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Transcript

Intro/Outro: Welcome to the Insurance Leadership Podcast. The podcast designed to bring you perspectives and principles from leaders in the life and health insurance industry we trust. You'll enjoy today's episode.

Ryan Eaton: Welcome to another episode of the Insurance Leadership Podcast. I'm Ryan Eaton, your host, and honored to have you listening in with us today. We have a special guest, James Benham, who's been on the show before. The last time he was here, he went over technology and kinda what was going on in the market. This time we're here because he is the author of a new book called Be Your Own Vc.

James is gonna cover the principles of bootstrapping your Business, starting something from the Ground up. He's got 10 principles in the book and they are fantastic. We are excited to have him on the show, but one other thing we're gonna be doing is the first 25 people that comment or share on social media today.

You're gonna get a free copy of the book sent to you. So with that, let's go ahead and hop into the show today. James, thank you for being on the show today, buddy. 

James Benham: Good to be here in person, Ryan. 

Ryan Eaton: So you flew over this morning from Texas. The weather wasn't looking good, we thought we were going to postpone it again for the second time, but very thankful, able to be here.

James Benham: Glad to be here. Always enjoyable going flying and always good to be here at Morgan White headquarters. That's right. And beautiful Ridgeland Ridgeland, Mississippi. 

Ryan Eaton: There we go. Well man, your book, you just published it. Yep. Tell us a little bit about it. Get us kicked off of that. 

James Benham: Well, in about two and a half years ago, I'd exited one of my software companies and sold it.

I kept the rest of the business in 2018, in about 2019. , I started saying, you know what, what we did and what, what y'all done here too is, is not the path that's talked about a lot in business. That's right. And bootstrapping, you know, using your own resources to build a business rather than going and raising money.

Mm-hmm. is the long, slow, hard, painful way of building business. That's right. But it yields so many great results and so I said, you know, it'd be good. to write a book about this while it's still fresh on my mind, the exit's fresh and we can talk about not just how to bootstrap a new business, but how to apply bootstrapping principles to existing companies.

And in, in the cases I, I referenced here, I referenced insurance companies. Mm-hmm. and construction companies. Cause I've done a lot of work with construction as well as insurance. And so that was really the idea is, hey, let's just talk. Bootstrapping. Let's talk about that mentality, that capital efficient mentality.

I had no idea when I planned on this, that the capital markets would freeze right before and, you know, the, the i the public markets would take, that's a great point. One of the worst years ever. The private equity and venture capital markets would take a total nose dive and the hot topic deur would be capital efficiency and how to ventures right.

Strap off the money. That's, I had no idea that was not intentionally perfect timing. 

Ryan Eaton: Yeah, perfect timing. Clear that one right? 

James Benham: Not my own, not my own. I just, I just thought it was a good time to ride about it after having an exit. I, I kind of feel like, you know, a lot of people can write books about a lot of.

but a lot of times it's premature if you haven't experienced it yet. That's right. That's right. And if you hadn't had a successful outcome, you're just hypothesizing on what the successful outcome could be. And in our. It went so well for all of us that I was like, we need to talk about this. But then, you know, I spent a whole chapter talking about how you can use bootstrapping principles to innovate inside of existing large companies.

That's right. That that's right. Really is a, a, a common topic too. 

Ryan Eaton: Well, speaking of being innovative, one of the things we were talking about just before we got started, you said you had the idea in your head for about two and a half years, and I was asking you what the process was like. and you told me something I'd never heard before. Why don't you kinda share kind of how you recorded everything and kinda your whole process. 

James Benham: Well, Ryan, like, like you, , I'm a talker. . That's right, that's right. One thing you and I share in common. 

Ryan Eaton: That's right. 

James Benham: You know, is, is we enjoy talking. 

Ryan Eaton: That's right. 

James Benham: We also enjoy listening. 

Ryan Eaton: Right. I mean That's right.

James Benham: That's why we enjoy, that's why we both podcast. That's our strengths though, is our strength. That's. It is our, it is our strong, strong. It's so true. So true. We you, you've been that way since you were at Mississippi State. And I was at Texas A M A M. That's right. And so I, I'd say that I recognize a long time ago that I, I will speak a lot more and a lot higher quality content than if I sit down at a keyboard and type.

And so I hired a crew to come in and film me. speaking the book so that we would have all of our video clips of talking about the book before we even went to, to editing. And then I, I spoke the whole book and that that was partly informed by years of podcasting, cuz I had had two podcasts. Now I, I have one cause I handed one over to a co-host, but I also informed by some friends of mine who actually studied how much content people produce when they type or speak.

And it turns out that you speak 10 times more than you'll. On average, the average human will speak 10 times more than you type. So the right number interviewed it, put the audio down, laid the video down. Then we transcribed it. And then I had a wonderful editor who was my marketing director for 10 years.

Liz Bek came in and turned that pile of words into a book. She was ama an amazing editor who edited it down because that's really. The hard team. I think I, I think Mark Twain said it I would've written a shorter letter, but I didn't have enough time. That's right. So it's at you, it's really hard to, to take a large body of content and chop it down.

And so went through probably a year and a half of that process of just refining it until it got down to the. The size that I'd be comfortable with. Cause I, I don't like large books. No. Perfect. So I read the book. Yeah. 

Ryan Eaton: Phenomenal book. Thanks. Great. I like the points. I like how you broke out the chapters.

Who would you say is your target audience for this? Cause I think anyone in business, obviously, anyone look at a start, something is crucial to me, but you probably see some things that, that I may not see as being the person who wrote 

James Benham: it. . Yeah. There's really three groups that I was trying to reach with this.

Now the, the first and most obvious one is people looking to start their own business and they, they're evaluating whether they go and raise money That's right, or raise a bunch of debt, or they try to bootstrap. And my definition of bootstrapping is building what you have to build so you can build what you want to build in other.

Starting a service business that can generate a profit from day one, right? So you can use the profit from that service business and then build the product business that you really want to build. And, and look, Morgan White, y'all did the same. We did thing. You did, we did the same thing. You can't just jump into being a carrier.

No. You gotta start a brokerage and then you can go into being an mga and then you can go into being a carrier when you get enough capital. That's right. You can do whatever you want. That's right. But unless you wanna go raise a bunch of capital and give away most of your. Bootstrap into a carrier is possible.

That's right. Cause you proved it, but boy, it's hard. And so that's really the obvious group. Number one is the startup entrepreneur. Okay? Group number two is the corporate entrepreneur, people that are inside of a large company. or a medium to large company. Mm-hmm. that want to innovate, they want to build something, but they don't want to have to go to their corporate innovation committee or their corporate venture capital arm and raise a bunch of money internally.

That's right. And I've seen this happen with a lot of insurance companies where you have a, some really innovative people, they don't wanna leave and start their own business. They love working in the company they're at, but they have, you know, the corporate venture arm or the corporate investment committee, whatever you wanna call it, you know, might.

Being tight with money or maybe they're having a hard time raising money internally. And so my, my argument is you can use the same principles to start a new pro service line that can then bootstrap a new product line. And then the third audience would be people are actually deploying capital. Cuz it turns out I'm a limited partner at a bunch of venture capital funds.

I'm an investor. That's right. VC funds. So this is not an anti VC book. That's right. This is about them and them wanting to be capital efficient. Another perspective. Yeah. I love that it. Like when a second and a third round's not available. How do you teach your companies, your portfolio companies, how to be capital efficient was what they have with the guy?

So I think 

Ryan Eaton: this book was written and, and I'll say that as I mentioned in the intro, this is not your first time on this podcast. Previously we had you here talking about technology. Great information, but I, I felt like given the state of the economy, the timing of your book coming out, you know, there's a lot of people, whether it's in the insurance industry or other industries losing jobs right now.

Yeah. There are a lot of people kind of rethinking, Hey, all these acquisitions in the insurance industry, maybe my agency has been bought by. Bigger agency and I'm not a huge fan of kind of the direction and everything and they got me kind of going in and they wanna do something different. I guess my first question to you is kind as we get into these principles, and I'm not gonna ask every single one of 'em because I wanna make sure I leave some stuff in the book, but I do wanna hit on a few, but what was your motivation that took you, I know you're just outta college, you kind of knew a little bit differently right off the bat, Hey, this is what I wanna do, but what was kind of your motivation for starting your own company?

James Benham: I think for a lot of people, It was the same as it was for me. I found out what I didn't want to do. Yeah. And that informed me about what I wanted to do. , it's a very true, it's like when I, when I talk to college kids and I, I'm gonna call 'em kids cuz I, I feel like I'm old enough. Now's right. Kids. That's right, that's right.

When I mentor college kids, and I've been, I've been mentoring PE students at a and m for about 15 years now. largely in the area of business and career. That's the area of mentorship. I try to stay in my lane, you know what I mean? Yeah, that's very fair. I'm not like a personal coach, you know, , that's not, I'm like, look, I don't, I don't know what you're gonna do personally, but I, I'm here to talk to you about, I can help you here, I can help you with career and business.

I love it. And so, When I talk to them, I say, you know, there's a couple things that are really good about being young and straight outta college. And that is first you're used to not making any money. That's right. Second, you don't have a lot of obligations in life, or at least hopefully you don't.

That's right. Have a lot of obligations in life. Hopefully you're not married with kids and That's right. And then you, you know, there's a lot and. , you you have a really high tolerance for risk because your baseline's so low. That's right. . And so for, so, so for me and Ramen noodle still tastes good. . Yeah.

And I, I, I, a lot of years of ramen noodles and tomato soup and, and, and mac and cheese and it wasn't that big of a deal. And so that's one of the things I see. And to, to speak to your scenario, let's say there's an agent who's not happy with how this sale went and they actually, well, for. I, I wasn't thrilled with the large accounting consulting firm.

I went to work for, I went to work for, at the time, one of the big five. Now it's the big four. Great firm, like a really great people. But the, the travel schedule was bonkers. It was every week, five days a week. Yep. So I was gonna be gone 90% of the time. and I just didn't see how I could have a, a life mm-hmm.

and, and secondly, you know, just, just the pace of work was, I don't mind working hard at all. Cause I've worked, you know, far. That's right. I've worked far more hours starting the business than I would've working for them. But it, j i I just didn't feel aligned with, with that, that type of company. And so, and I also noticed that over half of people quit after year three or four.

Mm-hmm. , I was like, man, That's a lot of attrition. That's, I mean, that's a lot of attrition. I mean, it can't be that good if that many people quit that early. I good. And so I went back after my second internship and I was like, ah. I called my dad. I'm like, Hey man, let's, let's go into business. I know you got your Teflon business, but you always said you'd, you'd back me.

You know, he ended up putting a whopping 5,000 bucks into the business. And and , I love that and gave me a, a credit line for another $63,000. So, I mean, you think for the price of a, of a suv. We started this company that has employed hundreds of people and generated an incredible amount of, of product and you know, revenue, income, profit.

I mean, it's really been an amazing journey. But it all started with just building some websites for people. And I think that with a, your agent scenario, it can start just as simply because if you're already licensed, you can go on, hang around a shingle that's, and you know, go chase after. 

Ryan Eaton: Well, I think that too, just to give everyone a little more background on James and his company, James has over 300 employees doing business all across the United States, all 50 states.

James Benham: He's got offices down in Argentina. Mm-hmm. , I mean, you're doing a ton of different things. South Africa as well, right? South Africa as well. Yeah. 

Ryan Eaton: You're making a lot of things happen and you started it off from scratch. Yeah. So we're kind of getting this information, 

James Benham: these principles, so to say, from someone who's been there from day one.

Right. And we, yeah. And now we build, a hundred percent of our software is built in the insurance business. Yeah. Hundred. It was, it was 50 50. Construction. Construction, construction and insurance. But you know, if you know anything about construction, you know a lot of that was, was an insurance overlay on That's right.

Construction. That's right. Because we were really dealing with the surety bonding part of construction. That's right. And we were dealing with, you know, the, the something called sub default insurance, sdi. I, so, okay. So we had some, some really interesting specialty lines that we were dealing with. . So that's what's been so fun is I get to explore technology but through an insurance lens.

So help me with 

Ryan Eaton: this. In your book, your first two chapters, I'm gonna kind of push 'em together as one and, and you talked about, you know, Cassius King. Yeah. Something we've heard and get outta debt and Stay outta debt. Two great principles. I wrote down two quotes here cause I wanted to say them because I thought they were so good.

You said nothing beats cash on hand, especially in an economic disruption. And the people should seek opportunities to generate reoccurring cash with low overhead. Great quote. The second one was, when revenue declines, debt has no sympathy and can't be cut as quickly as expenses. Another great one. Why don't you dive into those two principles, because I know there's a thousand things you can say, but yeah, I think that's so good because I mean, kind of part of the book.

Two is, you know, Hey, what do I do if I'm starting something? I need some capital. And so you have these good points, but how do you 

James Benham: kind of implement that into your, your business? Well, let's just talk about cash being king for a second. Okay. Because we've seen and with our, our age, we're about the exact, almost the exact same age.

That's right. And so, In our short 20 something year career since college, you and I have both seen some crazy stuff happen. We have, and we've seen some, some, some really healthy businesses that went out of business. That's right. Not because they lacked revenue, but because they lacked cash flow. They ran out of cash to operate the business.

And that's when you see a business suddenly fail. It's because they ran out of cash. You know, you have, you have accounting scandals, . Cause you can, you can play games with your books. All the all. . You know, obviously most books, I mean, most creative accountants go to jail and most creative accounting tactics are illegal.

So, I mean, you know, I mean, let, let's, let's just be clear. You know, creativity's not encouraged in accounting. That's true. And I got an accounting degree, you know, and they, they always said that in college, they're like, don't get creative with accounting.

Ryan Eaton: We talked about social security at lunch, and we said it's basically the biggest Ponzi scheme.

James Benham: Oh yeah. 

Ryan Eaton: And we were kind of getting into that and we said, you know, it's funny, Bernie Madoff did this, goes to jail. Our government does it every day and keeps going. They keep going. It's perfectly fine.

James Benham: When you look at the latest Ponzi scheme. Ftx, yeah. Which is gonna. pretty big, you know, tens of billions.

We think that's, it's big. Yeah. I mean it's, it's amazing that this guy Sbf, Sam Bank, bank of Frid, that he was able to create a Ponzi scheme almost as big as Madoff's in far less time. Oh. So, you know, and, and that he was so publicly defensive of it was hilarious. But he, he's, you know, he's, he's gonna be in in jail

But, but you know, that ran out when cash ran out. It's right. It's always, cash is always the guillotine over the neck of this kind of business that. When you see an economy turn and interest rates go up, you can bank on it that the Ponzi schemes are gonna have a hard time staying around because what happens, people redeem their interest and they need because they want cash.

That's because when things get bad, people seek cash. In particular, when you can make four and a half percent on treasuries. So cash is king, and now is gonna be a time when the people who like me and my dad, and you and your family who are super conservative and really careful, On cash flow. That's right.

And watch cash flow. We'll have some buying opportunities to buy distressed assets from people who were not careful about cash flow. That's right. Now cash flow and debt go hand in hand because if you're really heavily leveraged, like you did a big lbo, the big leverage buyout, right? And you, you levered a business up right before there's a decline in revenue.

Boy, that's like a vice. You got the vice on. That's right. You know the top end if you use it, if you use the vice clamp. That's right. One side of the vice clamp is revenue declining and the other side of the vice clamp is debt. That's right. In particular, the, what we're gonna see in the next two years is all the variable rate debt.

Come home to roost. In the United States, about 20% of homeowners are on a variable rate mortgage. In the United Kingdom in Australia, it's supposedly around 80%. I've read that this week, 80%. It's crazy. Now, those rates, they might be on a five year arm, right? Yeah. So they, they may have 3, 4, 5 years. Yeah.

Okay. Someone's coming knocking. But it's gonna, but you know, you can, you can set the timer and every year you're gonna see probably a tranche of 5% of the US housing market is gonna have their housing payment double overnight and they can't afford it. And then when you look at most commercial debts, variable rate as well, it's very, you know, very rare.

You can get a long extended fixed rate debt on a commercial loan. And so it's, you know, leveraged buyouts too. A lot of 'em are liver plus prime plus. Yep. And Americans aren't used to inflation. I'll tell you, I. because I've been operating in Argentina for 20 years and lemme tell you about inflation cuz they got 53% of it every year.

And so I've been dealing with inflation a long time down there. So that's where debt really matters. Yep. Cash flow really matters the opposite of this because I think sometimes it helps to define things by their opposite. I think that's good. Is growth at all costs? Growth at all Costs is the typical growth model of innovation and technology efforts.

And if you. One of the other big scams that was, you know Elizabeth Holmes. Ah, you know, and that, that entire debacle, they had a growth at all cost mentality growth at all costs. Yep. By the way, she's moving in two blocks from my office, the women's federal, the women's federal prison that she's moving into is two blocks from my office.

So she, she's gonna have a home there for the next 11 years and, and, Right now, right down the street from my office, gosh, because of a growth at all costs is the opposite of cash flow and and low debt. Because you're saying, I'm gonna ignore the fundamentals. I'm not gonna try and generate cash for this effort.

I'm just gonna try and grow top line at all costs, which usually means your unit economics are screwed up. And we see this a lot in insurance. Yeah, we're still seeing it right now. because they're still public insurance carriers that were hot in SureTech startups. That's true. That still have lost ratios over 110.

120%. That's right. Okay. That's right. Like a hundred something. 130%. That are still valued more than a dollar a share. And it blows my mind that they're still there. Yep. But the chickens are coming home to roost. Well, you see that, and I'm not 

Ryan Eaton: gonna say the name of the company. Me neither. Not like you didn't, but it's kind of one of those things.

I've seen one go from 120 something dollars a share to now $4 a share. And great company, they, their model worked, but they weren't paying attention anything to their debt. They weren't 

James Benham: looking at the the, they weren't looking income premium versus claims. Let's just say they weren't looking at premium versus claims.

That's not. They weren't looking at the most fundamental thing you look at in insurance. That's right. Which is you have to charge more. Oh yeah. A good bit more than you pay out in claims. Cuz you have this other thing called sg and a. That's right. . That's right. You know, cuz you gotta sell it and market it and administer it.

That's right. So it, that's, that's why fundamentals outta whack. Fundamentals are outta whack. And I don't know how Ryan, we as a society collectively lose focus on this every 10 years. Mm-hmm. , but we do. It's, it's 

Ryan Eaton: repeatable. It's repeatable. It happened, you know, it happened. It happened. We were talking about it when the happened in 99.

James Benham: Happened in 99 loans. I know it happened in 99 with the.com bus. That's, it happened in 2007 with the housing bus. It's happening again right now, and you can call this the crypto collapse. You can call it the. Dot com winner. You can call it a, there's a lot of things you can call this lot this one. That's right.

Ryan Eaton: Well, look, you, you mentioned your dad several times and one of the, the quotes you had in the book was your dad told you, don't be a lazy farmer. I love that. And the explanation behind it. What did that mean to you kind of? You know, 20 years ago. And does it have a different meaning to you today than it did 20 years ago?

James Benham: Yeah. More of a meaning. You know, my dad, you know, fathers and sons have complicated relationships. They can't because there's always an element of competition. Always, I've never met a father son where there wasn't an element of a, just a little bit of, just a little bit, sometimes friendly, sometimes not so friendly competition.

Yeah. But the more I have become a, a dad and been a family guy and been married a long time, and then, you know, you run a business a long time, the more you come to appreciate in many cases how you, you know, how your father had to develop things. That's right. And he was always real hard on me about this.

That you had to wake up early, you had to go to bed late, that if there wasn't enough money, it was on you as the head of the house to get out and take a second and third job that the onus was on you. And that if there was someone that was gonna be dog tired, at the end of the day, it's gonna be you first.

And I can tell you after 20 years after being outta college, 21 years now and being a, a parent for 15 i, this resonates true more than ever. Now we're sitting right now in Ridgeland, Mississippi. That's right. My father was raised on a farm about two and a half hours south of here and in, in the depress.

in the thirties, in southern Mississippi in the Delta. Not a great time to be around, man. . I mean, it was a, it was a hard, hard, hard, hard life. And he had a, you know, . It wa it wasn't a great life. So when he, when he, when he turned eight, he hopped on the tractor and he fundamentally ran the farm until he was 18.

Left for the Navy. And at eight years old. At eight years old, he was, he was running a tractor. Wow. In Mississippi. That's impressive. Yeah. And one of the things he loves being up here cuz he ironically, and we just have to tell the listeners through this, a random chance ended up getting a second house here in Madison.

And he spends about half his time here. He's all his old high school buddies now. Four minutes from our office. Exactly. Five minutes tomorrow. It's crazy. It's, it's crazy. There was, it is no, there's no rhyme or reason other than 

Ryan Eaton: Yeah, James and I met. Two years ago, year and a half ago, something along those lines. James starts coming over here within three or four months after that. My, my parents just put an offer on the house in Madison, Mississippi,

James Benham: but he raised me telling about this, these farming stories. And the problem in farming is if you're not just super consistent. Yeah. It's a brutal business. That's right.

Because the weather's gonna come and the downturn and commodity's gonna come. And the same thing in business. In the early days, I would lie to myself and say, say as we build this business, as we build this venture, it's gonna get easier for me. Mm-hmm. that, you know, I can start to coast or relax or take it easy.

And the reality is, if you've got a growth mindset, cuz there's kind of two kind of businesses, there is, you have growth businesses and you have lifestyle businesses. Lifestyle businesses don't really grow. They're there to accommodate the lifestyle of the owner. Mm-hmm. , which is not anything I've. Yeah. Growth businesses have growth objectives and revenue targets and want to be larger companies.

And if you're running any kind of growth business, you're never gonna have an easier year. You're just gonna try and carve out the, the work and delegate the work you're not good at or don't like doing. Yep. So at least you're enjoying the work you're doing. Right. But you can't be a lazy farmer. You gotta get up early, put the hours in, put the time in, have a work life balance.

Mm-hmm. , but you're not gonna get to take it easy. That's just not, businesses demand the attention of their owners. That's right. And when you don't give it, bad things happen. That's right. And the farms are the same way. 

Ryan Eaton: So let me ask you this. Someone getting something off the ground don't have any capital. They're trying to figure out what to do. 

Yep. What would your best advice be to someone and let's just take the gas, starting an agency or wanting to start a TPA or something to that degree. You know, maybe we're talking about a hundred, $200,000 to get something up and going up front, you know, borrowing from a family member, borrowing from a friend.

Yeah. Getting, getting a loan. What's kind of the things I think of and kind of if you're weighing pros and cons, 

Yeah. How would you tip the scales on what you wanna do? 

James Benham: Yeah, and I can tell you what I liked, what I did. I like having co-founders. Yep. I like having partners. I don't like doing it by yourself.

So, you know, I had my dad and one of my best friends from high school. Sebastian. Sebastian. Yep. And. So the, I think the first thing is making sure you've got a group that compliments you. Now there's, there's a lot of entrepreneurs who are able to do it on their own. You know, you, you wanna look at one of the largest single owner operations in the entire world is Tillman, Farida and Houston, the owner of the Houston Rockets and owner of the Landry Restaurant franchise and the Golden Nugget Casino, Fran, that is a single owner that owns all of that.

Wow. So, so he, he can write the book on building a multi-billion dollar business on boots, bootstrapping a multi-billion dollar business. There are people that are able to do the single. I like partners and I'm mentoring a couple of younger guys right now who are starting at tpa and, and they're boot, they want to bootstrap a TPA so I can, I'm walking them through the steps.

So what steps, so what are you telling them then? So the fir the first thing is they, and I'm, I'm not gonna spoil the, the surprise for them. Yeah. But I'm gonna speak in generalities. They want to build something really interesting. Okay. And I said that's great, but what you want to build requires a lot of capital.

What can you do right now cuz you're both licensed? Adjust. . They said, well, we can both be contract adjusters. I said, okay, great. Go be contract adjusters. Can you form a tpa? Yeah. We're actually in the process. Right. Okay, great. Form your own tpa. You're both adjusters. You can both do the work, right? Mm-hmm.

you don't need anybody else to do the work. Great. I said, now go out and chase down your first five accounts. If you can't make it doing this, you have no business building. The other thing you wanna build that. Because what they want to build That's right, is, is around technology and some other really cool things.

Yep. Again, I'm not gonna spoil their surprise, but they wanna build some, some really cool stuff around technology in the, in the adjusting TPA world. Yep. Like, cool. But if you can't build a claims adjusting business, then you have no business building that get your proof of concept. Yes. Prove you can sell the con, then go do this.

And my point to them was, you can be your own beta client. Mm. If you build a successful tpa. , you're both already licensed adjusters. That's right. You both have six years, eight years, 10 years of experience. You, you can go with just claims right now as a contractor. , then you can go adjust claims as a tpa.

Yeah. And then as you build up your cash flow, you can allocate a portion of your cash flow to investing in the technology you wanna build. And you can be your own first beta client. So you're pulling me into 

Ryan Eaton: another question I had, and it was talking about building the things you need to build. Yep. You know, and then you can build the things you want to build.

Mm-hmm. . . So a mentor of mine passed away about a year and a half ago from Texas. He used to always tell me, he said, do the things you need to do when you need to do 'em, and there will come a time you can do the things you wanna 

James Benham: do. when you wanna do 'em. Yes. 

Ryan Eaton: And when I read this in your book, I was like, oh my gosh.

I was like, I know 

James Benham: they're not the exact same, but pretty close the same concept. It it requires discipline and so, and suffering. So just to be clear, it requires suffering. That's right. Now, depending on the level of suffering is how much you hate doing the. Like, what if you're an adjuster and you don't like adjusting?

What if you hate adjusting? Well, it's gonna be a really painful, that's coming tough. It's gonna be really painful. Whereas my bootstrapping was building websites and custom software, and then I got into insurance three years later building custom software, and then I built insurance products. So I, I did the long, slow, painful ride, right?

But I, I think that, you know, it is helpful to be doing something that you actually moderately enjoy doing. I really enjoyed building enterprise software. I didn't enjoy building websites, but in 2001, there was a lot of that work out there. That's right. And so I went out and did it. You did what you needed to do.

I did what I needed to do and I just endured it. So taking you to a deeper side, kind of the 

Ryan Eaton: entrepreneurship side of things and kind of building your own business and kind of looking at. One of the things I really liked in your book, and you talked about your dad several times, there's obviously a big mentor to you, obviously a big factor in your life.

You kind of brought into the fact that how hey, he wouldn't let me go in or take over 

kind 

James Benham: of his stuff. Mm-hmm. , but he always brought 

Ryan Eaton: me to go help sweep floors. Mm-hmm. help pick up checks. Mm-hmm. help deposit 

James Benham: checks, help do 

Ryan Eaton: stuff to kind of get you engaged in the business. And you had several 

James Benham: different things.

You 

Ryan Eaton: kinda helping kids understand your passion and then also managing by sweeping floors. 

James Benham: Those were two great points 

Ryan Eaton: that, you know, I felt like as people kind of get their businesses up and going to kind of help get your kids involved and it's a family deal. Cause your family's paying a price as well with you going and working and hit on that for a minute, 

James Benham: if you don't mind.

There's a lot you can go into that. They, they do pay a price. Yeah. I mean, they, they're the ones who are having dinners without you and you're on a business trip and I, you know, at my peak of travel, I was gone a hundred. 40 days a year. That's a wow. Long, that's a long time away from home. Too long. Yeah. I had, I, I backed down part of the reasons I got my pot license, by the way.

That's right. Which is another discussion for a little bit later, but, but is I wanted to be home earlier at night because I just got tired of missing dinners. I got tired of missing events. So they do have to pay a price. It helps if you involve them so they understand what's going on and why and what the goal is, and they can give you feedback on whether or not.

Off the edge or not. That's right. So I think that's a big deal. My dad always said, he goes, look, I'm gonna do two things for you, which I didn't understand how big they were at the time. I'm gonna get you one American car, . That's what I said. He's born in 1938. You know, domestic going domestic. Domestic gonna be no Toyota.

You know, he was gonna get a my truck, a Ford, a Chevy, or a Dodge, because I'm gonna get you one American car. I'm gonna, I'm gonna get you. public college degree. I'm not sending you a private school, but I'll send you a public college. So he got me a, got me a Ford and he got me a Texas degree at Texas a and m.

That's right. Which is a huge deal when you look at how much student debt has hurts people. Oh, it is. So I recognize that I had a significant advantage. I talk about that significant advantage began of the book. It was great. But when you're dealing with this, He said, I'm never gonna let you work for my business, but I will back you if you start your own.

He goes, if you come work here, my employees won't respect you and you'll hate me at the end of the day. And he just, he, he was just, he knew me. Right. Yeah. Now that's not always the case. There's a lot of fathers and sons. But again, he, he wasn't giving general advice. I'm not giving general advice on this, by the way.

I get it because there's a lot of fathers and sons or mothers and daughters that should work together and I've seen a lot of very successful combinations, but the way my dad and I are and were it That's fair. It would've been oil and water. That's right. And he knew me. He also knew how, how determined and, and kind of, you know, driven.

I was, yeah. To prove myself. Yep. Because I left l. and went and they shaved my hair and, and gave me a uniform at the cor cadets at a and s I chose the harder path because I wanted to prove that I could do it without my dad, to be honest. Yeah. That's why I didn't go to lsu. I, I know my, my reasons. I wanted to prove I could do it.

Yep. And so that, that worked for me. But he always involved me in the steps. He, he would go to the, his shipping area and he said, son, I only look at one number every week. It's the UPS shipping bill. If, if that number, if that number's bad, then we're gonna have a bad. He goes, fine, fundamentals to watch. And then, you know, we go sweep.

He goes, son, always look at this. He goes, look at this. We changed the way we cut this Teflon and we saved 20%. He goes, the little numbers add up to big numbers. I mean, it was just a constant, just swing. Big doors, little hints, just swing big doors. And he was always, he was always just, everything was just, it was constant, constant lesson.

I love that. And so he also said too, 

Ryan Eaton: you can kinda mention in the report I loved, and I didn't have this, my stuff to ask you about, but he said get five reports. And look at those five reports consistently. Yeah. And know your numbers based off these five reports and kind of have that as a, as a model.

Yeah. Look at 'em consistently. Yeah. And they'll kind of be able to tell you how your business is running. 

James Benham: Yeah. Kinda like the shipping was one of 'em for you. Exactly. Shipping's a big one. I've got, I've just got really basic stuff I look at every day and I log in. Yep. And then I know if I gotta call my business partner and say, what's going on?

I gotta call 'em and I gotta go high five 'em. You know, I mean that it depend. You, you've gotta have good data and you gotta look at it every day. I love it. I mean, business and entrepreneurship and entrepreneurship, innovating is a daily habit, not a weekly habit, not a monthly habit, and it's not a side gig.

And so that, that's why I think it's in this case, talking about family. You know, I travel with my daughters a lot. Try and bring them, show them what's going on. I take 'em to speeches. They've, they've seen me give countless speeches. Yeah. They critique 'em and gimme notes afterwards. Oh, that's good.

They've been in podcast recording sessions with me. They've been in, they've been in business meetings with me. They come with me to political meetings. My dad used to ha my, and I can't believe he did this cause I was a city councilman too. He used to have me sit at the dias with him during city council meetings.

Really? And he would lean over and. Here's what's going on with this agenda, agenda item, and I was the only person that was not a city council member at the diocese. I don't know, I never was able to pull that off of my kids. Oh, some strings , because like I, but like he was always big on always just having me there.

you know, it was hard quiet to be quiet. Yeah. You know, but, and there was no phones back then, so. No, I, I, I just had to sit there and listen, but I loved it. Mm-hmm. , I lo I ate it up. You learn. Yeah. And I've had, you know, my, my daughter, I, I'm a region at a public university now, and I, my youngest likes to go with me to the meetings, the, the one-on-one meetings.

And I, I'll, I'll ask the, it was, I should, the one, the recent one she went to was with the state senator. And the state senators in Texas are very powerful. They're more powerful than congressmen because they have bigger districts and more money. I mean, it's Makes sense. It's a it's a big deal. Yeah. In Texas and I, I said, Hey, can I bring my daughter?

He goes, yeah, bring your daughter. And so she's sitting down watching him and me negotiate, or it wasn't a negotiation, but we were just having a discussion about, you know, what was going on with some, some stuff in, in the state. And and we, we walked out and did a, you know, a debrief afterwards. And it was just a great learning moment.

Ryan Eaton: That's a great experience. 

James Benham: So I think that's why involving your family is really important, but also recognizing what the limits are is important. 

Ryan Eaton: So you talk about as well the kind of, the, the pressure sometimes that comes and you were kind of talking about how, you know, you might miss some, some weekends from the family.

You mentioned that a minute ago. Yes. Might not be able to do everything you want to be able to do cuz you do doing the things you need to do. Yep. , then you kind of get into the fact you're talking about kind of employees and you get kind of, you know, sometimes they're Christmas or their livelihoods kind of based off the decisions you're making and the, you know, all the different things you're doing.

There's a pressure there with that as well that comes that a lot of entrepreneurs just don't talk about. Right. And you know, you, you care about your team. You wanna make sure, and unless you own a business and run a business, you don't always think about those type things. How, from handling that, is it something that maybe you didn't. you didn't see 

when you were first getting started because you had no employees at that time. Yeah. That kind of grows and kind of, you know, first you're like, Hey, I gotta generate revenue. Well, now you got a great company and revenue isn't the main thing you're thinking about. It's, Hey, I need to make sure my people are taken care of, that are in Argentina and seeing 50% inflation or whatever the case may be.

talk about that pressure from the other side of it that you don't see until you hit that success point. 

James Benham: Yeah. Well, you, you, you, the pressure starts in the beginning intensely because you don't have a lot of money and you have to make regular payroll. Yeah. And so that's, that's a very, very difficult lesson.

And I, and it's not a lesson. You have to be an entrepreneur to learn because you can be a. You can be a corporate innovator and have a budget and a team, and you're gonna have the same, a lot of the same pressures in my opinion. If you're good in business you're gonna be very concerned with your team's wellbeing.

I interviewed four people, I think it was in chapter eight, where I talked about corporate in entrepreneurs and innovators. Yep. and all four of those people are intensely concerned and worried about their people and how they're doing it now that they didn't start their own business. They're leaders, yeah, they're C level leaders at major companies, but they have the same concern that I do for my people.

So I just want to first acknowledge that's good that this concern should be something that you think about the board, whether you're a corporate entrepreneur, whether you're a venture, venture capitalist should think about this too. That there's decision, there's consequences and decisions they make and they, they so readily.

Engage in mass layoffs and you're seeing it right now. Oh, I love it. A lot of big cuts and big cuts on companies that are still profit. and that that's when you, I think when you look at a bootstrap business, they know how hard it is to find people that you'll often just squeeze your own margins before you cut.

Whereas public companies will cut before their margins get squeezed. That's right. So it you kind of a two different, that's different, two different approaches. Price, because public companies are real worried about that. The quarterly returns and their stock price cuz their. Responsibilities to the shareholders, not necessarily employees.

And if you're a bootstrapped entrepreneur, your responsibilities to your team understand, I underst understand you, you gotta feed the team. Like literally feed them and families Yeah. And their families. And you look at us, I mean, we've got, you know, I tried to add it up all the children and all the, the spouses and, and significant others and, and the other relatives that live with them.

And it's, it's probably just under a thousand people Wow. That have some kind of dependency on this business being healthy. And, and making good decisions. And in the beginning it will completely overwhelm you. Cause it completely overwhelm me and I, I didn't sleep for the first two or three years. and I asked my dad one time, and this was one of the times, he did not gimme anything remotely useful as far as advice,

I said, I said how? I said, how do you, how do you deal with all the pressure? And he said, I don't know. I just don't think about it. I'm like, that is, yeah, the, that is the least useful advice for me. It took a few years to get to the point where I said, you know, I am gonna really worry about running a, a good business, healthy business, try really hard to treat my people well, try to make good decisions.

At the end of the day though, my people have to be responsible for their own financial wellbeing. Right. They, they've gotta make good decisions and not getting too much debt. And I, I, I talked to them about not getting into debt. Yeah. They've gotta make good financial decisions personally. They've gotta make good life decisions and they've gotta be responsible for their families.

Mm-hmm. I, I gotta do everything I can. To make sure that we run a healthy business, and then they've gotta do everything they can to make sure they run a healthy family and healthy personal finances. And we both gotta take responsibility for our sides. I can't be responsible for every one of the families and their, and their, because it's too much.

It's literally too, too much to deal with a burden. And so I just want to try and make sure that I don't send them home. and now, and we have a very low risk business, physically, right? We're not in construction. That's right. In construction. You gotta make sure you send them home as good or better than they arrived.

That's right. Safe as good or better than they arrived. That's the rule in construction. And it, and to me that applies to their mental wellbeing as well. So how do we try really hard not to beat up if we do beat him, beat 'em up too much. How, how do we apologize and try and make it right before they have to go home?

How, how do we send them home? So that better than how they came better. Better than how they came so that they're not stressed or in, in a lot of anxiety or, you know, you're gonna have to have tough conversations and you're gonna lose your temper. You're gonna have failures as a leader. So how do you learn to apologize quickly?

Yeah. So they're not dragging a 10 week dispute out with their boss. That's right. And they're miserable making everyone around him miserable. Correct. Yeah. So, I mean, so I think that's the, the thing, the turning point for me was when I had to say, I can only be respons. for creating a, a healthy work environment and trying my best, and that's gotta be enough.

And a, a good friend of mine, Frank Cox. That he helped me define winning and he said Winning is doing the best you can with what you had that day. Mm. And so at the end of the day, you just say, considering all the other factors today that do the best I could with what I had, 

Ryan Eaton: you know, that's like the Atomic Habit's book by James Clear book, you know, it's a great one.

And it kind of hits on that same type thing is, you know, do what you can today. Don't worry about yesterday. Can't do anything about it. Win 

James Benham: today. Do the things, the little baby steps 

Ryan Eaton: today and yeah. Keep going. Making those baby steps after 

James Benham: day. Yeah. Like today is a, a great example. I, I, I really wanted to, to go work out this morning early.

Yeah. But I knew I had to fly. Yeah. And I knew the weather wasn't gonna be great, and I didn't wanna be tired when I knew I was gonna have made bad decisions. So my, my decision making started at 5:00 AM this morning. You know, alarm went off. I could always. Woke up said, no, I need more sleep. I'm gonna be too tired if I, if I do this.

And then when I did wake up, I immediately jumped into, you know, doing my reading, doing my work, getting stuff ready so that I wasn't stacked up before I got here. Right. I mean, it's, that's a, you gotta, you gotta gotta think through the day. You gotta look at the day and say, . And sometimes discipline means not doing the the hardest thing or not exercising.

That's right. Because it's gonna tire you out too much and then you're not gonna be any good. And then I'm gonna have a bad interview and I'm gonna have a bad flight and I'm not gonna be on the, you know? That's right. All kind of bad things happen. And in flying, they teach you that. Your flight that's at 2:00 PM they have a checklist called I'm Safe that you run, run through.

But it all starts when you. . And so I think that's the, you gotta look at your, just your day at a time. Yeah, you do. And say, that's all I can control is this, this day to day and this timeline. And you, and you gotta get enough sleep. That, and I can't underemphasize how important it is for people to sleep.

Well and there's some things like the weather that we can't control. Correct. Like today, today was terrible weather, . 

Ryan Eaton: So help me out. This kinda wrapping it. Looking, we've looked at some of the principles throughout the book. Yeah. And great principles. A lot of 'em we didn't go over just 

James Benham: specifically for the people who read it.

Ryan Eaton: Yeah. Tell me your favorite principle that we did not go over. The value it provided to you and how you think it could benefit the people looking at it. 

James Benham: Yeah. I'd say that the biggest thing I would say in here is that the number one rule of business is to survive. It was, it was, even though it's my number four.

Yep. I did that intentionally. I, I, you said that the first time we met too. 

Ryan Eaton: Yeah. Uh, You brought that rule up the very first time, and I love that. 

James Benham: Yeah. And so I, and I say this in the book and I'll just read it above all else, you must stay in business long enough for good things to. This means making tough decisions that drive the long-term viability of the business, not short-term or unsustainable results.

Oh, that's good. We are in a short-term world, we are in a quarter to quarter world. We are in a world where, I mean, look at crypto and the FTX failure and the voyager failure and all of, all the fail. And, and this is the beginning of the crypto failures. We're not at the end of this. That's right. This is the beginning.

that entire industry was around a, an intangible asset that had nothing to back it up. Filled with speculators who wanted to make a quick buck on companies that were behind these that were not fundamentally survivable. They didn't focus on survival? No. They didn't focus on having enough cash in the bank.

They didn't focus on having good. , they didn't focus on having good numbers. My dad always said, have a good account and good a lawyer, good banker. Mm-hmm. , you know, they, they just, they didn't even have that. Mm-hmm. , I mean, FTX was a $15 billion thing. Deal run on QuickBooks, man. I mean, that's just one small example.

Yeah. But, you know, there's a lot of talk about environmental sustainability, but man, you can't be environmentally sustainable if you're not fiscal sustainable, financially sustainable. , if you're not financially sustainable, you gotta be in business. That's right. It's just, , you know, playing baseball, you gotta be healthy the whole season.

Mm-hmm. so you can hit your batting average. That's right. And you can hit enough home runs. And if you don't, if you physically don't make it to the end of the season, you're not gonna have a good season. That's right. And in business, like I never would've gotten that first break in an insurance company if I hadn't sucked it up for three years and built a ton of websites that weren't that fun.

That's right. And I never would've gotten to build Smart bid if I hadn't gone all in on insurance. An industry that I didn't know about. , but because it was larger contracts and they were profitable, I was able to use the cashflow to build Smart bid, and I never would've had an exit had I not taken years of risk, but focused on building a company.

Mm-hmm. That when I sold it, Was financially sustainable and so we were able to have a great exit. I did another, I did two other interviews on the exit, so you can go listen to those and I can, we can do links maybe to those or, but, you know, did some, we had a great exit because the, the company itself was financially sustainable.

Now, I'm happy to say that the company that acquired SmartBid, that's their main product they're selling now. I mean, for the, for the gc, for the GC side of things, you know. That's awesome. It's not the main sub product, but it's the main GC facing product. It's our product. In other words, four and a half years later.

It was a good transaction for everybody. And yet, and you should win-win. You should care about that. That's right. Like you should care. Like after the exit, did what you build stand the test of time? Yeah. Was it fiscally sustainable? Was it technologically sustainable? Did the buyers say that was a good acquisition?

Cuz that impacts your reputation. That's right too. That's exactly right. And so I think that's why, you know, focusing on survival means that you will keep a long-term focus rather than saying, Like a lot of doctor's offices and I, I was shocked to see how many doctors don't focus on sustainability financially in their doctor's practices.

Mm-hmm. , because a bunch of them told me when Covid hit and they lost all their patients, that they almost went out of business because they all distributed all their profits every month. They didn't keep any cash reserves in the business. They weren't focused on survivability cuz they assumed that the revenue would always be there.

I they will always need their doctor. And the only thing that kept all these doctors offices afloat was the Triple P program. Oh, wow. And it was because all those, all those doctors have big mortgages and they distribute all the earnings every month instead of saving money. Well, that's not a survival based approach to running a business.

Ryan Eaton: No, it's not. 

James Benham: And so that's, that's why that's good. That's why, to me it's the, it's the most important in any business. Well, big business, little business is survival. 

Ryan Eaton: Well, man, I can't tell you how much I appreciate you being on the show today. It flying over here for the show, man, that was awesome. , I, I tell you, I really, I truly love the book and as I mentioned in the the intro, we're gonna give away 25 copies of the book to the first 25 people who comment or share the podcast post from today.

So 

James Benham: thank you. 

Ryan Eaton: We're excited about that and man, I'll tell you first class book. I really, I really, really enjoyed it. 

James Benham: Thanks for reading it, man. 

Ryan Eaton: All right, well that wraps up another episode of the Insurance Leadership Podcast. Remember, a good plan today is better than a great plan months from now. Thank you for listening.

Intro/Outro: Thanks for listening to today's episode of The Insurance Leadership Podcast. Make sure you subscribe on your favorite podcast app so you'll be notified of future episodes or stream online at. Leadership podcast.com.