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In 2008, Kay Walten’s Mexico-based business Loco Gringo faced the perfect storm: The Great Recession, a hurricane, Swine Flu, and drug cartel activity, all of which tend to discourage tourism. Loco Gringo started in 1996 when Kay was in Mexico exploring underwater caves with a client who introduced her to a thing called the internet. After writing a business plan on a cocktail napkin, she started hosting Mexican vacation rentals online. She shares with Clate and Scott the mistakes she made during the perfect storm, working as an international entrepreneur in a place where phone lines weren’t accessible, and scaling and creating a company culture.
Kay Walten: So this is what we had in 2009 if you can envision this. You had the economic crisis that was going on in the world.
Clate Mask: Yeah.
Kay Walten: Mexico - we had swine flu.
Clate Mask: Uh-huh.
Scott Martineau: Hmm.
Kay Walten: And you couple that with the drug cartels.
Clate Mask: Wow.
Clate Mask: That’s the perfect storm.
Scott Martineau: That’s amazing.
Clate Mask: That’s Kay Walten talking about the perfect storm and how to survive hurricanes in growing a small business. Tune in to the Small Business Success Podcast to hear more.
Scott Martineau: Welcome to today’s episode of the Small Business Success Podcast. This is Scott Martineau.
Clate Mask: And this is Clate Mask. We’re co-founders of Infusionsoft and we’ve got Kate Walten here. We’re talking small business success and we’re excited to have a great conversation.
Scott Martineau: We’re totally excited to have you here on the Small Business Success Podcast.
We meet with entrepreneurs and we share their stories and we find that business owners who are out there who are sort of struggling on their own really become enthused and energized by hearing what works for you and maybe we’re gonna cover a little bit of the dark side [laughter] and what hasn’t worked so great, so thank you so much for spending time with us today.
We’re real excited to get to know you more and learn more about your business.
Clate Mask: Yeah. Well, you’ve got a really cool business too. I think our listeners would love to hear it, so tell everybody what you do, Kay.
Kay Walten: Well, I think – the story I think sounds a little bit sexier than the day-to-day, [laugher] but what we do is we create custom vacation experiences.
So, what is that? Is that – we work with each person on an individual basis to help them find the perfect place to stay and the perfect locations and help custom build their experience so it’s not just like – it’s not going and buying a vacation in a box where you get picked up and you get seven days in a big resort and stuff like that and you just eat and drink and sleep in the same place, [laughter] but it’s to really get people exposed to the culture, the environment, the history and everything and we’re located in the Riviera Maya which is in the Yucatan section of Mexico. It’s in the Caribbean.
Clate Mask: Beautiful. Yeah. So pretty. And are all of your vacations – do you kind of specialize in the Yucatan like in Cancun, Riviera Maya or do you go all over the world?
Kay Walten: No, we don’t. We’re right now in the Riviera Maya – Costa Maya, which is just south of the Riviera Maya. It’s developing and then the state of Yucatan, so you’ve got Merida, which is the largest and the oldest colonial city in the Yucatan Peninsula.
We haven’t expanded. I mean a lot of it is because we give so much custom care and we know all of these properties firsthand and is that we’ve really tried – we’ve stayed very boutique and stayed in this area so that we could really give that just high touch service to everyone and have – I mean if we’re recommending a restaurant it’s because we ate there last week.
So we have a lot of you know – it’s a lot of high touch.
Clate Mask: That’s great.
Kay Walten: And we look into other areas, but being a small business – and it’s one of my questions for you guys later is about scaling and how to grow because we definitely have the model that works well, but it doesn’t – it’s great with technology, but it really takes a lot of hands-on and it really requires a human factor.
Scott Martineau: Uh-huh.
Clate Mask: Yep. Yep. So tell us real quickly where are you in your business now? How many employees do you have? How many years you been in business?
Kay Walten: We’ve been in business for 20 years.
Clate Mask: Wow. That’s great. Congratulations.
Kay Walten: I mean - and it still feels new and it’s great. So we started when the internet was this foreign concept.
And we started – it was me and a 336 IBM ThinkPad.
Clate Mask: Nice.
Kay Walten: Hand coding everything. Now 20 years later we have 10 employees, a bunch of freelance people who do some odd jobs for us along the course of the year and been trucking right along. So we started with 8 properties back in 1996 and now we have about – oh, 240.
Clate Mask: That is awesome.
Scott Martineau: Wow. That’s great.
Clate Mask: Congratulations. Very cool.
Kay Walten: Thanks.
Clate Mask: And for our listeners who know, we talk about the stages of small business success all the time. You are at that stage four and with ten employees we know things change a little bit.
Kay Walten: Yep.
Clate Mask: You’re also using a lot of contractors, so you’ve got –
you’re now really leading a team and a group of people to accomplish the dreams that you have for the business and so that’s a great place to get to.
There are a lot of – I don’t know if people realize, but there are only – there’s just a few percent of businesses that ever start – that start - that ever get up to be a seven figure business with 10 plus employees. I mean it’s a very rare thing. We like to call them the elite small businesses, so congratulations on being the elite. That’s great.
Kay Walten: Oh, wow. Thanks. It’s been a great trip. It’s been a great learning experience too and I wouldn’t trade it for the world.
Clate Mask: Very cool.
Scott Martineau: So Kay, tell us the – I don’t know if you can remember all the way back 20 years ago. That’s a long time, but what pushed you over the edge into entrepreneurship? What was that thing that got you going?
Kay Walten: Well, it’s kind of interesting. When I originally moved to what was then the Cancun-Tulum Corridor. There wasn’t even a Riviera Maya. It was just a section of beach. I moved there to explore underwater caves.
Scott Martineau: Wow.
Kay Walten: I was not planning on really working in tourism. I was in grocery marketing in the United States and had a chance to go take a job for $400.00 a month at a Dodge shop and take people out to blow bubbles to pay the rent.
And in my free time then I was exploring underwater caves, and so that was my passion there. And what happened then the person I moved there with which at this time my boyfriend and then became my husband, one of his divers that he was guiding – a cave diver – said, "There’s a new thing called the internet and you guys should do rentals for your divers."
Scott Martineau: Wow.
Kay Walten: So he said, "Okay, great." And so we started. I learned to hand code everything. Bought a used laptop for about $1300.00. And there aren’t even phone lines, so we had to drive like a half hour to check email to do a dial-up in a public phone booth where we take the cable and put it into the laptop and dial-up to some server to download and upload -
emails every day.
Scott Martineau: Wow. And then to push your changes to your website, you couldn’t – I mean, right?
Kay Walten: It was real – it took a lot of time.
Scott Martineau: Oh, that’s incredible.
Clate Mask: Yeah. That is really – well, it’s really cool that your boyfriend – your husband now – had that foresight to say, "You know this is actually going to be a great way for you to build a business attracting interests, getting people through the internet," because in – so was this I’m guessing ’96? Is that right?
Kay Walten: That was in ’96. Yeah. Literally the three of us sat around a table at a beach bar and wrote a business plan on a cocktail napkin.
Clate Mask: [Laughs] That is great.
Kay Walten: And yeah. I mean it really is.
Scott Martineau: Beautiful.
Kay Walten: It was not just a clichéd term. We really were doing that. And to work out a business model where we make commission on the reservations that we make. And at the time we were very fortunate because there was no information out there. I knew some people who were doing vacation rentals in our area, but there were people in the United States selling off of a brochure to their customers and here we were putting information on about restaurants and driving and all of this stuff.
And then it led into actually then we started the first forums. Online forums in the mid ‘90s, which at the time just – crazy is that these properties were coming up to us going, "Well, we don’t want people to be able to say how their trip was online. [Laughter] What if they complain?"
Scott Martineau: Right.
Kay Walten: And it’s, "Well, this is learning. If they complain it’s where to improve and learn and grow as a business."
And that was – it was interesting. We had I think – what – 10,000 or 100,000 maybe participants on our forums, which we still have to this day and it was really kind of – we didn’t know then that a company like TripAdvisor would become so popular where – and now it’s common place, but back in the ‘90s no one was kind of scared about having complaints or comments.
Scott Martineau: Getting the information.
Kay Walten: And what I’ve found is a lot of people will come up and defend the place and say, "Hey, we stayed there and it was great."
Scott Martineau: Yeah. That’s awesome.
Kay Walten: So, it’s been interesting.
Scott Martineau: That’s really cool. And so did the three of you co-found it together or did – is it -
Kay Walten: No. Actually we didn’t. It was just my husband and I. We had started the business and another friend of ours loaned us $10,000.00.
Scott Martineau: That was great. Very cool.
Kay Walten: And that was it. It was just the two of us and then a couple of years later since we didn’t – we needed more technology and we had some graphics – is we met someone from our forums who we could not afford to pay and we gave him a little bit of stock in the company and so he became our IT guy for up until years – I just bought him out not too long ago and – so but it was the three of us then at that point.
Clate Mask: Okay. So, let me push on that cause that’s a really, really cool thing. So, you got – you had – first of all you had to raise a little capital with a friend to get $10,000.00. That’s no small feat. I’m sure that there – I’m sure someone didn’t just come knock on your door and say, "Hey, can I give you $10,000.00 for this great business idea that you have on a napkin?"
So you had to go raise capital, which is a tricky thing to do. You also were working together with your boyfriend – soon to be husband – I would imagine.
Kay Walten: Yep.
Clate Mask: So that also was a tricky dynamic to work through and then as things were progressing, a couple of years later you were needing more skills, more resources, more talent to come into the business and you didn’t have the dollars to pay them so you were very resourceful and figured out a way to do that through stock which is a really powerful thing that smart entrepreneurs do.
So, I would love to hear maybe just a little bit about each of those three things because we’ve got listeners who deal with trying to raise capital to get some money together.
We’ve got listeners who are working with a family member or spouse and then there’s always the challenge - I know every listener out there is saying, "Hey, how do we get the talent that we need when we can’t pay for it?"
[Laughs] So, you’ve cracked the nut in three ways that’s pretty awesome.
Take maybe just a few – if you can give maybe a quick highlight about each one or a lesson learned in each one of those three things.
Kay Walten: Okay, great. Well, it’s – and I did all of these things. It wasn’t like I had planned for any of this stuff.
Scott Martineau: Clate likes multi-variant questions, [laughter] so make sure you respond in that order.
Clate Mask: [Laughs] My complex questions are a little tough I realize, but if you can help it –
Kay Walten: Yeah. I got to take notes here.
Clate Mask: [Laughs] Sorry about that.
Kay Walten: Raising capital and I think that – I still – even though we’ve been in business for 20 years, I think we still at times consider to raise capital for some of the plans that we want. Back in the day what we did is we talked to people. We talked to a lot of people and it wasn’t that we were so much looking for money.
We wanted to find people who believed in the concept and who were willing to take a risk and we – and what we did is just really basically outline – said on a cocktail napkin and said, "Okay. Here’s the outline and what we think we can do. This is why we think we can do it."
Nobody at the time was in the market, so we certainly had the niche. And we happened to find a person who was willing to put that money up, no terms. Didn’t care if they wanted it back. I mean we definitely found a beautiful angel.
Scott Martineau: That’s great.
Kay Walten: Yeah. And we did pay him back eventually. We said, "By the way, you know you loaned us the money with no terms, but we’ve made it back. Here ya go." And we gave it back to him.
Clate Mask: Awesome.
Scott Martineau: That’s great.
Kay Walten: So, it really wasn’t – I think back in the day it was a lot easier and we had contacts with people who had disposable income for that.
Clate Mask: But you had to sell your concept and do it in a way that got the person excited – excited enough to say, "Hey, I want to give this a ride."
And I think that entrepreneurs a lot of times don’t recognize that if you’re gonna raise capital – whether you’re talking about $10,000.00, $100,000.00, a million dollars – you’ve got to sell your concept in a way that people get excited about it and telling that story is something you did really well and congratulations to you on that. It’s cool.
Kay Walten: Thanks. And the nice thing is and it is whether it’s selling vacations as we do - if you come down to the beach and I am explaining what we are doing on the beach, -
you can’t help but be excited. So I think atmosphere - where is that conversation happening?
Clate Mask: Nice. Very smart.
Kay Walten: And the dynamics around it to really get people excited about it because then they’re going, "Yeah. This is just amazing. Yes, I can get behind this concept."
Clate Mask: Yeah. Yeah.
Kay Walten: So that worked for us. With stock, I’ve said the reason we wound up going with stock options that we talked about is we were in Mexico.
We started a Mexico corporation, but all the finances happened in the United States, so the Mexico banking system at the time was not as sophisticated as it is now and it’s not even super sophisticated now, [laughter] but the U.S. had the infrastructure.
And I’ll tell you what, in 1996 or ’97 I went to Bank of America and said, "Hey, I have a business on the internet and I’m going to take credit cards on the internet."
Bank of America said - and I was in their Houston branch – Bank of America said, "I’m sorry the banking industry will never be on the internet. It’s not safe. It’s always a risk."
Scott Martineau: Ah, that’s fantastic.
Clate Mask: Yes. Nice. So, you weren’t successful with Bank of America apparently.
Kay Walten: No, I wasn’t, but being in Mexico – having my life in Mexico and everything, I was very resourceful and I found someone for $700.00. I signed some papers. I now take five or six credit cards online. It was a high risk merchant account, which I still keep that contact, but he helped us out at that time.
Clate Mask: That’s great.
Kay Walten: So, in moving all our money in the states we didn’t want to put it under our own personal social security numbers and everything like that, so we formed S Corp in Delaware. Researched the most corporate friendly states.
Delaware was one of them and we hail from the east coast, so opened our corporation in Delaware with a company I found in the Yellow Pages literally and they still helped us with our documents and everything in the state of Delaware and so we had stock and we –
divvied up the stock between my husband and I and then had it just so that we just had a legal entity in the United States for all of our finances.
And we in the early days I guess if you wanted – or even early outsourcing employees because we were working in the United States - we had some employees in Mexico, so our U.S. company outsourced the labor it needed to our Mexico company, so it kept everything legal and balanced in both countries.
Clate Mask: Well, you guys did some great work there because a lot of times, creating stock or stock options is really – it’s creating a resource that you can use to get the right talent, to get the right advisors when you don’t have cash to do that and yet a lot of times businesses don’t do that.
It does take a little bit of time and expertise and by the way, if you’re going to sell stock you definitely need to get an attorney to help you with that because you can get in hot water fast with the SEC, so – but doing what you did is really awesome to hear at the stage that you did it –
and then it gave you the ability – it gave you the wherewithal to go and bring somebody in that had talent that you otherwise couldn’t have paid. And so, that’s awesome.
We’ve done something very similar over the years. When we were in the early days of Fusionsoft, we couldn’t afford to pay market wages. We just couldn’t.
And so we created stock options and we were able to get a combination of benefits for people that enabled us to bring in great developers, great people that would help us, but we couldn’t have done it if we weren’t really creative and resourceful and stock options was one piece of that resourcefulness that we offered to our employees that helped them to come join up with Infusionsoft.
Scott Martineau: This is interesting. It’s making me just remember watching some of the most influential – maybe thought leaders have really figured this out – so maybe a stock option plan as a formulized version, but I think the underlined principle is when you as an entrepreneur can get clear about a cause that is worth enrolling people in – the stock option is one of those, right?
Clate Mask: Yeah. Yep.
Scott Martineau: It’s like –
Clate Mask: I want to be a part of that. I want to own a part of that.
Scott Martineau: Right. And nobody wants to have stock options and something they think has no future or whatever. So it’s really that active being clear that you’re selling – so you’re selling to an investor, but you’re also selling to your employees and people that you’re trying to rally.
Clate Mask: Yeah. And that same thing that Kay, enabled you to get the investor for $10,000.00, you had to have a plan and a vision and a story that you could tell.
Kay Walten: Definitely.
Clate Mask: And that’s the thing that you’re enrolling people in and I think a lot of time entrepreneurs don’t realize that when you’re growing a business, whether you’re going to a bank to get a loan, an investor, trying to bring on an employee, getting somebody to donate some resources – all of those things require you to have a clear vision and plan that you can go enroll people in and get them excited about. And you clearly do that really well.
Scott Martineau: It’s so funny. You remember back – I’m thinking of Robert D. I won’t say his last name.
Clate Mask: Yes, yes, yes.
Scott Martineau: When we were at KWOOD we were having our - probably our roughest time in the business.
I was having a conversation with this custom software client that – actually, I don’t think he ever even paid us.
Clate Mask: Nope.
Scott Martineau: He was on the phone then –
Clate Mask: I remember that he got pissed.
Scott Martineau: He was essentially selling me on this vision [laughter] and Clate was like, "Dude, why are you talking to this guy? Stop talking to him."
And I’m sort of like being swayed out of our own business to this other guy’s business because of what he’s done. One story.
And the other story is another person that we know, which we won’t mention, but we’ve seen another very powerful – somebody who knows how to sell their vision and actually to – and what we think is a less effective way – they’ve attracted thousands and thousands of free man hours of attention into the business because of the way they’ve done it.
So, I’m not suggesting that people abuse it, but I love hearing, Kay, that you’ve leveraged that and you’ve got passion for what you’re doing and you’ve aligned people too. It’s great.
Clate Mask: Yeah. So, tell us when did you feel like, "Wow. We have accomplished – we have -" A real highlight of the business. "Man, we have made it."
[Laughs] When did you have a big highlight?
Kay Walten: I don’t know. I would have to say maybe in 2006.
Clate Mask: Okay. So about -
Kay Walten: And I don’t even and I don’t really – I really don’t know. I watched – I remember at the times we had television over the years and I remember watching when Pets.com and all of these URLs sold for stupid money.
Clate Mask: Yes.
Kay Walten: And we’re going, "Oh, wow. You know, some day we could sell," and had these visions of grandeur, but we lived on the end of a dirt road in a town that had one road in Mexico.
Who’s gonna buy a dot com that on the end of a dirt road in Mexico, right? I don’t know. I think it was in 2006 then when we kind of really – I mean we knew how to make money. We knew how to spend money and stuff, but we never really paid a lot of attention. We were just focused in the task at hand every day and to take care of all our guests and everything, so we really didn’t pay attention to what we were building. We were looking at the numbers and just went, "Holy shit. We’ve got this -"
Are we allowed to say shit? Sorry. Wow.
Scott Martineau: Say it twice why don’t you? Say it twice.
Clate Mask: [Laughs] You can’t say it once, but you can say it twice.
Kay Walten: You just lost the clean rating on the podcast.
Clate Mask: Yeah, right. [Laughs]
Kay Walten: But we’re like, "Oh my gosh." And so we thought, "Wow. We made it," and so then we’re buying – we invested in some real estate and everything and then 2009 happened and that affected a lot of people.
Clate Mask: Uh-huh. Yeah.
Kay Walten: Ourselves included. But I guess the one thing we never really looked at is we never really felt – I can’t really say that, "Boom. I arrived," Or, "We arrived," or anything like that because we’re always looking to grow and improve and try to be on the cutting edge.
What’s the next new thing coming down? So, to me it’s always just an evolutionary process and I certainly can’t – even now where I feel I have the enthusiasm as much now as a start-up as I did 20 years ago.
Clate Mask: Yeah. I love that. That comes through loud and clear. We can hear and see and feel that enthusiasm and I think the thing that listeners should take away from this is it was a ten year journey before it really hit you –
to say, "Wow. We’ve really done what we said we were going to do." And I think a lot of people – that’s one of the most common things as I talk to entrepreneurs, they don’t realize how long it takes and how much discipline you have to have to just continue with it and the reality is for almost every business owner, the first two or three years are really, really tough and that’s what prevents people from actually – that separates people from getting to the small business success because they don’t want to push through those first few years, but congratulations to you on that first 10 years of the journey and then for the continuing 20 years – or next 10 years and overall 20 years of just innovating and constantly improving, which is something that we really revere. So, great job.
Kay Walten: Oh, thanks. I will say this is – when we originally started we never even started with the grandeur of selling millions of dollars in sales and this, that and the other. What we really just wanted – we wanted to pay the rent.
Yeah. I mean we had to make a living in Mexico. We just wanted to pay the rent.
There wasn’t the materialistic needs to go out and get stuff.
Clate Mask: Totally.
Kay Walten: So, I guess that’s why it kinda took us surprise when we realized that we actually had made this type of progress, because that really was – we didn’t have that big goal in mind. We just wanted to take care of the rent and if we had some extra beer money at the end of the day, then it was great.
Clate Mask: Yeah.
Scott Martineau: Little free oxygen tanks, right? That’s the –
Kay Walten: Exactly.
Clate Mask: Yeah. And the reality is that most business owners don’t start with this big, huge, grand vision. I mean people will say – the common question - "Wow. Did you ever think when you started this business that it was going -"
No, we started off and we wanted to get out of debt. That’s what we were trying to do. For us, owning a business was not having a boss and getting out of debt.
Those were the things that really drove us and it took a long time for us to get to a point where we were like, "Holy crap, we could really do something great here if we had the guts to go for it."
And it took several years for us to get to that point.
And then for the last 10 years or so – we’ve been on this journey for 14 years, but in the last 10 years or so, we have been up to a bigger vision, but it took 4 or 5 years before we could see, "Hey, maybe we should go for this bigger thing."
And I think that’s very – because we talk to entrepreneurs – very common. It’s like mountain climbing. You see a peak. You think that’s where you want to go. You get to that peak and you realize there’s another peak you want to go to. It’s just – it’s the growers in us. It’s what we do, so congratulations to you.
Kay Walten: Thanks.
Clate Mask: That’s really awesome.
Scott Martineau: All right, Kay. I’d like to hear about maybe a time where – maybe it wasn’t a peak. Let’s hear about the valleys.
Look back over the last 20 years. What’s the time – did you ever have a time when you’re like, "This is not gonna work. Let’s throw in the towel."
Or what was the most challenging –
Clate Mask: Well, it sounds like 2009 might have been. [Laughs]
Scott Martineau: Yeah. We saw a little something in your eyes there.
Doesn’t have to be that, but take us to the low point.
Kay Walten: Well, one thing I think people forget about when they think about being in the hospitality/tourism industry and it’s a little thing called hurricane season.
So, pick a hurricane - Hurricane Roxanne, Hurricane Emily, Hurricane Wilma – the one thing with environmental type issues and you happen all the time where they’ve had tsunamis, hurricanes and everything.
It’s really beyond everybody’s control and it’s very hard. You get torn personally because you want to take care of your guests and they’re all asking questions and people going – a year from now going, "Well, can I come at Christmas?"
And like, "Listen, we’re packing up shit up here. We can’t really worry about your Christmas vacation. Let’s get you the initial issues."
But to walk out after and things are devastated, it’s just such a blow cause you live in paradise and then it’s just destroyed.
So, that’s a bit of a shock, but we clean up the one beautiful thing and I think this is common to any destinations that rely on tourism is that the comradery and the dedication to get business back going –
and to welcome guests is spot on and everybody works really hard. I believe that in any destination. Works really hard to get tourism back on its feet and to really make the – and go the extra mile for guests coming to make them feel welcomed. So that’s one factor that’s – it’s a temporary factor, but it is a factor.
But we talk about 2009 - 2009 was the perfect storm. That was a great segue.
Scott Martineau: Yeah. That was beautiful.
We just need to name it.
Clate Mask: [Laughs] That’s right.
Kay Walten: So, this is what we had in 2009 if you can envision this. You had the economic crisis that was going on in the world. Mexico – we had the swine flu and you couple that with the drug cartels.
Scott Martineau: Uh-huh. Wow. That’s amazing.
Clate Mask: Perfect storm. Yeah.
Kay Walten: Now I will say this – and people - we still get questions from time to time about the cartels. The cartels – I mean they’re not – we’re very far away from the borders – the border lands up in the United States.
Scott Martineau: Yeah.
Kay Walten: A lot of that’s in central Mexico and so when people ask me about that even today. What do I say? Three questions, "Are you coming for drugs?"
And they go, "No."
"Are you coming for guns?"
And they’re saying, "No, we’re not coming for guns."
"Are you coming for hookers?"
And they said, "No."
I said, "Great. You’re gonna have a wonderful time because people are not on the beach to harass you."
Clate Mask: That’s right.
Kay Walten: So, it’s like anywhere in the world. You’re looking for trouble, you’ll find it.
Scott Martineau: Yeah.
Kay Walten: But 2009 and this was where I made a mistake, okay? Having been through the history of hurricanes and you have little economic slumps every now and again, which we weathered and we knew the trends - is that 2009 with this perfect storm – is we just said, "Well, it’s gonna get better. It’s gonna get better. It’s gonna get better."
Scott Martineau: Uh-huh.
Clate Mask: Uh-huh.
Kay Walten: And so we made cut backs. Tighten the belts and everything –
and it’s gonna get better. And while we’re waiting to get better – and we don’t have money – we didn’t take the money at the time and push it in because personally we had real estate investments, so we didn’t have personal capital to keep pumping into this – is that while we’re sitting there waiting is WordPress came around.
The big online travel agencies – the OTAs – came in. So, you didn’t any geeks to build a website. Boom. Instantly people are building vacation rental websites. TripAdvisor comes out. The big companies start coming out and so we come through the other side of this slump and go, "Oh, my God. What happened?"
Scott Martineau: Wow. Yeah.
Clate Mask: Yeah.
Kay Walten: And so now we’re playing catch up where we used to be setting the bar, now we’re going, "Oh, man." And we’re running to catch up. And that was a little bit difficult. I mean it took years to come back from that and it was just like, "Wow. I can’t believe that I didn’t see that," but we were so I guess struggling –
in a sense that didn’t anticipate all of these bigger entity things on the technology side that brought opportunity to a lot of other people.
Scott Martineau: Yeah.
Clate Mask: Yeah.
Kay Walten: It made it so easy and it really leveled the playing field.
Clate Mask: Yeah. That sounds – that’s really interesting, so I’m guessing what you ended up doing is driving more on your expertise, more on your specialty -
Kay Walten: Exactly.
Clate Mask: Differentiating yourself from the big people by providing that personal experience that was very tailored and that only you could deliver because of your experience and that deep expertise that you have. Is that – I mean just listening to you – is that how you would describe the way that you got out and through that challenge?
Kay Walten: Well because we have a wonderful clientele. We have a lot of repeat customers. We have a very big list and everything – is that we did dabble a little bit into competing with the big boys, if you will – where you could go and buy vacation packages and everything and so we tried to do a little more mainstream –
and broaden the focus and because we don’t have those big marketing dollars behind us, like an Expedia or Travelocity, is that we then saw, "Okay, this experiment didn’t work."
Now we’re going back and saying, "All right. We are – focus on being boutique. Focusing on high touch." And really going, "This is our niche."
Scott Martineau: Yeah. Own it.
Kay Walten: And that we’re not gonna be – unless we bring in big investors – we’re not going to be that big out of the box buy your whole vacation package here. And you know what? That’s not in my heart anyways. That’s not my style.
Clate Mask: And the customers that you were getting through that other – when you were trying to compete with big ones, I’m sure that didn’t bring you the love and the passion and the enthusiasm that you get when you serve your customers – your clients that come for these specialized, tailored vacations. So, I bet it also kind of robbed you of some of your passion.
Kay Walten: Yeah and now we’ve gone through a little bit of tweaking and rebranding over the recent years in that and it’s been really exciting. It’s been a lot of fun and anybody in our staff is saying, "We’re getting back to the core values that we have always had as a company."
And okay we’ve learned a lot through the way, so I don’t regret any of the other decisions that I’ve made in years past, but now we’re going back and going, "This is who we are and all of these other things. Yeah, it was nice. It was like putting on a pair of shoes. Yeah, these – I can wear them once, but then I got to chunk them and go back to my flip flops."
Clate Mask: Doesn’t that feel good to get back to the core values? So, you said a couple of things that are really cool. First of all, your business, you have an understanding that there are going to be hurricanes. There are going to be these hard times and so you’ve built your business and you’ve prepared for those in different ways.
I think a lot of times, business owners, they’ve got hurricanes of their own in their business in different ways, but they’re not used to it and that optimism that things are always going to be getting better actually –
caused them to not prepare, not to face the brutal facts when the hurricanes are hitting and to not prepare for when those hurricanes might come.
And so I think it’s interesting what business owners can learn by listening to your experience. They can find what their hurricanes are and prepare for them in ways that will help them to weather those storms.
Scott Martineau: Yeah. I think the metaphor of your local community which sort of organically comes together is also important. Think about an entrepreneur. If you’re out there and you’ve got no support structure, you’re not prepared for the hurricane. Hurricane’s coming. One or two in, you’re like, "Nah."
Clate Mask: Yeah. Totally. And the other thing you said goes – I wanted to comment on that Scott’s kinda touching on here is the thing that happens in a community or a small business when things get tough or in any business actually – what happens is the humility, the gratitude of being able to serve customers, the core values – that comes back and it comes back in a really fun and powerful way.
I’ve watched that in our business over the years as we’ve gone through ups and downs when that happens. I’ve watched it in customers businesses. I see it all the time and you’re pointing out how it happens in a community and when the gratitude that comes, it’s like the gratitude of a farmer when it finally rains after a long drought.
You just have this gratefulness that you can do what you need to do and when you can serve people the way that you want to serve them and that happens when businesses go through those dark, tough times and I think if we just embrace it and we really appreciate it, it helps us actually pull out of those times and get to a better place.
So, I think there’s some really cool things you drew out in your story of your perfect storm in 2009 and it’s fun to hear not only how you rallied, but how the community rallied and then the things that you learned as you got through to the other side.
So, congratulations cause that’s just a cool story and I know that it’s really fun to tell those stories in hindsight. You feel awful when you’re going through them. [Laughs] I mean they’re just so hard.
Kay Walten: Yeah. It sucks.
Clate Mask: So, congratulations to you. That’s awesome. So, I don’t know, Scott if you have anything else, but maybe we ask - do you have any questions for us?
Scott Martineau: Well on this – maybe – Kay, you’re awesome. I love your energy. We’re not in the same room, but I can see it and feel it.
And I just love that we got to hear about the journey. You go from the end of this single dirt road in the middle of Mexico to this - through all of these journeys and mountains and valleys and get to where you are. I love your tenacity and your willingness to just experiment and bounce back. It’s inspiring, so thanks for sharing that with us.
Kay Walten: Oh, thank you.
Clate Mask: Totally.
Scott Martineau: So, tell us what questions do you have for us?
Kay Walten: Okay. So, what are some of your – what would be your three tips in building a culture?
Scott Martineau: Ugh.
Clate Mask: Well, how did you know we love to talk about that? [Laughs] So Scott, why don’t you go first? Otherwise I’ll probably go way too low. [Laughs]
Scott Martineau: Well, we started touching on this earlier. I’ll start with the number one thing is you’ve gotta get clear about your purpose and by the way, the temptation for a lot of business owners is that the purpose of the business is to feed them financially. That’s where we started.
You can’t build a great culture on, "Hey, everybody. Help Clate, Eric and Scott build up a business that we can sell for x and you know – five years and then you don’t have a job."
So, number one is you need to do the hard work to get at the core of articulating. Now, it’s inside of you. You’ll feel it, but it needs to be articulated clearly enough that those that you’re attracting to the company will be able to see it, feel it, understand it and know whether they’re aligned to that objective. I think that’s the number one most important thing. Get clear on your purpose.
Clate Mask: Yeah. And as part of that getting clear on the purpose, you’ve got to really find that thing that makes you passionate, that makes what you do magnetic and you’ve got it obviously because you’re attracting people, -
but I think sometimes business owners don’t take the time to make it explicit and so it just kind of is inside of who the business owner is and some employees figure that out and kind of are drawn to that and others are always trying to read the business owner’s mind and, "Gosh, I don’t really understand this," so getting really explicit about the purpose of the business like Scott said.
I think that’s the first thing. The second thing is getting clear about your mission that you’re up to, so this is different than the purpose and this always isn’t just like the fuzzy words that you write on the wall.
This is like – we like to call it a three year goal, sometimes a five year goal, but this is like what the company is up to over the next few years.
And this is a little less touchy feely and a little more like we’re on a mission. Like a military mission. We are going to plant the flag in the ground when we are done with this.
We’re going to accomplish this. I mean it’s a very - like we are on this march together to go do this and so to – you need both parts of that. You need the more inspirational -
Scott Martineau: Enduring.
Clate Mask: Enduring soft part of it that should live forever and then you also need the, "Okay and how are we going to channel that and go accomplish certain goals over the next few years?"
And some people are very goal oriented and that comes natural. Other business owners really like the purpose and that kind of helps them move along in the right direction, but they need to get those clear goals. So, the mission I think is the second thing.
Scott Martineau: We found it helpful to create a metaphor for that that makes it a little concrete for your team. So, for example in Fusionsoft, they’ll start with a purpose.
Our purpose is to help small businesses succeed, which is a very simple statement, but has a lot of history to it. A lot of the challenges that we struggled with as an early business were really what sort of baked in the DNA the understanding that we want to make it easier for small businesses to be successful.
And then our purpose that we’ve been working on – our mission that we’ve been working on most recently – we use the Everest analogy in our efforts to create and dominate the market – all in one sales and marketing – or small business sales and marketing software.
And we’ve had base camps along the way and people are clear around the company about what we are going to attack. So, those are the first two.
The third thing is that you need to understand – you need to see in your mind’s eye with great clarity the type of people you want to attract to your company.
You imagine people – all of us want to go – we’re taking so much of our life and applying it to work. We want to know that when we show up, we know what we’re going to get there.
We have found that most successfully comes when you get crystal clear around the core values that you’re going to demand that everyone of your employees embodies and you’re going to hire to that and you’re gonna train to that and you’re gonna fire to that and literally you’ll sort of develop this instinct and your entire team will develop the instinct of saying, "Is this person aligned with the values that we want to create and are they going to add to this culture and create a -" Cause I don’t think you want to create core values that make it so that you’ve got a bunch of robots that all look the same.
There’s great diversity, but –
on a foundation of core values that are consistent and that’s what makes walking into a place of business where you can feel the culture I think. That’s one of the core foundations.
Clate Mask: Yeah. And I would say I totally agree with Scott on purpose, mission and values and I think that the values part of it is – you talked a little earlier about getting back to core values.
I mean you’re really talking about the core and essence of the company and if you think about it, the purpose is really why you’re doing what you’re doing.
The mission is really what you’re up to and the values are how you go about doing your work and whether you’re – not matter what industry you’re in, you have a certain how about the way you like to operate.
So we teach businesses all the time that if you can get your purpose, mission and values in place – and by the way, the purpose and values should be enduring.
The mission will change every three to five years as you accomplish new things, but getting that in place – people don’t realize that’s actually what drives culture. They think it’s perks.
They think it’s the paint in the building and the colors and that’s not what it is. People come to Infusion and stuff and are like, "Oh, we love your culture. It’s so great and this openness."
Well, all of the things we do are related to the core values. The open, real communication. That’s all about openness and the way we operate. The transparency. The empowering entrepreneurs, which is our number one core value.
We empower entrepreneurs and you can feel it as you come in the building, but all of that comes down to are you actually hiring, training and firing to your purpose, mission and values?
And if you do that, you’ve got great people in the building you love working with. It’s a ton of fun to work together and you don’t have to create a bunch of stupid policies to tell people what to do because they actually fit your values and they know what the mission is that we’re all on together and they’re up to the same purpose.
Scott Martineau: And you just have to be dogmatic about making sure you’re bringing people in that are in alignment with that. So make sure you’ve always got three good candidates –
and that you’re having one of the major factors being are they in alignment with that culture you’re trying to create?
Maybe more than you wanted to hear. [Laughs]
Kay Walten: No, no, no. No, no, this is great because this leads into a follow up question that occurred to me while you were talking is that okay, so you have a – now we’re in an age where we can have people work remotely, work from home, work another – from other locations. How can you perpetuate or keep that cohesiveness with the team when they’re in remote – outside the office – they’re in remote locations?
Clate Mask: Yeah. We get this question a lot, particularly in elite form and I used to – I’m going to be totally honest – I used to tell entrepreneurs it’s almost impossible to create a great culture if you’ve got remote employees.
And I’d see the sad looks on their faces as I would say that [laughs], but I really believed that was the case when we started teaching this many years ago, -
but I have watched really intentional entrepreneurs over the last few years create amazing cultures and with remote employees where people are all – where everybody’s working virtually and I – man, I love it. I applaud them.
It’s doing the same thing, but there are certain hacks that you can do to make it work. I’ll tell you what, I’ve learned some of those tricks are get together every so often. Some people will do it quarterly. Some people will do it annually, but it’s an investment that you know you have to make.
You have to be together every so often. Get together for regular planning sessions. So we have a rhythm that we teach, a planning rhythm that we teach. It’s basically a daily, weekly, monthly, quarterly, annual rhythm and you’ve got to have that rhythm in place – those constant touch points.
And whether you have those touch points by web conferencing or by phone or in person there’s a rhythm that you need – a daily, weekly, monthly, quarterly, annual rhythm.
So, get together every so often, have that rhythm and then be aligned to –
a strategy plan that reinforces your purpose, values and mission. And what I mean by that is you’ve got to have everybody understanding very clearly what their role is in the mission that we’re all on together.
So, those are – if you will do those things and be very intentional about them, you absolutely can create a great culture with employees that aren’t all in the same place.
Scott Martineau: And I would say just one little tactical thing to add would be to just perfect the tools that you use. Invest the time to get the tools right, because if you don’t you’re gonna have a bird in the saddle of every interaction that happens over the wire.
You’ve probably already experienced this, but whether you’re using Hangouts or Skype or Slack or whatever the tools are, make sure that you’ve got simple – it’s fast to get connected and that the collaboration can happen really easily. Google docs I found would be a great tool for remote because it’s such a collaborative tool. You can do that really easily.
Clate Mask: Yeah. Great question.
Kay Walten: Right. And what would you say is an overlooked characteristic of a successful mindset?
Clate Mask: Hmm. That’s a great question.
Kay Walten: That people just – they don’t think about. They’re missing the boat. They’ve got their head right, but there’s something they overlook.
Clate Mask: That is a great question. You want to take that first, Scott?
Scott Martineau: No, I want to think about it. That’s a brilliant question.
Clate Mask: Okay. It really is. It’s a really great question. I’m gonna say a little differently. Maybe it’s not overlooked. In some cases it’s overlooked, but I think in a lot of cases it’s dramatically underestimated.
Kay Walten: Or understood. Yeah.
Clate Mask: The importance of this. And it is the skill to quickly take a "bad thing" and turn it into motivation or a good thing –
whether it is negative customer feedback or regulators knocking at your door or a hurricane that’s hitting you or your merchant account that’s holding funds from you.
I mean you go on and on and on and on and the reality is in small business you get hit by these things large and small all day long, every day and I think what people don’t understand is I think the skill and the intentionality to notice the things that are bringing us down and quickly do the work on our thoughts to change that and cause that to actually turn into something positive.
Sometimes it’s just looking at the silver lining. Sometimes it’s actually thinking about it and saying, "Is that really true or am I just being freaked out by that? Is the fear of the eventuality actually causing the problem?"
There are lots of different ways to get at it, but I think what most human beings do is we go through life with stuff happening –
to us and us accepting those things that are happening as good or bad and moving through life on that basis. For a successful entrepreneur, you have got to understand that things are things.
They’re not bad things. They are not good things and the way that we look at them – the way that we look at those things happening has everything to do with success. They’re not good. They’re not bad. They’re just things and we got to look at them in a way and turn it into a way that we can get motivation, positivity, confidence, excitement, you name it so we move forward towards success.
Scott Martineau: Byron Katie has a fascinating book called Loving What Is and she teaches this exact principle, so I’ll just pile on for a few seconds. She gives a four question formula, so you ask yourself when the thought occurs like Clate is saying.
And usually she’s saying, "If you’re experiencing suffering or pain, you know that you need to go do -" – she calls the work. So, she ask yourself the question. "Well, is it true?"
So, maybe you’re sitting there – the hurricane is upon –
you and you’re confident that your house will be destroyed, right? So, is it true? Well, yeah. Of course it’s true. They just saw it on the news. It’s coming. The path is here. Can you absolutely be sure that it’s true? Maybe not, and then - but I think the next two are the most important. How do you react when you have the thought?
Clate Mask: That it’s true.
Scott Martineau: My house will be destroyed, right? And you go to that place where you’re like, "Well, I get stressed. I make dumb decisions. I freak out. I’m yelling at my husband," or whatever. I don’t know if you do that, okay, but – and then the great question is who would I be without the thought?
How could I show up in the world without being focused on that thought? And so, I think it’s just – that’s a formula for doing what Clate’s talking about, but I think it’s brilliant.
We’ve got to create a little bit of space between having the thought and deciding what we’re gonna do with it and it will happen hundreds of thousands of times in a business and it’s a great skill that helps outside of growing a business as well.
Clate Mask: No doubt. As entrepreneurs I would wish that skill to all of us and I’m always working on it and some days I really suck at it and other days I’m really good at it. But working on that thought. Examining our thoughts and not allowing them to be true if they are causing us problems.
We can turn around any thought. Any thought that we have. "Actually it’s me that’s the issue here and I can change this."
Or it’s – there’s always a way to turn that thought around into something that is motivating and positive.
Kay Walten: Exactly.
Clate Mask: And I think that is something that most people dramatically underestimate the importance of in small business success.
Kay Walten: Right.
Clate Mask: It’s an awesome question. Thank you. Thanks so much. We appreciate the time you’ve spent with us. I have to ask you this one last thing. What do you think is – when you say the characteristics of small business success – in a word, what’s one characteristic that you think is critical for small business success?
Kay Walten: One thing – boundaries.
Clate Mask: Boundaries? Interesting. Very interesting.
Kay Walten: Cause I think it is – I think that as small business people we let people cross our boundaries or we don’t establish boundaries because either we want to please everyone or we want all the customers and we start bending and if we – what we find is that if we don’t establish boundaries than eventually then we develop resentment and a lot of other frustrations that occur, so I think boundaries are really – are very important to establish all the way around.
Clate Mask: Very cool. That’s awesome. Well thank you, Kay. It’s been great talking with you, getting to know you better.
Kay Walten: Thank you, guys.
Clate Mask: Your business is cool. Congratulations on the 20 year overnight success story.
Congratulations on the great things that you’re doing and good luck to you in the next stage of your business.
Kay Walten: Great.
Scott Martineau: And thank you to all of our listeners for tuning into this episode of the Small Business Success Podcast. Stay tuned for our next edition where we’ll share more stories of successful small businesses.
Kay Walten: Great. Thank you guys.
Clate Mask: All right. Thank you.
Scott Martineau: Thanks, Kay. Take care. Bye-bye.
Kay Walten: Bye-bye.
Clate Mask: All right. Thanks, everybody for listening in to the Small Business Success Podcast. Don’t forget to rate on iTunes and share and subscribe. We look forward to the next podcast. Make sure you tune in.