The Leadership Shift That Took This CEO From Survival to Scale

TRANSCRIPT SUMMARY:

‍

00:00 Intro: Inner Game vs Outer Game

00:17 Podcast Intro & Guest Introduction (Mike Chaput)

01:00 Early Career & First Business Failure

02:08 Lessons from Bankruptcy & Resilience

02:12 What Insight Does Today (Managed IT Services)

03:05 Industry Landscape: Small vs Large Players

04:46 Why It’s Rare to Scale in This Industry

07:52 How Mike Got Into Managed Services

10:54 Early Growth & First Competitive Advantage

12:45 Scaling Challenges & Customer Retention

14:06 Growth Ceilings & Leadership Evolution

16:39 Biggest Leadership Learning Moments

18:35 When Core Values Were Wrong

22:00 Redefining Company Values (Respect vs Humor)

26:26 Setting Vision: Thinking Backwards vs Big Goals

28:46 Why Big Goals Create Energy

29:31 The Turning Point: Why Change Was Necessary

30:49 Prey vs Predator Mindset in Leadership

33:09 Sponsor Break + Podcast Context

33:33 Vision & Values as Team Alignment Tools

36:00 Why Alignment Beats “Perfect Strategy”

38:04 Building Team Trust & Leadership Foundations

40:39 How to Actually Create Core Values

44:17 Why Most Company Values Are Weak

45:17 Learning Through Books & Experience

47:02 Diagnosing Problems Through Values

49:06 How Goals Shape Attention & Behavior

51:18 Capital Strategy: Growth vs Exit Decisions

53:00 Future Direction: AI & Business Transformation

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FULL Transcript:

Jeff Holman, Host (08:31.071)

Welcome back, everybody, to the breakout CEO podcast. I'm your host, Jeff Holman. I'm here with Mike Chaput. Mike, welcome to the show.

Michael Chaput (08:46.68)

Thank you, Jeff. Pleasure to be here.

Jeff Holman, Host (08:48.477)

Yeah, it's so good to have you. Mike, you are the CEO of Endsight. You've been doing that for a while. It's a managed service provider, right? And well, I want to ask now, because we were just talking on the icebreaker questions earlier about family stuff. You've been doing, I have to do the math, but you've been doing Endsight for about as long as you've been married now. They're competing, aren't they?

Michael Chaput (09:15.97)

Not quite. So the rough outline is I actually had a company that I was the CEO of before Endsight that was called PCS Networks. That was four and a half years. It ended up going bankrupt. So Endsight was started in 2004. My company, the first company that I did which was an IT systems integrator, that we ran from two.

Jeff Holman, Host (09:17.471)

Jeff Holman, Host (09:34.676)

Got it.

Michael Chaput (09:42.798)

from basically from 2000 to 2004 and I was married in 2002. So, you you can kind of put the pieces together there, but I was, let's say, partner not married with my wife. You know, we were in a serious relationship since like, what was it? Probably 98, I think was when we started to date seriously.

Jeff Holman, Host (09:47.487)

Hmm.

Jeff Holman, Host (09:55.497)

Sure.

Jeff Holman, Host (10:00.925)

Okay, that's fantastic. I've been married since.

Michael Chaput (10:04.908)

She supersedes all the business stuff, but the marriage kind of intersects.

Jeff Holman, Host (10:09.115)

I mean, she's still around and she's been through, I'm sure, the good and the bad. You mentioned a failed business or a bankruptcy. That's a tough time and she's still here.

Michael Chaput (10:18.37)

That's the ugly. That's the good, bad. That's the, the, bankruptcy is that's the ugly.

Jeff Holman, Host (10:21.885)

Yeah, yeah, well, you're not the only one to go through it. So we'll talk today and maybe maybe hear some of your thoughts about what you've learned along the way. But as we get into this, give give the audience a little flavor about where Endsight is today, what you've you know, what what you're running, what you're managing, what it looks like.

Michael Chaput (10:42.328)

So, Endsights in the IT managed services space. So if anybody knows, doesn't know about that, it's a super highly competitive space. So think there are maybe a thousand different companies that do what we do in every major urban area. know, like in the Bay area is one of our areas, there might be, you know, a thousand different options. Most of them are incredibly small. You know, there's a lot of five men in less shop, tons of 10 men in less shop and in a handful of 20.

Jeff Holman, Host (10:46.207)

Mm-hmm.

Michael Chaput (11:11.276)

people or less shop. It's dominated by small people. can see this and there's, know, at one point in time, one of the major software companies went public and so they shared their data in a public report. You could just see this as like really weird curve where it's just like everybody's really small. In the last five years, the private equity people have come into the space. And so now what you have is this really strange dynamic where you have tons and tons of really small companies and a handful of really large national companies, which

are really kind of a acquisitions of, you know, they're just basically a bunch of the small ones kind of compiled up into one national brand. and site is, is quite rare. We're not, we're not totally unique, but we're probably there maybe if I, and I'm pretty, I've been in the industry for more than 20 years and, but there's maybe like 20 or 30 of us. So we're 140 employees, uh, which

Jeff Holman, Host (11:47.337)

Yeah.

Michael Chaput (12:06.254)

is not big for a normal company, but for an independently owned managed services company, we're one of the largest in the, in the nation. So, um, that's really strange, but it's hard to grow in the space because again, there's no competitive barriers to entry in it. It's, unregulated. There's no capital barriers. So anybody can enter it. That makes it very difficult to scale. Um, and so, uh, we're about 35 million in total revenues, uh, 400 customers. And, uh, so.

Yeah, it's unique to be able to have, and we own our own capital table. So it's basically my business partner and I, my co-founder and I pretty much we, we own the whole company between the two of us. So that's the, a little bit of the skeleton story on

Jeff Holman, Host (12:46.025)

Yeah.

You've been bootstrapping since before bootstrapping was in style, out of style, and coming back in style now. You've been doing it the whole time.

Michael Chaput (12:58.166)

Yeah, exactly. We're like bell bottom jeans, you know, it's coming back in style again.

Jeff Holman, Host (13:02.739)

Exactly, exactly. Yes. Well, that's fantastic. So why is it so rare in the industry that your size of business exists? Is it just too easy for people to split off once they feel like they can do what the company they work for is doing? Or is it because the acquisitions have been sucking at people past this point of operation? What makes it so unique?

Michael Chaput (13:27.096)

So, you know, I think it's, I think it's Michael Gerber who wrote the book about the entrepreneur seizures. Did you ever read that book? It's, it's, yeah, the email. That's it. That's it. Yeah. So that when I read that, was like, yeah, that's, that's our industry. it's, it's basically a bunch of technicians, you know, who one day decided that they needed to run their own company. So you have these people with technical skills who are the founder CEOs of these companies, but they.

Jeff Holman, Host (13:35.345)

Is it part of e-myth? I don't remember the phrase. Okay.

Jeff Holman, Host (13:50.152)

Yeah.

Michael Chaput (13:55.138)

They don't actually have all the disciplines necessary to run a great business. don't understand finance, marketing, sales, operations management. They basically know technology. so, and, and candidly, you know, I don't want to insult any, but sometimes they don't even know that very well. And, and so they.

Jeff Holman, Host (14:05.715)

Yeah.

Jeff Holman, Host (14:13.821)

Yeah, well, and a lot of them don't want to know, they don't necessarily want to spend their time on the on running the business, right? That's not what they've done, not what they're familiar with. I think the legal industry that I'm in, lawyers are a lot the same way. You you become a legal expert, but you're expected someday to be, you know, do business development if you're going to become a partner or whatever, if you start your own law firm. But until then, you get to just do the work, be the technical expert.

Michael Chaput (14:26.552)

Well, good.

Michael Chaput (14:40.45)

So there's, so there's even a problem on that dimension. So there's literally no regulatory barrier. There's no legal bar. There's no law school. So I'd like to do what we do is just complete utter wild west. There's no code. You know, if you think about like everything else, like, know, if we're going to, somebody's going to set up a firewall, they, there's nobody's checking to make sure they're certified on that technology. There's, there's no code. There's nobody that comes in and inspects that as properly done.

Jeff Holman, Host (14:53.95)

Hmm.

Jeff Holman, Host (15:04.702)

Yeah.

Michael Chaput (15:09.422)

It's just total wild west and the consumer is a bad proxy for quality. So what that means is that they choose on price way too often, which means that the lowest, the low cost leaders who are doing poor quality don't just die. you'd expect wealth. word if capitalism were working and the poor quality people would just go out of business. But the it's very difficult. And even when things go wrong, the consumer doesn't understand why. So, you know, it's, it's just, it's a.

Jeff Holman, Host (15:15.743)

Yeah

Jeff Holman, Host (15:31.219)

Yeah.

Michael Chaput (15:39.362)

It's a gnarly place to compete on a lot of dimensions. so to do it well and to do it right and to build a brand and to build a reputation and to scale customers and to scale employees and all that is, it's an incredibly difficult market with which to do it in. And so that's why so few people have done it.

Jeff Holman, Host (15:58.048)

Well, so let's go back to 2004 then. mean, what was your story to get into it? If there's not really a barrier to entry, and I think we might be talking about barriers to entry later on in your story too, but if there's not a barrier to entry, kind of tell me what prompted you to go into this industry. Was it something you'd been working in or was it an opportunity?

Michael Chaput (16:14.958)

Well, yeah, so I mean, there's a crazy lead up, which I don't want to consume the whole podcast on, but I, when I was 24, I took an SBA loan and I bought a company with a partner, the same partner, by the way, that I run Endsight with now. And that was a technology integrator. So the kind of the, the idea of the revenue model was you would take other people's technology, think Lotus notes, for example, then you would.

Jeff Holman, Host (16:43.348)

Mm-hmm.

Michael Chaput (16:44.488)

deploy it or integrated into the customer's business. it was, the, other name for these companies were value added resellers. So you had to sell the technology and implement the technology and integrated into the business. And for a bunch of structural reasons that didn't survive, but we were, we learned a lot about it and we learned a lot about sales. So when the, when the company didn't survive, you know, we were kind of left without work and anything to do, but we kind of knew it and we kind of had.

technology vendor relationships and we kind of knew the Bay Area marketplace. are, we are members of EO San Francisco. So we had a kind of a pretty decent business social network with which to kind of scrounge up customers. And we had the failed companies carcass, which were, which had left some unmet demands to, that we might be able to figure out if they still needed help on certain demands. And so we figured out how to fashion a business together. Um, uh, it was super meager, you know, it was like five of us and

Jeff Holman, Host (17:21.204)

Mm-hmm.

Jeff Holman, Host (17:42.132)

Yeah.

Michael Chaput (17:43.226)

and we were basically just doing work for fee, you know, was what it, what it turned out, we were doing at that point in time, but, very shortly after I met a, I met a guy, out of Philadelphia who was just an incredibly early pioneer in this IT managed services space. And, I met him at, kind of an industry kind of peer function. And, we actually shared financials and I was just like,

What is this? You know, like, are you doing this? everything. Yeah. He had all this recurring revenue and I was just like, what's going on here? So he, I, I begged him into letting me come and do a site visit at his office, just outside of Philly and my business partner and I flew there and we did a tour and we just completely decided to like burn the ships on the classic IT consulting business, which was just kind of paying our bills.

Jeff Holman, Host (18:16.073)

So he was ahead of you on the financial curve.

Michael Chaput (18:41.39)

and transformed the business into the IT managed services space. And for a minute, it wasn't a high competitive business. know, there wasn't, there wasn't a lot of companies like this who were offering this model. So from like 2005 to like 2009, we were doing things different enough where the story was differentiating in and of itself. And then we started collecting customers and we started growing a nice little, little business and we, and we, and we did a lot of the early learning. Um, and then, you know, so, so

by the time everybody entered that market, we were just a little bit better. We had been doing it longer. We knew the tools better. had a brand, we had some recurring revenue. And then we just built the business from there. But yeah, that's how it got started.

Jeff Holman, Host (19:27.225)

How big were you guys when when the industry started to really develop when people started coming in maybe in larger masses?

Michael Chaput (19:34.382)

So by 2008, 2009, had already grown the business. I want to say maybe somewhere in the like the six to eight million in annual revenues, almost like it was all recurring. mean, it wasn't all recurring. So you had these recurring contracts, but all of our project revenue came from the recurring services bases in a real kind of predictable mathematical way. We knew we were going to get 20%.

Jeff Holman, Host (19:45.14)

Hmm.

Michael Chaput (20:03.714)

hardware and software attachment, we make 20 points on that. We knew we were gonna get 25 % attachment on professional services. And we know we can make a 50 or 60 % labor load of gross margin on the professional services attachment. can math it all out. And then the whole business came about not churning the base and finding new customers to add on, which sounds simple, but it's actually quite challenging because the...

Jeff Holman, Host (20:07.102)

Yeah.

Michael Chaput (20:30.242)

the sales started to get really competitive. It was hard to differentiate. There was a lot of people coming in for low prices and you're going to lose customers for let's say reasons that you can't control. sell or they have their own financial issues and reasons you can control. mean, it's, have people who make mistakes and you make legitimate mistakes and the customer gets frustrated and leaves. And so you have to

Jeff Holman, Host (20:51.71)

Yeah.

Michael Chaput (20:57.856)

sort out your operations and constantly improve that while growing and accommodating and bringing on new people and training them. So, you know, it's just a typical business mess and you got to organize it all. and, and then to, to go to do that, you know, from five or 6 million to 8 million to 10 million to 12 million to 15 to 16, all the way to 35 million is a, you know, it's a, it's a grind and, you gotta be good at a lot of things. if you, if you want to just kind of keep

moving the ball forward. And mostly you have to be great at creating customer value and you have to also be great at making it valuable for the employee to want to work with you because you need the best people. And if you get the best people, you can create a lot of customer value. And if you can keep people motivated and keep customers happy, you can accomplish a lot.

Jeff Holman, Host (21:47.359)

I want to dig into the aspects of creating value for the customers and the employees. I think that's an area we should talk about. But before we get to that, as you look back, I once had an employer when I was an intern coming out of engineering school, I worked at this firm where we designed power and lighting for buildings and places. And I talked to the owner frequently because it was a small firm. And he said, know, Jeff, it was really easy to grow from from one to 15 people.

And it was really pretty easy to grow from 25 on. But 15 to 20, man, we started and restarted and like that kicked our butts trying to grow from 15 to 20 people. Did you have some times in there when you're like, man, it was so easy here. What's keeping us from growing in this stage? Did that happen to you?

Michael Chaput (22:38.262)

a hundred percent. I couldn't tell you the exact number of people where, where ceilings were hit, but there's, there's definitely, yeah, kind of like ceiling moments where you kind of get things organized for, for, for, let's say a certain volume of, of business. then to make it to the next volume requires changing your thinking, your philosophy, your identity.

Jeff Holman, Host (22:51.262)

Mm-hmm.

Michael Chaput (23:07.776)

It requires taking risks, letting certain things go. You know, there was a, there's a famous quote where it's like, and I don't remember the numbers, but it's like to go from zero to 50 employees. You have to be willing to delegate all the stuff you don't like, but to go to like 50 to a hundred, you have to start delegating the stuff you like. And, you know, that's like, you know, that, that was true for me because I, it wasn't hard for me to delegate the stuff I don't like, you know, but then when I was.

Jeff Holman, Host (23:23.058)

Mm-hmm.

Michael Chaput (23:37.376)

I really did a lot of the sales and I loved working with prospective clients. To me, it was just a problem solving exercise. I'd go in and I'd really identify what problems they were having. And I would know our solution set because, you know, as part of building it and I would just kind of match them up and say, Hey, look, we can all these things you describe, our customers don't experience those problems. And here's why. And we'd close a new deal and that felt very rewarding. I enjoyed the work. I love making the new relationships. But I mean, eventually there's only so many

Jeff Holman, Host (23:50.686)

Mm-hmm.

Michael Chaput (24:05.912)

You know, there's a churn rate that you just can't avoid. And if there's a sales rate that you can't surpass, you're just going to hit a, you're going to hit a wall. So you have to essentially figure out how to build an organization that can do that same procedure successfully so that you can scale. And that's, you know, that was a, one of the things that I had to learn, but it wasn't just me, right? We had operations people who were really good at things. We had to give up things to other people. And, you you're doing this all across your organization.

Jeff Holman, Host (24:13.436)

Yeah.

Jeff Holman, Host (24:33.053)

Yeah.

What do you think were some of the biggest, I don't know, learning moments for you going through that? Where you're like, because you probably had this nailed, you're like, I can do this. I'm working and I got this down. I don't know where you went from delegating what you didn't like to delegating what you liked. What were some of the shifts where you're like, I never expected to have to do this, but once I did it, you started to see the results.

Michael Chaput (25:02.638)

Yeah. So, um, there's a lot of ways I could answer that question, but, I think the way I want to answer it is, um, I, so I, it being a member of, uh, EO San Francisco was interesting. So I remember in 2002, I met Vern Harnish. If you don't know who Vern Harnish, runs a program called gazelles and he has a book called Rockefeller's habit. And most people nowadays, they talk about

Jeff Holman, Host (25:18.494)

Mm-hmm.

Michael Chaput (25:31.128)

Gina Wickman's EOS. But my experience was like Vern Harnish was on all that stuff well before Gina Wickman was, and he came up with this program called the one page business plan, which was basically the vision traction organizer, one.o now. and, and I learned about that in 2002, but at that time in my life, I was like 26 and we were in survival mode and I couldn't process how to do core values and all this stuff. So we just kind of set it aside.

Jeff Holman, Host (25:32.744)

Right.

Jeff Holman, Host (25:46.461)

Yeah.

Jeff Holman, Host (25:58.899)

Yeah.

Michael Chaput (26:00.704)

We took that up, you know, and, and, and with Endsight, and we started having this discipline of filling out what, ultimately people refer to as a vision traction organizer, or if they, if they like Rockefeller habits, the, the one page business plan. And we had a set of core values and we had, you know, one year targets, five year targets and quarterly targets. And, and we had critical numbers and, know, it was kind of, there was a discipline to it. We went off site regular, you know, every year to refill out this plan and we did.

Jeff Holman, Host (26:13.918)

Mm-hmm.

Michael Chaput (26:29.366)

a quarterly regiment where we kind of like went offsite, not like, not like travel to, but like, you know, for the, for a day. And, and we thought we were pretty like, we thought we were pretty smart, you know, like we would tell people about it. We were proud of it. we would, we'd promote the core values. I oriented everybody on them. there was a point in time where I realized that the values were

Jeff Holman, Host (26:56.97)

really?

Michael Chaput (26:58.19)

And, and I realized that there were elements of the plan that we just couldn't really conceive of very well. Like for example, the big hairy audacious goal, like I, like I was too young and immature to like properly understand that concept, but the, but the values was a particularly, important piece because, I remember reading, I think it was, built to last by Jim Collins and Jerry Porras and, and all.

I just, don't know exactly what he said, but what I took away was something like value should last the lifetime of a leader. And so, and to come up with these values, Jeff was really hard. Like we, we would go off site and we'd spend days arguing about them and running these exercises, trying to come up with them and trying to like argue about the, the, word, should they be this long? Should they be this, should there be five, should there be four? You know, and by the time we finally came up with something that

Jeff Holman, Host (27:53.394)

Yeah.

Michael Chaput (27:57.058)

The founding team and the, and the lieutenants all agreed to it was like, there was maybe nothing in the world. wanted to do less than go resort through that. Not to mention that I had publicly, you know, promoted these things for clients and to employees. And I had my reputation on the line. but there, there, there was a specific thing where I realized like, this is wrong. This is like,

Jeff Holman, Host (28:14.3)

Right, right.

Michael Chaput (28:22.67)

It isn't going to work this way. And it's, and it's, and it's in our way, the, the, the very values that we were so proud of that we promoted were, were antithetical to our ultimate goal, which we hadn't even well articulated, but we kind of knew anyway. And so, so yeah, so that was, that was, that was a big thing was like, like being willing to, to, to, be humble enough to.

go back and retool that. And so one of the things I want to get across to maybe people who are, you know, in a different spot in their leadership journey is like, don't be so hubris about your, about your values. there's like they're written on a stone tablet handed to you from God. Like the way I look at it is as a, as a C I kind of break, I kind of make things simple first before I make them complex. And I see the, the job of the CEO is kind of two dimensions first.

Jeff Holman, Host (29:15.677)

Yeah.

Michael Chaput (29:21.49)

They're both complex dimensions, but the first one is kind of your business strategy, which I think is synonymous with vision. Cause you know, your, your, your vision is ultimately a description of the future state of your business. It's where you're going and your strategy describes your pathway, how you're going to get there. So that's your vision. That's one half. The other half are what are the philosophies, beliefs, and, and, kind of behavioral norms that if followed perfectly,

Jeff Holman, Host (29:33.03)

Yeah.

Michael Chaput (29:50.092)

would manifest that vision. That's the domain of values. So like if that's off the table, like if you're not willing to like, you know, pivot or experiment with the philosophies and beliefs and behavioral norms, then all you can do, all you can do then is try to make sure your strategy sandwiches into the values. well, strategically we're stuck with these. So we got to pick a strategy that might work with the, with the

Jeff Holman, Host (29:52.115)

Hmm.

Jeff Holman, Host (30:05.586)

then it locks it locks up your strategy. It locks up.

Jeff Holman, Host (30:12.977)

Yeah, yeah,

Michael Chaput (30:19.554)

the beliefs and philosophy. And the other thing about it is like, you should have values. You should be willing to be wrong on them because you don't know any better. Like you don't know that they're wrong until you know, like I didn't like it took me getting new philosophy. Like I, I, what changed for me specifically was I, read Edwards Deming. I went to business school in 2008 and I took operations from, from a woman named Sarah Bachman. And, and she introduced me to the, the lean principles.

Jeff Holman, Host (30:48.979)

Mm-hmm.

Michael Chaput (30:49.112)

You know, like the Toyota Toyota way and all that kind of stuff. And I started reading Edwards Deming. And I just remember reading his 14 points of management. One of them point eight, cause I talk about this enough to know that it's actually 0.8 is to drive fear out of the workplace. It's, basically psychological safety and Deming's explain that, if you want a high quality organization, then employees have to be the eyes and ears for leaders, which means they have to surface the problems.

Jeff Holman, Host (30:51.741)

Yeah.

Jeff Holman, Host (31:07.41)

Yeah.

Michael Chaput (31:18.498)

But if they're worried about reputation, reputational risk, and if they're worried about, disciplinary action, they'll hide problems from leaders and leaders won't, won't need to do it. So at the, at the time, two of our core values, one of them sounds so innocent is have a sense of humor and take enjoyment for the day. Like it sounds so innocent. Even now, as I say, it sounds like, how could that be a problem? Well, I'll explain it. Yeah.

Jeff Holman, Host (31:30.417)

Well, I'm... Yeah.

Jeff Holman, Host (31:45.064)

Sounds really positive. Sounds like we should all have positivity, right?

Michael Chaput (31:47.934)

I'll explain it in a second. The second one that was a problem was, was take pride in your work. Also like, it sounds intuitive, but here's how it manifested. It manifested in a rubber chicken that would hang on the cubicle of somebody who made a mistake. That's how it manifests.

Jeff Holman, Host (31:56.893)

Yeah.

Jeff Holman, Host (32:06.579)

What do you, what do you, so you would actually pass a chicken around and be like, hey, it's kind of funny.

Michael Chaput (32:09.772)

Like every time there was like a mistake, like a chicken would go from one person's thing. It was like, it was like, it was like a meant to be like a good humored way of like trying to like acknowledge that a mistake was made. And it was, but, but underneath that was like a kind of a disdain for mistakes. You know, was like, we didn't like them. That was the kind of the take pride in your work. And when we saw them, it was like irritating and the rubber chicken was like humor was like at the, it was at the apex of value.

Jeff Holman, Host (32:15.838)

It's like a reverse trophy.

Jeff Holman, Host (32:21.629)

Yeah, yeah,

Jeff Holman, Host (32:29.98)

Yeah.

Nobody wanted the chicken on their cubicle, did they?

Michael Chaput (32:39.918)

And, what I learned from Edwards Deming is if you want a high quality organization, by the way, which in managed services, if you want to scale it, you have to have a quality just because it's so competitive that if you can't produce a lot of customer value for the dollar, you just, there's somebody else that's going to take that work. So what we needed was, we needed was respect. That was the, and that's, you know, that's what Toyota figured out with respect for people. So when you look at it's okay to have humor.

But it has to be subordinate to something higher, which in our case was respect. you couldn't have humor if it was, you couldn't use humor if it was disrespectful period.

Jeff Holman, Host (33:11.88)

So the humor.

Jeff Holman, Host (33:16.656)

Yeah, was misaligned.

Michael Chaput (33:18.45)

And, and so, you know, like, you know, taking pride in your work was, kind of also off, off the mark. It was, and it became something like taking pride in how our work affects the people around us, our customers, our colleagues, and, and the, and, the societies we're part of, and we want to take pride in the impact of our work. And, and so, you know, but, but the values were off enough that culturally we weren't going to, we weren't going to hit our milestone. We weren't going to hit our

Jeff Holman, Host (33:38.941)

Hmm.

Michael Chaput (33:47.534)

our highest, our highest potential. And so then, you know, to go back and retool that meant going to work and being like, you know, we still love humor, but it's not at the apex of value. It's not the, it's not the philosophy and the beliefs and the behaviors that's going to take us where we need to go. And that meant a retool.

Jeff Holman, Host (34:04.146)

Yeah. How long have you operated with these, with this set of values before you recognized way to, really? And it probably at one point it felt like it was working really well for you, I assume.

Michael Chaput (34:08.718)

More than a decade, more than a decade.

Michael Chaput (34:14.53)

Well, that's it could, because having some, the thing about it was like we, didn't, couldn't, we couldn't really figure out big, audacious goal. Like I didn't understand it. Like we couldn't see that far. So what we did instead was we, we set vision backwards. It's like, you know, based on let's say a best case trajectory of what we think we can do, where could we be in a year? And then we'd set those targets and we'd be like, and if we did that for five years, where might we could be? And we'd set those targets. And it's like, that's wrong.

Jeff Holman, Host (34:43.004)

You just scaled up today's performance and.

Michael Chaput (34:44.908)

Yeah, that that's wrong. Right? What you, what you really want to do, what you really want to do is say, okay, if we could become anything we wanted to become, and all we had to do is declare it. What would that be? What would be our most audacious ambition that we would just love to see that would be like something that would just be like, all we had to do is declare this thing. What would it be like, forget about time as a, as a vehicle and what, and that thing must be something that we would be willing to sacrifice.

Jeff Holman, Host (34:54.216)

Mm-hmm.

Michael Chaput (35:14.644)

other idols on the, on the marks to it. So for example, if our, if our ambition was like to become a billion dollar firm, let's say, then we would probably have to sacrifice owning our own capital table. Right. You know, so, but we, that wasn't what our ambition was. Our ambition was to be the highest quality managed services provider in the world. Like we wanted to out quality everybody. And we had a definition for what, what that meant. and it didn't matter big or small. We didn't care.

we wanted to compete with the small guys in quality and the big guys in quality. we, and we knew what metrics, like if we could see everybody's metrics, how, where we would have to win. And so that didn't require us to, to dilute our capital table, but it did require us to sacrifice other, let's say sacred cows. And that, in this case, it was the values. So, you know, like we, have to be willing to sacrifice everything to this highest order goal. And that should be out, that should be out in times such that you're not.

Jeff Holman, Host (36:02.983)

Yeah.

Michael Chaput (36:12.622)

Let's say lost by the pragmatism of it. Like, there's no way it's like, well, don't worry about the way the way will emerge. Just pick your target. And then you start setting goals. Like, okay, if we were to get there, what would be a reasonable spot where we could become in five years? And if we were on track for the five years, what would we have to do in one? And then in order to be a one, what would we have to do next quarter? And how would we deal with the start solving these problems over time? As you back into the, you back into the vision versus trying to look at where you are and be like, wow, if

Things went really well. Where might we be in a year? It's like, that's not quite right. You know, you want to, and the, thing about that, Jeff is, what's like the, the ambition of the goal is what creates the energy to achieve it. You know, it's like small goals are, are not really that exciting. Like people spend energy on something that's exciting. So you want to, you want your goal to be interesting enough where it'll, it'll

Jeff Holman, Host (36:56.486)

Yeah.

Jeff Holman, Host (37:08.72)

More of it.

Michael Chaput (37:09.474)

Cultivate the energy to manifest the goal.

Jeff Holman, Host (37:13.373)

Well, yeah, I love that. I love that statement. But I'm curious, though, because I think a lot of people in your shoes just, you know, projecting a little bit here, they would say to themselves, man, we've been operating for decade. We got, you know, we got this system core values. We've got some goals we're working towards. We're making, you know, millions of dollars, whatever that is in revenue. I think a lot of people would say to themselves, I don't think we need to change. Like, what was the signal you had that said?

No, we got to reevaluate our values. got to rethink how we approach our goal because we're doing bottom up, not top down or whatever. Like, what did you see differently that maybe other people wouldn't have seen?

Michael Chaput (37:54.338)

Yeah. Well, there, there, it's funny. I talk about a lot of the same things, but hopefully your, your audience is different enough where they haven't heard this before. But, so I kind of one of the other little tools I use to describe leadership and goals is there's, there's the animating spirit of a prey animal. That's the limbic system that stress it's protect. Then there's the animating spirit of the predator.

animal and that's the goal seeking system. That's the dopaminergic system. That's where our feel good chemistry comes from. That's becoming that's vision. So if your goal is to stay the same, that's a, you're definitely going to manifest the prey animal spirit because you're just going to protect what you have. And no, nobody's having any fun in that system. Nobody's nobody's challenged themselves to become something more.

The highest order miles loves thing we discussed in the nobody's challenged themselves to be more. You're not challenging yourself to be more. There's, there's no vision. You're not really leading anywhere where you're leading people to what be the same. Like that, that's, that's not going to inspire anybody's best life, best performance, life's best work, nothing like that. So

Jeff Holman, Host (38:53.404)

Yeah.

Jeff Holman, Host (39:09.405)

So was it a lack of energy or a lack of excitement in the team and you're like, what's missing here?

Michael Chaput (39:14.062)

I mean, there's just something innately fun about building something. It's like playing with Legos or, or playing a video game where you're, where you're building something. Everybody wants to be a part of it. Your best people are going to go somewhere where they're building something. So if your goal is like, I just want to be the stain because this is a good life for me. It's like, maybe so for you, but there, if you're a leader, there's a lot of other people and they want to go somewhere. They want to build something.

They want to be part of something fun, something interesting. And if you can't provide them with that vision, then somebody else is going to provide them with that vision. You know, it's like, and, and, and you'll just be turning customers and turning employees. You'll be doing the same amount of work. You'll be in your limbic system all the time. You'll be stressed about every customer loss. You know, if you go into predator land, you're like, you're on the attack. You're in the dopamine, allergic system. You're doing something exciting and everybody's having fun along the way. And you tolerate your setbacks a lot better because you know, you're.

Jeff Holman, Host (39:47.741)

and they will go somewhere else.

Michael Chaput (40:10.382)

You're in that, you're in that predator animal. All right. We didn't get that zebra. We're, you know, I, I use the herd of lions chasing zebras, but we're going to go, we're going to go on the attack to the next one. And, and everything's fine. You know, otherwise you're in that kick beehive land where everybody's going, you know, it's like chaos. Like the prey animal land is, is, is the, is the land of, uh, of chaos. And it's, it's when zebras get attacked, they, they zig and zag and try to them confused and everybody's confusion.

Jeff Holman, Host (40:16.786)

Mm-hmm.

Michael Chaput (40:39.832)

trying to avoid the, trying to avoid the angry, you know, whatever, whatever is attacking them. could be the leader. could be a customer. it could be a colleague. People will invent problems internally so that there's some drama because they're bored. I, I just, I think it's

Jeff Holman, Host (40:44.273)

Yeah, the lions, yeah.

Michael Chaput (41:00.972)

I just have a very strong opinion that, that if you want to be a leader, then take people somewhere or don't be a leader, know, like, well, let somebody else lead. Like if you want to stay in the same spot, then let somebody else be the leader.

Jeff Holman, Host (41:14.993)

Hmm. Yeah. Had you seen this, this chaos in your team? And then, you know, once you sat down to figure out new values, new vision, new big hairy audacious goal, like, like, did it bring order? Did it bring alignment? What was the impact?

Michael Chaput (41:31.384)

So, so I see, I see chaos. Well, so let me take it a step back. So, you know, I like these vision traction organizer, one page business plan as a tool, but I think a lot of people are, are using them without really understanding what they're doing. And because they're kind of useful and they're working there, they're like, they declare victory on it, but it's better to understand what's happening. So

The, your values and your vision are your uniting principles. They make, they are what make your team a team. You know, that like, cause you can have people who have the same logo on their business card, but are not a team. They're just, they just get paid from the same place, but they don't function as a team. So yeah, exactly. If you.

Jeff Holman, Host (42:04.637)

Okay.

Jeff Holman, Host (42:18.267)

That's Patrick Lincione's five dysfunctions of a team, right?

Michael Chaput (42:24.782)

I love Pat Lencioni, by the he's a local guy. He's here in Concord. My boys went to school at De La Salle where his boys went. They played lacrosse with him. I also met him at Y or an EO event at San Francisco back in the early 2000. Brilliant guy. I've read almost all of his book. I think I've read all of his books. The motive is absolutely fantastic. That's a great book on servant leadership. But anyway, yeah. But he also has one by the way, called silos and politics, which is a similar kind of vein.

Jeff Holman, Host (42:32.794)

cool.

Jeff Holman, Host (42:37.843)

nice.

Michael Chaput (42:53.282)

But back to what I, you know, back to my perspective on it, the uniting principles, you can disagree on things below, but like, if you disagree on where you're going, like, like, you know, what's your BHAG, if you disagree on that, you just need to be part of a different team. Like we can disagree about what we can disagree about how the best way to achieve that BHAG is, but only to the extent that we're trying to get smarter about the strategic direction. And then we have to disagree and commit because it's all about.

Jeff Holman, Host (43:00.689)

Mm-hmm.

Michael Chaput (43:22.166)

It'd be like lions, know, when lions go after the zebras, they, they don't go after the herd arbitrarily. They actually pick one of the zebras because they don't have hands and tools, know, so they, they circle that zebra out. They like a target and they, and they get that zebra away from the herd. then they, then they go for the kill. And yeah. And so if you're thinking about your team that way, like if your team is just chasing the herd.

Jeff Holman, Host (43:33.362)

Yeah, yeah.

Jeff Holman, Host (43:42.791)

I think orcas do something similar, don't they?

Michael Chaput (43:51.266)

Like I've got a better strategy. I want to go after the slowest zebra. want to go after the oldest zebra. What about going after the funny looking zebra so we don't get lost. It's like, if you have three different strategies you're applying, your team isn't going to win. Like you're better off choosing a not perfect strategy that everybody agrees to. Like I'd rather go after the harder zebra. If everybody were going after it together, then you know, three different strategies, but one of those strategies is the, let's say the optimal one. It's like.

your team alignment is much more important than the, let's say the optimal strategy. So what aligns the team? You know, what is it that aligns a team? It's, it's the shared ideology. It's the shared vision. It's the shared values that make your team align. Now here's something very useful to know. we, we perceive the world in relation to our goal.

So we don't even know what things are until we know what we're trying to do. Like we determine what's a tool, what's an obstacle in relation to what we're trying to accomplish. And we do the same for people. So we, we figure out whether somebody's a friend or a foe on the basis of whether they can help us achieve the goal. our targets are aligning and if they're shared, we can perceive each other as friends. So the, the, the interesting thing about people is they, they want community from work.

Jeff Holman, Host (44:46.557)

Okay.

Michael Chaput (45:13.408)

Everybody thinks they want pay and they do because they need money, but they're going to be there all day. So they want to work with people they like. They want to find play and work. There's other things that they want also from work. And one of them is community and you can't really get community with just happy hours, because if people go to a happy hour, people that they hate, they see as obstacles in their way. They're, just not going to talk to them in a happy hour, or they're just going to fight there. in my first company, the, the one that went under, I literally had to break up a physical fight between.

two employees, like it was so dysfunctional. So you can, you like a happy hour isn't going to solve that, know, like quality time only works if you perceive each other, if there's, if there's a, if there's, if there's trust, that's kind of the baseline that's pet, Lencioni. And then, then on top of that, have shared ideology and that would, that would include the target and that shapes the very perception itself. So, so as a, as a leader, you know, this work of creating the vision and values, I mean, it's

Jeff Holman, Host (45:43.995)

Wow. Yeah.

Jeff Holman, Host (45:58.236)

Mm-hmm.

Michael Chaput (46:09.834)

It's the, it's the work, it's the leadership work. It's not, it's different than management. You know, it's, it's, it's, it's the work of a leader and that's what a leader needs.

Jeff Holman, Host (46:19.751)

Well, so how have you achieved that with your teams then? I mean, is it a matter of going off and defining everything and then teaching people what you've, you know, what values you've adopted as a leadership and helping them to align to those? Or is it more about, you know, finding people to bring on board that are already aligned so you don't have to realign them? Like, what are the steps that you've taken after working for a decade under one value system, changing it?

I mean, did the team react to that and say, whoa, what are we doing? Like, I don't fit anymore. Or how did you manage that change?

Michael Chaput (46:59.49)

Well, there, there, there's, again, there's a lot, there's a lot of, a depth below that question. So let me, let me hit a couple, maybe a couple of points and I'll see which one you want to dig into first. So the first question might be like, how do you, how do you come up with a good set of vision and values? I mean, that's like a really, really complicated question, but it's the tactics are reasonably understood. So the first thing you need to do is you need to understand who your most.

Jeff Holman, Host (47:06.471)

They're not a silver bullet, Mike.

Michael Chaput (47:29.698)

competent and loyal lieutenants are as the leader. Like you have to figure out like who's my first team. Who's my, my best group of people. The second thing you need to do. And this is, this is totally Patrick Lenz. The only straight from five dysfunctions of a team is you have to build trust amongst those people. And that comes from vulnerability. so, you know, that, that means that you have to be incredibly vulnerable. There's exercises. use, exercise called the lifeline stole that from the.

Jeff Holman, Host (47:39.602)

Yeah.

Michael Chaput (47:59.498)

EO or the YPO playbook, where we share the highest and low, the highest and lowest moments of our life. By the way, most people think vulnerability comes from sharing the lowest moments of your life. And that's true, but a lot of people don't share their wins because they don't want to be judged as being egotistical or arrogant. And so that's also a risky place to share. So when you do a lifeline and you share the peaks and valleys of your life with, with other people and you do it in a real sincere way.

Jeff Holman, Host (48:18.855)

Yeah.

Michael Chaput (48:27.542)

It can be the basis of people really understanding how you think and why you are what you are. And, so you do an exercise where you can establish some basic human trust, where you come together, you drop rank, leader goes first and you, and you get vulnerable and you, and you develop trust. Once you cultivate trust, you know, you kind of have to establish this, this idea of like, what could we become at our best? This is that BHAG that's going to guide everything else.

Then you need to understand what are the philosophical principles and ideas that are going to, that are going to help us get there. Now to do this well, nobody will like this very well, but you have to have good philosophy. That means you have to be well read. Like I said, I didn't have the philosophy of Edwards Deming when I first set the values and that's why my values weren't good. So, but I've read probably at least a thousand books on, business leadership and I've been to business school.

Jeff Holman, Host (49:06.855)

Yeah.

Jeff Holman, Host (49:22.46)

Wow.

Michael Chaput (49:23.756)

So like the, the philosophy that's in our core value code isn't like, isn't shallow stuff like, you my dad was a hard worker. So hard work. It's like, you know, it's like there's Kim Scott in there and her radical candor about connection. There's respect from the Toyota lean. There's there's, there's all these principles from, from lean thinking by James Womack. And there's principles. mean, there's, there's so many, there's

Patrick Glanzione on service leadership. So there's a library of probably 30 or 40 books that unpack the principles of our core values. So you need to read a bunch of books and you need to figure out what principles are going to help manifest your vision. And then you, then it's an effort of distillation. So you have a library, then you have principles and then you have values.

Jeff Holman, Host (50:00.444)

Yeah.

Michael Chaput (50:18.198)

And values have to be rememberable too. like just as a, as a, example of how this works at Endsight, the first extraction, which is really easy to remember, but not meaningful as RSVP. So like you won't forget that, but it doesn't mean a lot, but R stands for respect and connect. Okay. R S stands for servants heart. V stands for value value and P stands for progress over comfort.

Okay. So now they're starting to get a little bit of like, now it's like a, now it's like a stick figure drawing. You kind of know what it means. You know, it's a human, but you don't really know a lot under each one of those values. Respect and connect has like five or six, we believe statements that describe specifically what it means. And then each of the bullets, there might be one or two books even that are the making of that book. So for example, in servant's heart, there's a bullet that says,

A leader's purpose is to serve their team so that team members can serve the clients and each other. That servant leadership that's illustrated by Patrick on Chione's book, the motive. So if you really want to understand that bullet, it's really a distillation of an idea that's illustrated in an entire book. So as you grow in the leadership rank and Endsight, your expectation for fluency in the library, the canon of literature that makes up our philosophical underpinnings that are our behavior values.

Jeff Holman, Host (51:18.301)

Hmm.

Michael Chaput (51:43.458)

You know, you have to get deeper and deeper into understanding the thought leadership behind them. So values aren't, they're not for the meek. know, they're not like, I like there, you can't just be like integrity. It's like, that's not, that's not going to do it. You know, it needs to, you need to really understand, what the best business philosophies and how to align them with your strategy. So we knew, for example, at NSI because we're in a competitive market.

That it was going to be customer value and quality. We're going to be the ways that we were going to differentiate, which means that we had to take playbooks from people who had operated in that kind of environment and run those playbooks. Excellent. And that there was cultural elements to the success of those plays, you know? And so, yeah, so it's difficult. Like it's, you know, there's, there's no easy way to, to victory. It's, it's just like anything like Steph Curry works really, really hard. And if you want to be a great leader,

Jeff Holman, Host (52:20.093)

Mm-hmm.

Michael Chaput (52:39.906)

There's just no way around it. You're going to have to be really good. That means you're going to have to.

learn and dedicate yourself and, and, know, and, set the tone that way.

Jeff Holman, Host (52:53.149)

How did you get on the same page with your team about this? Was it easy? They just said, yeah, this makes sense. Let's do this. Are they all readers? Or are you kind of leading the charge by saying, hey, I'm reading some books and I'm going to share them with my team? Because at that level, you've got a lot of team members. And just making sure you're all in alignment on those goals is probably an achievement in and of itself.

Michael Chaput (53:22.008)

So yeah, you know, it's funny, because I started out as a CEO, it's so young and when I say young, that's not really even what I really mean. What I mean is like totally incompetent and ignorant. Like I didn't know I hadn't, I hadn't closed a sales deal. hadn't, I hadn't negotiated anything. hadn't managed anybody. didn't understand how to read a financial statement. was just completely ill prepared. So, I, but I had this hour long commute to work.

Jeff Holman, Host (53:45.371)

Yeah.

Michael Chaput (53:51.766)

And an hour long commute home. So I started just taking in audio books and I just took in every audio book that was available and Barnes and Noble just one by one. And I would get reading lists from people from EO and I would just read them. And, I would be like, I would scrape the world. And when I would find a good one, I would, I'd be like, you need to read this and I'd, you know, get my, my business partner or the book, and then I'd get my managers and then they would read it.

Jeff Holman, Host (53:56.221)

Yeah.

Michael Chaput (54:17.966)

And then we'd book club it, you know, we'd be like, okay, what's there to learn from this? Is there anything to do about this? How can we use this idea? And, um, and is there action to take sometimes I'd get the paperback book and I'd go through the highlighter. Um, and it just kind of became part of my life. You know, I was on the road. There was a ton of windshield time back in the, 2000, 2010 and 2010 to 2020. mean, two decades, basically, but just an enormous amount of windshield white time to sales calls and.

Jeff Holman, Host (54:43.442)

Yeah.

Michael Chaput (54:47.542)

I would just multitask, you know, I'd be on these audio books and, and, and I would share them out and, and we'd talk to people about them. And of course, you know, business school didn't hurt either. That was kind of a lot of dedicated learning time. And I, so anyway, so the bottom line was time plus effort means getting good. It's like, if you, if you, eventually you get to 10,000 hours or whatever Malcolm Gladwell's idea where you become a

Jeff Holman, Host (55:08.85)

Yeah.

Jeff Holman, Host (55:16.006)

Right.

Michael Chaput (55:16.414)

become a true expert. And, it, you know, it's helpful while w if you have a lab, you know, if you're, if you have a company and you're, you're, you're, a team, you're trying to lead and you're, and you're seriously paying attention to the signals that's happening there. Cause like stuff is going wrong and you're what's going wrong. Like, you know, I went a long time where it's like, what's going wrong. And I, you know, I'd ask one, I'd ask a question. I'd say, well, are we executing the values?

Exactly as they, as, as we believe that they are, should be. And if the answer is no, then we have either, have, you know, okay, well we haven't either selected, right oriented, right, or operationalize these values properly, because if we were executing the values, problem goes away. Or maybe it's like, no, we're executing the values perfectly. It's like, well then the, and we're not manifesting your strategy. It's like, well, maybe the values aren't right or they're not clear or they're not comprehensive enough.

Jeff Holman, Host (55:48.69)

Mm-hmm.

Jeff Holman, Host (56:02.619)

Yeah.

Jeff Holman, Host (56:11.773)

out of alignment.

Michael Chaput (56:14.786)

And we need different philosophy and it would be like, well, who could we talk to? It's like, well, who's doing what you're trying to do. And they're doing it better than you. They might know the answer that you go and you try to find them. What books and mentors did you have? And, you try to sort that stuff out and, and you just grind and eventually the solution emerges up, you know, going back to goals when you have targets. Like this is another thing that's, that's very useful to understand. If you, your life is different when you have a target.

Jeff Holman, Host (56:44.509)

Yeah.

Michael Chaput (56:45.15)

Like, like, like what you'll pause on different things in your, in your social feed, for example, like what will catch your eye will be things that might help you with your target. So if you have a target, like your social feed will change. Your conversations will change with other people. It really changes what you pay attention to. So your, targets are ultimately, a force function of attention. They, and, they, the other thing is kind of weird as they.

Jeff Holman, Host (57:00.988)

Yeah.

Michael Chaput (57:13.826)

They kind of control your conscious. Like, like, like when you're feeling like that nagging feeling, like, should be doing something different. What that is, is that your, your current action is at odds with your long-term, your proximal goals or your proximal attention is at odds with your long-term vision. And that's what that, that's what it's, you know, that's a Jiminy cricket kind of thing. It's like telling you, should be doing something different, but you won't even get that signal if you don't have the targets. So.

Jeff Holman, Host (57:28.273)

Yeah.

Jeff Holman, Host (57:41.319)

Yeah, what's the name of it? I'm blanking on the name where, you you don't notice something, but once you speak it, you start to... What's that?

Michael Chaput (57:48.044)

The rads, the reticular, the reticular activation system. It's called the rads. Yeah.

Jeff Holman, Host (57:52.486)

Yes, yes, yes. And you're, so you're talking about that, but you're almost talking about the reverse of it. Like if you're, once you, once you have felt alignment, it's almost like you can feel when it's not there, I guess, right? You can say something's off. I, I, like my razzes. I'm, I'm, I'm unrazzed right now or whatever it would be.

Michael Chaput (58:06.531)

Yes.

Michael Chaput (58:13.122)

Yeah, you're not, you're not noticing what you need to do. You're not seeing the pathway forward. Like the pathway, like the pathways are there, you know? and you know, like, sure. There's like a, there's like, you know, you might be like, there's a genetic potential thing. It's like most that's like hardly anybody's problem. You know, like that's might be a problem if you're trying to be the world's best basketball player, but like the vast majority of people.

Jeff Holman, Host (58:16.476)

Yeah.

Jeff Holman, Host (58:39.953)

Right, right.

Michael Chaput (58:43.422)

It's hardly, it's hardly their issue that they've, that they're doing everything right. And they've just run into their genetic potential. Like how many people do you know who are, who are doing everything right, but they just ran into their genetic potential. Like it's almost, it's almost a limiting factor for nobody.

Jeff Holman, Host (58:57.679)

Yeah, we use 10 % of our brain, right? And we're not running into the cat.

Michael Chaput (59:01.102)

So, you know, I don't really want to hear that very much. It's like, you're capable of a lot more and you know it, you know, I don't even need to, I don't even need that argument. It's like, you know, that you're capable of more. like, like, let's not, let's not talk about, let's not talk about your, let's say your genetic potential as being the limiter of why you're, you're facing your problems. It's almost certain.

Jeff Holman, Host (59:10.427)

Yeah.

Jeff Holman, Host (59:20.657)

Well, I'm curious to take this a slightly different direction. You know, you mentioned there are probably only like a dozen companies out there like you who aren't, you know, the really small ones or the ones that you know, P.E. backed gobbling up the really small ones. there is there a reason that like, is this where you want to be? You want to stand out in this in this in this place kind of between the small and the and the really large? Is that the right place to be?

Or does just depend? I guess what I'm really asking is, should other people who have 10 or 20 people on their team, should they be looking at PE, an acquisition someday as an option versus looking at growing into something like what you've grown it into? How do they approach that type of decision?

Michael Chaput (01:00:16.27)

Uh, well, I mean, I, I guess I could never presume to decide for anybody, something like, like what they're, you know, the kind of question, it's kind of the question is like, what should your capital strategy be? Should you own your own table? Should you bootstrap it? Should you VC it? Should you find a family office to partner with? Should you get friends and family? It's like, like, I think it, you know, the thing I'd like to say is your capital strategy starts in service to whatever your goal is. You know, should, you should set.

Jeff Holman, Host (01:00:24.955)

What's best for them, sure.

Jeff Holman, Host (01:00:43.005)

Mm-hmm.

Michael Chaput (01:00:45.558)

A compelling goal that first puts juice in, know, like puts juice in your own tank. Like it should be something that you're excited about. You know, our, our quality mission has really driven our company for the last, let's call it eight years. And it was meant to be a 10 year, you know, 10 year vision. Like now what I'm thinking about is like, what's next for us, you know, like, you know, we, we've, are an incredibly high quality organization. And, you know, the next goal has to go through that dot, you know, it can't.

It's like, okay, what goes through that dot to something, to something else. And interestingly, like for me, I'm what I'm thinking about now for our company is something like when I was first in this business, I was a technology integrator. kind of mentioned that we were brought technology and put it into people's business. And then for the last decade and a half, let's say I've been managing tech, I've been managing the tech tech stack. And it's been like making it secure, making it reliable.

Jeff Holman, Host (01:01:17.852)

Yeah.

Jeff Holman, Host (01:01:32.626)

Mm-hmm.

Michael Chaput (01:01:43.16)

troubleshooting, we've been doing integration, it's like, you know, replacing computers and replacing wireless access points is like not, not that much tech. Like the volume of new tech that we've implemented has been slow and steady such that the predominant value we do for our customers is manage what's there. I think that, I think that's shifting. And I think AI is, I think AI is shifting it. I think there's going to be a bunch of new agents, the L L And I think what customers really need is a partner that

Jeff Holman, Host (01:02:01.605)

AI, right? Yeah.

Michael Chaput (01:02:13.504)

Is helping them translate their business problems in a way that the newest technology can, can solve it and, can really, really manifest the next generation business. And I, and, and the interesting part about that is like, don't do that with somebody who doesn't know support really well, because if you put a bunch of agentic AI in there and we don't know how to, when the LLM changes models and it breaks and you don't know what to do and the, and the company who put it in hasn't mastered service.

Jeff Holman, Host (01:02:22.748)

Yeah.

Michael Chaput (01:02:43.758)

You're your host. So the, the, service element, the managed services element becomes just as important, but it doesn't become the central differentiating factor. That means a customer is going to get to come to us. It's going to be because of our skill at, integrating tech. And so we we've had a business intelligence practice at Endsight for, you know, the last 10 years where we're really good with data. And it turns out that like, what a great skill to have with the AI because

Jeff Holman, Host (01:02:44.017)

Yeah. Yeah.

Michael Chaput (01:03:10.894)

With AI, the first thing any kind of agent needs is it needs to have information and it, the universe of information is too much. You know, it needs to have your information such that it can do what you need it to do. And it needs to be restricted. It needs to be safe. It needs to be secure. It needs to be reliable. And you create an engine below. And so we launched an AI practice this last year to go along with our business intelligence practice. And I think that there's going to be a lot of business transformation that's going to occur. And so what am I excited about? Well,

Jeff Holman, Host (01:03:24.775)

Right.

Michael Chaput (01:03:40.206)

I'm excited, excited about solving real market problems. It's like, and I think about them as really human problems. Like, uh, maybe this will hit home. Maybe it won't, but 200 years ago, the average life expense expectancy for a male was 35 years old. So, you know, if you don't know, it's like 76 now. So we've doubled that and more. And the only way, the only way you can answer how is it's through.

Jeff Holman, Host (01:04:01.714)

Mm-hmm.

Michael Chaput (01:04:09.324)

Technology and markets. That's how we did it. It's, you know, it's, technology and markets and, and everybody's worried about AI and they should be, there's going to be dislocations. I'm not saying there won't be, but we don't want to go back to a world where 80 % of our workforce is, is spending time trying to make sure we eat. And I think as we figure out how to deploy the next generation technology to humanity's problems, we're going to create more and more abundance.

Jeff Holman, Host (01:04:11.005)

Yeah.

Jeff Holman, Host (01:04:30.396)

Great.

Michael Chaput (01:04:39.916)

So what, what's really exciting is to try to figure out how do we use what's there that use machines and tools and tech to solve human problems so that we can have longer lifespans and richer lives and, we can do more interesting things and we can build more interesting stuff. And so, you know, that's what, that's what excites me. I think at the, if, if I were speaking to leaders, it's like, what real problem could you solve? You know, like pick a real problem that like the market needs, like pick.

You know, go, go after something that would make things better if you, if you succeed it, like, Hey, look like society would be better. You know, if I solve this problem, like right now, this problem is annoying for a lot of people. And if we solved it, it would be a big win for a lot of people. And you know, yeah, you got to figure out the monetization strategy, but it's like, find something exciting to go off and, and, and work on that. That's a.

Jeff Holman, Host (01:05:13.339)

Yeah.

Michael Chaput (01:05:34.168)

That's human oriented. It's a human problem underneath. Will there be a market there? Will you, will make money? We'll provide a return to your capital tables and put food on the plates of your employees. It's got to, it's got to pass that test, but ultimately it should be, it should be a real social problem because you know, like roofing, like that's a real social problem. It's a commercial business, but man, I'm glad my house is dry when it rains. so every, every one of these businesses are solving some kind of serious commercial problem.

Jeff Holman, Host (01:05:43.953)

Yeah.

Michael Chaput (01:06:02.824)

And so, and, and, and they're, they're social simultaneously. that they're, and that, that's how I'd look at

Jeff Holman, Host (01:06:09.436)

Yeah. And that's really interesting because I think what I've seen is a lot of people, especially in the, you know, when you're talking about innovation and people inventing new things that I deal with, there's been this shift almost to, you know, bootstraps so heavily that you only build small things. A tool that's so niche that it solves a problem so you can, you know, use it and scale it fast and sell it off for a little bit of money. It's not, you know, it's not humanity focused. It's

It's almost like project focused. And I wonder, you know, as we, as we get into this, if the real, the real learning is what you're saying where AI comes in and it, is the tool to make things faster, but the real value is going to be, when we get past these small project, orientations and we get into who's going to, who's going to make sure the human element is still there in

in the midst of AI and how that works. That's going to be the key. At least I think. Is that consistent with what you're saying?

Michael Chaput (01:07:15.426)

Yeah. I think there's another thing that you're, you're, you're talking about too, which is that like there's the business is a economic game. You know, it's like, it's, it's, an economic game all the way around. Everybody who's playing it is the score is, is denominated and it's denominated in dollars, but dollars on their own is that that's a, there's a big distance between dollars and I'll say a good life. And you would have to say, well, what's

Jeff Holman, Host (01:07:42.684)

Mm-hmm.

Michael Chaput (01:07:45.046)

What's the difference? It's like, well, I think what makes a good life is, I mean, there might be some degree of like comfort, which, you know, and safety, but ultimately comfort and safety. It actually doesn't really make for a good life. Like, I think there's a lot of great philosophy around why, but so then what does it something more like meaning and purpose? It's a community and connection. Those are, those are what make for, for a good life.

And there's no reason you can't have it all. Like there's no reason why you can't get economic returns and simultaneously get community relationships, meaning and purpose. And in fact, my whole ethos is it's actually easier to make money when you consider and put forth first those more idealistic things like you're, and of course it is like it, it's really obvious if you think about it. So when I was a younger CEO,

And my motives were immature. You know, it was like they were, they were, they can be a caricature of something like financial safety and security. So I can take care of my family. Very me centric, right? Or maybe worse. be like, I don't want to be dominated by a hierarchical power structure. Like in my, my family childhood of origin, or like in the corporate world where I worked before, or third, like maybe I want to prove something to my dad.

You know, like these kinds of immature motives, like, but just think about what you like, are you excited about those things? Like, no, nobody would be like, so like for me to lead a group of people so that I can fulfill those really selfish self-centered motives, all I'm doing is cultivating a bunch of self-centered motives for everybody below me. And they're that's putting everybody in limbic land. Cause I'm in limbic land. I'm in that prey animal land. got safety and protect.

Jeff Holman, Host (01:09:14.0)

Yeah.

Jeff Holman, Host (01:09:20.571)

No.

Jeff Holman, Host (01:09:40.422)

Yeah.

Michael Chaput (01:09:42.264)

So if I can transcend as a leader into something more idealistic, more mission oriented, more social oriented, more community and connection centered, then what I do is I, I disrupt all of the cynical reasons why people don't want to follow because like, like they're, know, it's like all those things are, is they're signaling off of, off of the self-centered leader. So, so it actually makes it easier to scale a team when you're, when you're less

When you're less focused and this is the ironic part too. It's like economics. Okay. So let's take the people, the boots on the ground, people who are doing the day in day out work at Endsight. How are they going to make the best career, make the most money possible? The answer is their performance. If they have a great performance, they create a bunch of customer value. It's going to be easier to pay them more. So are they going to get better performance if they're economically driven or if they love the job, they find purpose in it. They find play in it.

Jeff Holman, Host (01:10:29.776)

Mm-hmm.

Jeff Holman, Host (01:10:42.844)

Well, you think it's economics, but it's not, at least in my experience.

Michael Chaput (01:10:45.83)

It's, it's what we, it's not experienced by the way now it's actually science. So it was Doshi McGregor and their book prime to perform where they studied this. said, I'll have to experiment. And they determined that the play motive and the purpose motive were correlated to very high performance. And the next one was, was potential. That's like the becoming. I wanted, I'm doing this as a stepping stone and the three that were correlated, the terrible performance were emotional pressure, economic pressure and inertia.

Jeff Holman, Host (01:11:07.942)

Yeah.

Michael Chaput (01:11:14.168)

So we know that economic pressure and emotional pressure are correlated to negative performance and play and purpose are correlated to high performance. So in a grand irony, if you want people to reach their economic potential, you have to, you have to cultivate motive that transcends economic and emotional pressure into something like play and potential and purpose. So that's the, want your people to do better economically? Well, the first thing you got to do is to get them to stop thinking about economics. The economics come to them.

Jeff Holman, Host (01:11:18.939)

Yeah.

Michael Chaput (01:11:43.766)

You can see this by the way in sports, you know, like the best players, like they're, they love the game. They make the most money too, but they love the game. The ones that are there who are there for the money, you could smell it and they're, they might be really, really talented, but they're, they're never going to be the best of the best, even if they have the best genetics. So it's very difficult by the way, to, to, to, perform well over time. If you don't have a play as a source of motive, because it's just draining.

Everything you're doing is draining and you're constantly seeking to do something else. But it's also in a grand irony. could make more money, but you're going to spend it trying to make up for the fact that you hate your job.

Jeff Holman, Host (01:12:26.14)

Yes, I see that in my field quite a bit.

Michael Chaput (01:12:28.824)

So if you love your job, you know, can actually, you can actually afford like you can afford to have less money, but you end up having more because you love your job and that makes your performance higher. So it's, it's, you know, it's a little bit of a, it's a mine, it's a mind trip, but you really, as a leader, you, if you can transcend your own immature sources of motive, you're going to make it lot easier for your team to achieve their best potential. And that's gonna, and that's going to help everybody.

Jeff Holman, Host (01:12:55.452)

Well, you've got my mind spinning a little bit here thinking through all the stuff you're saying. And I wonder if some of our audience members will say, man, it makes sense. Where do I start? How do I, I mean, Mike's way ahead of me in terms of reading and business. Like, where would they start to come down, to get onto the path that you're on? Is it read more books? Is it reevaluate your vision and values?

What's the, what are the steps somebody should think about the major milestones and say, I want to follow this. I want to be a better leader. I want to create better culture. Where do I start?

Michael Chaput (01:13:38.446)

So, I'm writing a book right now, where I'm kind of putting together all these ideas and some kind of coherent with a bunch of other things. But one of the concepts I, I talk about in the book is this, there's a, I don't know if you know this, probably you don't. This is like a real subtle part of Marine, nautical things, but inside of a big ship, there, course there's a rudder. And if you turn the rudder, the ship turns, right?

Jeff Holman, Host (01:13:47.483)

Yeah.

Jeff Holman, Host (01:14:05.894)

Mm-hmm.

Right.

Michael Chaput (01:14:09.378)

But inside the rudder, there's something called a Becker rudder and a Becker rudder is inside the rudder and it opens up one way such that the water flows so that the rudder turns. So it's the rudder itself and the Becker rudder are hacking fluid dynamics so that you can, with a steering wheel, you're not actually controlling the rudder. You're controlling that Beck Becker rudder. And so what you want to really understand is like, what's the littlest thing I can do.

Jeff Holman, Host (01:14:13.457)

Okay.

Jeff Holman, Host (01:14:26.342)

Yeah.

Michael Chaput (01:14:38.594)

To move this entire tire ship. Like what's the, what's the most effortless, effortless way? What's the Becker rudder version of this? And it's a great place to close because it's also where we started. That's with yourself, you know, you want to become a better, a better human being. And, and you can put a lot of attention, you can put a lot of attention to that because you're, you're essentially your patterns and your habits. I mean, and

Jeff Holman, Host (01:14:48.038)

Yeah.

Jeff Holman, Host (01:14:58.267)

Mm-hmm.

Jeff Holman, Host (01:15:06.044)

Yeah.

Michael Chaput (01:15:07.702)

And if you change your patterns and your habits to something more productive, everything else is going to start falling around around that. And so you've got to have an idea of what you want to be and what you want to become. And if you don't know that that's a problem, like you're, you're, you're what, what my kids call an NPC. You're a non-player character.

Jeff Holman, Host (01:15:32.597)

Yep.

Michael Chaput (01:15:34.606)

Your character and somebody else is somebody who knows what they're trying to do. how do you know, how do you add intentionality? Well, you need to create an individual vision statement. You need to start there. You need to start with something. It's like, what do I think the best version of myself, who do I think the best version of myself is? When am I at my best? And, and then where am I trying to go? What am I trying to become? And that's that.

Jeff Holman, Host (01:15:37.787)

Yeah.

Michael Chaput (01:16:02.388)

That's the basis for your own individual affirmations and visualizations. And the other thing that I would put out there is just like, you know, control your body, control your mind. You know, most people they're like, yeah, I know what I need to do. I just, I can't get motivated to do it. It's like, okay, well, like you probably, you could start with something really simple. You could just choose to move more than you're moving. Most people need to move more. And if they, if they could get.

Jeff Holman, Host (01:16:07.889)

Yeah.

Michael Chaput (01:16:32.076)

If they could get a win by having the discipline to move a little more, they start getting confidence in other elements of their life. This is like, there's a bunch of science around this too. And then.

Jeff Holman, Host (01:16:43.098)

This is make your make your bed in morning or get your steps in or one of those things where you're putting more motion and routine into your life.

Michael Chaput (01:16:53.59)

And then, and there's like habit stacking on that too. could stack one, but they, but the other, but the other big one here is like shrink the change. Like I hear people like, I, know I should read more, but I, just, I'm not motivated to do it. like, well, could you sit in a chair holding a book?

Jeff Holman, Host (01:17:13.67)

Yeah.

Michael Chaput (01:17:14.85)

I mean, I'm being dead serious about that. If that's all that you're capable of doing right now, they go sit in a chair for two minutes and hold a book and do that for as many days in a row until you start opening the darn thing.

Jeff Holman, Host (01:17:27.26)

I was going to say maybe read a paragraph, but you're starting even more basic. Hold the book.

Michael Chaput (01:17:30.83)

Like, like, like hold the book. You know, when I went to business school, I used to have these big giant case readers, full stuff. And it was like, I was so, I was running a company at the time and I had two small kids and it was like more than I could think of to go through. knew I had to read these case readers. It was going to make the classes way more interesting. So I would literally do this. I'd go, I'd say, you don't have to read the case, but you do have to go make yourself a cup of tea and go sit in a chair with that case reader and nothing else.

Jeff Holman, Host (01:17:59.633)

Yeah. Put it.

Michael Chaput (01:18:01.794)

I'd go get tea. I'd go sit there with the case reader with a chair and I would literally do nothing else. And then all of sudden I would be like, I could just open it up and restart. Then the next thing you know, I'd read it and then I'd be reading and then, you know, I'd crank through and then I'd be engaged and then, and then things, things would happen on the, on their own, but you got to shrink the change. You got to shrink the change to what, what you're willing to do. And, you're, you are your own. Becker rudder, you know, it's the.

Jeff Holman, Host (01:18:14.652)

then you're engaged.

Jeff Holman, Host (01:18:28.826)

Yeah.

Michael Chaput (01:18:29.518)

It's an inner game, not an outer game. Like everybody's looking for, I got to figure out the new market and the new, you know, I'm in the wrong market. I've got the wrong product fit. It's you know, you're probably where you really need to, yeah, you're the Becker rudder. You know, you probably need to get a little bit more movement in. You probably need to do a little bit more mindfulness. Do you have a gratitude practice? Do you know, do you have affirmations that you're doing? Are you visualizing your future? Like if you, if you focus on your inner game,

Jeff Holman, Host (01:18:42.332)

start with your own Becker rudder.

Michael Chaput (01:18:59.406)

The outer game solves itself. And so the, the, the, the best advice I could give anybody on this thing is, think of themselves as the Becker rudder of their life and focus on their inner game and let the outer game, you know, let it emerge. Like you'll, if you start reading, you're going to get better philosophy. And if you get better philosophy, you're going to have better values because you're, they're just a derivative of your, of your values. And you know, it's like,

And, you'll have a better strategy because you'll, you'll be able to, you'll have, you'll start getting a better network. All kinds of things will change, but I would start, I would start with the intergame.

Jeff Holman, Host (01:19:36.09)

I love this, Mike. You've given us so much to parse through and think about. It's clear that you've been thinking about these things for decades. And I'm excited to see the book come out and read a copy of it when it's ready. What's the book called? Do you have title for it yet?

Michael Chaput (01:19:54.766)

I'm my working title is, uh, broken to built right. Um, and the idea there is, know, kind of, kind of the story of bankruptcy. Yeah. Yeah. That's the working title. I'm, I'm doing, I don't know if I'm going to keep it all the way to the end. got to finish the book and then figure it out. But the concept is kind of neat. I'm, I'm telling like really like narrative rich, you know, sensory detail stories about.

Jeff Holman, Host (01:20:02.333)

The life of every entrepreneur, right?

Jeff Holman, Host (01:20:20.23)

Mm-hmm.

Michael Chaput (01:20:20.654)

my career. So it's going to be like, you're going to follow me as a main character and a story. Some of them will go back to childhood, early career, but each after each one of those chapters is a. A diagnosis of a principle. So what would, what did the principle be? So like, you know, I talk about childhood of origin story. Then I might, know, my second chapter would be something like, how do you transcend childhood of origin kind of trauma or motive? Like, you know, so would be things like we talk about there. It's like, you can't.

Jeff Holman, Host (01:20:28.762)

Wow.

Jeff Holman, Host (01:20:33.713)

Mm-hmm.

Jeff Holman, Host (01:20:47.611)

Yeah.

Michael Chaput (01:20:51.522)

the, the, know, your, your, your behaviors are a product of your, of the narrative structure you put about your life. And if you want to change your, your behaviors, you need to kind of go back and really think about what meaning is behind things that happened to you and, and, and take some ownership of that and look at it more holistically. And, and so, you know, then I'll tell a story about my career at TI and I'll talk about kind of bureaucracy and politics and

Jeff Holman, Host (01:21:19.718)

Yeah.

Michael Chaput (01:21:20.352)

And how that informed, you know, some of my, my, my beliefs as a later leader, you know, and I'll, so I'll, I'll, basically, kind of walk through some stories and some principles and hopefully people will be entertained and they'll also kind of learn something. It'll be like part, part story, part lesson. and that'll be a nice balance. I'm also, I'm also, launching a podcast. So if you like these ideas or if they, if they appeal to you and you're interested in.

Jeff Holman, Host (01:21:40.217)

Sounds fascinating.

Michael Chaput (01:21:49.394)

my podcast, can find that up Mike chape it.net. Okay. Now that'll take you to a page where you can subscribe. My podcast is going to be, it's all in person, high production. And just in my, my 25 years of being a member of YPO 400 customers, business school, there's just a professional network is, is really, really,

Jeff Holman, Host (01:22:09.456)

Yeah.

Michael Chaput (01:22:14.19)

humblingly good. Like the people who are willing to come and spend time with me to talk about this stuff is amazing. And we're coming on where I'm packing all kinds of leadership stuff, you know, we're talking about EOS, but we're also talking about lean, but we're also talking about people's stories or entrepreneur stories. So we're finding out their lessons. And then I present some of my ideas. And so I get real time feedback. So a lot of the ideas that I have are I'm working them actively with my guests and, that's a lot of fun.

Jeff Holman, Host (01:22:42.64)

Yeah. And that's at mikechapot.net you said. fantastic. We'll put that in the show notes. Well, yeah.

Michael Chaput (01:22:44.398)

And so you can catch that there.

Yes, yes.

And, Jeff, one last thing before, I, I, I want to first thank, I mean, this, this has been an hour and some time here and

Jeff Holman, Host (01:23:01.985)

I don't know. It's been a good conversation. I've gone over your time, I think.

Michael Chaput (01:23:07.553)

Yeah. Well, I just, if people made it to the end of this, I just want to, first of all, thank them for their time and attention. think, you know, if you haven't gathered, think, you know, attention was actually. Was a, an Egyptian God, like they, built, they built a sanctity around attention. was, that was symbolized by the eye because the eye is actually kind of approximate. Like you look at things that you're, you're giving them attention to because it's so important. If somebody's given this show,

Jeff Holman, Host (01:23:32.079)

Yeah.

Michael Chaput (01:23:35.85)

Attention, you know, I, I think, or giving me personally attention. I, I, I really want to express gratitude for that, but then there's always this ask and it's, I've been on maybe 15 podcasts and it's, it always feels a little uncomfortable, but I want to do it instead of the host because I'm the guest and it's tiresome to do it as a host. like, if you watched all the way to the end of this episode and you haven't liked or subscribed to this content or shared it with somebody or commented or engaged.

You have to know that the, way that the internet and everybody else figures out what's good and bad is by the early consumers of this. So it needs that affirmation. And so it's like a duty. It's, it's a duty to be like, Hey, I endorse content. That's good. And so if you thought this was good and you haven't endorsed it, you're kind of like not even doing your duty. Like you really have to do this.

Jeff Holman, Host (01:24:24.902)

Yeah.

Michael Chaput (01:24:30.988)

You're worried. know why all the reasons why you're worried about doing it. Like, I don't want to be like bombarded with a million. It's like, it's kind of like the price you pay. We don't get paid for this. It's basically free and we're trying to pay things forward. So the, price is, you know, like the content, share it, comment, super frustrating to always have to do that, but that's really what's necessary. And if we don't want our entire social feeds to be just like littered with,

littered with content that's designed to, manipulate us through, yeah, like manipulate us through, arousal based, you know, algorithms, then then we have to fight against that as a community and, try to try to get great content out there. so, anyway, I just want to make that appeal. And I also want to thank you for having me on and for your time.

Jeff Holman, Host (01:25:02.748)

Distract us. Yep.

Jeff Holman, Host (01:25:24.018)

you're such a gracious guest. really appreciate that. And liking and giving reviews, that's all very much appreciated. And we do appreciate also the attention that our listeners have given to this. But it's probably been easy for me to give attention to it because you've got so many good concepts that I think apply to people that are either looking to build a business or have been building a business for a while and they're taking it to the next level. I think there's a lot to take away from this episode.

So Mike, I really wanna thank you for taking the time and energy and bringing all of your Endsights from the last several decades into this conversation.

Michael Chaput (01:26:01.806)

Well, thank you, Jeff. Appreciate it.

Jeff Holman, Host (01:26:03.908)

Yeah, thank you. And to our audience, thanks for joining us one more time on the Breakout CEO Podcast.

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