325. Interview with David Ledgerwood, Co-Founder of Add1Zero: How to Create Your Own Momentum in This Down Economy

Susan Sly 00:00
Hey, everyone, wherever you are, I hope you are having a fantastic day. And in this episode today, I am going to be interviewing a great, amazing, humble, vulnerable human who has overcome losing businesses, transcending anxiety, and talking about what it really takes to bounce back and make a pivot, especially after shuttering the doors of your dream business and then having to lay everyone off and what it takes to start over again. And so this is a two part episode. And in this first episode, I'm gonna be talking to David Ledgerwood, about the economy, how it has been more challenging, especially for quality lead generation, and what he is doing to circumvent those challenges. And then, in part two of this amazing interview, you're going to hear about David, and his own journey with anxiety and how he manages it. And also things that you can do when you are flatlined in your business to what we call making it rain. So with that, we are going to get into today's episode. And before we do, I want to give a shout out to Uno Femme wines and the founder Jen Pelka. I am an investor in Uno Femme wines. And if you haven't heard the episode with Jen, it's absolutely amazing. That episode is incredible, because we talked about what it really takes to build a business, especially after losing one, which tends to be a theme. So many entrepreneurs have a hard time and they really struggle getting back on their feet after a devastation like that. And that grit, that determination, it's quite incredible. So if you haven't heard that episode, definitely check it out. If you haven't checked out Une Femme wines, do that too. So with that, let's go ahead and get started with today's episode.

Susan Sly 02:05
This is Raw and Real Entrepreneurship, the show that brings the no nonsense truth of what is required to start, grow and scale your business. I am your host, Susan Sly.

Susan Sly 02:19
Well, hey, what is up, Raw and Real entrepreneurs wherever you are in the world, I hope you are having an amazing day. And yeah, we're gonna talk about the S word on the show. And no, we don't have the E warning. But we are going to talk about sales today. And especially sales as they relate to entrepreneurial ventures and we're going to talk about why startups fail. We're going to talk about the economy. And my guest today has opinions on many things, but opinions that I definitely respect. He's become a friend. He has a 20 plus year business career that began in professional services at PwC, where before dying of boredom, he carved out a weird niche as a batch developer, and checked to the fortune 500 box with UPS, JP Morgan Chase, and Aetna. And if you've ever received a package or deposited a check, there's a pretty decent chance and piece of code he wrote was somehow involved. From there, he went into publishing and just when the web was overtaking newspapers, and you know many of you know, I read an actual newspaper on the weekend, so it hasn't totally taken them away. And periodicals giving him a front row seat to disruption, and honing his taste for entrepreneurial pursuits while also learning how sales and ops must gel for customer success. He then went on to walk out of a stable job and say, Forget all this nonsense, I am taking charge of my own destiny. So on top of everything, he's a sales expert. He's a leading podcast host, but he's also a dad of five kids, which most respect to that. It's incredible. So my guest today is the one, the only, the founder of Add1Zero, Mr. David Ledgerwood. And some people call him Ledge but I'm gonna call him David. So David, welcome to Raw and Real Entrepreneurship.

David Ledgerwood 04:14
Thank you, Susan. I appreciate that dramatic read of my past. So it's storied and ugly in places, but you hit the highlights. So you know, it's not all learning out there. You know, you look back at your early adventures and you go Yeah, I wouldn't have bought that from myself. So you know. Wow. Yeah. It's a journey.

Susan Sly 04:41
Well, there's so many things that we're going to discuss in today's episode and I want to talk about career pivots. I want to talk about building a business. I want to talk about startup failure, but I'm going to jump right in. So here we are, depending on when someone is listening and we have the conflict in the Middle East. And I use that word lightly. We have America printing money like crazy, more money in the last four years than all the previous three decades combined. We have, I read this morning in the news, David, that the mortgage rates have gone up again. And the average family is spending close to $1,000 more per month than they were even three or four years ago. And we see startups as a result of, this being the worst year to raise money in decades, we see a lot of startups shutting their doors, people aren't starting startups like they were before. And here you are specializing in the lifeblood of what a startup needs, which is sales, so has this economy, in your most humble but accurate opinion, affected the ability of the average entrepreneur to sell?

David Ledgerwood 06:06
I did, so qualitatively or quantitatively speaking, I can say now some 15 years and I have not seen a Q2, 3, with such low lead volume across clients and businesses. I mean, it was a truly dismal summer, you know, just absolutely across the board. And I don't, I think there's like the, there's the macro economic story that is kind of, you know, sort of playing out, right. And then, you know, in addition to that, you see all kinds of things like, I don't know, like, I almost felt like there was like, vastly more vacation this summer. And I just wonder if that was like, there's still this sort of COVID hangover, you know, that is kind of like, to hell with this, like, everybody's still burned out, three years later, and I'm actually going to take time off. I have never gotten so many out of office messages, as I did. Like the decision makers just checked out this summer. And on the plus side, I can say that going into q4, it looks like it's going to be the usual and absolute madness, like there is pent up demand. So anybody that made it through, at least in the sectors that I'm involved, then like actually, it looks kind of like pretty hot run into the end of the year. So if anything, and in my experience is like so now I've been through, I've had the blessing of having started businesses in all of the ones of the lifetime, you know, economic collapses that have happened, you know, since I started these adventures, and you know, they're only supposed to happen once every 100 years, and now I've had three of them, you know, so I don't know if that's like, you know, climate change or something where, you know, we're just gonna have worse storms every you know, more often, but I can viscerally think back to 2008. And I had, I had raised money and you know, I was going into the end of the year and, you know, brand new company. And you know, it was, it was small, we're half a million run rate. But I mean, things were hot, we were staffing up and then it went to zero, like literally $0 of revenue. Like the instant the clocks switched to 2009, everyone cancelled everything. And I burned all the money, I paid a bunch of people and I shut the doors at six months. And I mean, gosh, that's like, that's, I still remember that. So that never leaves you. I would say that, you know, cash, cash is still king. And I became obsessed with this idea that, like revenue is, revenue is just everything. Like it's like the gas in the car. I don't care what your car is. Revenue, is it. And I just said, why aren't we teaching and I was involved in the startup accelerator space and you know, all these things. And it was all about raising money. I was like, Why the hell aren't we teaching people about revenue? Like that's it. Like it's the cheapest financing. It's the one that is gonna keep you alive no matter what. And you can bank cash, like just do that, like, and we're, we're killing companies by teaching them like, this is all about making a slide deck and pitching for VC money. It just drove me absolutely nuts. So I'm now just out there waving the revenue flag, you know, all the time. And yes, sales as a function is part of that. But it's like the 20% not the 80% from a revenue function is the primary core reason we exist. That's why we have companies and that's not some like sort of, you know, sort of capitalist manifesto or anything like, literally like, you can't run a car without gas. And let's just have that conversation first. So that's, I go out and bang my cowbell on a regular basis about revenue.

Susan Sly 10:15
I think it's a great cowbell today. And we're seeing too, even the startups that I'm invested in, for example, one of them, AIM7. And I've had Dr. Eric Korem on the show a couple of times. And just as a sidebar, full disclosure, you can see my investments on susansly.com, and of the 322 founders I've interviewed, I've invested in four of their companies. But the the thing I would say is that, as I'm watching, say, aim, go out, and pitch in Silicon Valley and so forth, that they've got a, you know, a month over month revenue story. It's not big revenue, but it's that growth. And to your point, David, that, you know, the VCs, they want to see revenue, they want to see growth, they want to see your projections, but they not necessarily this pie in the sky, like, show me what you think your revenue is going to be five years from now, like, let's look at the solid 18 to 24 months. Let's get this question. In your opinion, and I'm very curious about this, What is familiar about what's happening in the economy now, versus what was happening during the recession? And what do you think is different? Because I want to get into how you recovered after closing a company. But you know, I know, for some of us of a certain level of wisdom that, you know, some people listening, you were toddlers during the last recession, David and I were not. And so I keep thinking, David, there's some things that are familiar. And there are some things that are very different, but I you know, just as friends, I want to know your perspective on it.

David Ledgerwood 11:51
Yeah, yeah, there are materially different things. I mean, the interest rates situation is real, you know, and I don't think like, the vast majority of people who are actively doing business now just haven't been in a situation where money wasn't free. And it's not going to be and you have to go back to where we were practically toddlers are at the very least, like, you know, our parents had 17% mortgages or whatever in, you know, the, the 80s, right, and none of us remembers that, you know, so that I think is, is dramatically different, like capital is going to be expensive, except, again, revenue, right. So like, that's important. When we talk about like, preparation for downturns or, you know, being ready to have dry powder like that, it's still the same, right? Put some money back, we intentionally build in our businesses, like a reserve fund like that, we, it's almost like, your personal finances where you have an emergency fund, like, we don't pay ourselves all the money that we could. We make sure that we're banking money and we can make smart investments when we need to at that point. So because there is 20 grand here, or 20 grand there where you can kind of go, let's now invest in building that new program when the market's down. And if you don't have that, and you don't have that protective layer, I mean, everything's about runway and cash flow analysis. And so in the sense that hasn't changed, except that you have nowhere to hide, like, you're gonna go get a line of credit for 27% now. Like, you can't factor your invoices for free anymore, and you aren't going to be able to entice anyone to give you money when risk free money is going to pay them a pretty damn good interest rate, like you, you are risky, you're vastly more risky than anything. And, again, the only money that you can get is revenue that doesn't cost you an arm and a leg. So I think that's the same but more poignant than it was back, you know, when now, and you also have like, ubiquitous information flow that you just didn't have before, you know, and therefore, you know, all information is public information. And there's some positives, right, like, we can all access a remote workforce in a way that we couldn't before. You know, like, that was revolutionary, you know, 10 years ago, and now it's just like, yeah, we're all on Zoom. Like, I don't even know where you are. And you know that we can have a relationship and we can build stuff together. I have of my core business partner, been in the same room for six times and 20 years, you know, like you can, you can do that and you didn't used to be able to do those things. So, by and large, I'm an optimist. But these are, these are challenging times when you can kind of look at it and go, like, what if all the money stopped for my business? Like, how long would I last? And I think, having been through that once, like, you just have like, you have this. We are optimists, right? We're entrepreneurs, like, we make something out of nothing. But I just, I just want to like, impress on people that, in fact, nothing can be a zero, like an actual zero, you can have no money. And, and I think that unless you've been through that, you can discount that idea.

Susan Sly 15:50
Definitely. To your point, it's really interesting, because operationally, what is so different than the recession was that some of the startups I know, they never had an office. And there's this whole debate, like everyone needs to be back in the office. A startup shouldn't be comparing itself to what, you know, Meta is mandating or what whoever is mandating, these are multibillion dollar companies that were started during the last recession. You can keep your operational costs down by using overseas talent by not having an office, which is an expense. And like you said, having that cash flow reserve, I think is so critical. So how did you manage emotionally when that business stopped?

David Ledgerwood 16:41
I mean, straight up, like if I'm raw, like, it just gutted me, like, I probably drank too much. And, you know, I shut my business. And what I would say is that having a good network and having this, you know, sort of collection of skills, like is still an important thing. So at that point, I, you know, shut the doors. And on Friday and Monday, I picked up a consulting gig. And so, and one thing I can tell entrepreneurs that has been helpful to me, and I'll qualify this and say that, like, I work in b2b services, I don't have tech companies. I have human powered things that are technology enabled. And we deliver services, you know, so it's materially different in that way. So I can't speak to what do you do, you know, to start your next tech startup, I mean, I probably could speak to it. But, you know, that's not my wheelhouse. But, you know, what I have always done is, I've maintained this idea of a side consulting company, that is always my company. And that is always live, and you know, sort of like, it's there, it actually doesn't do anything. But I can always jump to the next income making, gap filling, endeavor because I have that. And I think that that's been really important for surviving the troughs where, you know, I am on business 16. Some of them were really tremendously bad. And, you know, and like I, I learned of myself that I'm generally a better follow on founder. I'm, you know, I'm the guy that can scale things better than I'm like, my ideas generally suck, you know, so or they're, like, 15 years too early. So I have fun stories of like, I swear, I invented Foursquare, you know, before, but like, nobody believed me, but so, you know, I think it's weird, right? Like, people will tell you like, burn the bridges, or, you know, and in sense, like, I burned all the bridges of saying, I'm never gonna go have a real job again, because I can't, I'm not really good at working, you know, for people, like I got fired a lot. You know, I've kind of had like, a chip on my shoulder. And, but I always did have a backup plan that was me and a different bucket of me, and that I could deploy that asset, you know, kind of differently. Like that was a fallback plan. I wasn't drawing a salary on somebody's W2, but I was able to provide services that were valuable. So always have that. Maybe that's the pivot of like, the startup of me, not any given company, and I also became able to really not treat them like they're not your children. They're not actual living entities, like any brand logo, name, like none of these things actually should have an emotional hook for you. Like they're your guppies and a lot of them are gonna get eaten and not grow up and don't get attached. Like that's not a thing. You're a thing. Your families thing, like those are real, physical, emotional entities. And I see so many, particularly first time entrepreneurs, you know, get hung up in this like, and I did it too. And I'm just like, maybe it's like the rite of passage, but I'm gonna spend like days upon days designing my logo and website and my color schemes and all this bull. And like, it doesn't matter. And the most successful businesses have had correlation, not causation, I don't know. But it's like, I made up a name in the shower, I went in my hard drive, took a logo that I paid somebody to make for some other thing that failed, and changed the word. And people love it now. And I think, like, that's really what matters, is like build that, you know, sort of collection of your real emotional hooks and build that self awareness and then come and try out stuff, as you know, a business like, that's really what, you know, it's funny, because when you finally actually make something work, and I have failed, so monumentally and doing that so many times that, like, I can look back and say, yeah, it's because I did it all wrong so many times, I just recognize the pattern of that. And it looks like you're successful until you think like, it took me 16 tries to do that. A lot of singles, a lot of strikeouts. And then finally like, it's almost like holy, we actually make money. Like, I don't know, maybe that's the disease of entrepreneurship, but it's also the blessing.

Susan Sly 21:39
I hope you enjoyed part one of this interview with David Ledgerwood. And we take your feedback seriously, one thing we see is that when a show is around 30 minutes, we get more downloads than if it's an hour and I get it. Most entrepreneurs have very short attention spans. So in the next episode, David and I are going to be talking about entrepreneurial anxiety, and how do you really come back from losing your business and starting over? It's profound. And the thing I want to say to you about entrepreneurship is a lot of you have this fear of starting a business, of taking the leap of saying, Hey, I'm going to leave my full time job and I'm going to build a business. And the thing I want you to know is the majority of entrepreneurs actually do it part time. And so as you're listening to not just this show, but other episodes, know that most of the people that you hear all of these success stories, they started maybe with one or two hours a day or some time on the weekends to get their idea really, really going before they go all in. And what you're going to hear from David in the next episode is that he always has a side business setup that he can just turn a switch and go anytime he wants, which is a great idea for each and every one of us. So with that, I want to thank you for being here. God bless. Go rock your day, and I will see you in the next episode.

Susan Sly 23:11
Hey this is Susan, and thanks so much for listening to this episode on Raw and Real Entrepreneurship. If this episode or any episode has been helpful to you, you've gotten at least one solid tip from myself or my guests, I would love it if you leave a five star review where ever you listen to podcasts. After you leave your review, go ahead and email reviews@Susansly.com. Let us know where you left a review. And if I read your review on the air, you could get a $50 amazon gift card and he would so appreciate it because reviews do help boost the show and get this message all over the world. If you're interested in any of the resources we discussed on the show, go to Susansly.com. That's where all the show notes live. And with that, go out there, rock your day. God bless. I will see you in the next episode.

Susan Sly 24:04
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