The secret to success is simple! Join Peter Taunton (Founder of Snap Fitness) and Eric Partaker as they share their secrets on how hard work and persistence can help you reach your full potential and succeed in life!
KEY POINTS
Life Is Unpredictable – Life is uncertain. In moments of uncertainty, when you face adversity, you can not view it as a failure. Learn from it, grow and move forward better than you were before.
Fail Fast And Learn – Don’t get hung up on being a failure. You’re not a failure. In fact, if you haven’t failed, you’re not trying hard enough. Anyone can be an all-star if you set the bar at your ankles. Get your head in the game, don’t be afraid to fail, and believe in yourself.
Your Deserve Success! – Believe that you are as deserving of success as the person next to you. You deserve it, but it’s going to be hard work. Adopt the right mindset to know that there’s going to be not only hard work but sacrifice.
Push Yourself To Your Limits – As soon as the work towards your goals gets uncomfortable, as soon as you feel yourself struggling, that’s when you have to push yourself beyond your pain or discomfort. If you want to grow in business, you must push yourself.
Anyone Can Run A Business With The Wind On Their Back – It’s just smooth sailing. It’s easy. Your character is defined in moments of strife. Push yourself, don’t give up!
Opportunity Is Usually Disguised As Hard Work – Opportunity, it doesn’t knock, it whispers. You have to recognize when opportunities come your way. See it, feel it, embrace it. The biggest failure in life is a missed opportunity.
Surround Yourself With Winners – Winning in business is a team sport. Surround yourself with great people that share in the same passion, the same vision, and they’re willing to walk on fire for you. Those are the people who will lean forward and take the shots with you.
Success is 10% of what happens to you and 90% of how you react to it.
Hard Work Works – There are no shortcuts, in life or in business. Get your head down, work hard, and celebrate your successes along the way!
Believe In Yourself! – Every day, look in the mirror and believe in the person looking back at you. In moments of difficulty, you’ve got to believe that you’re capable of powering through it.
TRANSCRIPT
Peter Taunton:
So important every day that you look in the mirror and you believe in that person looking back at you. That is absolutely key, because in those moments of difficulty, you’ve got to believe that you’re capable of powering through it. I’m the youngest of seven kids. I grew up reasonably poor. I went to school in a two-room schoolhouse. I had ADD that was off the charts. I went to college, quit college my junior year, and then went on to build one of the largest wellness brands in the world. I’m living proof that the American dream is alive and well, if you’re just willing to lean in and not settle, just continue to grind it every day.
Eric Partaker:
Hello everyone. And welcome to another episode of, The 2%, where, as always, we’re interviewing peak performers in all walks of life. Why? Because we want to help you elevate your game, professionally, personally, giving you tips, tools, and strategies that you can use to close that gap between your current and best self. And I’m super excited today to be interviewing Peter Taunton. Peter, welcome to the show. Great to have you here.
Peter Taunton:
Hey, it’s my pleasure. I’ve been looking forward to this all week.
Eric Partaker:
Awesome. So you’re away right now, right? You’re at your lake home, you said?
Peter Taunton:
I am. I spend about nine months of the year in Miami, and then three months back here in Minneapolis. And you know what, if I could pick up and give you a tour, I would. It is absolutely a beautiful day out here on the lake, and it’s very peaceful. It’s my little getaway, my little slice of heaven.
Eric Partaker:
Awesome. And Miami is a great place to be in, as well. I love Miami.
Peter Taunton:
I love it too. You know what? Miami has got a great energy. Obviously the weather is great, and what initially drew me, was that it’s just a favorable tax state, here in the United States. So I moved to Florida for that, but then ended up picking Miami just because I love the energy within that city. So much diversity, so much [inaudible], which I really appreciate.
Eric Partaker:
Yeah. Yeah. Lots of vibrancy, and of course, a lot of great weather, too. Now, you’re quite the achiever. So founder of, Snap Fitness, which we’re going to be talking about. You’ve been recognized by Ernst & Young as the Entrepreneur of the Year, CEO of Lift Brands. You’ve done a lot. You’ve been a pioneer in the whole fitness space, but we’re going to get into all of that for sure, but maybe take us back. Let’s go back into the time machine. You didn’t start off this way, right. So what were the humble beginnings? Share, please.
Peter Taunton:
You know what? I grew up, I have an identical twin brother. I don’t know if I told you that, Eric, or not-
Eric Partaker:
No.
Peter Taunton:
But I have an identical twin, And we are the youngest of seven kids, and I grew up in a small town in rural Minnesota. And I set that up because I want people to understand that it doesn’t matter where you’re from, how small you are. Think about this, Eric, I’m the youngest of seven kids. I grew up reasonably poor. I went to school in a two-room schoolhouse. I had ADD that was off the charts. I went to college, quit college my junior year, and then went on to build one of the largest wellness brands in the world. Right? So go figure. Now, there’s a lot of road rash in there, but I’m living proof that the American dream is alive and well, if you just willing to lean in and not settle, just continue to grind it every day.
Eric Partaker:
You have a good story about popcorn, don’t you, as a kid?
Peter Taunton:
Yeah, my father owned a grocery store in this small town of ours. And when you turned about eight years old, my dad put you to work, and it was not a choice, right? He would say, “Hey, look, you’re going to start selling popcorn on your eighth birthday.” So that’s what you did. And with my dad, he was, and I responded well to this type of discipline. My dad was saying, “Look, make no mistake about it, son. You’re going to either be working for me, going to school, playing sports. That’s your life right there,” because he kept me out of trouble, right. And it was good for me. It really was. He taught me an unbelievable work ethic. And I’ll be honest with you, as a child, I didn’t realize today, as a successful entrepreneur, that some of the lessons I learned as a boy would be so applicable in my later life. I had no idea, but as I sit back and I reflect, I realize, “Wow, what a gift that was, that my father passed on to me.”
In fact, after I sold the first portion of one of my companies, I, I called my father and I said, “Hey, look,” because they made it public of what I had sold it for us. And I told him, “I could never repay you for the lessons that you taught me over the years, of just how to lead people, and how to get people to walk on fire for you, right.” And it was just my dad being able to, he never put himself above anything.
In that small grocery store, he was the owner of the business, but you would see him shoveling the sidewalk, bagging groceries, working the checkout stand. He did it all, stocking shelves. And the reason he got people to work for him, and really pull deep on the oars for him, is because they knew that he had their back. If somebody was getting slammed in their aisle, not being able to keep up with the grocery demand, he would jump in there and help them stock their shelves, because there was one person assigned to every aisle of the store, and it was their job to make sure the store looked full, right. That was their job. And sometimes, let’s face it, my dad had a very, very busy grocery store in this little town, and that’s because everyone loved him. Why? Because he was so approachable, such a great guy.
Eric Partaker:
So this is a nice thread to pull on. So the lessons that you learned, in those early years, and then how you applied them, how they shaped you in business later in life. So certainly one of the things that you’re talking about there is that no job is beneath you, right, as an entrepreneur. And that you have to role model the way. So can you take us through some examples of how that influenced you then?
Peter Taunton:
Well, for my father, when he started at the grocery store, he was hired to come in, and they gave him an ownership position in the grocery store. But the goal was to try to turn this failing grocery store around. It was not reaching, it was not utilizing its full potential in the eyes… It was a, Red Owl, store, by the way. So they hired him to move from a big, major metropolitan area, out to the small community, where he was going to try to turn the store around. So things were not favorable for him. So what did he do? He gave it everything he had to, working seven days a week, and re re-engaging not only the business, but himself. Immersing himself in the community, because he realized without the community behind the business, the business will not thrive.
So he was just in complete utilization of every aspect of growing his business. He was very efficient, from an operations perspective, but he was also very disciplined in making sure that he was part of that community, sponsoring the football teams. When you come from a small town, Eric, you’ve got to be sponsoring the Little League baseball teams, you got to be going to the football games. You’ve got to do it all. You’ve got to be present in the local parades, you’ve got to be part of all of it. And he was.
Eric Partaker:
And so you took that. What was the first business that you took this mentality, then, into?
Peter Taunton:
Well, the first one was, I had an opportunity, when I was 22 years old, to turn around a failing health club. At the time I was a professional racquetball player, and I got a call one day-
Eric Partaker:
Whoa, whoa. Wait, hang on. You’re a professional racquetball player?
Peter Taunton:
I was, yeah, I was at-
Eric Partaker:
That’s pretty cool.
Peter Taunton:
Yeah. My twin brother and I, I was a touring pro for about 12 years. Yeah, it was great.
Eric Partaker:
Okay. Well, can you take us back to that, because that sounds like that was happening before you’d even gotten into your health club gig, right?
Peter Taunton:
Yeah. I’m a Christian guy, and I always think that everything happened in my life, when I sit back and I look at my life, how did this kid who went to school in a two-room schoolhouse, how did he get from there to where I am today, with yachts and multiple homes and jets, and how does that happen? Right? And so I’m very thankful for the life that I have. Now, granted, it was a lot of hard work, I’m not going to lie about it. I believe that anything is possible, which is, my book, Impossible Hill, talks about it.
So for me, when I was 13 years old, I was like most small kids. I played football, baseball, basketball, those were my three sports. But when I was 13, I picked up a racketball racket for the first time in my hometown. And it was a big deal. It was a small town, and a racquetball club opened up. I’d never played racquetball in my life, but for some reason, that sport really catered to my athletic abilities. And in a matter of about a year and a half, I was a really good player.
I was a really good player in my town, and then I remember I went to a national tournament, which is one of the first tournaments I’d ever played at. And I got beat, Eric. I got beat 21 to 3, 21 to 2. I got absolutely pummeled, decimated. I thought I had a competitive chance going into this tournament, but what it did, it opened up my eyes. It opened up my eyes to how the game was supposed to be played, and I went back to my hometown and worked on my game, and within three years I was a touring pro. So once I saw it, I put in the work, okay, because I had never seen it played at that level, but once I saw it, then I knew the work and the intensity of which I had to embrace that sport. Now I didn’t know that I was becoming a pro, but I knew that I wanted to play like that, and that’s what I set my mind to.
Eric Partaker:
Right. And there’s something pretty powerful, right, about having your ass handed to you, when things don’t go your way.
Peter Taunton:
Yeah. You don’t know what you don’t know, and I didn’t know that that’s how that game could be played. It was played at such a different level, at such a different pace than what I played. So I really respected and appreciated that, and the one thing that is so important in everything that you do is, you have to believe in yourself. So when I saw it, I believed that I had the athletic ability to take it to that level. So I never once thought, “Man, there’s no way I’m going to be able to do that.” I looked at it and I said, “Okay, I got it. I’ve seen it. I’ve got it. I know what I need to do.” And that’s exactly what I did.
Eric Partaker:
So when people get thrashed like that, in business or life, and just completely decimated, because you could have easily just decided after a couple of those beatings that, “Look, this isn’t for me,” right?
Peter Taunton:
It was so embarrassing, you wouldn’t believe it. Yeah.
Eric Partaker:
Exactly. And I think that would be the default reaction or response. Why do you think it’s so tough for a lot of people, when they really get hit hard, to recover?
Peter Taunton:
Well, I think one of the first lessons you need to learn, in life and in business, is that life is unpredictable, it’s uncertain. And in those moments of uncertainty, every time you face adversity, you can’t look at it like you’ve been completely blindsided. And yet we all know people that are like that. And when I do my consulting today and I’m mentoring, I say, “Hey, look, understand that’s just life. That’s just how life is. Life is not always kittens, balloons and butterflies.”
Life is uncertain. Life sometimes sucks. Right? And you’ve got to embrace it, and you are going to have failures in your life. So the key is when you fail, fail fast and learn from it, right? Don’t get hung up on, “Man, I’m a failure.” You’re not a failure. In fact, I always say, “If you haven’t failed, you’re not trying hard enough.” All right? And I often say, Eric, anyone can be an all-star if you set the bar at your ankles. So you know what? Get in the game, and don’t be afraid to fail, and believe in yourself. Believe that you are capable, and most important, believe that you are as deserving of success as the person next to you. You deserve it, but it’s going to be work. And you’ve got to have the right mindset to know that there’s going to be hard work, there’s going to be sacrifice. It’s going to be uncertain, it’s going to be scary. Those are all parts of winning.
Eric Partaker:
And that’s a real key mindset shift, isn’t it? Because if we just take stress as an example. So a lot of people, when it comes to stress, stress in business, stress mentally, they’re of this thinking that, “Oh my gosh, stress is bad. I need to run away from stress.” But it’s funny, right? Because you, as a former professional athlete, or anybody who goes to the gym, they certainly don’t view that, when it comes to their body, it’s not like we go into the gym, you’ve run all these health clubs. How many times does somebody go into the gym and say, “Can you please point me in the direction of the exercises that will stress my muscles the least?” Because we know, in the context of our bodies, that the stress builds strength. Right?
Peter Taunton:
Right. And push yourself to those limits. I always tell people, depending on what their goal is, and depending on what their ages, but I tell people, “Hey, look, as soon as it starts to get uncomfortable, as soon as you start to feel that lack of acid build up in your arms or your legs, whatever particular muscle group you’re working, that’s when you’ve got to go to work. Right then, that’s when you got to push yourself beyond that pain. That pain is not hurting you. You’re not straining your muscles. You’re not breaking. Look, you’re going to be perfectly fine. But if you want to grow your muscles, you’ve got to push it.” Just like, if you want to grow in business, you’ve got to push yourself.
Eric Partaker:
Yeah. Hearing you talking out so reminds me of, in university, I went to University of Illinois of management of pain. Two of my training buddies, they ended up placing number one and number two in the state’s natural bodybuilding competition.
Peter Taunton:
Wow.
Eric Partaker:
So I would go training with them quite a lot, and I’m sharing this because I think it relates to failure and it really relates to some of the concepts that we’re talking about here, about pursuing stress. When we’d be in a workout, I’d be getting towards that ninth or 10th rep, I always remember, they’d say these, “The ones that count. All the ones before that don’t count. These, here, this is all that counts. If you fail here, everything’s gone. The whole set.”
Peter Taunton:
I love that. Right. I love it.
Eric Partker:
So that’s the similar, you’re talking about when you feel that, almost when you feel that lactic acid from a business point of view, or the stress from the business point of view, great, that’s where you should be. That’s where you’re going to win the set. Right?
Peter Taunton:
And that’s what I talk in leadership. So leadership qualities, anyone can run a business with the wind at your back. It’s just smooth sailing. It’s easy. I always say people’s characters is defined in moments of strife. That’s where you know who the true leaders are, when competitively, within their marketplace, they feel like they’ve been blindsided, and they have to make tough decisions. They have to pivot, because their business is no longer relevant and that becomes risky and uncertain, and it brings a whole new wave of elements and emotions that come into play. That’s where people are defined, just like in sports and in life and in business, it’s all the same.
Eric Partaker:
And it even applies, as we’re talking here, I’m thinking about, because we both have kids, right. It even applies to parenting. Is the measure of a good parent, how well they parent when the kids are well behaved, or is the measure of a good parent, how well do they parent when the kids are misbehaving quite badly?
Peter Taunton:
Right. That’s a great point that you make, Eric, and you know what, it’s with everyone. I’m not here to judge anyone on how they raise their kids, it’s I know it’s a big job. It’s a big job, with probably the largest responsibility you’ll ever have in your life, but some people operate from a position that they want to be their kids’ best friend, and others have to find a nice balance between providing structure and guidance and still being their friend. Do you know what I mean? I was of the latter, and it still doesn’t mean that you’re going to win in every case. We have things that happen in people’s lives that are really difficult and challenging moments, and that’s just life in itself.
Eric Partaker:
Cool. All right. So we’ve got pro racquetball player. So we’ve gone through that. Now, we’ve got this incredible job opportunity that’s presented to you at an American fitness center. And can you tell us a story about that? Because this is quite fascinating, what you do here.
Peter Taunton:
Yeah. Literally, I got a call one day and it was from the owners of the club that I had played at, as a kid. So that club was failing financially, and I told them before I moved, at the time I was living in Orlando, Florida. And I told those guys, “Look, if you ever want to turn this club around and give me a call.” And I didn’t think my phone would ever ring. About a year and a half later, my phone rings, and it’s these guys, and they said, “Would you ever consider coming back to Minnesota and running this club and turning it around?” And they said, “Here’s the deal. We’ll pay you $16,000 a year. But if you turn it around, you can buy us out with the profits, because we’re done. We’ve had enough of this.” So that, to me, now, some people say, “Peter,” and the club was losing $200,000 a year, right? So there were five owners. Every one of those guys was kicking in about 40,000 a year just to keep the lights on. Anyway, they came. So some people would say, “Peter, that is crazy.”
I always say, “You know what? Opportunity, it doesn’t knock, it whispers.” So you have to see when you get your break, you have to see it and feel it. For me, I didn’t look at it like, “Oh my gosh, this club is losing 200 grand a year.” I looked at it and I said, “God willing, if I’m able to turn this thing around, this is my springboard. This is a chance for me to own my own business.” And I was able to do that. Over the next eight years, I was able to turn that club around buy everyone out. And I went in and I refinanced it, and that became my springboard.
That business, I took it from losing $200,000 a year to making $250,000 a year. That’s a $450,000 swing. Keep in mind, in a small, little rural community. So it was really a big deal in my life. And then I went on, once I paid my loan down, I was fearless, because when you start with nothing, when you’ve survived at the bottom, you’re fearless. Right? So as soon as I had my club paid off, I got a loan, and I built another club. I did that seven times. And I did that for the next 20 years. All right. Build it.
So I had seven clubs, I sold all my clubs. And when I was done, when the dust settled after 20 years, at that time I was married. I had kids that were five, three, and one. I sold my business, my life savings at the time, Eric, I had about $3 million and the bank and I didn’t have any debts. And that was my life savings at that time. And so then, sitting back, I was doing some odd jobs here and there, thinking about what my next deal’s going to be. And then I thought of, Snap Fitness, okay. I thought of, “I’m going to create a club,” and went through this whole process.
I didn’t know at the time that I was going to build one of the largest wellness brands in the world, I didn’t believe that that’s what I was doing. But as I sit and reflect now, in hindsight, I’d say that 20 years of taking your club from a complete failure to a complete golden child, that in itself was a great learning platform for me. So I was positioned to make something great. I didn’t know that I would actually execute on it, and when people talk to me about it today, I say, “Did I believe that one day I would have 6,000 locations in 28 countries? No,” but I would follow that up by saying, “I’m certainly capable of doing it.” I knew that, I knew that I was capable of doing it. I didn’t know that I actually do it.
So it really comes as no surprise that I was able to build this big empire, but make no mistake about it, I stood on the shoulders of amazing people, okay. Because winning in business, it’s a team sport, I promise you. You’ve got to have great people that share in the same passion, the vision, and they’re willing to walk on fire for you. You got to surround yourself with people like that, that are going to lean forward and take the shots with you. That’s what it takes.
Eric Partaker:
Can you just repeat that? How many locations, how many countries?
Peter Taunton:
Today, I have 6,000 locations spread across multiple brands in either franchises or licenses in 28 countries. So go figure, right.
Eric Partaker:
Absolutely incredible. And what I love, there’s a common thread here, right? So you experienced some extreme failure in the whole racketball arena, became a pro player. You were introduced to a failing business with this health club opportunity, you turned that around. And as you so wonderfully said, when you’ve experienced the bottom, when you’ve experienced the worst, and it literally can only go up, right. You’ve seen all shades.
Peter Taunton:
All shades, and you know that the bottom, you know that you’ve survived there. So you know, as bad as it could possibly get, that’s where you lived for a long time, right? So you become fearless. Now, as you become older, and you start, for me, when I started, Snap Fitness, keep in mind, I had $3 million in the bank. Within five years, and then this is something important for all your listeners. Keep in mind, I was about 40 years old at the time, I had $3 million in the bank and some people said, “Man, 40, you’re a little bit long in the tooth, or whatever,” right. You’re a little long in the tooth. But within five, six years, I went from having $3 million in a bank to having a business that was valued at over a hundred million dollars, okay.
When I was 45, 46 years old, I sold 40% of my company. And I remember, I could tell you where I was the day when the funds landed in my account. I sold 40% of my company for $47 million, okay. And I could tell you, I was walking down the first fairway at Springhill Country Club and my phone rang. And it was my attorneys and my accountants saying, “Hey, Peter, the funds have been transferred. The funds have landed in your account.”
And I hung up my cell phone and I went to my Wells Fargo accountant, I saw 47 million and change there. And I knew that moment, my eyes welled up, my friends are wondering what the hell is going on with me, they thought it was some tragedy. And I said, “Man, I did it. The kid from the two-room schoolhouse actually did it.” And I was living proof of it. And I knew at that moment that my life would be the same. And it hasn’t been, in all the right ways.
Eric Partaker:
So what, with everything in mind that you’ve shared so far, or even maybe, perhaps one of the lessons from your book, Impossible Hill, what is one of the things that most entrepreneurs should be doing, but are not?
Peter Taunton:
Should be doing, that are not? Well, entrepreneurs are an interesting breed, right? Because I have the opportunity, the blessing, since I stepped down as the CEO, I do a lot of consulting. And a lot of times I meet entrepreneurs and they’re thinking about launching a business, but they don’t have enough capital, okay. They’ve underestimated the capital they need, but the other piece of it, that is hard to see and recognize, is they’re not in the mental mindset. They don’t have the discipline to get into that business, willing to take the punches that can come with owning a business.
Hey, look, we’ve all heard of people where they start a business and it just came easy, and it seemed like it was effortless. That’s one, but that’s a rarity. Most people, I think, in life and in business, you’ve got to plan for the worst and hope for the best. So for people I say, “Look, you’ve got to be mentally prepared, getting into business, that you’re going to have some sleepless nights, and that’s part of the journey. It’s not that it makes it a bad thing. Appreciate those moments as well. Appreciate the uncertainty that comes with building a business, appreciate how you’ve got to leave yourself completely open to change and ideas, especially early on in a business.” Because the last thing you want to do, when you’re starting a business, is not be flexible, because the consumer is going to determine whether a product is relevant or not.
So listen to your consumer, listen early, and listen often, and make the slight changes that you need to. So that, number one, you can continue with that customer relevance, which equates into customer loyalty, and a lot of people get so caught up in, “This is my dream. This is my business. And it’s my, my, my,” Hey, look, it may be yours, but you’re failing on these three points, in the eyes of the consumer. It’s time for you to pivot.
Eric Partaker:
So let’s talk about, Snap Fitness, then. So as you’re building this, and it becomes the hundred million plus valuation company that you grew it to, what were some of the changes and the pivots that you had to endure?
Peter Taunton:
Well, fortunately, the fitness space, it evolves. You think about it, in the years, it used to be you had a Universal Gym and a Schwinn Airdyne. That was as archaic as it got. And now today, interestingly enough, today, it’s not about heavier weights and faster treadmills, it’s about the community and culture you can create within your four walls. We evolved from, when I started, Snap Fitness, those clubs were only staffed 20 hours a week. It was like going into a hotel gym on steroids. You had a key card, it got you into the business, 24 hours a day, you belonged to one, you belonged to them all. It was affordable. It was $35 a month, and it was relevant at that time with the consumer.
But here’s what changed, very quickly. Pretty soon, the consumer wanted it staffed more often. So today that same product, it’s staffed from about five in the morning until about eight o’clock at night. It’s a lot of group fitness and functional training. It’s just evolved into what the consumer is looking for, and it continues to evolve. Every one of our members, when we onboard them, we onboard them with a heart rate strap, because heart rate based training is where it’s at. Otherwise you can just fake it. You can’t fake your heart rate. Right? Some people say, “Oh, I’m short of breath, or they’re sweating.” That has nothing to do with how hard you’re working, realistically. Because you could be dehydrated, you could be sleep deprived, it could be a number of things, but your heart rate doesn’t fake it. So training within that heart rate zone that’s going to get you optimal performance is key.
Eric Partaker:
Yeah. And I can totally just relate on a personal level, too. The training has changed so much since-
Peter Taunton:
So much.
Eric Partaker:
When I was in university in the early nineties, for the guys it was just, go to the gym and try to lift as many heavy weights as you could and get as big as possible. Now, it’s so much more scientific, like you say, and so much more functional as well, too, right?
Peter Taunton:
Yeah. Functional, and even some of the, I’d be curious to see your two buddies that were the bodybuilders. Most of the body developers did very little cardio, unless they were cutting for a contest. So they pumped a lot of weights, their diet was really tight, really strict, but very little cardio. But today, the real athlete you incorporate good cardio, good cardio interval training, and then good resistance training. It’s the muscle training and the heart training, it’s all together. And then obviously, abs are made in the kitchen. A lot of people don’t understand that. You can do a thousand sit-ups a day, but abs are made in the kitchen. No question about it.
Eric Partaker:
And that does not include being made with Ben and Jerry’s.
Peter Taunton:
No, that’s exactly right. Yeah. And you can have those moments. I love sweets, right. But I just don’t have them every day. And I exercise every day, which is how I stay in great shape.
Eric Partaker:
I’m with you on that, but equally I have to admit that, oh man, if I see some of those Ben and Jerry’s containers nearby.
Peter Taunton:
Yeah. Right?
Eric Partaker:
It’s hard to resist. One of the quotes, which is part of your whole management philosophy, is that, “Success is 10% of what happens to you and 90% of how you react to it,” which I love, because that’s such a beautiful statement. And can you give us a couple of examples of where you live that, maybe one professional and one personal?
Peter Taunton:
Yeah. I had a, and this is compassion as well, because at the end of the day, you are who you are, right. And whether you’re at work or whether you’re out in the street, compassion goes a long way. And I think that we’re hitting that, everyone should be, you should be respectful of others, you should love and be fair, right. So, that’s just how I roll. And I remember one day, not too long ago, probably eight years ago now, seven years ago, and I had one of my employees and he was one of my earlier employees, who had embezzled, over a three-year period, about three and a half million dollars from me.
Eric Partaker:
Oh my gosh.
Peter Taunton:
Yeah. He ran one of my divisions. At the time, now my company’s since grown, it’s a $200 million company. So over a period of three years, he embezzled this money, and the money had been spent. Anyway, we finally caught him, right. And at that time, when my CFO came in and they said, “Hey, Peter,” and then he came in, his face was white. And he comes in my office. He goes, “I got something really terrible to tell you.” And I said, “Well, what’s going on?” I thought someone had died, car accident, whatever. He goes, this individual, I won’t say his name, “He’s been embezzling from us for the last three years, to the tune of three and a half million dollars.”
My first thing, I said to him, at first I was upset, you could see the upset. I was upset, and then I was disappointed, within a minute. So I went from being completely pissed off, because that’s a lot of money. Secondly, I was disappointed because he was one of my first employees, right. And I trusted him, and I felt completely betrayed. But then I said, “Does his family know?” Because I knew that life was never going to be the same for him, okay. Ended up talking to him. He had spent all the money. He had a drug and a gambling problem, spent it all. In fact, he not only blew through that money, but he was about 300,000 in debt to a number of different casinos in the area, where he had extended lines of credit. And anyway, it ended up costing him a divorce with his wife. And maybe it was just a bad deal for him, so I felt compassionate about it.
But in those moments that we all have, and there’re different degrees of those moments, but I always talk about the, of maintaining your composure. And that’s so important. Some people’s leadership style is, they’re going to yell and scream and kick the garbage can, and do that whole scene, but understand, that’s what people remember. Just like when people hear the story on the street, anyone that was in that room at that moment, their first question is going to be, “What did Peter do?” Okay. And the answer has got to be, “You know what, he was calm. He was composed. He was obviously visibly upset, but within a couple of minutes, he asked about their family, and how are they doing?” So that says a lot about just people in general. I knew he ended up going to jail and doing that whole thing. So I knew how the story was going to end for him, and I helped him in any way that I could, but he had to pay the consequences for his bad choices.
Eric Partaker:
Okay. But you still were able to demonstrate some compassion for him.
Peter Taunton:
You know what, keep it real. We’re all human, we’re all flawed. And it was very, very poor judgment. I happened to be on the receiving end of his poor judgment, and it’s very, very unfortunate. And that’s money, we never got it back. The money was gone, it was not coming back. We didn’t have insurance for that type of thing.
Eric Partaker:
It’s crazy that it was even a little bit more than your entire life savings at the age of 40.
Peter Taunton:
Yeah. Right? I never thought about it like that. Thanks, Eric. Thanks for bringing that up.
Eric Partaker:
Right?
Peter Taunton:
[inaudible]
Eric Partaker:
Shows you how successful you had made your business, that you were able to absorb such a failure, right. That’s definitely not one to notch up on the win board.
Peter Taunton:
It was unfortunate. It was a great, great learning experience for me. From that point forward, I made sure that we had unbelievable checks and balances within the department, and then outside of the department, by third-party auditors and whatnot. Now I don’t leave anything to chance.
Eric Partaker:
Yeah. Yeah.
Peter Taunton:
And it’s easy for people to steal. It’s interesting how people rationalize within their heads, when they see a business that is clearly growing by leaps and bounds, year over year. So people just feel like, “I’m going to take some of this.” And it’s unfortunate.
Eric Partaker:
How about on the personal side, something that brings to life, success is 10% of what happens to you, 90% of how you react to it?
Peter Taunton:
Boy. You know what, I’ve made a lot of investments. I made a lot of investments with business associates and friends, and not every deal is up and to the right, in terms of the performance. And for me, you learn some of those valuable lessons. No-one comes to me with a bad business idea. Every one of their spreadsheets look fantastic.
Eric Partaker:
Yeah, of course.
Peter Taunton:
And it’s just a no-lose type thing. And you got to get burned by a few of those, I think, to get savvy enough to realize that, look, I need to stay within my core competency. So, that’s what I do. I stay in my lane, but I’m happy to be, I’m involved in probably 10 different companies today. But even those 10%, it’s not more than 10% of my net worth. So if every one of those companies were to fold, it’s not going to affect me and the lifestyle and the legacy that I’ve put in place for my charities, and family members, and loved ones, right. So-
Eric Partaker:
That’s a nice way.
Peter Taunton:
Yeah. I keep a balance in my life. It’s really difficult to hit two grand slams in the same game. So for me, I talk about cash preservation, how do I manage that? And then, how do I still have enough capital to invest in some things that are fun and interesting, but it’s never fun losing money, right. It’s never fun, and that’s just what it is. That’s life.
Eric Partaker:
I like that, though. I think that’s a nice, simple metric, not more than 10% of your net worth.
Peter Taunton:
You got it. I see so many people, it breaks my heart when I see people that have managed to sell a business, and let’s say they have $10 million. I was just consulting a guy just a couple of months ago. He sold his business for just a little less than 10 million. And 10 million is a lot of money, don’t get me wrong, but it is not a lot of money when you do what he did, okay. He went and bought a large boat, bought a second house, was traveling all over the world, spending money like a drunken sailor. And when he comes to me, he has about a little less than 5 million in the bank. So over a period of five, six years, his 10 million is not 18 million now, it’s 5 million.
So I told him, “Hey, look, you need to stop the spending. I put him in a position. We sold all of his depreciating assets, and any assets that he has as well, that are just costing him. Owning a large boat, that’s got a price tag before you even use it. There’s there’re costs associated with it. You’ve got slip fees and, I know for my boat, I have slip fees. I have insurance. I pay my captain. There’s a number of things that come with it, before I ever take the boat out on the water, right. So we just had to strip all that away and then figure out, what’s the passive income that 5 million can drive for him, and make sure that falls within his lifestyle because he was adamant he didn’t want to go back to work.
I told him, “Well, you will go back to work. If you keep spending like you are, you’re going to be out of cash in the next five years, make no mistake about it. And then, now, the unfortunate piece is, you’re going to be in your early sixties, going out and trying to get a job in this workforce, trying to support a lifestyle that you have today. It’s just not going to end well for you. So you’ve got to swallow your pride.” That’s a big step for a lot of people, especially men. “Swallow your pride, start selling all this bullshit that you’ve bought over the last five years, that may have brought you some happiness, but you are squandering your money away, and quit going out for dinner every night and buying dinner for everyone you see, and playing this role that you obviously can’t, it’s not sustainable for you. You had 10 million, not a hundred million. So let’s just put it in the right realm.”
So he’s in a good place today, but he’s not going to be, he had to make some serious changes and reflection on how he wants to live the rest of his life.
Eric Partaker:
Yeah. And you have a lot of wisdom, right, that you’re able to draw on to help these folks.
Peter Taunton:
Yeah. And we’re all living longer. I just heard, I just heard yesterday, anyone that’s born today has a better than 50% chance of living to 103.
Eric Partaker:
Wow. That I had not heard. That’s amazing.
Peter Taunton:
Yeah. 50% chance of living to 103. So, that’s amazing. You think about it today, we come across people all the time that are elderly. My dad is 90, and he’s he’s he runs a ranch in South Dakota, right. So it’s possible, but you’ve got to stay active. You’ve got to stay on it.
Eric Partaker:
So I want to go back to the flip side of a question that I asked you earlier. So what’s one thing that most entrepreneurs are doing, but that they shouldn’t be doing?
Peter Taunton:
Well, I think financial discipline is a big key. For me, early on, especially in a startup company, it’s so important that you’re taking every dollar that’s made and you’re putting it back into the business. If you’re in a products and service business, obviously, putting it back into inventory because if you don’t have the inventory, you can’t sell it. So to me, investing the money back in the business, rather than pillaging the company, and it never has enough dry powder to grow and evolve as the consumer demands, right. For me, I was a big proponent of that. I put every dollar back into the business, because I knew there was no better place for me to put my money then back into the business. And I knew every time I put a dollar in, I was getting five out. So it made no sense to put it anywhere else.
Eric Partaker:
Yeah. If you’re an entrepreneur, as I’ve experienced as well, one of the safest places that you can invest is within your own company.
Peter Taunton:
You’ve got it.
Eric Partaker:
You have such incredible insight, knowledge and ability to influence the decisions and the direction and everything.
Peter Taunton:
All of it. So key.
Eric Partaker:
What’s one thing that Peter believes that most other people don’t?
Peter Taunton:
One thing that I believe that others don’t? Well, that’s a tough one, Eric, because I believe, I always say hard work works, right. I believe that there are no shortcuts, in life or in business, and I don’t think I stand alone in that fraternity.
Eric Partaker:
You don’t stand alone on that front, but I’ll tell you what, geez, all you have to do is go onto the net and see tons of people trying to peddle dreams and other approaches that will get to get you to the place of riches very, very quickly, and all that. And it just does not work that way.
Peter Taunton:
Yeah. I’d say that it’s so unfortunate that, today, social media has many great things, it’s really a great place to get information, but the other side of it is, there’s so many people faking it on there. There’s so much false sales, and false lifestyles. And what breaks my heart is when people go to the internet, social media and they start looking at everyone, and they think, “Man, I’m a complete failure. I thought I was doing all right.” But they see some guy standing in front of a Ferrari he doesn’t own, a plane he doesn’t own, he’s fanning hundred dollar bills, and he says, “Buy my subscription, buy my book, buy my this, and I’ll make you rich.” To me, anybody that’s doing that, or who’s selling who selling something, they’re a fake, they’re an absolute fake.
So most of the mentoring I do, most of the consulting I do, most of it, I do for free. Realistically, I do it for free, because I feel like myself, coming from a two-room schoolhouse, I feel like I owe it to society. I feel like I owe it to give people a leg up where I can. And that goes for whether I’m helping people in business, or whether I’m helping someone believe in themselves, or feeding the homeless in the streets of Miami.
Eric Partaker:
So what’s next for you? What’s next to focus on?
Peter Taunton:
I’m doing it right now. Honestly, the consulting that I do, I love doing, and I don’t take pay, but sometimes some of the companies, they want to try to hire me. I’m not hireable in that capacity, I don’t want to be someone’s CEO, but what I do is I take equity in their company and then I take them to the promised land. So I do that with two to three companies a year, and so that’s why I have a portfolio of probably 10 different companies that I have an interest in, right now.
So that’s what I’m doing, and then living my life. I have balance. So balance in my personal life, my business life, my faith, family, all of it. I’d like to keep it all balanced. And when I was working, Eric, I probably wasn’t very good at that. I was so driven, because I always ran my company a little paranoid. I always felt like the other shoe was going to fall any day.
Eric Partaker:
Right. Right. So if somebody is thinking, who’s listening or watching, and they’re thinking, “Wow, I might be one of those two to three companies a year that Peter could help.” How would they get in touch with you?
Peter Taunton:
The best way, without me giving out my personal cell number, would be just to find me on Instagram, which is Peter_Taunton, easy, find me, and then shoot me a message and just say, “Look, I was listening to this podcast, or however they come about,” and I look at every one. I look at every message, believe it or not, I’ve got close to 600,000 followers. I look at every message. People say, “Oh, come on.” I do. I make the time.
I don’t respond to everyone, but when one of them resonates with me, if somebody said, “I was listening to this and I was inspired, and I’m wondering if you could help me or spend some time with me,” those are the people that I do. I’ve had two of those today. And they said, “Would you mind making some time for me?” And I said, “Of course I will.” And that’s just how I say it. “Of course I will.” How could you say no to that? Right? You’d have to be a real ass to say, “No,” to that, wouldn’t you? With all the blessings that I’ve had in my life, how can you say, “No,” to somebody who says, can you give me 15 minutes? Of course I can.
Eric Partaker:
Yeah. I totally, totally hear you on that. I get similar emails and things on social media and it’s just part of the duty, part of the responsibility.
Peter Taunton:
I think it is. The Bible says, “For a lot that is given, a lot is expected,” right? So, and that’s how I look at it that, how this youngest of seven, two-room schoolhouse kid got to where he is today, I reflect about that often, and I appreciate the life that I’ve lived. And I feel like it’s my obligation to leave this world with a fingerprint, make an impression where I can and make it a good impression.
Eric Partaker:
Peter, I’ve really, really enjoyed the call with you. I’ve really enjoyed meeting you. You sound like such a great guy. Look forward to hopefully meeting you in person at some point-
Peter Taunton:
That’d be great. I would love it.
Eric Partaker:
Yeah. Maybe in Miami, I’m actually planning a trip to Miami soon. So maybe if I hit your nine months right, then there we go.
Peter Taunton:
I’ll be back in Miami, definitely by October 1st, for sure. And I’m there usually till the middle of May.
Eric Partaker:
Cool. Very cool. Very cool. So just to wrap up-
Peter Taunton:
And we have each other’s email, right?
Eric Partaker:
Yeah.
Peter Taunton:
I’ll make sure that we, after we go off the air, let’s get each other’s cell numbers.
Eric Partaker:
Yeah, that sounds awesome. That sounds great. Now, the show’s called, The 2%, the goal is to give people super practical things that they can use to help break free that 98%, join the estimated 2% of people operating at their full potential, in work, in life. If you could share only one success secret with the world, one thing that can help someone break away from the 98 and join that 2% club, what would it be?
Peter Taunton:
That’s an easy one. First of all, I can promise you, if you want to break away, you’re staring down the barrel of uncertainty and a lot of sacrifice, big commitment. You’re going to have those character-building moments. So it’s so important, every day, that you look in the mirror and you believe in that person looking back at you. That is absolutely key, because in those moments of difficulty, you’ve got to believe that you’re capable of powering through it. Because if you don’t believe in yourself, you fail on so many fronts. So obviously, believe in yourself. That’s where it starts.
Eric Partaker:
Amen. Self-belief. Peter Taunton, everyone. Thanks again so much, Peter, and yeah, really, really delighted that you’ve come on the show.
Peter Taunton:
Yeah. I enjoyed it. Great questions, too, and I’m glad I had the opportunity to share.
Eric Partaker:
Yeah. Thanks a lot, Peter.
Peter Taunton:
Right on.
