[Rewind] Marcus Lemonis on Profit, Product, People, and the Process

Marcus was scheduled to speak at T&C 2020, but the event never happened. Roland and Marcus still had a chance to sit down and chat though, and this podcast episode revisits that brilliant interview.

And exciting news! Marcus will be speaking at Scalable Impact Live in Austin, TX on November 2-3, along with NFL Hall of Fame running back Emmitt Smith and Kendra Scott, who has had a billion dollar exit in her fashion brand.

Marcus is known for looking at the 3 Ps—people, product, and process—when he’s evaluating a business to invest in. When asked to break that down, he said it’s important to first establish the fact that this framework works for everyone. It’s an easy way for him to communicate with people on TV about how to think of their business differently. The application is universal.

Product, Process, People

These are the three things that matter in a business, but you have to rank them in terms of priority, Marcus says.

Product is the easiest one to think about. A relevant product or service is something everyone can understand. It’s got to be real time, digestible. It has to be able to change when the environment changes, and it’s got to be driven by the market, not your emotion.

Process is all about how you develop the idea, how you properly document it, build the case study around it, test it, roll it out to people, and continue to improve on it. Where a lot of companies die is that they don’t evolve, and you have to. Your process has to evolve and take into account new technology, trend changes, etc.

People are the most important. It’s easy to say you care about people, but Marcus has started to rev this up a little more recently. Start with yourself. You can’t respect other people if you don’t respect yourself.

2020 has been a crazy year. It has wreaked havoc and played tricks on people’s minds. We’ve lost a lot and need to take stock in who we are as individuals, family members, community people, and leaders. Then apply that to people who work with you, not for you. We get frustrated with people, and we change our tone. We have this mindset of you work for me, instead of you work with me. We can be collaborative and thoughtful and still be good leaders.

“I can go into any business and help them to think differently about themselves and other people,” Marcus says. “If you’re not capable of thinking differently, you shouldn’t be a leader.”

What Is So Attractive About Turn-Arounds?

The Profit is all about turning around businesses that are having challenges. What makes someone want to tackle something so difficult? Marcus says he’s always just been more at home with looking at things that are broken (processes, products) and really understanding it. “I’m more comfortable with things that are fractured,” he says, “because I like to be the guy with the glue who puts things back together.”

How does he decide when to help people and when to cut his losses? He says a lot of people think he’s crazy. “Why do you waste your time with knuckleheads?” people ask him. And he does it because of what other people learn while they watch him do it. He invests time in people to prove something to himself, to help others, and he knows it also resonates with the people watching. He wants to raise people’s self-awareness about their behavior.

How does he deal with people attacking him while he tries to help them? Well, that part isn’t much fun. When the cameras leave, those relationships don’t always work out. If they’re delusional about themselves, they usually don’t change. Don’t rely on the other person to dictate your behavior, he says. You can’t let people take you off your game.

The Profit is one of the longest running shows on television today. He’s ultimately learning for himself and teaching others to think differently. It would be easy to kick people to the curb, but it’s better not to. Marcus thinks of people like himself when he was starting his own business. How would he have wanted people to have treated him while he was struggling? That’s what he does for others.

The key to business isn’t about being the toughest person in the room and having a poker face. We all struggle in our businesses at some point. Businesses closed daily because of Covid. At the end of the day, be transparent about who you are and where you’ve come from, and don’t try to create a fantasy life. Create wealth for yourself that allows you to have freedom and to invest in others. Don’t create wealth to separate yourself and have an elitist mentality.

A Business Partner Has to Bring Capital, Expertise, or Contacts

The important part of a roll-up, Marcus says, is partnering with like-minded people. You don’t have to agree on everything, but share goals and vision. A lot of people talk about balance in life, but he doesn’t subscribe to that.

Any potential business partner has to bring capital, expertise, or contacts to the table. And, honestly, capital is the least important asset of the three. Marcus loves networking. He loves to learn from people like Roland and share his own experiences so people can learn from him. Surround yourself with people who can be additive, he says.

What he really wants a partner to bring to the table is a new way of thinking about something. He wants to hire people who are smarter than him, people who can make him better.

The Importance of Diversity in Your Business

Marcus doesn’t do equal partnerships. He won’t ever do a deal that’s 50/50. He’ll either be the minority and let the other person take the lead, or he wants to drive. You can’t get in a car and have two people take the wheel. There might be exceptions to the rule, but he won’t do it. There’s got to be a clear leader. However, when he gets into a deal, even if it’s just 10%, he does like to have financial control.

“For those people who own 100% of your business,” he says. “I would encourage you not to. I think it’s important to have gender and racial diversity. I’m not saying it to check a box. You have to represent your consumers. All of them.”

He says you have to truly know your audience. And to know them, you have to reflect who they are, or you’ll serve them one thing when they’re asking for another. Surround yourself with people who look like your audience. Your audience isn’t all middle-aged white guys. You need a diverse team running your business.

How Covid Changed His Investment Thesis

Marcus used to be very public about not investing in technology, because he didn’t understand it. He likes brick and mortar, tangible products. Then someone approached him about a technology-driven fund/deal. They wanted a $2M investment. “They wanted me to think in new ways,” he says, “and they wanted me to partner with them, because I see things differently too.” Now he finds himself only wanting to invest in digital tech stuff.

“Covid accelerated my need to change my thinking,” he says. “I realized that the brick and mortar environment we lived in won’t exist anymore. Technology is the future of the world. What I do hope happens though is that technology people and digital marketers can lend their credibility and experience to brick and mortar stores.”

He says we all come from different places, have different experiences, and we all think about life and business differently. “We don’t want to get into a homogenous way of thinking about things,” he says. “The key for me in business is that conflict is healthy. Getting different opinions and learning from other people is essential to growing yourself and your business. The key for me is respect. Respecting others’ opinions, no matter how much you disagree. Make me better. I want to make you better too.”

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