, give product cover off, if you're manufacturing a product you have manufacturing covered off, if you're going through the retail channel, to somebody you know how to negotiate with retailers, if you're doing e commerce is there an e commerce expert. And so what we want to do is make sure that you're checking all those boxes. Now it's possible that one person can wear three hats, and that's okay. But what they're looking for is, are there any absences in terms of boxes unchecked, or you're adventuring into this business, but nobody really has the expertise in this space, or in this area, and we identify weaknesses. So you allocate a score on management, and then you'll allocate the score based on the size of the market, you'll allocate a score based on their go to market strategy. And then, and so it's very subjective. A lot of times, if there are five different people in the room, you may get five different scores. But that's why you have an investment committee, that all weighs in together, and then you'll be within a certain band in evaluation. So if you are in a business, that's pre revenue, the maximum valuation you could probably obtain generally is probably about 5 million, if you check every box, but you're about ready and you've already got proof of concept and you're ready to hit the market. And whereas if you already have revenue, profitability, then and you have been, obviously they've been can be higher. But that's the way that valuation typically works in small businesses is based on where you are, you've got a low and a high, they score you based on all these metrics. And the higher you score, the higher you are in the band, the lower you score, the lower you're in the band. And that's typically how it's done in this realm.

JP Gaston: 34:22

You mentioned in their go to market strategy. And we've we've talked about it a little bit, I think for a lot of entrepreneurs, especially in COVID times, I will call them, you know, they've started a little business out of their garage or out of, you know, the shed in their backyard or whatever they're they're working out of, and they don't have a strategy, they just they, you know, they've got a product in their head, they start making some sales, and now they're in this space where they know the products, they know how to build it themselves. They're ready to take that next step from selling to friends and family to actually having a business. But they might have heard the term go to market strategy, but they don't actually know what that looks like. So maybe if you could give us give a bit of a breakdown of what a go to market strategy actually is and How it can be utilized to improve your business and your business model.

Unknown: 35:04

So you know why that's a great question is because the go to market strategy is probably more important now than ever before. If we think back to the 80s, and 90s, you could place an ad on TV, radio or newspaper, and you get 10s of 1000s of eyeballs to it was actually fairly simple because there were very few mediums that attracted people, you fast forward to today. Now we've got PVR. So people don't watch TV commercials anymore. They're serious radio. Now, there's so many different stations, and everyone's following social media. So there's so much more competition for eyeballs than ever before. And so the question of where to advertise this become so much more difficult in terms of reaching your audience. And so from my perspective, the marketing is actually a much more and more important component of your business plan. And in fact, I would go as far to say, as a mediocre product with an amazing mark, go to market strategy has a higher chance of success than a an amazing product with a mediocre market or go to market strategy. So for go to market strategy, you really you need to really key in on understanding the pain point of your product, who your audiences, where your audience is likely to see any advertising, if you were to put in money into those ad dollars. And if it's digital marketing, then which forums are you going to be on for digital marketing? How are you going to get your message out how much education is required? And, you know, from our perspective, when we put together financial projections, we have a concept called cost per acquisition. And basically, what that means is how much does it cost to acquire acquire a new customer as a new user? And understanding what cost looks like roughly, is going to be important for your sales projections. So if you do a sales projection, and you present to investors, and you've got a hockey stick sales graph, the obvious question was how how did you get the hockey stick sales graph? How are you going to get your revenue to double every year. And if you're able to say, Well, it's because I'm going to advertise on this forum, my cost per acquisition is $5 per user. And I have some experience, because I've been at seven and I know I can get a little bit more efficient. And through this new strategy, in year two, I'm going to be bringing my cost down to $4 a user, and here's how much I'm investing into marketing. When you're able to divulge that type of information, you gain so much more confidence from an investor. Now you're obviously nobody has a crystal ball, and you could be completely wrong. But at least you've got a well thought out strategy. And in a lot of these presentations, they're not looking for you to predict what you're going to do. They're looking for a well thought out strategy, and the fact that you have a plan. And to me go to market strategy, a lot of times people just put up a slide and they go digital marketing, social media. And that's just, it's, it doesn't explain anything you need to really go into, here's the forms we're going going into, here's how I see acquisition happening. Here's the cost per acquisition that I can see, using this method of marketing. And getting into more details

JP Gaston: 38:09

on that. I highly recommend advertising on podcasts. Just personal.

Unknown: 38:17

You know, for clients come rolling in, I'll come back on and reinforce

Seth Anderson: 38:23

the URL, you mentioned cost per acquisition. And I'm thinking back to we were talking about revenue, and a lot of business owners or startups focus on the revenue side takes a while for that to come in. Are there any other financial metrics that people should pay attention to or have on their radar radar early on? I'm thinking like ARPU, or am poor average revenue per user average margin per user, like, do you have any recommendations? I know every business is a little bit different, but some, some good financial metrics to get in place early on.

Unknown: 38:52

So if I stick with the market strategy, I first I'm going to say the lifetime value of your customer. In terms of Do I have repeat customers? Do I have a consumable product that people are going to have to buy over over and over again? Do I have a product that last 510 years, so they will buy from me and I won't see them again. So understanding what you can make from the lifetime of that of that customer is pretty important. The number one metric that everyone needs to follow is cashflow. And it's and the number one reason why businesses fail is because they run out of cash. And so, and I think there's a there's a lack of recognition that profitability is not cash flow. So there's a misconception that if I look at my income statement, I see how much profit I made each month. That's exactly how much cash I'm going to have. Well, that's not necessarily true because you know, you have payable terms, you have receivable terms. Sometimes you make a sale, you don't get paid for 60 days. But you'll get you'll get the sale immediately on your income statement, but you won't see that cash for 60 days. Sometimes you will make an investment in capital expenditures, you'll put some development into your website, well, then her cost doesn't get booked on your p&l, it gets capitalized on your balance sheet. And so understanding your cash flow, doing a cash flow, a weekly monthly cash flow projection, and knowing what your cash burn is, when you have to really start generating revenue before you get into a cash flow problem is absolutely vital. And, you know, I think, for a lot of people they do when they, when they say come up with a budget, they say, Okay, well, I'm going to spend 20 grand on marketing and spend 20 grand on this 30 grand on this. And so my budgets 100 grand, well, we don't know your cash flow unless you map it out monthly, right? Because you're going to burn this amount, okay, my first sale isn't going to come to month five. So I'm actually going to burn four months of this before this comes in. And so one of the first things I work with for a lot with a lot of my clients is during that 12 month cash flow projection, because everyone's thinking about year two, year three, I'm thinking do we survive this year? Because for a lot of companies, that's actually the more important question. And that's where investors actually get spooked A lot of times, is they're not thinking about whether you can make a grand exit in three years, they're thinking, do you know how to survive the next 12 months? with a limited amount of cash?

Seth Anderson: 41:15

just kind of want to geek out on the formulas a little bit? You mentioned a couple there. So lifetime revenue, if you're a new business, what's How do you calculate that? What what's the actual formula there? So it so that, you know, just thinking out loud? Because you may not know how long you're going to have a customer force? Are there like some benchmarks? Like how would you How would you actually calculate that?

Unknown: 41:37

Let me expand on that in terms of not just the calculation for that formula, but what I typically do in a financial model, let's just say you have a consumable product that people buy every month as the shampoo or something like that, right? So what I do is I estimate, okay, let's, let's look at patterns and behaviors and some of our content, sometimes you need about a year, two years of data to get there. Otherwise, you're guessing, but maybe it's guesswork in the beginning. But you know, what, when I reach out to customer and I close them, they're gonna buy a shampoo 50% of my customers or customers are gonna be satisfied, and they're gonna keep buying. So we have that assumption, great, sweet routine, 50% of my customers, out of that 50% 90% of my customers are going to find every month, and others don't use the shampoo as frequently. So I'm going to say that 50% of those customers will buy every two months. And then I'm going to have a drop off rate minister, well, let's just say that I lose 5% of my customers every year because they find a new shampoo product they like better because there's competition out there. And so you map out all these different metrics, and then you're able to calculate your total customer base on an ongoing basis. And that's how we help our clients build these financial models, is we actually have the drop off rates we have, how many are recurring buyers, how many by every month, how many by every two months. And the last piece is the viral component of, well, how many of these customers are going to refer this product to a friend, and that friend is going to jump on. So we actually do our thinking into all these different variables and come up with percentages that we make assumptions about each year. It's not only important for running your business to think that way, because that's the reality. But it's also proves to an investor that you've actually really thought out how your revenue actually grows and the behavior of your customers. And I think a lot of investors are impressed when they see to what extent we go to prove our revenue and not just show a hockey stick graph.

JP Gaston: 43:42

So you mentioned that there's some importance to setting up accounting early. And I imagine there are some folks who are listening to this saying ARPU, what is it EBITDA? What is that? I don't know, I'm not sure what that is. So what are what are some of the paths that that an entrepreneur could take? When it comes to accounting? Like I know, there's, you know, there's some online things, there's some smaller firms, there's some larger firms, but what would your typical recommendation be for for setting up accounting.

Unknown: 44:11

So the most typical small business that I walk into as a bookkeeper that they pay anywhere between 25 to $35 an hour, and they do a notice to reader annual financial statement with one of the accounting firms, it could even be one of the large ones like the one of the KPMG, or the Aronson Young's. And in 99% of those situations, when I go in and look at their financials, they are a complete mess. And the reason being that, you know, with a bookkeeper, they're generally good at entering basic transactions. So the issue an invoice to a customer, if there's a payable, and they issue a payable, and they do a check out of the accounting system, but when you have anything complex, so if you have put your own money and there's a shareholder loan involved, they probably Will not a book that if you buy a piece of equipment and need to capitalize it and put depreciation, they probably won't know how to do that. And when you engage in accounting for notice to reader, a notice reasoner basically says the accountant did not review any of the information and they relied 100% on management for numbers. So it covers their ass, they don't care if the numbers are correct. And what you have are completely inaccurate financial statements. And I'll give a give a some some examples. I walked into a company before where they thought their financials were in good shape. Then I pulled the balance sheet and I say, okay, so it looks like the company owes you $20,000 I see shareholder loan 20,000? No, no, I've put up like at least$150,000. Well, that's not what your balance sheet says. your balance sheet is 20,000. And it just hadn't gone through the effort of calculating all the personal expenses throughout for the last three years into the business. And you have to have that established when you go raise capital can ended because investor is going to ask how much are you owed as a shareholder as one of the key questions. And so it gives you that as an example. And so if you're down that path of a bookkeeper slash, notice to reader, chances are your financials are incorrect. And when you go, when you get to the point where you're raising capital, and you go through the due diligence process, you're probably going to come back and do cleanup on your financial statements at some point. And it's a very expensive process, the further back you have to go. So my advice is to at least hire an account manager level person on for for accounting. Some of that could be a call it anywhere between a 60 to $80,000 salary. But at least somebody who is certified as a CPA, or has experience running accounting as a manager had a manager level, so that you're getting the right expertise, or putting the books together, these people will know how to set up the accounts correctly from the start. When you open up QuickBooks for the first time, and you're setting up your accounts, they will know how to set up the accounts. If you come across a transaction, that's not normal, they'll know how to book it. And so that's one method. The other method, obviously, and I guess this is self promoting, and part of the reason why I'm doing this podcast, I guess, but it's to hire a CFO service company like ours, where you actually engage us on a month to month basis, we do monthly financial statements, because we don't want to be going a year back and asking to remember what this transaction was that came out of your bank statement on January 2 on 11 months ago, and it usually answer's no. So we want to avoid that. And we actually want to make sure that we have the financials accurate on a monthly basis. What that does, if it's accurate, is one with real time monthly financial statements, you actually have metrics to improve your business. So you can see in real time, if you're slipping in a margin on some of your products, if your expenses are getting out of control, in certain areas, your financials will tell you that right away, and you can make that change immediately on a month to month basis. And the second part is when you go and file your taxes for urine and complete your financial statements. It's a seamless process, because they're all accurate. And we've been working on it every month, and there's no surprises. And you know, the fallacy of doing your accounting once a year, which 90% of small businesses do is that they forget what happened in January, February, March, April, May. Heck, some people forget what they did a month ago. And so the process of putting those financials together becomes a lot more painful, if you haven't been monitoring it properly. But having accounting expertise in place, a lot of people look at as a cost center and they say, I know, I know I have to do that. I know I got it, I might do my taxes once a year. But really, you can turn accounting into a tool that helps you with your business actually helps you a sales helps you improve your margin, helps you identify whether your vendors are doing their job correctly, and that you're getting a good return from all your vendors. If you have a marketing agency, your financials will tell you how well you're doing on your direct to consumer sales, versus what you're spending on marketing. And then you can turn to them with the results. So this is all of the things the all the benefits of actually having proper accounting in place from the start.

JP Gaston: 49:10

That's, that's awesome, because there's so many people who, like I was saying earlier that you know, they're in their garage, or they're out of their shed, and they don't they, well, now they go online. And they download a piece of software and they think that it's going to manage their finances for them. But then it's still only as good as the inputs, you provide it. And I've

Unknown: 49:29

yet you know I have yet to come across a software that is automated enough. I think there's enough complexity in accounting that it does require a person with expertise Still, we may see a day where I get replaced by a robot, but I just don't think we're there yet. And I think that you do require the expertise because a lot of transactions do require some critical thinking and judgment calls. And it's not as easy as looking up the rule book on CPA and making a call based on a rule book because there's gray and accounting and how you do the accounting Learning is important when you present to investors because, you know, the investors are going to judge your company to a large extent based on your financial statements. So how you present them and what's in them is critically important. When you go to raise your capital,

JP Gaston: 50:12

I know how important this is only because my mother was an accountant and a controller during her career. So I, as a child, I got to hear her come home and complain about all of the things that needed to be done to dig into some of the expenses that they were dealing with to better understand the business.

Unknown: 50:28

And, you know, we've been hired to repercussions of poor accounting. So we had a firm come to us and what they weren't able to make payroll. And they were surprised by it. And they would be they were blindsided because they hadn't an account external accountant that wasn't watching their cash flow, they just do the front end their financials every quarter. And they were blindsided. And they're like, we know we need something else in place now. Because it's, it's unfathomable that this happened. I've had clients come to me and say, now we're getting audited by CRA now. And they they're challenging three years of tax returns. Well, when you go through a process like that, you spend 10 times more than if you had a CFO or accounting service in place. When you're fighting CRA and going back three years and fighting interest in penalties, it becomes a lot more expensive. So I mean, the repercussions of not having the accounting in place, even though it seems like every dollar you have today should be going towards business development, or technology or something that generates revenue, you will get burned by not putting a single dollar into accounting today. And it's going to cost you more in the future than if you were to put a few dollars in today to make sure you've got processes in place. So I think it's very worthwhile.

Seth Anderson: 51:44

One of the trickiest things, I think in business is having is entering partnerships. And, you know, we mentioned you mentioned earlier being on the same page and knowing what each other's goals are, because that can lead to some pretty tricky situations down the road. But any advice to folks that are working on entering a partnership on on some of the common issues that come up, or some things they really need to think about before, you know, engaging in that,

Unknown: 52:08

I'll start with choosing a partner. And if you've already done that, then too late, but I'll give this advice anyways, from my perspective, a partner is somebody who balances you. There's a yin and the yang. And so, you know, for example, I see sometimes I see two partners that are exactly the same in terms of go getter, entrepreneurs, type A personalities, Chase every shiny object, don't leave no stone unturned. And that's a little bit dangerous, because what happens then is that there's a lack of focus. So if you know that you are a type A personality, that you're willing to chase shiny objects that you want to grab every opportunity possible, you want a partner that is more analytical, a little bit more conservative, is going to hold you back and say let's think about this a little bit. And make sure that we've done a bit of due diligence before we dive into this. And so I believe that there's the balance from that perspective. The other piece for partnership that I think is important is complement complementary skill sets. So there's generally two types of entrepreneurs that I know there's a lot more but the two most common ones are those of the innovator who's really good at creating products, and as you mentioned in their garage, and are creative and create product. And then there's the marketing people who are brilliant business development people. And so if you are an innovator, and you know you're you're the innovator, you want to partner up with somebody who knows how to sell the product and do business development and do marketing. And vice versa. If you're the marketing person, you want an innovator on your side. And but essentially, you want people that complement your skillset, you don't want to have the exact same people. As a partnership. I always advise that do not do a 5050 partnership is actually quite common. But even if you bifurcate rules, and people have different responsibilities in staying in their own lane, you're always going to have decisions that are a little bit gray. And to have a stalemate is a recipe for disaster. In my opinion, I think you should always have a 51% owner at a minimum, or you bringing the third partner with a smaller percentage of let's say, a 10% equity stake, as a tiebreaker, so that you always have the ability to make a decision, a critical strategic decision. The other advice that I give partners is you if there's never going to be 100% equitable relationship. And if you're constantly focusing on what you're bringing to the table, and what your partner brings to the table, you're going to drive yourself insane. You know, I went to a seminar and asked people, how many people feel like in their group project that they're doing the lion's share of the work and almost everybody in the room put up their hand. There's this self bias that we do all the work, I carry the weight, my partner isn't carrying the weight as much. And guess what your partner probably is thinking the same way and so too One of my key pieces of advice is don't think about that don't stress on that go into relationship knowing that the relationship is likely going to be a little bit inequitable that one party is probably going to bring a bit more to the table than the other. But as long as they work hard, and they work together harmoniously, then it should work out. The last piece of advice that I give partners is draft the prenup, make sure that you've got the exit strategy in the event of a breakup because over 70% of business partnerships break up, it is very likely. And it could be also just one partner wants to move on that they were ready to move on to the next project if they want to start another business. But having terms ahead of time on how that breakup occurs, and discussing it ahead of time is absolutely critical. Because you don't want to be arguing about valuation and who keeps the business, or else you end up in court. And the lawyers are the big winners of all this and your business blows up, you spent all your money on legal fees, and all of a sudden, you're both unemployed with no business. So make sure that you've got at least the indicative terms of Okay, let's map out the scenarios. If I want to leave if you want to leave if you know, how does that look? How does that work out? How do we determine valuation, all those terms need to be mapped out ahead of time, and at least on a high level thought of. And to an extent where I advise I to actually have an agreement signed, the partnership agreements signed ahead of time before you start getting into business is when the business becomes successful, is when fights actually start to happen when your business is actually worth something is where a fight may happen.

JP Gaston: 56:38

It's funny, that's just a quick reminder to our listeners, that this is not a relationship podcast, although all of these tips probably apply in both situations. But that that is something that we've heard before and on in some of our recent conversations about you know, entering partnerships is that the when when things fail is not as big of a problem as when things are successful. And you have to figure out, you know, you when people are only making 2030 bucks a piece, it's not a big deal. But when you have a $2 million valuation of your company and someone wants it wants to exit it, it becomes a little bit more complex.

Unknown: 57:14

I mean, the pie the pie is only worth fighting for if it's a substantial size right? So

JP Gaston: 57:20

depends on the flavor of the pie to cherry pies,

Seth Anderson: 57:26

verify alright Simon Darrell, maybe just one more thing here before we we get out of here. But what are you doing for personal development? How are you? What are you working on? What are you staying current any tips on good books, podcast, stuff like that?

Unknown: 57:42

I've read several books. Some of my favorites are Dale Carnegie, how to win friends and influence people. I have a sales advantage book as well from from Dale Carnegie. Good to Great for from jack Welch's is a great book as well. And a lot of times, it's a soft skills that I'm continuing to work on. And I find that in business to be successful. It's not, it's never the technical aspect, right? The most technical people and the most educated people are not the most successful. It's the people that are able to build relationships and manage people. And that comes down to managing clients. And that comes down to managing my employees. And the more effectively I can do that the more successful I will be as an entrepreneur. I'm also in a couple of networking sessions. Obviously, Sydney moguls has been extremely helpful in creating a network of entrepreneurs, and people that I can bounce ideas off of, when you start a business, if you don't have a partner, it's a it's a lonely place. You know, if I get if I have a challenge in my business, I can't run to an employee and and ask for advice. Some, sometimes it's a little bit more complex than that. And so having a group and network of other business owners that you can bounce ideas off of tell them the challenges you're facing and get their feedback on how they face the same challenges is pretty critical. And you know, the networking aspect in terms of just challenging each other. Hey, let me run my sales pitch by you and give me some feedback on what you think on whether you would buy my product or not. Or why is it that I'm getting a sale or slow sales cycle, maybe you can give me some ideas. But it's constantly getting, getting that feedback. Because when you do something like a sales pitch, as a business owner day to day, when you get into a process and you are doing financial models day to day, it's very easy to get caught up in doing the same thing and never improving. And so I'm always seeking feedback from my network of peers on Am I getting stale? What can I do to improve just because the world is changing so much and we just have to keep adapting, and keep making ourselves better

JP Gaston: 59:55

if we want to stay alive. So speaking of keeping, adapting, and keeping you continuing to improve yourself and your business. How can folks get in touch with you and your business and work, work work with you going forward, we got a lot of a lot of entrepreneurs who are probably now chomping at the bit to get get some insights on on their accounting and their financials.

Unknown: 1:00:16

I better get some more I probably add a server to the website. So my website doesn't crash right after this podcast.

JP Gaston: 1:00:22

I hope so. I hope so.

Unknown: 1:00:25

My website is www dot distance capital calm. So that's v as in Victor, i s t a n C, E, capital calm very quickly. The word distance is actually the combination of the word VISTA and distance. And the marketing agency came up with that because they said, when we interviewed people, they said Darrell sees the big picture. So the word VISTA came up, and other clients that he takes me the distance he gets me ready. And so we have VISTA and distance to make the word resistance. And just so everyone understands how the branding worked out. So it's ww distance capital Comm. Or you can email me directly at Darrell da RYL. dot Ching, CH i n v, at distance capital comm

JP Gaston: 1:01:09

so you can see where you want to take people and then you take them there. That's perfect.

Seth Anderson: 1:01:14

That's exactly it. This is an absolute pleasure, Darrell, I really appreciate you popping by and we look forward to keeping in touch and seeing seeing you down the road here.

Unknown: 1:01:23

JP, thank you for having me. Thank you for putting this podcast together. I'm sure you provide a lot of value. A lot of your listeners that are looking to start businesses and grow businesses. So putting out this type of advice with different speakers, I think is a huge value to do to the community.

JP Gaston: 1:01:38

Okay, well, thanks so much, Joe. We appreciate you coming in. Thanks, guys. Take care. Have a good one.

Voiceover: 1:01:43

Thanks to Daryl Jean from distance capital for joining us today. Now, stay tuned for the podium. Brought to you by beyond the beaten path visit beyond the beaten path.ca.

Seth Anderson: 1:02:00

I don't know what you JP, but I'm inspired to start a business. After that. Sounds good.

JP Gaston: 1:02:08

I am excited that you are inspired to start a business now that we're partway through start.

Seth Anderson: 1:02:14

Yeah, no, we're, we're pretty in.

JP Gaston: 1:02:17

Take a lot away from that episode, though, that we really need to make sure that we're like, as soon as we finish recording you and I had a conversation. And within within 24 hours, we kind of had some information flowing back and forth in the form of slides and structures and all sorts of things that we need to do for our business.

Seth Anderson: 1:02:38

Yeah, like give Ryan Reynolds 1% of our business. If we ever get into a fight, he can mediate it.

JP Gaston: 1:02:45

Hey, Ryan, quick question.

Seth Anderson: 1:02:47

Listen. What do you think about the rock and Ryan Reynolds having an arm wrestling competition for 1%? Some sort of triathlon events. Yeah, it's

JP Gaston: 1:03:00

gonna say I don't feel like Ryan. I mean, I love Ryan. It's great Canadian. amazing actor. I don't think Ryan Could I think Deadpool could win. I don't think Ryan Reynolds would

Seth Anderson: 1:03:13

record we could throw a foot race in there. And then some sort of neutral something.

JP Gaston: 1:03:19

The Rock post stuff at like two o'clock in the morning and talks about how he gets like five hours of sleep each night. So I'm basically like the rock.

Seth Anderson: 1:03:26

That's your you're basically like,

JP Gaston: 1:03:29

basically pretty much I mean, minus that eating nutritional value of any sort and working out regularly and being in like every movie made in the last season you'd think,

Seth Anderson: 1:03:42

Okay. I don't doubt it. I think you have more similarities to jack black than the rock but I digress.

JP Gaston: 1:03:53

A jack blacks making some interesting things on Tick Tock.

Seth Anderson: 1:03:57

None of this has anything to do with this week's behind the beaten path podium.

JP Gaston: 1:04:01

That's true. Although it would be a little mysterious, and it would be the Twilight Zone II to get to Twilight Zone.

Seth Anderson: 1:04:09

Okay, maybe it does.

JP Gaston: 1:04:11

It does unintentionally it actually does have a little bit to do with May the 11th, which is National it is National Twilight Zone day, may 11.

Seth Anderson: 1:04:22

So it's national,

JP Gaston: 1:04:24

national

Seth Anderson: 1:04:24

national Sunday Twilight Zone day. So we are going to share our top three Twilight zoni moments.

JP Gaston: 1:04:34

I like Sony, I'm gonna let you go first this week, because I feel like I've got some stories.

Seth Anderson: 1:04:40

We did have a consult with my mother. Right before this, and that was not helpful.

JP Gaston: 1:04:46

It was it was hilarious. For me. It was maybe one of the funniest phone calls that I've gotten to listen.

Seth Anderson: 1:04:54

I'm glad you enjoyed it. It was in no way shape or form helpful to my list. All right. What do you got? Number three, I have, I don't. This is what I'm going with. When I was like 12. Give or take, probably Google it. The Blair Witch Project came out and terrified me, scarred me for life, mostly because the area that I lived in at the time was pretty woodsy. And I don't know if you've seen The Blair Witch Project, I assume you have I have that basement. At the end. Yep, our basement looks just like that. It was shot in your house, honestly, might as well have been. And I don't know if that's Twilight Zone II or whatever. But like,

JP Gaston: 1:05:45

I'd say it is yeah, it qualifies. I you met the criteria.

Seth Anderson: 1:05:49

I still think about it. And it's been like 20 something years.

JP Gaston: 1:05:55

Yeah, it qualifies.

Seth Anderson: 1:05:56

Yeah, that's a good one. Yeah. And there was even like this old shanty bed down there. I don't know who was sleeping down there. For the love of that. I'm like, freaked out now. Like, I want to leave my basement. And I have like a nice basement now.

JP Gaston: 1:06:11

except for that one room, they didn't renovate. Where there's a little shaky bed.

Seth Anderson: 1:06:19

Okay, so that's why number three, number two, I've had a couple of really vivid dreams in my life, that then one in particular. And I don't want to go too deep on it. But I dreamt that I was at this building that I've never been to before. And it was all wood. And it was very sad. And at the time, I had been up in the Yukon for like six weeks. So I was losing my mind a little bit on account of being in the Yukon for six weeks with no for any amount of working on a diamond drill. And I just remember like, I can still like visualize it in my dream. And a few weeks later, my dad died. And I walked into the church. And that was what was in my dream many weeks earlier. And I had never been there before. And that just yeah, that was weird. That is weird. You have some sort of psychic ability. I don't know what it was. But again, that was like 15 years ago, and I still think about it. So

JP Gaston: 1:07:40

that's very Twilight Zone II. When we first started talking about this, you were unsure if you could come up with three. I feel like you've got to solid one so far.

Seth Anderson: 1:07:48

We'll see if I disappoint on the last one I had another really vivid dream but I'm going to save that for another podium somewhere down the road a

JP Gaston: 1:07:54

vivid dream I'm gonna have to start writing some stuff down.

Seth Anderson: 1:08:00

Number one, one time when I was working in the oil fields up by Wainwright I don't know if that's what they're called. I think of like, The Land Before Time where there the tar fields. Like Ducky all covered in anyway. We were driving home from from work, I guess. And we're sitting at the stop sign. I can still picture it's highway. I think it's highway 16. Right by Viking there's the highway intersects and you can go to cameras or you can go to Viking. There's like a little like kind of y intersection or j intersection. My Potter the stop sign. And it's nighttime. And all of a sudden it was like the middle of day, like the whole cab lit up and it was like it was like daytime. And I was like What is going on? And the guy that was driving the truck is like oh, what's what's the fireworks and I'm like, that was some kind of fireworks. I don't think that was a fun. I don't know what that was. Turned out. It was like a meteor the size of a coach or something. It was maybe a car. I can't remember it was a pretty big size Meteor that landed just just in the Saskatchewan side of the border. But it like literally you're sitting there at night and all of a sudden it's like daylight. And I was so sketched out. One would be and I just remember like going back like we're driving back and I called Caitlin I think had a flip phone at the time.

JP Gaston: 1:09:42

So it was like a year or two ago.

Seth Anderson: 1:09:45

And I was like I don't know what that was and she thought I was crazy. He literally thought I had lost my mind. And I yeah, that was that was the Twilight Zone stuff and turn on the news. It was a meteor and Did

JP Gaston: 1:10:00

that like where you freaked out until you saw the news story? Yeah. And you're like, Alright, cool. It was just a giant thing from space that could have been.

Seth Anderson: 1:10:10

Like, I actually still remember getting out of like, we got back to the shop and I got into the truck. And I remember looking up in the sky, and the stars were like, extra bright. They probably weren't, but it just seemed like they were it I'm like, the world is gonna end like some. Like, what? I don't know what's happening right now.

JP Gaston: 1:10:27

I've seen Independence Day. Oh, no, Independence Day hadn't come out at that point. Because

Seth Anderson: 1:10:35

this was 1992.

JP Gaston: 1:10:39

You had you had just recently given up your blue Nokia phone with snake on it. Guy picks up his sweet flip phone.

Seth Anderson: 1:10:48

So those are my three Twilight Zone moments.

JP Gaston: 1:10:51

Nice. I dig it. I take it. What do you got? All right. The first one is, is not like Twilight Zone like freaky. But it is a weird story that's always stuck with me. So I'm going to I'm going to include it. I actually could have done three, based on the next two that come after this. But you'll understand more later. Got to keep those listeners interested. know, when I was a kid when I was like, I think I was like five years old. I told my parents that I chose my family that I was looking down on them. And I decided that this was the family that I wanted to be a part of. And my entire life. I'm not particularly religious. I you know, as a kid, I went to church, all those sorts of things. But um, I, you know, I don't know. Now, I'm not a religious guy. But I have still very vivid images in my head of actually looking down on. And I don't know if I've just conjured them up. And you know, when I was five, I just believed that it was true. And so those images stuck with me, but very, very real. And like I told my parents at the time, and I don't remember exactly what I had told them, but I told them some things that happened before I was born. And maybe they had told me the stories, and I just regurgitate. They were like, sure, great. But it's just always been a thing. And my family jokes about it all the time, too. So I would say that's somewhat Twilight Zone II type. Something that's not paranormal. It's just Twilight Zone. Mysterious. Number two, I worked at this radio station for a long time. 10 years. And it's called the White House of Rock. It's in St. catharines, Ontario, there's three radio stations, actually, that worked out of there. And I've worked for all three. But this building used to be so many things. It's connected to the Underground Railroad. And you can actually there's about 10 feet of tunnel underneath it that you can actually get into and walk down. It was a insane asylum for a while. It was a hospital for a long time. It's been there was a house for a while so they call it the White House of Rock but it's actually been a number of different things over the years and it sits on a hill above this river. It's like this beautiful building, but they turned it into radio station. Anyways, all of that history because of these like crazy stories that everyone who works there knows. And one night I when I was working for the am station, they used to have this show called The X Factor. And it was just this paranormal thing. And they it was set up so that there was a booth where everyone SAT, had their conversations and then there was a second booth which was the production booth which is where I was by myself doing all the spinny daily things you would call it and so they're talking and they're they're actually performing live on air they're performing the seance for the building that we were in and this trophy on the cabinet in front of me slides all the way across the cabinet falls off the side and I'm just sitting there in the room by myself staring at it all the hairs on my arm standing up no idea what's going on it got really cold in the room for probably 30 seconds and then it warmed right back up and I don't know if that was just my like internal reaction or what but right as they were doing this seances trophy falls and again, much like religion, I'm not big into paranormal stuff, but that freak so immediately, I'm just pressing the button to like signal to the guy Hey, look over here. He looks over. I'm like, we need to go to commercial. Because I don't know just what what what just went on over here. But that isn't the only story I have from there.

Seth Anderson: 1:14:41

Go on through. So

JP Gaston: 1:14:42

one night I was working for the rock station and they just had this really late concert that they were doing like a live to air thing and so I was in the booth, doing the live to air portion, bringing it back to the regular programming that would run overnight. Bit of a transition thing and Just sitting there doing my thing. And I had heard about this person that could be seen in the building from time to time. And so of course, when you're the only person working at two o'clock in the morning that's just on your mind. And like, every corner, you look around freaks you out, hairs back in your neck stand up, like, and they had this upstairs section that used to be like, sales. And there's this grand staircase because it was this old giant building house that was originally built to the house that has huge staircase that like curled up to go upstairs and so I I need to go upstairs because the washroom on the main floor was broken. The only other washrooms upstairs, all the lights are off, because it's two o'clock in the morning who's working upstairs, and I get halfway up the stairs. And I just hear this like, blood curdling scream. And I turn and look and there's like this, not a person, but almost like a silhouette or an image of a person. And I probably could have just relieved myself on the stairs. But I decided not to walk up to the bathroom, I walked immediately back into the control booth. I set everything up to run overnight, and probably about 14 sessions as me so that I could just run itself and everything will be okay. And I set the alarm and left for the evening. And never came back. Yeah, yeah. And like the whole time like when you go out the you have to go at the back to get to the parking lot. There's like a little park there. And there's, you know, some folks who are homeless and sleep on the benches and whatnot there. So you when you go out the back like you there's a lot of noise and people talking and like grunting and groaning and stuff even at 2am. And so you walk out the back door and you still continue to hear these types of notes. And there's only one exit from the parking lot. Yeah, I have. I don't think I've peeled out of that parking a lot faster than that evening. You know,

Seth Anderson: 1:16:51

it reminds me of when I worked at the radio station in Wainwright and there's this big long staircase. And I'd be there late because I used to board up the boiler game so they'd finish it like I don't know 10 or 11 or whatever. Yeah, so nobody else is there. And then you'd shut off all the lights and you go to had to go down like this staircase. I don't know. I just remember like being like running down it. Yeah,

JP Gaston: 1:17:13

yeah. Yeah, it's really weird being in buildings like that. Alright, well, now that we freaked ourselves out.

Seth Anderson: 1:17:21

That was fun. If you would like to hear some more ghost stories, feel free to give my mom a call at yonder beaten path. She has stories about those dogs dogs, Ghost pigs ghost any kind of ghosts. Her number is 780-842-6767 just give her a show. And you can chop it up with her. Yeah, she

JP Gaston: 1:17:47

could probably build you a nice ghost cribbage board yeah

Seth Anderson: 1:17:49

goes cardboard. Why not? Whenever you want she personalized cups personalized tumblers personalized anything personalized goes maybe I don't know how that works. But if you can laser marshmallow I feel like you can laser a ghost.

JP Gaston: 1:18:03

If you can bring your ghost in. They will laser has that. But

Seth Anderson: 1:18:07

that is a Seth guarantee. Right? They're

JP Gaston: 1:18:15

bringing you guys to be on the beaten

Seth Anderson: 1:18:18

path.ca check.

JP Gaston: 1:18:21

If you can mail your ghosts. This is worldwide if you can. Go ahead and do

Seth Anderson: 1:18:29

after that Phone Guy like my mother should start like some sort of ghost podcast this.

JP Gaston: 1:18:35

Or we should just always record your phone calls with her and she could start a podcast for them. No.

Seth Anderson: 1:18:41

All right, maybe next season.

JP Gaston: 1:18:45

Yeah, let's throw another thing into the mix.

Seth Anderson: 1:18:47

I like to do that.

JP Gaston: 1:18:49

I have noticed.

Seth Anderson: 1:18:51

Well, three episodes left the final three for season two.

JP Gaston: 1:18:55

Stay tuned, folks. We've got some some really good ones coming up. Awesome. Well, thanks

Seth Anderson: 1:19:00

for joining us. We'll see you next week.