Michael, thank you so much for joining us. It means a lot to have you here. First, tell us about your journey to becoming CEO of the company or CEO of Calix, and how you got into this industry. Let's start there. Tell us about yourself and the company.
Okay, great. Thanks for having me Clint. I really appreciate it. So how did I get here? I went on a journey. I was at Microsoft for almost a decade in Europe and in North America. Then I got recruited back into Canada with a company called Bell Canada to run a transformation. Actually my expertise is around transforming companies into growth companies. Then I went to Salesforce where I got shipped off to Tokyo, which was quite an experience. And then I took a global job with Salesforce.
I was at a point in my career where I was talking to my family about what we do next? And we had moved back to North America where I was doing this global job and out of the blue I got a phone call from a recruiter who said, "There's this really incredible company that's doing some amazing things in the industry, in the broadband industry. Would you consider talking to them?" Sorry, enter full screen. Sorry, there's some distractions on my screen.
No, you're good.
I took a look at their website and it was a hardware company doing networking for telecommunications companies. I'm like, "Absolutely not." And they say, "Wait, we want you to talk to the CEO. Here's his background." And his background was, prior to Calix, he had done two multi-billion dollar companies. One, he sold for $2 billion, the previous one for $7 billion that he sold to Cisco. And they're like, "Just have a conversation with him." And a one-hour conversation went to three hours and I had two insights. The first was that this is the smartest person I've ever met. He's one of those who got accepted into university at 14 types of people. The second thing was that he had this vision for leveraging software in the cloud to transform the broadband industry. And I found it fascinating.
I was thinking about whether I could continue on at Salesforce. I also had another offer from a very large pre-IPO cloud company that you would know, but that company, while I was about... I was on the edge of whether I should sign up with them and I was going to be on their executive team and it would've been very lucrative. I also had this nagging sense in the back of my head, a story I've told many times, which is when I look past my previous career, across my career, the only mistake that I actually regret is taking a job for money. And for me, that job would've been a huge amount of money, a big payout, but it was so boring.
So all of a sudden this lands in my lap, and I think there's a lot to be said about luck and those different things. And all of a sudden I meet this person who's incredibly smart and I'm a lifelong learner who's going to go do this crazy thing, take a hardware company and turn it into a software cloud and appliance company with the vision of transforming an industry. I love to do hard things. If I think about the greatest, most exciting things I've done throughout my career, they're always the things that other people wouldn't do or huge risks that were incredibly soul crushingly hard. And this just met all those. It got me excited.
And so that was seven and a half years ago. His name's Carl Russo. And over the last seven and a half years, I joined halfway through the journey. It's been a 13-year journey and over the last seven and a half years, I've had the opportunity to join him on this vision of transforming our company. And we've been very successful. And if you've ever read the book The Innovator's Dilemma, everybody who learns our story who's a professor or someone like that or knows the innovator's dilemma, they basically said, "You did what one in a thousand do and is written about in the Innovator's Dilemma that everyone fails about." And that's what we've been on.
And so what do we do, Calix? We are a software cloud and appliance company who helps broadband service providers of all sizes. Verizon is one of our customers. They're unique in that they understood our long-term journey and vision for the industry, and therefore they joined us on this journey. They took a bet, which they don't usually do, to small service providers. The same technology at Verizon is running in Cedar Falls, Iowa. And we created this platform and put it in place so that broadband service providers of all sizes can transform how they serve their customers with three goals.
One, which is to simplify their business, make it really simple for them to compete with the web scale companies and do incredible things that drive high operating margins and drive fast time to market. The second one is to innovate. So really take the best in the industry, innovate on this platform at a really rapid rate so that they can diversify their business in the markets they serve. And the last one is grow. And growth is fascinating in our industry because it has two flavors. One, if you're private equity or you're owned by a family or you're a public company, growth means the traditional things that we would think about which are margins, profit, all those different elements.
But then 42% of our customers are actually not-for-profit cooperatives who have really come out of the post-war era. They provide telecommunications. Farmers who got together just like they did with electricity to provide these services to places the big companies wouldn't. And in their scenario, growth means better lives for their members and real focus on the community. And so in that scenario, that's what we do. We've done it wildly successfully.
When I joined, our market cap was about 250 million. We were losing significant amounts of money because we were making the investment into the platforms that we're building. While we haven't released for 2023 or for Q4, the projections were that we would organically grow past a billion dollars in the fourth quarter. And if you look at all of the public companies in the North American market, there's 9,000 of them that have a market cap greater than $10 million. And if you apply the metric of three years 25% growth, three years profitable, three years cash flow positives, and no debt, out of those 9,000, there's only 26 companies. And I'm proud to say that Calix is one of them. And so —
That is the background. That's the journey.
That's incredible. Hey, I want to follow up real quick on some parts of your journey because I wonder if it applied and you learned stuff from it, in particular when you went and lived in these other countries, I imagine like Tokyo and things like that. What was that like? What did you learn from that that you've brought to Calix from the experience of building in other markets, building in other countries, in other cultures? Tokyo is wildly different from the United States, right? And Japan seems like —
By the way, Tokyo, it's like living on Mars, right?
Yeah. It's like the greatest country ever. I don't know how they do it, but it's incredible. Anyways, what have you learned from that?
This is a storytelling scenario here. I'll tell you how this first came out. Look, I am an Alberta boy. I grew up in rural Alberta, which is Canada's Texas. And so a little farming and oil town. All my family are immigrants. They came from Holland after the war. They are farmers and those types of things. And so I grew up in rural Alberta. I really just had... We were not wealthy. My whole goal in life was I wanted to provide for my family and have a strong financial future. And in the end, that's what drove me out of university in a big way.
But my wife came from the same background, blue collar background. Her parents were blue collar and those things. But right after university she joined a group called Up with People, which basically she traveled all around the world, so she was much more worldly than I. And I still remember, here I am plowing around, I want to make sure that we have the mortgage paid off and a really a house and our kids are taken care of. That's one of the things that I didn't have as a kid.
And so it's a Saturday afternoon, we're sitting there and she looks at me and she goes, "Is this it?" And I said, "What do you mean?" And we're looking out in the backyard and she says, "Is this it? Are we going to do this for the rest of our lives and die?" And I said, "This is pretty great." Exactly. I said, "This is pretty great. We got a pool in the backyard. Our kids are..." They were young at the time. "They're healthy, we're progressing through our careers and that kind of stuff." I'm like, "Clearly you got something on your mind, so spit it out." And she said, "I'd say we sell it all and let's move internationally."
And so this was a big shift for me. She had been all around the world with people. I hadn't traveled anywhere. I was just focused on what I would call the more contemporary common focus on what I'm going to do. It took me about three or eight months to wrap my head around it and then we started to pursue it. So I would say the first thing is that to move to the UK, it really took a goal-centric approach, which I think I apply to everything we do at Calix, but also everything I do inside my own personal journey, which is you have to set goals. And if they're not big, as you heard in Good to Great, BHAGs, big hairy audacious goals, if you don't set big goals, you'll never achieve them.
And so I use that as an example where my wife set a goal for us. My job at Microsoft, I just spent all my time figuring out, "Okay, if we're going to move internationally, I want to do it within Microsoft. To do that, I have to be at least a director." And so I set that goal and three years later we were in the UK. That's the first thing. I think a goal-centric mindset is really important. And then you have to have a plan. So once you set the goal, what's your plan?
In everything I do, there's a plan. In fact, I just got out of a meeting. As we're rolling out our 2024 plan, every manager in our business is expected to have a strategic plan. What are your goals? How are you going to achieve them? And how are you going to measure them? And so we call this the SP, which is our strategic plan. And by having everybody in the organization with an SP, whether they're a sales leader or a product leader or a finance leader, it really ensures that everybody has that goal-centric mindset. And that's really important.
And I will say, I've always done that. I rolled it out in teams, I've run and managed and led, but an inspiration for me to keep doing that was actually my time at Salesforce. Marc Benioff is famous for this. He has a process which he calls the V2MOM. I don't like that acronym, and I didn't like the way he named some of the things. He talks about vision and values and some of the things... I don't like the way he named it. So I renamed it on my own. And I thought that a goal-centric approach is really important. I've lived through that. That was the first thing.
And then the second thing I would say is that I learned living in Tokyo, and I have a LinkedIn article about what it takes to be successful if you live in Japan. There's two parts to that. The first one is that if you have a learner's mindset and you're a beginner's mind and you're constantly saying, "I don't know what I don't know, please teach me," and you're open to feedback, I think that's one of the keys to success. That article that I wrote actually isn't what I did as a guide to other people on, "Hey, this is how you're going to be successful if you are an expat in Tokyo." It was actually based upon a meeting that I had with a gentleman, I believe he was with Accenture, and it was very fortuitous.
We're like three weeks in, I just joined Salesforce, I moved to Tokyo, I'd never been to Asia. So back to my goals, I talked to my family and I said, "Hey, I'd like to go do a job in Asia." And my kids, my sons were going into high school and they were like, "Sure, we'll go." And so I set a goal, it took me a year and a half. I had never been to Asia and everyone thought I was nuts to even try, but I set the goal. And 18 months later we were living in Tokyo. And when I landed, I said, "Okay." It was a partnership meeting. And at the end of it, he said, "Are you going to be the 99% of expats who come to Japan, do a two-year stint and leave as failures, or are you going to be the 1% who succeeded?" Obviously the way he stated that really caught my attention. And so I said, "I'd like to be the 1% who succeed. So you've been here for 25 years, tell me how."
And that's what I put in that LinkedIn article is he gave me a whole bunch of insight. And in the end, I think what I took out of that was everybody's the same, whether you're Japanese, whether you're European, US, American, if you actually dig into who the person is, we all want to be successful as individuals regardless of our cultural elements and all the different elements. So you have to understand how to work with someone within the different cultures, but more importantly actually, if you just understand that everybody's the same, we all just want to have good lives, we want to support our families, we want to achieve our career goals, we take that approach regardless of language or culture, it can work.
And so I would say that the other big thing is understanding the individual. One of my leadership philosophies that was taught to me really is to invest in the success of others to be successful. And as long as you apply that in the cultures and help them understand truly that you're not there to make your own career successful, you're there to make them successful. And I've always believed if you make everyone else around you successful, then you don't have to think about your own success. Because if everyone that you work with is successful, then doesn't that mean inherently you'll be successful? Because I firmly believe you would do it. I just applied that philosophy in Tokyo, and I'm proud to say that I was very successful there because all my team members were really successful. Long answer to short question.
No, that's incredible. And by the way, the Benioff thing in his model, I agree with you on the name, because I always forget it, but it is pretty profound and what he's come up with there is really interesting.
How do you decide where to spend your time as CEO? This is one of the big things that I always hear from other CEOs and people who are part of this community is like, "How do you spend your time every day?"
How do you decide that?
It's interesting you say that. It was in this month's Harvard article, I think, or Harvard Magazine, actually has an article about how CEOs spend their time. And one of the things they identified, and I don't know how they came up with these statistics, I'm assuming with the surveys that I get all the time that I don't fill out, and it basically said that it's CEOs that 39% of our time is dealing with urgent issues and emergencies, which actually sadly I think is probably right because people need you to unblock things and that's really your role, not to do their jobs, but two people are at loggerheads, they're trying to figure out how do I solve a problem? They can't agree, but neither one of them has the authority to be the final decision-maker or resolution provider. So they come to you to be the arbitrator. So I think probably 30 or 40% of my time is actually spent unblocking as team members try to work together.
But back to my strategic plan, I would say a large part of my time is always correlated to what's the plan. So I would say that taking up another third of the time is that we are actually progressing from a strategic plan point of view along the goals that we've set for the year? And for us, we call it at the executive leadership, so my directors and myself, it's what we agree to with the board. We go through this process once a year. Again, in that regard, we do use Marc Benioff's approach to it, which is this fascinating voting mechanism. And we've built it. I don't know how he does it, but we built it so that we come out with this agreement as a leadership team on how to do it. So that takes a third of my time.
And then the other third of my time is, I would say, focused on what I call Horizon 2 and Horizon 3 elements. So the urgent problem would be Horizon 1. You're familiar with the Horizon model, I don't know, it came from Bain or someone like that. Horizon 1 is within the year. Horizon 2 is two to three years. And Horizon 3 is the real long-term stuff. So I would say I deal with the arbitration and urgent stuff, Horizon 1 40% of my time I spend. And then the rest of the time is guided by our strategic strategic plan, and those are all Horizon 2, Horizon 3 things. And part of that is also working really closely with customers. When a customer calls, everything drops. I'm very customer-centric.
And frankly, if I think about the best innovations that have come in our business, the best impact that I can have as a leader is actually back to the investment in the success of others to be successful. Look, if all of our customers are successful with our technology to build a strong business and do what I said, which was simplify so they drive high margins, innovate with us so that they have all these new services and a diversified business, which allows them to crush their competition, and then grow organically, then that comes over to us in the form of obviously our platform helps them do that and we get rewarded. So I spend a lot of time with customers. How about we say a third, a third. A third in Horizon 1, a third Horizon 2 and 3, and then a third with customers. And I love spending time with customers. I learn so much.
What does a typical day look like for you? Are there any routines, habits you do every day that you've found have been successful?
Yeah, my life is not routine. Look, I was saying this, we had our leadership team together. We're an all-virtual company. And so once a year we bring together all people managers, and we did this in early December, we do it once a year, so they can build that interconnectivity so that on a Zoom call and those things. It doesn't mean that they don't get together inside their groups, but we bring the entire leadership team together once a year. And what I said to everybody is, "The CEO job sucks," bluntly, "If you're actually doing it right, because you're at the behest of everybody else, because your job is to serve."
So with regards to routine, I think that to me was probably the hardest thing that I had to grapple with as I took this roll over. And I've been doing the job for about three years. I think I got the official title 18 months ago, but I have a really strong partnership with who's been an incredible mentor, our chairman and founder, again, back to Carl. And we have a very good deep relationship where he is. He really helps me a lot. And he's, as I said, a mentor. You have to realize that your job is to serve, and that means that there's a lot of time where routine goes out the window.
There are certain routines that I haven't set in place in the calendar with regards to trying to do the weekly meeting with the leadership team, those different elements, we have those cadences. And then at a personal level, the one thing I do try to always set aside is get 30 minutes a day of exercise. And that's pretty easy. If I'm in a hotel, I can do that by going downstairs before it starts. If I'm home, then it's 100% I have to do it. But that would be the only routine that I try to hold sacred, which is to do 30 minutes of exercise a day. Otherwise, frankly, it burns me out.
My dad died young. My dad died at 75, and this is a horrible thing to say, but it's his own fault. The reason why he died at 75 is because he always had a potbelly, which we used to joke about with him. And by the way, my brother's a doctor, he's an orthopedic surgeon. My mother is a nurse. So it's not like he has the excuse of, no one was telling him what he had to do. But he had a potbelly. He never worked out. He always said he stopped smoking, but we all knew that when he went for a walk, he was smoking. And he was a meat and potatoes guy, because that's how he grew up.
And we kept saying to him, "Hey, by the way..." I think he was 65 where we had like a massive coronary and like, "Dude, wake up," and he didn't. And so I don't want to be like that. I don't want to die at 75. I have, which I've talked about on LinkedIn, I have rheumatoid arthritis. I found out I had that when I was 23. If you follow the statistics, it means I'm technically going to die 10 years younger than everybody else. And I'm hellbent on not going to die. I want to die at the same level of time as everyone else. I don't want to die at 65, which is what a lot of my uncles have done. That exercise part's a big part of it.
I also find that it's the only way to de-stress. And this is a stressful job. Everybody needs something. It's not that they want it, everybody needs your help. You're there to serve. If you do your job well, it's not about you. It's not about you at all. It's about you're there to serve. And that means this job is more 7/24 than any other job I've ever had. So that's the one routine. A long answer again to a short question, sorry.
No, it's beautiful actually. What do you think about artificial intelligence? Every company is thinking about this.
You said we were going to pivot around, so.
Yeah, this is a complete pivot. We're going to a different subject entirely.
No, that's fine. Great. I'm all yours. Artificial intelligence I think is fantastic. I do think what freaks everybody out about artificial intelligence is the fact that we don't know how it operates. If you actually go and look through the evolution of AI, and there's a book that I can look up, but there was a book written about the evolution of AI. In fact, Carl, once again, it's funny, I had this conversation with him at one point and he goes, "Oh, when I was 16, I was in the labs at MIT when they were inventing AI." Fascinating fellow. If you look at the initial invention of AI, it's actually not AI, it's machine learning.
And machine learning is actually humankind's control of an AI engine. Machine learning is algorithms where we program the algorithms and then out comes this intelligence. But the problem with that is that the AI that we now have is regression based. And therefore the evolution of AI, I was realizing that machine learning doesn't scale, you can't actually build these algorithms out. You have to use this regression based model, which means that we don't know how it works.
We've been doing a lot of work on AI, so we process between 15 and 50 terabytes of data every hour. And as part of that, we have a lot of machine learning algorithms and AI engines running TensorFlow or things like that. We've used ChatGPT-1, 2, 3, 4. But five years ago was when we really started to go down this path. So one of the things that we believe AI is really valuable for our customers is if you're a small service provider, broadband provider, you're in a local market, you don't have access to this very expensive data scientist and all the other things. AI with really great learning models can add significant value.
And so we've been working with it very aggressively over the last five years. And we took an anonymized set of data of user behaviors and we had our data scientists build out an algorithm for propensity to buy. And it took them two weeks, it had 2,400 trees, and then we put the data in and it came out and said, "Okay, here's your stack ranking of propensity to buy." We then put the data into a neural network, providing some broad, which is how the new AIs are going down the path. Popped in the elements that we were looking for and in minutes it popped out the same information.
So this is what freaks everybody out that you don't know how it did it, that it did it. I like that I know the 2,400 trees because we as humans are controlling versus I popped it into the neural network and it just did it, that's what freaks everyone out. And so I think AI is great. I think it's fascinating. I think it has some significant issues with regards to if you have a large learning model and it's based upon what's on the internet, God help you because there's so much pollution on the internet, then it's actually going to teach it bad things like racism and on and on and on. These are the challenge —
Yeah, it hallucinates too sometimes. It's fascinating. It can hallucinate.
Right. But it's hallucinating because of the fact that it's a learning model. But where I think it adds value, I think there's really two elements. One, I think inside our organization we rolled out, as fast as we could, our head of IT I basically told him, "As soon as you can get a copilot on Microsoft," we're an Office 365 customer, which I love Office 365 and the cloud solutions they have. I said, "The second that copilot comes out, sign up, do the license." And so we were one of the first ones signed and everybody gets it. There was a debate, "Hey, should certain people get it?" No, whatever the dollar value is per month.
Because the value of AI is that if you have somebody that's $200,000 a year as an example, I'm just picking arbitrary numbers. Let's say they're $200,000 a year, but they've got 20 years of experience and you have to recruit them. And we all know that we have a labor shortage. There's a huge labor shortage due to the immigration issues. Legal immigration is not where it needs to be, so we don't have enough people to do the jobs. And so going and finding that person's hired, but then also teaching them to have that level of expertise is difficult. Versus with an AI, you can take somebody who's got five to 10 years of experience, augment their skills with AI, and now they can get to the same level of performance as someone who's earning $200,000. And I think that one real big benefit is just doing things.
Our development team did a large AI modeling inside with our groups, and we had very senior developers and very junior developers, and the average gain was about 40%. But what they were doing there was automating a lot of tasks that they didn't like. No developer likes to build their test cases once they run their code. And so it helped them really quickly build test cases, which is a huge productivity gain. Shocking level. And in fact, there were a bunch of the senior developers who didn't like it, didn't like using it, but they were like, "Wow, it did make some really rudimentary tests that I hate doing anyways and allowed me to go do high value work." Internally at Calix, I think that's real value.
And then for our customers, again, this is the democratization of technology where in the past big companies always had the advantage where they had access to technology or they could build it on their own and all these different things. And so we call them giants. When you're competing up against Amazon and others, how do you have the assets that they have? Now a small company based on our platform, which has AI engines built into it, has access to technology that used to be the purview of just the big companies. And so they can actually, because they move faster leveraging our platform.
A small company can now rip apart a big company. And that big company won't even know that that small company who's using our platform and all those engines, the automations and the insights and all those different things, they won't even know what happened to them by the time it's done.
And so I think it's really exciting. And as with all disruptions in technology. When electricity first showed up, as the internet came out, all these different things, everyone started freaking out, "Oh, we don't need it," or, "It's all bad" and blah, blah, blah. But what always comes out is that it all sorts itself out.
Yeah, that's right. It always sorts itself out.
Always sorts itself out.
For good or for bad, but usually by the end of the day it's for good. You mentioned something earlier that I want to touch on as well. So you said you're an entirely remote company. What was that decision? Why did you make that decision? Was that decision made during COVID, pre-COVID?
That's a big topic. Oh, yeah. Tell us about it.
That's a great question. And we did it in 2016. And the reason why we did it is actually for a strategic reason. Because while we've done really well, Calix is in a very specific niche, and so people don't really know who we are. If I had a nickel for everyone who said, "How is it that I don't know you?" In fact, we had a board member who joined us from Indeed. And one of the things he said to me, he goes, "I've actually gone through and the company you are." He goes, "I'm in Silicon Valley. How is it that I don't know you? You're the most interesting cloud company I've never heard of." And in fact, to that point, we just won the best place to work in Silicon Valley for 2023. We're getting a bit more well-known.
Yeah. But for us, what we did, the reason why we went hybrid and really pushed it in 2016. There were some holdouts, like R&D used to debate, "Oh, I'm not sure we need the whiteboard." And I'm like, "When I go into that big fancy San Jose office that we have, I see all of you guys either in Zoom rooms or not in the office because the traffic's an hour and a half to get in from your house into Silicon Valley across like 15 kilometers because San Jose traffic is so horrendous. So you all say that you have to collaborate."
And when it came down to it, they needed to whiteboard once a week or something like that. And so we did it so that those people who didn't want to work in the office, who wanted to be flexible, that we could attract talent. That is the reason why we did it. It was a conscious choice, talent.
And in fact, myself, I've tried to stay out of the office my entire career.
I always hated going to the office. The commute was a waste of time. And so I wasn't embracing it. And if you look at our leadership team, we are all distributed across the United States. Myself in Canada and the US. I go to both places. And the benefit has been enormous.
A good example is we had someone on the security team during the back to work stuff for COVID she was being told she had to go back to the office. So she was looking, as a lot of people do, and she said, "Is this real or are you guys full of it? What if I want to move to a small state and live on a mountain?" We're like, "As long as you're hopefully moving into the serving territory of one of our broadband customers who will have great service so you can be on the Zoom call, have at it." And she's like, "Really? You're not going to force me back, this isn't something?" And I'm like, "No."
It's funny, it seems a lot of companies who are smart have got to a hybrid model. It seems like that's where it's landed. For us, we stayed remote because we were always remote. COVID for us was like, "Who cares?" Other than the R&D guys, I proved to them. And so they all... Now, by the way, with whips and chains and tractors, I couldn't drag those guys back to the office these days. Actually, I can't see it because I got it blurred. But this big thing here is not a television, it's actually a whiteboard.
So what we did was we bought 200 electronic whiteboards and put those into the home offices of a lot of our team members, like architects and those people had to whiteboard, to facilitate it. You spend the money on buying real estate or make an investment one time like this, give them the flexibility to live where they want and continue to invest in travel so that they can be together occasionally to connect. I really think the value is just actually having a personal relationship is important, which is why at our leadership meeting even, we kept trying to jam more stuff into it. I'm like, "Stop. Lunch is two hours."
Every time we do a session, we're going to stop it and we're going to make everybody get up and move tables so they get to meet more people. We're going to have a really long three-hour evening where they just hang out and we're going to put rules in place, you can't sit with people that you know, that kind of stuff. Those are the types of conscious things you have to do.
But yeah, it's been very successful for us and we're proud of our culture. I think we're 4.9, 4.8 out of 5 on Glassdoor. And by the way, there are a lot negative comments on there too because we're not perfect, we're always learning. But I think the culture we built is pretty good. And in the end, the culture is all about how our team members, what kind of company do they want to have? They make a decision every day of what kind of culture we have.
Yeah, Michael, I could talk to you for hours, my friend. This has been a fascinating discussion. I want to be respectful of your time though. We end every interview the same way with the same question, and that is at CEO.com, we believe the chances one gives is just as important as the chances one takes. And I wonder, when you hear that, who gave you a chance to get you to where you are today?
That's interesting. So if I think back on it, I think there's been many people throughout my career who have been, first of all, very gracious with their time. That earnest little annoying fellow who keeps harassing them and asking them. If I was to go through and say the most important breakthrough moment in my career was when I first started out. I was a sales rep at Canon, and when I joined, I'm a voracious reader, so I've read pretty much every business book that's been written. And when I was in university, I loved reading business books. I hated my classes because I found them boring. And as the saying goes, those who can't teach.
I loved my profs who were consultants because they were doing and being a professor. I didn't like the profs who were just very theoretical. And so I just read all the business books and I came out and one of the business books that said to me had said, "Go find the best person in that company and then go ask them how they were successful and learn from them." And so everyone said the same guy, Paul Shearstone, was the best sales rep in the company. So I tried to hunt him down, but he was hard to find. He was hard to get a hold of. And so I left him a voicemail and this was the time where you had to be wealthy to have a cell phone. This is in like 1990, I don't know, 3 or 4. I didn't have a cell phone, so I called him from a landline, left him a voicemail, and I said, "Hi Paul, my name is Michael. Is there any way I could tag along with you for a day?" And he didn't return the call.
So I waited for three days and I called again. No response. I called again. I called again. And it was like four, six weeks, every week I just called, "I'd like to spend some time with you." And then he finally called me back and he said, "Michael, is Paul Shearstone, you can come to my house. Bring a notepad and a pen, and yes, I'll talk to you and I'll help you." So I drive over to his house, and again, this is the time before Audible and all the other things. So I'm listening to the radio. I didn't have a cell phone because I couldn't afford a cell phone. I'm broke. I'm just out of university. I think I'm making a thousand bucks salary a month and all commission. And so I'm broke.
And I go to his house. He's living in this big beautiful house. He welcomes me in, "Hey, I'm Paul," by the way, he has the exact same mustache that you have.
Yeah. In fact, I look at you and you remind me of Paul. And he graciously invited me in and we went down to his office. He's got this big office, and he's got at the time of the OJ Simpson trial, I remember that specifically. He's got the OJ Simpson trial running on the television. And so I said, "Before we start, I have a question for you." And he goes, "What?" I said, "I called you five times or six times, why didn't you call me?" He goes, "Because the world's full of lazy managers and there's lots of lazy leaders." And he goes, "And all these lazy leaders, what they do is the first thing is they say to their sales reps, go be like him. And so everybody calls me and says, 'I want to learn.' But the reality is the majority of people don't want to learn." He goes, "The world is full of people who just follow and don't do. The world is full of people who want to live their lives but don't want to learn."
And he goes, "And so I get that call of, 'Hey Paul, will you coach me?' every day all day long." And he goes, "And I have a rule. And the rule is it's five nos to make a yes." And he goes, "So I applied that rule to your phone call." And he goes, "You are the first person in my entire career that I will mentor because no one has ever called five times." And then he goes, "Now, one back for you." He goes, "What did you do on your way over?" I said, "I listened to the radio." And he said, he goes — and I think this applies to social media, your iPhone, everything else, and by the way — if you can't tell that these two lessons have had a profound impact on me for my entire life, I will reiterate, these have had a profound impact. This is how I live my life.
He said, "The radio's bubblegum for the brain. It tastes good for a short period of time, but it has no nutritional value." He goes, "What you should have done was actually have books on tape in the car, and you should have been using that time to learn." And he goes, "Every moment, every free moment you have, you should be focused on learning." And he said, "The reason why is because," and he printed something up. I wish I could whiteboard it for you, but he basically... So I'll try to say this verbally. He said, "Success equals 15." And then he took a piece of paper out and he drew it out and he drew three boxes, and he goes, "There's three components to success. The first one is, we'll call it, territory. Whether it's territory or job," he goes, "And every one of these boxes gets five points. So add the three boxes up, you got 15."
So he goes, "The first one is territory or job." And he goes, "We have to assume everybody gets a five because you can't start off and say, 'I'm screwed because I've got a two.' We're going to assume that you got a five. So everybody has a five." And then he goes, "The other two boxes are two components, time and experience, or skill." And he goes, "In my job," he goes, "You know why OJ Simpson's up there?" And he goes, "And you know why I'll spend more time watching OJ Simpson this week than I will working?" He goes, "Because my experience is a nine, so for me to get to 15," he goes, "If I just want to hit my goals, I have to do a one and I'm there." He goes, "I don't want to just hit a one. I want to overachieve, therefore I'll do a three or a four, and I'll get over 50 and I'll do an 18 out of 15 and I'll be successful and I'll spend a lot of time watching OJ Simpson."
He goes, "Now let's look at you. He goes, "You get a five for your job and your territory." But he goes, "Look at your skill." He goes, "You're a one. And therefore if you're six out of 15," he goes, "The only other variable is time. So how are you going to get 15?" I'm like, "Time." And he goes, "So you got at least a nine, but you better be ready to commit actually a 10 or 11." And then he said, "Now here's the kicker that people don't get." He goes, "So that seems pretty..." He goes, "Do you understand?" I'm like, "Yeah, it makes complete sense." And I go, "That's how I was thinking anyways. Work my butt off to achieve it, till I grow."
He goes, "Now here's what people don't do because after they've been in the role for six months or a year, they don't actually take a step back and say territory, is it a five? Because it can be a three or it can be a seven. The first thing. And then they don't self-assess themselves." So he goes, "A year from now, what you need to do is say, 'Okay, my skill level was a one my time's an 11. Is my skill level going up to a three or a four or a five so that I can start bringing down my time?'" He goes, "How much time you put in you can always decide." But he goes, "If your skill level isn't going up," he goes, "Because most people don't actually take the time to really assess themselves and decide, 'Am I good at this job? Do I have the skills that I need?' Are they honest enough with themselves that, 'Maybe I need to do a different job.'"
And it was fascinating because during that time, there was another new salesperson who was also doing this. I remember saying to him, six months in a row, I'm like, "Dude, you shouldn't be doing a sales job. You're just horrible. I'm telling you as a friend, you're horrible. You need to go. You're not really great with people. You're super awkward, but you're very smart. Go get an accountant's job. Do something different. You're great with math. Go do something that really plays to your strengths. You're trying to be a sales rep. You'll never be successful." And sure enough, I bumped into him 30 years later, and he has had a very, very underwhelming, unsuccessful career because he wasn't self-reflective enough to accept that he's going to suck at that job.
And so I think in life, you look at all jobs, and I've applied that model to my CEO job and the previous jobs and everything I've done, I'm like, "Okay, I know I'm going to have to put in a ton of time, my skill level is going to come up." And then it really just comes down to do I want to continue to put in as much time, which means I can get to an 18 or a 22 out of 15? Or do I want to tail it back and balance it out? Who gave me a break? I would say that person, Paul, and he's got a bunch of other really great stories. The impact he had on my career, I have thanked him many times, was beyond profound.
And I'm so lucky. He could have just said no. But he took the time to teach a lowly person like me, and the impact I attribute... He basically... In that moment, in the first 15 minutes of our conversation, I had the benefit of three life lessons that have literally shaped my entire career.
I love that. Success equals 15.
Success equals 15. I've told that story hundreds of times, and someone actually just made a joke to me this morning about something else. He goes, "If nothing else, I've known you for 20 years." He goes, "You're probably the most persistent person." And I'm like, "Five nos to make a yes." I can drive some people crazy. So five nos to make a yes, always be learning. And by the way, it's so much easier. At that time, I couldn't afford... I remember Anthony Robbins books where... Tony Robbins, remember him? They were like 400 bucks to buy the tapes. I'm making a thousand bucks a month, man. How am I going to pay that?
So what I ended up doing was I found a place that rented books and I would take them home, I would take them onto... Using one of those dual tape decks. For those of you listening who don't understand what a tape deck is, google it. I would make the tapes, and I had this big tape deck in my Volkswagen Fox that I would listen to sales tapes of Brian Tracy and all this kind of stuff as I drove, because I didn't have a cell phone. I just found how to do it.
Versus today, Audible books. I remember a couple years ago, my son, I walked by him, I'm like, "What are you doing?" And he's like, "I'm listening to a professor," I think Stanford or something like that, who's on YouTube, who has taped all or has recorded all of his sessions and he's doing every week of World War I, and that's free on YouTube. If you want to learn about anything these days, there's no excuse. For me, it was an affordability issue. By the way, you can look up what a library is to kids. You had to go to the library and stuff like that. You couldn't afford it. Now, there's no excuses. And then success equals 15.
I love it. Michael, thank you so much for spending the time with us. Seriously, it means a lot. That was incredible. I'm sure we'll talk to you again sometime. Congratulations on everything you're building. Best of luck, my friend.
Thank you, Clint. It was a great pleasure to be on. I really appreciate it.