KP Reddy unravels the nuanced language businesses use to define their success. He dives deep into the vocabulary entrepreneurs employ, from funding rounds and architectural prowess to revenue figures and asset valuations. Join as he explores the psychology behind the words businesses choose and how these choices shape perceptions, both internal and external.
KP Reddy unravels the nuanced language businesses use to define their success. He dives deep into the vocabulary entrepreneurs employ, from funding rounds and architectural prowess to revenue figures and asset valuations. Join as he explores the psychology behind the words businesses choose and how these choices shape perceptions, both internal and external.
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Speaker 2:
So, scrolling through LinkedIn and I came across this post where you typed words matter. So I thought I would uh, I'd read part of this, or maybe I'll. It's not a long post. Maybe I'll read the whole post and then we could unpack it. And if you're new to the podcast, this is what we do. If you're not following KP Ready on LinkedIn, you should. His posts are thought-provoking, they're pot-stirring. If you're in the built environment, the world of the built environment architecture, engineering, construction, real estate you should follow KP. And this is your opportunity to find out what's going on in KP's brain as he's conjuring up some of these posts. So here it goes.
Speaker 2:
Words matter. When I ask how big is your company? No-transcript, rarely do I hear 100 million per year of revenue with 40% gross margin and 10 million in EBITDA. The above are just examples. Ignore the numbers and you go on to say the vocabulary that we use to describe our businesses, except for the last one, are all the indicators of what we think success looks like for our business. The last one is all that matters. So I hear examples like that all the time and I'm guessing that anybody that's listening to this right now goes yep, I've heard that, or yep, I've said that, something along those lines. So, as you were, you logged into LinkedIn. You're getting ready to post something. What inspired you to type this post that starts out. Words matter.
Speaker 3:
Well. So I think there's a couple things. One I I don't. I'm not suggesting we walk around with t-shirts that show our financial information. That's not the suggestion. The suggestion is that if you walk around and talk about how many employees you have as a definition, like a mathematical definition of your business, over time that gets ensconced into the culture and therefore every decision you make becomes around hiring people, because that is the status oh, we're about to hit 500 people, like. So someone's running out trying to hire someone to hit 500 people. Right, it's not, because that's what the business is. So it's this extrapolation of financial information where people are like I'm not going to share my financial information, but I have to have a way of communicating it.
Speaker 3:
But what I find interesting is um, engineering and architecture firms are a people business. Construction companies are a people business. Yet when, at when, you ask them how much, how big are you? The design professionals will always say people and the contractors will always say dollars in construction revenue. So you ask yourself why? Why do they do that? And I think it's because maybe the design professionals are very focused on how many people they have, because it's about timesheets, it's about converting and arbitraging what you pay people and what you charge them out with. That is the business model. So therefore, that's what you track A contractor. You can do a billion dollars in construction as a contractor with maybe 100 people. That doesn't tell me enough. Another firm might do 10 million with 100 people. You know, it's just. It's really hard to know and they view that as the when you know when people are high fiving each other, they're high fiving each other about that new project and how many hundreds of millions it added to their backlog. So I think those words drive over time.
Speaker 3:
What is important, what is success, and when you think about business transformation and how I want to think about transforming my business, if I get stuck in a rubric like number of people, you, you're gonna have a hard time getting out of it. I see this other one in the real estate world like billions of transactions, billion dollars in transactions. Well, what they don't tell you is they made 10 bucks a transaction, right, it's like great. I had someone pitch me the other day oh, we did a billion in transactions, kp. I'm like then why are you raising money? Well, you know we get a penny a transaction or something like some absurd little amount. So that billion in transactions translate to $50,000 a year in revenue. That's like a big, so what? Right? But they love running around saying a billion.
Speaker 3:
So it can be used one. It can be an anchor to how you set your culture. It can also be a way to embellish your success. You know it's I always say it's. It's kind of like you know, going to the gym. I mean, I spend three hours a day in the gym every day. Well, you spend your time looking at the mirror and listening to the podcast and talking to people he didn't actually work out, right, it's, it's not the metric, no, no, um, you know, um trainer is gauging the success of their client by how much time they spend in the gym, and so I think there's just this idea of like you build these ideas and these words and then you propagate them over and over again, and that is what defines your culture, which is a huge part. It's a massive boat anchor to innovation yeah, yeah.
Speaker 2:
So play devil's advocate a little bit, maybe. You know, when you talk about architecture engineers, you're exactly right, that's, that's that's how they talk about their size. Part of that may be, you know, the contractor says, well, you know, $10 billion in construction. The architect doesn't think about it that way because they get a very, you know, much smaller percentage of the revenue of that than the contractor does. But when it comes down, you know, and this, this, I think, is super danger zone right, this is the way we've always done it, which, to your point, that's that hinders renovation or not renovation, innovation every day. When it comes down to the point, you you mentioned culture. It's culture of the profession. Right, this is the way we talk about an engineering firm. This is the way we talk about an architecture firm. It's 360 architects or it's a thousand engineers? Do we have to turn around? Does? Does the engineering firm have to turn around and buck that system? Um, break, break. That culture of the profession is that. Is that the point, or part of the point? The entire?
Speaker 3:
okay. So in a construct where I go give all these talks, right, and people ask me about ai and I'm like, yes, ai will transform the industry, and the first place they go to is, oh, you mean we're going to have less people, it doesn't go to. I mean, that's fantastic. We're going to be able to do even more intricate designs. We're going to be able to do a lot more differentiated projects. Maybe we only do museums and the museum business is slow, but AI will help us get the skill sets to move into sports arenas.
Speaker 3:
Right, there's no thinking about this. Technology is going to allow us expand our business. The immediate thinking is oh, how many jobs is going to get rid of? Yeah, I don't know that contractors are thinking that. Contractors aren't saying, oh, ai is going to get rid of a bunch of our people. Ai saying they're saying AI is going to get rid of a bunch of our people. No-transcript. It's going to help us attain more construction backlog. We'll be able to bid on more projects, and if you correlate those two, they're rooted back into how do you define a business. If an architecture firm defines themselves by how many people they have, ai as a disruptor means we're going to have less people, whereas a contractor is not saying, oh, ai is going to have us do less business. Oh, we can do twice the amount of work with the same people.
Speaker 2:
Yeah, it's driving a mindset 100%. Yeah 100%. Yeah, yeah. We see that a lot. I've seen that in past lives, consulting with firms like that oh, we can't compete for this project because we only have x number and you know the, the our competitors have twice that many, or something like that.
Speaker 3:
It, there's no thought about capability, there's no thought about creativity or anything, it's just the, it's the number and it is driving that mindset I think when I was younger, we had a um, not a software development firm and I was like notorious for taking the wind out of my salespeople's sales because they'd come in. Hey, we just sold this project and let me tell you all about like they would tell me all about like how amazing the project was. I was like how much? When do we get paid? And they would just be like, dude, like I'm trying to tell you about like this amazing project I just went. I was like how much, and when's the wire coming in?
Speaker 3:
yeah and it was like, like it's like you don't even care. I'm like, oh, I care, but the first set of questions is more important to me. Then, once you tell me that I do want to hear about the project, I do want to hear about the project.
Speaker 3:
You know my son's doing midterms right now. I don't ask him like how do you feel my hand? How'd that go? You get a pass. How'd it go? I feel my hand, how'd that go? You get a pass. Like how'd it go. I don't say like hey, was it hard, how did you feel about? Like I'm asking him those questions. So I think, unfortunately, like I might now, if he's like oh, dad, I think I got a d. I'm like, oh well, that feels pretty terrible. But the facts that matter to me are much more binary in nature, but I do think how that drives. I think it really tells you a lot about how people think, about what's important and what the incentives are yeah, yeah, I mean that's you start the post with.
Speaker 2:
words matter and I think that's that hits the nail on the head, right. That's driving the mindset. And you know, if someone doesn't agree that, that, that the 100 million year of revenue and 40% gross margin, 10 million if they don't agree that that's what matters, well, that's a that's a different conversation. But the mindset that is set up by the words is driving you in a certain direction and that's really why I appreciate this post. It develops, it creates your focus. And is that a focus that ultimately matters in the livelihood of your business, the success of your business? Well, that might be the conversation for another podcast, but this is a good one.
Speaker 2:
If you don't follow KP, it's K period, P period, ready R-E-D-D-Y on LinkedIn. A lot of great posts, a lot of very insightful business technology innovation posts. They're going to make you think. That's why KP and I come here to unpack KP, unpack the brain of KP and figure out what it is that's inspiring the posts that he's making. And so this one, as it starts out, as I said, it starts out, words matter. When I ask how big is your company, some of the common answers are you should check it out. Thanks for listening to us. Kp Thanks for unpacking this for us and we'll be back for another Unpacking KP next week.
Speaker 1:
Thank you for tuning in to the Shadow Network, looking to get involved? Well then, check us out on our website, shadowpartnersco, and learn how you can work with KP and join our community as soon as today. All it takes is a few clicks. Did you enjoy the episode? Leave us a five-star rating on your podcast platform of choice, or share it with your friends. Share it with your coworkers, share it with your neighbor's dog, doesn't matter. Spread the word until next time.