Rich Sexton is a principal and co-founder of LDR. He is currently building the deal infrastructure of LDR, leading investment research and analysis, and consulting on senior executive. Follow him @LDRinvestments.
Who is your hero? (In business, life, or both.)
My grandfather. He was one of the first plastic surgeons in New England and later became renowned in his industry, but more importantly, he was an extremely hard-working, soft-spoken and respected individual. All six of his children would list him as their hero and he would never brag about any of his accomplishments, from going to undergraduate school at Dartmouth to putting himself through medical school at Duke by selling vacuums. He was a doctor in WWII and a man who was highly respected in his neighborhood, but he never demanded that respect because he never had to. He was well-liked by everyone that he met because of his charming personality and jovial outlook on life. He worked hard, but he was always there for his children and grandchildren, a trait that I think is difficult to find in today’s business-first mentality.
What’s the single best piece of business advice (unorthodox tips welcome!) that helped shape who you are as an entrepreneur today, and why?
“Humble and hungry.” Miami high rise to Wyoming basement. I left the military as an officer in a U.S. Special Operations Command having operational control over some of the most highly trained military men and women in the U.S. Armed Forces to work out of my car, living in a basement with a family of four, in a very remote location in the United States. I had to start all over at the age of 30 and in a new industry that I had to learn from scratch. I had to believe in myself and my ability to succeed at anything. I was walking alone, but I had the ability to take difficult criticism and rejection from individuals who I would never have considered peers, but now they were customers.
The humility attribute is key to listening more than talking. The more I have learned about being an entrepreneur, the more I have to learn. Good and bad advice is all around you and the only way you can know the difference is if you listen. Oftentimes, I find myself in a room with individuals who are so busy talking that they miss key indicators of how the conversation is going or key subtle messages that are being transposed across the desk. I make a point to learn something new every day, from anyone I am around. This thirst for knowledge opens up doors of trust to employees, customers and partners. Everyone loves to teach something that they know a lot about and a willing audience is a necessity for anyone that is going to teach.
What’s the biggest mistake you ever made in your business, and what did you learn from it that others can learn from too?
Trusting blindly. It is a difficult balance when you are starting out to want to do business with those you trust. Typically that circle starts with friends and family. I now use a simple framework to help make this decision for me: “Can I fire this person without personal ramifications?” If the answer is no, then I choose to take a pass and would rather keep the friendship or relationship with the individual.
Business with people you know from childhood is sometimes the easiest to acquire and the most difficult to part with. Now I prefer to do business with friends of friends or relationships that are once removed. I believe those people still have a high-value system, but aren’t prone to taking advantage of an existing relationship with myself or my team.
What do you do during the first hour of your business day and why?
I spend time with my wife, Ana. As an entrepreneur, I never know when my day will end and I don’t have federal holidays or weekends off. We wake up early together and enjoy that hour of no disruption. It is a time that allows me to not be distracted by the day’s to-dos and it’s an investment of time that is the most important to me and our future together. I know that business will have ups and downs and inevitable failures to come, but my family will be the common denominator going through everything with me as the future unknown struggles reveal themselves.
What’s your best financial/cash-flow related tip for entrepreneurs just getting started?
Expectation management: Never count on revenue until it is in your bank account. Regardless of written contracts or verbal promises, small business is always extremely volatile in the beginning. Try to make your budget on variable expenses; even though they tend to be a little more expensive, it will pay off in dividends when you have a month(s) of receivables that are not collected on time. This will also be an easy margin improvement as your company grows. You can maintain a healthy working capital account balance and switch to fixed expenses that will reduce the constraint to your bottom line.
Quick: What’s ONE thing you recommend ALL aspiring or current entrepreneurs do right now to take their biz to the next level?
Grind: Persistence and hard work will always overcome luck and talent. Don’t be intimidated by fancy degrees or more experienced people in the field. If you wear a cap of working hard and making thoughtful decisions, you will most likely come out on top. I truly believe in hard work and never being too good to do a job that is better for the company regardless of how many employees you grow to have under you. The more persistent you are with your endeavors, the more likely you will achieve them.
What’s your definition of success? How will you know when you’ve finally “succeeded” in your business?
Success is having the peace of mind that I have had a positive impact on the people who I have interacted with throughout my life. When LDR has created a culture that is living and breathing on its own, one that enables everyday people to come into our company and better themselves by achieving professional and personal goals, it will be a success. The ability to impact employees in a positive way that goes beyond the professional workplace is the ability to transform regions or large populaces. The fact is one-third of the average American’s day is spent at work. Using those eight hours each day to improve that individual will have a waterfall effect on the families and friends who the individual interacts with outside of work.