If you want to keep your business over the long haul, you can’t leave it all to chance. Legal troubles can ensue, and it may have nothing to do with anything you’ve done wrong.
In this episode of The New Music Industry Podcast, I interview Scott Smith of Royal Legal Solutions who shares not only about how to protect your business but also the steps we need to take to scale our businesses.
- 00:14 – Introductions
- 00:26 – How can we legally protect our companies?
- 02:09 – Do online businesses get sued too?
- 03:47 – What steps do people need to take to fully protect their company?
- 06:27 – GDPR and compliance
- 10:53 – How can you invest tax free to increase returns by 20% automatically?
- 13:21 – Are there any advantages to being set up as a self-employed or entrepreneur from a tax perspective?
- 15:09 – How do attorneys think about startups?
- 16:50 – What sort of missteps do people make when scaling their business, and how do we avoid them?
- 18:53 – Why jumping on the latest technology might not be helping you grow your business
- 22:29 – Selling your personality as a product?
- 26:10 – What social media is for
- 28:56 – The basics of music copyright and analysis paralysis
- 37:45 – The downside of attaching meaning to every event
- 39:43 – Burnout and the benefits of meditation
- 41:16 – Working excessively
- 43:57 – The high costs of burnout
- 46:07 – What are some of the biggest challenges you’ve experienced on your journey?
- 48:30 – What are some of the biggest victories you’ve experienced on your journey?
- 52:39 – Balance and sustainability
- 56:03 – Are there any books that have helped you on your journey?
- 57:59 – Is there anything else I should have asked?
David Andrew Wiebe: Today I’m joined by Royal Legal Solutions’ Scott Smith. How are you today, Scott?
Scott Smith: I’m having a great day today man. How’s it been going with you?
David Andrew: Not bad at all. It’s been a crazy day but I’m looking forward to this conversation.
So, today we’re going to be looking at something that has yet to be discussed in the podcast but could be one of the most important aspects of running and growing a rock-solid business, which is the legality of running a business.
Now, some of you might be starting to tune out already but maybe when you hear this stat you’ll begin to pay more attention.
“Over 90% of corporations will be sued in the US.”
So, Scott, please elaborate on this. How can we protect our companies fully?
Scott: Yeah. Well, you just got to know that if you’re in an active business that you should anticipate a lawsuit. The reason why is not because most people are shystey or anything like that.If you're in an active business, you should anticipate a lawsuit. Click To Tweet
It really has to do with its people having disagreements about what they think they agreed to and then whatever’s on the piece of paper. Right? And then now you have a lawsuit because people get angry.
So, to really think that you’re never going to be sued is really to say like everybody I do business with for forever is always going to love me no matter what. I’m never going to be angry with them. That’s silly.
We, at Royal Legal Solutions, we principally are working with a lot with real estate investors because those have huge amounts of capital tied up into assets and what they need to be doing with their portfolios of assets in combination with litigation protection.
But for everybody in your audience, you really got to think about what are the really simple things that you could be doing immediately to just take you from having zero protection into having some protection.
The best way to do that would just be like… I don’t know. Just like a simple even one to two LLCs would take you from having nothing into having a very high level of protection if you use them correctly.
David Andrew: Now, this is something I’m sure people are wondering a bit but does this is applied to online business just as much as a brick and mortar business?
Scott: Oh yeah, for sure. Right? Websites get sued just like anything else. Right? You can get sued for all types of compliance issues like the people’s credit cards, note that you put up, like music that will have copyrights attached to it and now people want to sue you over it.
We live in the most litigious lawsuit happy country in the world. Really, the right way to do it no matter if it’s with a brick and mortar or whether it’s online – Royal Legal Solutions is online. It’s a huge online law firm. We help people all across the country no matter where they live.
That was one of the things that we looked at initially too was our own asset protection, which was we compartmentalize everything that we have that’s worth anything – all the IP, domains, graphics. Everything all belongs to a separate asset holding company.
Royal Legal Solutions is really an operating company. It doesn’t own anything but it conducts all of the business. It signs all the contracts and does all the customer interface. So, if anybody ever decides to sue us, it’s Royal Legal Solutions is the one that did business with them, right. Well, that’s the one that doesn’t own anything, so we’re happy for them to sue it all day long and all the assets of the company are protected in a separate company as a holding company.
That’s why I recommend every business owner to do is you need to separate all of your assets into one company – a company that owns everything but manages nothing and they need a completely separate company that manages everything but owns nothing.
David Andrew: Okay. So, you kind of hinted at it. Would you be able to sort of paint us a picture of the specific steps it would take to fully protect your company?
Scott: Yeah. I mean it’s really simple, right? It’s really just you spin it up two LLCs. You can form those up any way you want to, right. I mean if you can’t afford to hire an attorney, go to LegalZoom. That’s better. Maybe it’ll work, right, if you can’t afford it. But it’s better than just than the absolute “I’m not going to try anything at all.”
David Andrew: Better than nothing. Right.
Scott: Yeah. Right. Because maybe it will work. You’ll never know, right.
And then what you do is then you take all of your personal wealth and your rights to any of the intellectual property you have or whatever and you’re going to hold that in asset holding company A. Right? The asset holding company A is just a normal LLC.
And then you’ll have… The second LLC that you’re going to spin up is what’s going to be called an operating company and that’s a shell company so it’s not going to own anything but that’s where you’re going to sign all your contracts with. If you hire people for any reason to help you with anything you always conduct it through that other shell company.
It becomes really simple because all you’re doing any time you are interacting with anybody in the world is like “Oh, I use my LLC for that to sign contracts or do anything with it.” Right?
Any time you’re having stuff that you make money or that you buy assets or whatever that’s all just going to be held inside of your other asset holding company that you never do business out of. It will just hold it in for you. So, it’s really simple in a way you actually set that up.
Navigating though, like how to do that is something that a company like myself can help you from the ground up on how do you actually do that if you don’t want to try to do it on your own. But more power to you if you want to do in your own, right.
I don’t think there’s anything necessarily “special or magical” about attorneys in any way. But really, it’s just kind of like one of those deals like do you want somebody else to turn the wrench for you because we’ve done it a few times and so we can make sure it’s done right. But I think anybody really, like realistically – you can learn anything you want to in the internet age, right, if you just spend the time to do it.
David Andrew: Yeah. True enough. It’s just about making the time.
I sometimes get questions that I think are a little bit ridiculous because they could be easily Googled but maybe that’s the value I’m presenting. I’m not too sure.
I guess if it’s a question I feel like I can answer in a good way then I’m happy to do it that way but I definitely know what you mean.
Scott: Yeah, for sure.
David Andrew: This is something I’m wondering if you’ve dealt with. Maybe you’ve had a few questions people asking about this. I’m not sure how much you’ve dealt with it yourself if your clients are mostly in the US, but what about this whole thing about GDPR, general data protection regulation, which came in effect May 25th?
Scott: Yeah. I mean it’s one of those things that… We’re really focused on just the domestic as a protection piece for people are doing right and so we really limit the scope of what we’re doing in terms of what’s actually practicalities of lawsuits. Right? And how do the litigation game get played out from attorneys and then how do we make sure that attorneys have no incentive to sue us because they can’t find out what we own and then we don’t actually own any thing so they can’t get anything from us because everything we own is owned by another company. That’s really the scope of what we’re looking at.
David Andrew: Gotcha. I just thought I would ask because I’m sure it’s maybe fresh in people’s memory, especially if they have an online business and they’ve had to deal with the fact that “oh yes, I do have data from people in Europe and now I have to figure out how I’m going to properly protect it and implement it” and all that kind of stuff but…
Scott: It’s a whole other rat’s nest in what you need to do with that. I’m sure there’s going to be a ton of money we all end up having to spend on compliance because of it.
David Andrew: Yes.
Scott: So, I mean what are you going to do, right? The good news is that it’s so pervasive of a problem. It’s like “Okay. Well, who’s actually going to come after you for it?” Right? So that’s one of the good things about really big problems is that they are so big like “Okay. Well.”
It’s like online piracy. Yeah. Yeah. Yeah. We all know it’s like super wrong and the penalties are horrible but who is actually coming after you for online piracy?
David Andrew: Yeah, same question I had. First of all, who’s going to enforce it? Second of all, I’m sure their targets are going to be mostly bigger companies before they ever bother or even think about going to the small ones.
Scott: Same thing as any assumed smaller companies. What would you look at? It’s like everybody always chases the big money, right. And that applies for government regulations that they want to enforce. That’s how those politicians make careers for themselves is by doing massive litigations, right.
It’s the same thing for attorneys when you’re looking at small business owners is that everybody is still looking for the money. Like there’s one thing in this world we know that’s true. The gold makes the rules, and also the gold usually drives people’s decision making.The gold makes the rules, and also the gold usually drives people's decision making. Click To Tweet
But what those bigger companies should be doing too is the same types of strategies that I would be recommending for everybody in general, right, is that they should be operating through shell companies have their assets protected either domestically. In their case they might even look to protect them overseas because they can afford to. That’s even crazy higher levels of protection. Then you see guys like GE and AOL doing a lot of stuff.
But just the basics of how it works for separating the assets from the operations is something that we can all do. We can all do it easily and it really separates everybody from classes above. Everybody else here domestically that really just does nothing.
I mean most people I work with have a ton of money and they have no protection. They’re like “Oh, I got like… I got this money in the bank. I own all these assets. They are all in my name. I think my insurance is enough to protect me.”
I’m like “No. Insurance only protects you against negligence. It doesn’t protect you against breach of contract, allegations or fraud, anything else. So, you got into a car accident that exceeds the limits of liability of your insurance coverage and for so little amount of money.”
In the grand scheme of things, you can just wipe off like all the levels of risk because you would have like insurance in your life that protects you against 80% of the stuff that can go wrong and then once you put in a company structure is the other 20% of the protection.
And so, now you’re essentially litigation proof from anybody being able to sue you after the end of the day, which I think is pretty cool because I think you are just like chilling making money doing your thing and not worrying about law suits.
David Andrew: Gotcha. Yeah. So, it’s good to protect yourself but definitely follow the money trail.
Scott: Yeah, yeah for sure.
David Andrew: Yeah. Don’t be too lackadaisical in not setting up proper protection but yeah look at the money trail for sure.
Now, I’m not working a 9 to 5 anymore. In fact, I’ve only ever been a part time or casual employee but I’m sure there are a lot of people listening who do have a day job and income outside of it, so how can we invest tax free and increase returns by 20% automatically?
Scott: Yes. It’s actually only really available for people that have non W2 income. So, if you’re a 1099 employee, this is going to be something that’s going to apply to you because what you can end up doing as you set up your own LLC, that we were just talking about, and then what you’re able to do is become an employee of your own LLC, as a sole employee of the company. It’s something that’s called the solo 401K.
Here’s how crazy this is. You can take $50,000 of money that you would make as profits right in doing your job and you can take it all tax free into a solo 401K. Then you can loan yourself up to half of the value. So now you can loan… Say for 50 grand you get your $25,000 pre-tax money that you can spend on whatever you want. And then you have another $25,000 as hold in a solo 401K that you can use for investing in whatever you want to invest it. You can invest in all kinds of things, right. I mean even up to businesses.
I have some of my friends that I set this up with that that’s what they made. Their whole yearly income was 50 grand. And now they’re like all right well they live off of like the $25,000 that’s like pre-tax dollars and they’re still socking away $25,000 a year because they can live off a $25,000 as long as it’s tax free. That’s post tax dollars. They still owe the money to 401K but they’re like “I’m definitely going to worry about that in 30 years. I’m not worried about that.”
Which is risky, right? But you know everybody’s trying to make a living, right, and trying to get by. But you don’t have to do it that way and live that kind of lifestyle, right. I mean all of my real estate investor clients take advantage of it. I mean everybody that has 299 income it’s like a no-brainer right because it costs you like maybe like a thousand dollars or so to set up and then you… just have all these crazy tax advantages that fall out of the back end for like no work. They just shuffle the money around and set up the structure and you’re done.
David Andrew: That’s pretty amazing. And yeah, it seems like there often are certain tax benefits to being an employee but what about like self-employed or entrepreneurs? Are there some advantages to being set up that way?
Scott: No. Like none really. I’m talking about for a tax reason, from a tax perspective. From a tax perspective you ideally don’t ever want to have a pass-through entity. Like no entity structure is really bad.
Everybody that’s an entrepreneur what you would typically want to do is set up an S Corporation, take all of the income that you’re making from it as an employee of your own corporation, save yourself the 15% from the self-employment taxes that otherwise you’re paying so that gives you like 15% right off the bat just doing that.
And then once you take that structure and then blow that into a solo 401K you can take up the first $50,000 of income you made that year and have it all tax free. So, now like your taxable nut is super small because you just saved your 15% and you just put $50,000 off the taxable table to be able to go out in the beginning of it.
So, that’s really the way we shall be doing it if you’re, what do you call it, if you’re self-employed. Right? Or you’re 1099 or self-employed, right.
The employee status I’m talking about with an S Corp is like a technical employee. It’s like your own S Corp, right, and you’re the only employee. It’s just a little funny game that gets played with the tax code there, right.
You could call it a loophole or something like that but it’s really not. I mean that’s just the way it’s written and everybody in the real estate investing game is already doing this. It’s not like it’s even something that’s like “Scott’s grand vision of strategy”. Right? This is just anybody that’s in the know that read a couple of books. Anyone into the same stuff would know the same things.
David Andrew: Gotcha. Okay. I appreciate that clarification. I have a friend in Japan who is an attorney but he’s also helped establish companies raise funds for them. So, how do attorneys think about start-ups? How should we set ourselves up for success and security?
Scott: Royal Legal Solutions is actually technically – I mean I still feel like it’s a start-up. It’s four years old but the growth that we’ve had in the last six months like we’ve like 4x in the last six months. So, we still have all of the start-up pains.
The reality of the startup game, in my perspective looking back, is like don’t spend any money until you have to, onto a lot of stuff that I do because it’s really about what are my capital? Like, where is my capital that I can draw from to be able to increase my runway?
But then once you actually start making money then it starts to shift a little bit, right, because now you’re actually trying to say “Look, I’m not really just the make or break. My runway is going to go.” It’s like “Nah.” It’s really not about where can I have steady growth because I have income.
And then once you start going with that, once you’re in that scenario then you have to start doing legal and tax planning because now it pays to actually put time and money into like making sure your bookkeeping’s right in case you’re audited and making sure that you’re taking advantage of all your tax pieces that you can be doing. But really like you should probably…
I think the number one thing is if you can have avoided it is try to keep everybody as a contractor status in any way that you can. Make sure you’re compliant with the law, right. But if you can structure your employment around to make your business work around having contractors you’ll save yourself like 20 or 30% in overhead for your most expensive assets which is almost always your manpower.A business' most expensive asset is its manpower. Click To Tweet
David Andrew: Now, what sort of missteps do people make when scaling their business and how can they avoid them?
Scott: Do you want to know all the missteps I’ve made?
David Andrew: Sure. That would be helpful, I think.
Scott: Let’s do it. Air all of the dirty laundry of what this is like trying to grow this company.
Well, I mean it’s just that we’ve had such huge growth. One of the problems with having a big growth in an industry that I think we’re going to be able to monopolize in the next couple years is that you keep breaking everything, right, because your vision of what you need to build can only go so far. If you’re growing at the rate that we’re growing at then you put together new systems and then two months later like your systems break because you’ve overloaded it. Right? So, then you have to revamp a new system.
So, what I would definitely recommend for everybody is sandbox everything while you’re creating it inside of something that’s a really easy tool like Excel Spreadsheets and Google Docs. Right? And sandbox everything out of there while you’re revamping.
Don’t jump in into anything that’s going to be boxing you in on what your system usually looks like. Like jumping too quickly to a HubSpot or something like that. Right? Or Salesforce or whatever. Wait until you can actually know exactly what your systems need to look like and then do a roll out of a tech piece to save you time and money and speed on that end of i.
But like every business is so different in what the sales cycle and processes needs to look like that I would try to push off tech for as long as I can until it’s just really way too burdensome and then I have to implement a technical solution.
I think everybody right now is way too fast on implementing technological solutions to create efficiency before they really have a good understanding of their business and their processes.
David Andrew: That’s really interesting because I think most people would be thinking “Oh, I really need to be agile. I need to be able to switch things out quickly be able to adapt quickly, move on to the next thing to make my business more efficient, more effective, more automated.” But what you’re saying is don’t do that until you have the core structure in place.
Scott: Yeah. Well, it’s because where do you think you’re actually moving dials bro? Are you moving dials because you automated that email? Probably not.
David Andrew: No.
Scott: And so, the issue is that things people are doing what I see time and time again here in Austin anyway is – I like how this become more of an entrepreneurial tech start-up talk than anything that has to do with law which is great. I like talking about tech stuff than law anyway.
What I see time and time again here is that it’s really sexy for everybody to get together to talk about like “Hey, what program are you doing for this and that? Here’s how we set up over here.”
But then what I find is like everybody gets caught up in this really what’s the fun talk of what’s happening inside of their business instead of focusing on the one core thing is like what experiments am I my running right now that lets me get to know my customer more to be able to know exactly how I need to pitch him and what are the exact products that they need and what are their problems. Right?
That’s why I’m sandboxing. I’m saying don’t worry about tech solutions until you can have that narrowed down that you know like I know where these people live, I know whether they drink whole milk or two percent milk, I know what’s going on in their life. I know exactly what it is that I need to tell them to pitch them and what exactly those products need to look like for them to be like “Holy smokes! This is what I’ve been looking for my entire life.”
My personal intuition and my feeling is that unless I have a product that I can tell people about and they are like “Wow! I’ve been looking for this my entire life. This is the most amazing thing I’ve ever heard of. I have to have it.” then I need to keep it iterating on my product.
David Andrew: That’s totally a fair point because I had my coach come on the podcast and he’s always saying your number one priority as a business owner is to create an offer that converts. The reason is because if you don’t have an offer that converts you don’t have a business.
Scott: Yeah, right. Yeah, yeah. Right. And if you have an amazing product then everything else can kind of be really not so great and you’ll still be fine. But it’s really hard to take a mediocre product and then make a business out of it because then everything else has to be perfect because the playing field everybody is already in there.It's hard to take a mediocre product and build a business out of it. Click To Tweet
But if you stay inside of your creative space for long enough, you’ll create a product that is very amazing that you’ll change the dynamic of where everybody else is playing and then everybody else has to catch up but they really can’t because they don’t have the creativity to be able to get where you’re at. And then you can figure out all the technical pieces and you know what’s the Infusionsoft for this or HupSpot for that or whatever. Like all when you’re already there.
David Andrew: Yeah. Sometimes I have seen the opposite work in the sense that okay people will go and create an audience through their content on their blog and on their website and then they will sell something to them. The product could be just about anything but because the audience loves that personality or the content so much they just buy it no matter what. It doesn’t mean it creates a great reputation if it’s a bad product though.
Scott: Well, and you might also think about the person’s personality is actually their product.
David Andrew: Yes.
Scott: Not actually a thing they’re selling. And so that’s what they iterated better than everybody else to be able to stand out with it and that’s why people are buying, right. So, I mean there are probably some different ways you can chop that up depending on how you want to look at it.
David Andrew: That’s really interesting. Speak more to that. How do we sell personality?
Scott: Well, I think… Who are the guys that are doing this best right now, right?
David Andrew: Pat Flynn, Gary Vee.
Scott: Yeah. Right?
David Andrew: Yeah.
Scott: It’s like “I know billionaires. They text me on my phone all the time.” I get guys that pitch to me in marketing meetings like that all the time. They want to pitch me for a new thing. Yeah. Yeah. Billionaires text me all the time. I’ll be happy to sit down with you and help you with your branding and whatever whatever, right. I don’t know… I think that’s what a lot of guys have done and they’ve had success with it. I really don’t understand a lot of it.
David Andrew: Me either.
Scott: Honestly, I’m too big of a nerd to really want to do it because I get off on ideas and like what can we actually build and do. I don’t really get off on like I want to shoot a video of me with a Ferrari and tell everybody how great I am. I just kind of feel like a douche whenever I do or even think about doing that. I’m always like “Yeah, that’s stupid.”
But for some guys it really works, right. And like the audience they play to, I’ve talked to a lot of those people that follow those guys religiously and whatever and what you find is that it’s a ton of hype and the mind of the audience to get them excited to buy stuff but the actual drive for a lot of those guys to really make a splash in doing something really isn’t there.
It’s because it’s really easy to get excited about business until you realize that the actual part of running a business and building a business is like 90% of chewing glass on stuff. Hopefully it’s a little bit less.
But like, it’s really… The very beginning is super fun, which is what gets you into it, and then like slowly you get sprinkles of fun as you just have tons of work you have to do you. And then you just keep dreaming about like “Oh, there’s a light at the other side of that tunnel.”
And then you remind yourself that it’s like no there’s not really because once you get to that side of tunnel you’ll be like “Well, how do I actually… do I grow this again? How do I double this again?” And you’re going to throw yourself back into the same cycle of torment with small sprinkles of happiness around what it is that you’re building that seems like it’s a lot of fun and a lot of it. It’s just a ton of work.
At the end of it though you get something that’s better than happiness. In my opinion, you get something that’s called fulfillment. And fulfillment is what it is what you get but you don’t get happiness. And so, that’s not the right thing to chase, I don’t think.You don't get happiness in business. You get fulfillment. Click To Tweet
David Andrew: No. I can testify to what you’ve said for sure. I don’t want to sway anyone’s opinion one way or the other. I don’t really believe in that whole movement of let’s sell success. Yeah. Standing in front of a Lamborghini talking about reading books – okay, great. I guess that’s how you found your success is telling people about reading books. I don’t really understand it so I don’t try to understand it.
Scott: Yeah. It’s not my thing. I mean the most I think I was willing to do when I talked to my marketing team about it is I’m willing to capture all of the bad ass stuff that I do in my life just generally. I just hiked Kilimanjaro a few months ago and I go canyoneering in Utah now for like you know a three-day trip out there. We do rappelling over like waterfalls in the desert and stuff like that. Right? I was like “I’ll show people that.”
But this is my metric of what I think is cool. If you think this stuff is cool, that’s great, but I really don’t care. I’m not going to go sit in front of a mansion with a Lamborghini and be like “Hey, if you just follow me I’ll show you all the secrets.” Because I was like hey, nobody got those secrets like that. If they did it wouldn’t be on YouTube trying to tell you about it.
David Andrew: Yeah. Exactly.
David Andrew: Yeah. That couldn’t be more true. And you know what? That’s what social media is for, right? Share your fun moments or cool moments. I’m not talking about presenting a really polished image, which is what everybody seems to try to do but I am talking about like oh yeah you know something happened outside. I suddenly saw this fire and I caught it on video. Okay, cool. That’s what social media is for but let’s leave that to the realm of social media not business.
Scott: Yeah. And maybe there’s a way that mix that right. Like if people really want to know more about the person behind it and there’s some ways that I kind of like it and that I hate it when things are too perfect. When people are too perfect that they get idolized, I really dislike it because I really buck against people that are like “I just follow Anthony Robbins ‘til the end of my day.” I’m like “Yeah. Anthony is really cool. He’s got some really cool ideas.”
David Andrew: Yeah.
Scott: He has some interesting viewpoints to come into that but like what you just did is turned him into like a cult leader. I was like “I don’t think that’s what he intended. I don’t think that’s beneficial for anybody.”
David Andrew: No.
Scott: Right? To just like blindly follow like that, right. So, I really like social media for that kind of aspect of it. It’s one of those… If you look at anybody that really is like… I just forget who was talking about it on Joe Rogan’s podcast but they have some awesome pictures of this guy in social media. He’s got like a bazillion followers, this Italian dude. Some of them are really neat like scuba diving and playing chess underwater while scuba diving but you could tell it was like an all-day photo shoot to get that one shot, right.
But the things that were actually really interesting to look at is when he was just like on his yacht dancing with his friends and these girls and stuff like that. It was like “Ah, that is actually him having fun and having a good time like enjoying himself.” Those are the things that we really want to see is like what are the things that we can see other people doing that was like “Man! They’re really doing something that they’re really taking advantage of and enjoying their life.”
Instead of trying to be like “Oh this is a fake presentation of something that I think would be cool in my head but is just totally inorganic.” To me it’s just kind of repulsive. That kind of inorganic feel that now seemingly drives a lot of that online personality mambo jumbo.
David Andrew: Yeah. I think what you just explained is basically bringing some reality to the personality. I think it’s right. We are not just people sitting in front of cameras talking about business all day. I guess unless you’re Gary Vee, but you know the rest of us have real lives and people are curious and want to know in some cases. That kind of content can be engaged with for sure.
Scott: Yeah. I think so man. That’s all I got to say about that. And that’s all I got to say about that.
David Andrew: Great. Here’s something I should ask about. I’m not sure how much you deal with it but there’s this whole thing about copyright. I think for most musicians it’s actually just analysis paralysis. They’re not dealing with “I’m so confused about copyright. I can’t figure it out. I’m just going to sit here with all my music and never release it to anyone because I’m trying to figure out copyright.”
It’s actually just… they’re stuck in their heads about this analysis paralysis. It’s interesting that copyright law hasn’t really kept up with where the music industry is going. It’s trying to adapt now but with like you said piracy and streaming and all this other stuff going on it’s hopeless cause to try to keep up. For musicians that are concerned about copyright, what are some of the basics?
Scott: Well, I would probably say generally just follow your best practices checklist under that but then I would probably always resort back into saying if we’re going to release something, release it in an individual company that owns a song. Allow that one company to violate a copyright. Right? But don’t release it personally and don’t release it in the company that’s going to own all of your other assets. And then I would just let it fly and then see what happens. Right?
David Andrew: Yes.
Scott: Because the deal is that you’re always going to lose way more by not taking action than you ever will by taking action as long as you take the right actions. Right? So, if you’re doing this thing where you can take that song and then you isolate it inside of its own LLC structure. It means they can’t blow it back on you. Right? And then you release it like that.You're always going to lose way more by not taking action than you ever will by taking action. Click To Tweet
The worst-case scenario is that they sue the LLC, they stop the distribution of song, and then you have to shut that LLC down. But you didn’t really lose anything, right? You lost like under a thousand dollars for putting together the company and suing it off but was your worst-case scenario.
But imagine what your best-case scenario is, is that actually it flies on the radar or nobody cares or whatever, right, and now you have this awesome song that’s able to try all this tracking for you and create a fan base for you. Right? And your outside risk was super small.
That’s why I think I’m probably one of the lawyers out there that’s like “Oh yeah, yeah, yeah. But don’t worry about the law too much” because I’m playing a different game. The game that I’m advocating that we play is “Yes. Let’s follow the law.” Right? Don’t do something crazy or fraudulent or whatever, right.
But let’s make business decisions that are built upon the premise of saying even if the worst-case scenario happens I still have a really good shot of winning and winning big doing just exactly what I want to do and then if I’m wrong then I’m like “Okay. Well, that kind of sucks but whatever.” I can just go ahead and move on with my life.
It’s not a super like Buddhist like I’m detached from the world and horrible things happen. I don’t care. It’s like really it’s like just a little bit amount of money that I end up like okay wasting, and then I’m fine. So, that’s my two cents on it.
I mean do you really… Especially right now, right? Especially as we get more and more like the strength behind industries that are motivated around sharing information. The downside for not releasing is huge because all you need is one to work, right? Really. And then all of a sudden now you’ve created like a whole evergreen type of revenue for yourself from your fan base as long as you’re nurturing that correctly.The downside of not releasing is huge because all you need is one to work. Click To Tweet
What you can’t afford to do is to get stuck in the thought process, right. Or get stuck thinking like I have to know all the information. I really try to advocate for saying like shoot for it. Once you feel that 80%, good. That’s really like if you’re… If you can’t shoot for it once you feel that 80% good, you might not be cut out to be an entrepreneur because you kind of have to do it exactly where you need to go. And then, be like “All right, that’s good.” I was like “Let’s do it. Let’s move.”
Because if you wait… Once you get above 80% it’s like the 80/20 rule, right. Anytime you get above 80% at anything that you’re doing, whether it’s golf or books or knowledge in any area, it’s an exponential amount of energy that you have to spend to be able to increase 1%. That’s why there’s a huge amount of energy that you have to spend between being in the 96 percentile and 97 percentiles but almost no energy it takes to be from knowing nothing about something and can’t do it all to like being in 70% or 60%. Right?
If you think about it. She and basketball or playing golf, right. Golf might be a great example of this is that if you don’t know anything about golf at all. You can’t even hit the ball, right. But then after a day or two or a couple lessons you can actually get around the course. Like “Okay”, right.
But to be able to be at the PGA tour you need to be raised from the time you’re two and a half years old in a diaper playing to be able to have enough time to be able to get… because that’s what separates the top one percent as having all that extra time doing it.
So, I would just say the same thing about…. with everything. Compartmentalize your downside risk, right. So that way if you’re wrong about that extra 20%, it’s not catastrophic and you can recover from it but the ability to move faster by just being say like “I’m 80% sure and going with it and knowing that your downside risk is going to be minimized, you’re going to be moving so much faster than everybody else. You’re going to be moving at two to three times the speed that they’re able to do. That’s what’s going to separate you from any of your competitors.
David Andrew: I love that perspective and one way I would think about it too is like almost the greatest form of protection is just releasing it and putting it out there and then it’s under your name. so, if anything goes wrong like you say, the downside isn’t that massive.
Scott: Yeah. Downside is not that massive. I’d rather be first than try that. What do you get really, right? Even if you have all these patents and copyrights and whatever, right. The only thing you just bought was the ability to sue somebody else. You bought the privilege of being able to spend a bunch of money to then go sue somebody else in a gamble hoping you’ll win. Right?
In the new era that we’re going to be seeing in there, lawsuits will still exist of course, right, but what’s going to be more important than anything else is actually owning the thought space. Who can be quickest to own the thought space? Or be tagged as I guess part of the brand.
And then the lawsuits relatively speaking would be inconsequential for a lot of people because it’s like “Oh, I already built like a whole following off of this so I have tons of cash to be able to go fight a lawsuit if I have to or do whatever you need to after that.”
David Andrew: Yeah. And they say that roughly one million songs are released annually. Do you really think you’re going to release something that is so revolutionary that people haven’t heard of? Does it use notes? Does it use chords? Does it use scales? It falls into the category of music and everything’s been done.
Scott: Right. Yeah, right. Exactly. Yeah. I would just go for it. I’ve always seen it. The reason I harp on it is like you always lose by waiting.You always lose by waiting. Click To Tweet
David Andrew: Yeah.
Scott: Almost everybody loses by waiting. It’s the saddest thing because like most… Almost inevitably if you talk to anybody that has like a fear of an action and then they do the action and then afterwards they look back at it, and they’ll say “What was I so afraid of? I should have just done it.”
If you look back at your own life, I bet that you will see that for anything that you were afraid of before. It’s a trippy feeling to think for myself anyway or looking back at Tom at Royal Legal Solutions was that I never thought that I… in my mind would be able to do what I’m doing right now.
Like to have a company of this scale with 43 people with this kind of growth and how do we… what do we do with that? I never thought it was going to… I never imagined that this would be possible, right. But the whole thing stems from kind of just being like “Fuck it, let’s go for it. Let’s make sure we’re doing everything right, but let’s just go for it and we’ll just keep going for it. Like hard.”
And now I look back at it thinking of where/what things were like a year ago or two years ago or three years ago or four years ago. How could I have not done this earlier? That’s the trippy piece because like once you’re in it you’re like “Oh this is where I should have been all along.”
And what really trip my mind now is to think that 30 years from now I wonder if I’ll be looking at myself back in three years from now be like how could I have thought that that was any level appreciable level of success? Some small mall internet legal advice and business advise company. What was I so afraid of that time? The things that I’m afraid of now. Like a year or six months from now or maybe a month from now or maybe a month from now. I mean I’m like “Yeah, there is nothing to be afraid of.”
David Andrew: That’s huge. I mean I was just at a three-day weekend conference and one of the things I learned was we attach so much meaning to every event and that’s unnecessary. The thing that happened happened. You had a failure in business? Well, that happened but that doesn’t mean you’re a failure. Right? That’s the automatic response as a human being is to attach so much meaning to that one failure that we don’t move forward with the next thing.The automatic response as a human being is to attach so much meaning to that one failure that we don't move forward with the next thing. Click To Tweet
Scott: Yeah. Yeah. No. I think that’s right. Like something happens we make everything mean something.
David Andrew: Yes.
Scott: You know? My favorite thing to do with that is when I find myself making assumptions about other people’s behavior, I’d be like “Do you ever find yourself doing that where it’s like so and so did that because they thought blah-blah-blah.” But you don’t actually know anything but you’ve created like an entire story about what was going on a person’s head.
And then if you go up and ask them like “Hey, were you thinking blah-blah-blah when you did whatever?” Most the time they have no idea what you’re talking about because they didn’t even know that it registered as something to you because they don’t even care about you. Most people only think about themselves for like 98% of the time. Right?
David Andrew: Yeah.
Scott: And then when you ask them about it it’s like totally wrong. They’re like “No. No. That’s not what I was thinking. I just had some gas from a bad sandwich and that’s what was happening to my face. That’s all that was about.”
Like “Oh, shit.” And here I was the whole time rooting this whole convoluted story and playing out hypotheticals about what that meant and how… And I did that to them again. I always do that. How could I possibly do this to myself again? I’ve been working so hard at not doing that thing. Whatever that is, right? It’s whatever the story is that we tell ourselves that just distracts us and brings us down.
But yeah, I think that’s awesome that you are going to conferences like that. It’s like those are really important. I still like going into those a lot too because it’s kind of like my church about like is my head still on straight? Like have I really sat down got quiet and thought about this stuff about what I’m doing? I do it now as a daily practice. I’m just like my meditation practice in the morning which actually helps a lot. Have you done any?
David Andrew: Yeah. I have been trying the meditation thing. It was especially critical in about, I guess it was the end of May beginning of June for me. Like I was kind of on the verge of emotional burnout and when I recognize that it was like daily. Spend once or twice a day meditating, getting out of nature, sleeping more, exercising, getting massages, everything in my power to like get back to where I was.
David Andrew: Yeah.
Scott: That’s super solid man. It’s one of those deals. And I still have a couple areas of my life like this that I think that we can struggle with as entrepreneurs that we can push until we burnout and then I’d like it’s so much worse trying to recover. The recovery time of how much time that you have to spend to let things build back up after you deplete them all the way is super rough. It’s worse than being out of shape physically because at least I can hit the trail, I feel good.
But if I burnout emotionally I’m just like sitting there like a zombie like half depressed. I’m like “Oh my God. I got to get…” And that’s like “Oh, I got a whole thing I got to go do.” I got to do this. I got yoga. I got to spend time with friends. I got to go to nature. I got to go on vacation. I have to have alone time. I was like “Oh my gosh. These are nonstarter.” Not doing the maintenance every day is just completely like a nonstarter right now because it’s too expensive. Hold the pedal to the metal for too long.
I don’t know how Elon Musk does it. I mean he could just be like a miserable person. I have no idea. Working 16 hours a day, six days a week, or whatever he does it sounds insane.
David Andrew: Yeah. I even talk to some of those folks and I kind of ask them how they did it and they’re like “Well these days I try to take the weekend off.” So, it’s not even I take the weekend off. It’s try. “And then every six to eight months I take a vacation.” I said “Well, that’s great.” I think I still would burnout trying to do that. Maybe just because…
Scott: What is their real workload like? You know what I mean? Like people tell me about that where they’re like “Oh, I can work 16 hours a day, eight days a week or whatever, right? I only take one vacation a year for three days.” I’m like “All right. I want to see if you work how I work.” because I work crazily intensely whenever I’m working and I’m like this doesn’t… I’m not including phone calls to my mom. None of that’s making it in my workday. I’m like “That’s impossible.” I want to say that it’s like totally impossible for people that try to say that they actually do all that.
I don’t even know if they know they’re lying about it. I think that they actually believe that they’re working all of those hours of the day and thus when they are telling they are telling like a true story from their perspective. Like I’m working all day long but if you actually shift that and saw what they did, I bet that they are actually not doing that much output, anymore output than the rest of us that are like “No. Probably nine to 10 hours is an absolute max for me of how much work I can really do.” They are just stretching it over more time and saying they are working all the time. I bet that. I bet that would be true.
David Andrew: Wow!
Scott: I don’t know what I’m betting or who I’m betting but whatever.
David Andrew: Wow! No. It could just be a story, you’re right. It’s crazy to think about that. Yeah, we don’t often think about what the things other people say and the validity of them because we’re not there. We don’t know. It’s all second-hand opinion basically.
Scott: We don’t know. They could also not be lying in their mind, right. They could actually believe that they’re working 16 hours a day when they’re doing what they’re doing. That’s just how they work. Right? Like “Oh, my kids are around me doing whatever whatever but I’m checking email on my phone.” I might count that as work. I’m like “Well, not really. That’s not real work. That’s like half work.” It’s like 2% of your brain capacity it takes to go through and check email.
I’m talking about like work work. What is that focused? The attention I’m actually building and tackling problems. That’s where you burnout emotionally. That’s where you try to like really scrape it in resources to be able to keep your mind going.
David Andrew: I like it. And to your point about the costliness of burnout. I had a friend who burned herself out I guess twice in the span of the year and a half or two years of building her business.
First time she kind of take a vacation and you know came back fairly refreshed but the second time was like it was really impacting her health. I saw this whole drama play out before my eyes, right.
So, it’s like that’s a lesson I need to apply to myself to make sure I’m not getting myself to that point because without you there’s no business.Without you there's no business. Click To Tweet
Scott: Yeah. Well, it’s 100% right. It’s about like… I think that it’s one of those important things just like we’re talking about like LLC structures and how do you launch your music and all this stuff. A lot of it has to do with like how do you create, how do you limit downside risk personally as well as business wise for how you operate because our happiness overall as people increases with stability. Right? That’s typically what we want. We need certain levels of stability to be able to allow us to relax, create peace, and then through piece we’re able to enjoy like all the other pieces of our lives that come through because life can’t just be work. Right? I mean there’s like 12 or 13 probably major areas in real life like family, spirituality, friends, romantic relationships, whatever you’re going to do.Our happiness increases with stability. Click To Tweet
Unless you have that consistency where you don’t have these big whipsaws you don’t have the internal emotional stability I think to have the resources to really give all of the pieces of your life.
I’m a big advocate for being really conscientious about limiting downside risk because you don’t… If every month of your life is like you’re playing the lottery whether like next month is going to come or not. Like you can’t do that for a super long time without it taking a massive toll on you. I just don’t think it’s necessary.
I mean you could do it, right? But is it really necessary to live like that? I don’t think so. I think there’s probably… There are smarter ways of being able to approach the problems creating wealth and doing business.
David Andrew: Now, what are some of the biggest challenges you’ve experienced on your journey?
Scott: Yeah. Well, mine was really about trying to stay balanced. Right? Because I love the work. It’s a weird thing to say. For me, my work is actually one of the most fulfilling things of my life because… I’m a super big nerd, right. Like just mega nerd. And that for me the most fun things in life are actually the biggest puzzles.
So, the puzzle of what it is to build a business like the type of business that I’m trying to do or I guess that I am doing now since this is like four years old is like one that’s challenging enough that I think it will reshape an entire industry.
So, diving into what that’s like as a person makes it difficult because just like how you were experiencing with emotional burnout, right, I get the same thing if I work too hard for too consistently. Then my go to is like I’m just going to order a bunch of crap food. I literally gained 30 pounds in the last like nine months.
David Andrew: Wow!
Scott: By the way though, I’m still boxing every day and lifting three times a week.
David Andrew: No kidding.
Scott: I was still able to lift myself up in weight while I’m gaining strength the whole time. I really just call it like anybody asked about it or like whatever I’m just like I’m just in a massive bulking phase right now. I’m just really just really getting huge. And then the cutting phase will come later.
But it’s really a lack of balance, ultimately, right. It’s like using something else to compensate for damage that I’ve done to myself. Right? As much as my brain wants happy stimulation about whatever, the easiest thing to do is to grab a drug and food is just another type of drug but I don’t drink and I don’t do drugs. Right? Food is something I get “Well, I bet I could eat three slices of that pizza. Absolutely.” I don’t know. I would say that’s my big thing right now.
David Andrew: I totally get what you mean. We all have our favorite drugs to turn to. What are some of the biggest victories you’ve experienced on your journey?
Scott: Yeah. I mean it’s tough. It’s tough really to say, right, because when you can… you do like certain marketing piece or whatever, right, of maybe you can double revenue in like a month, and certain things like that will pan out. And then like “Oh, that’s really awesome.”
But now I think I start to re-evaluate it because I don’t really look at victories in my business anymore. I’m really looking for victories in my life. Right? So, I’ll count every victory I can to tell you the truth. That’s like a meta victory. Is that like take the time to recognize all the things that are going right because all of my day is spent focused on the hardest problems that nobody else in the company can solve. Those are the ones that always float up to the top.
What I do is I’ll start to recognize all the small victories. Like if I made it to boxing that day, did I do my protein shake that I want to do in the morning and hydrate correctly for that. Did I take 15 minutes off every couple hour to stretch like while I’m working just to make sure I’m doing what my body needs. A lot of my things have to do around like taking care of my body because that’s like the biggest thing that I am working on right now. Right. I’m making that a priority. Like my physical health needs to be a priority.
The victory for me is really in saying like “Am I taking time to really look focus on the little things that are going to overall make my life happier instead of just having tunneled into work?”
David Andrew: Absolutely. It all adds up. Again, if you don’t have your health, what kind of business do have?
Scott: Yeah, what’s the point?
David Andrew: Yeah.
Scott: Yeah. Yeah, you don’t really have anything because you go on vacation and the vacation sucks because you can’t do anything. That’s fun you know.
David Andrew: 100%.
Scott: Yeah. Yeah. Seriously though if you stop like drinking and stop smoking weed and stop partying and like all that and now you’re just like a sober lifestyle that kind of can go with. Like if you’re doing entrepreneurialism like those two can go hand in hand a lot of times because if you just can’t pay the recovery price for going out and partying like a lot of stuff becomes not fun anymore.
Chilling on the beach is not all that great without a couple of beers. You know what I mean right? It’s like it kind of gets boring after about 45 minutes to an hour of doing that, right? So, you have to be physically be able to go do stuff that’s more fun and engaging than that and that actually takes like strength and flexibility and all the pieces of your body actually working the way you want it to and to have the stamina to be able to make it.
Look, I did Kilimanjaro three months ago. Massively like overweight for climbing a mountain, right. And you know I made it. I’m like even ahead of a lot of my group members that run marathons and stuff like that.
That was still way more… It was way more difficult than it should’ve been. Like it was not enjoyable levels of difficulty because I was just grinding through it. I was like “Man, that kind of sucks you know. It’s like a once in a lifetime kind of thing. I’m never going to go back there and do that again.”
I wish I had taken the time to look really prepped for it and to ready myself for it so it would have been really enjoyable instead of just like “Yeah, I did it.” And yeah, it was a cool experience because it was so difficult but I didn’t really enjoy it.
So, I think maybe that’s like a line, right. It’s like spending the time to focus on some of these other issues in our lives whatever those issues might be for us is… like it allows us to enjoy all of the other things more when we have won a key issue.
And way it’s really awesome, right, because everybody can see it. Like that’s your issue. If you have like crippling internal depression you get to smile and everybody’s like “They look great. I’m sure they’re fine.” Depending on whatever you got.
David Andrew: Yeah. I’ve had a lot of back and forth on this and it’s very true. I think it is important to find some kind of sensible balance because if you’re going to be building a business, odds are it’s going to be very difficult for you to work out twice or three times a day and also party and also have social gatherings and also see your friends all the time but you can do it in a sensible way for sure on a weekly basis.
People would be crazy to think I work seven days a week. Oftentimes I do it you know some of the work end up spilling over into the weekend. That’s not unusual but I’m not working all weekend long. There is that time to recover and recreate as well.
Scott: Yeah. No, I think I got you. The more you are working then the more stressful things get. The more time. I think it’s important that we budget for ourselves. And we budget just like we would anything else. Like that’s your car. You don’t skip oil changes, right. You just don’t skip the stuff that you budget for yourself.
Like that becomes priority number one, which is it’s weird to think about it that way because the more you’re giving yourself to your company into those pieces to your life the more that you can’t sacrifice yourself to get there. There’s a mantra that we have inside of the business community, or some type of belief. I don’t know if mantra is the right word but some type of belief that success comes with extreme self-sacrifice.
I was like no. I don’t think so. Some of that is necessary. The need to sacrifice is necessary but it’s like sacrificing other enjoyable things for the sake of this thing that actually brings me deep levels of fulfillment.
I’m going to sacrifice going on the boat with a bunch of chicks and my buddy. Like if he invites me out to go on Saturday. I’m going to forgo that because I have… there’s things that I know that I need to work on.
I’m such a lunatic that I actually going out on the boat like I won’t even enjoy a boat trip unless I have those things because it’ll still be on my mind and so then I can’t even get in the moment of like being out there.
Learning those things about yourself I think are incredibly important too. Know how do you need to give yourself and sometimes that can be different for everybody but just having an awareness of it is like 90% of it.
David Andrew: That’s huge. And the question I always ask is “What is it for?” I’m working from 6 AM to 12 AM at night every single day and I’m building my business. I go “What is that for?” “Oh, to build my business.” No, that’s not a reason. That’s not a goal. It’s not measurable. You’re just burning yourself out. So, what is it for?
Most of the time there’s no answer, right. If the answer is in the next three months I could be completely free, have my debts paid off, have automated income coming in, then I say “Okay. Go for it. Let’s make this happen.” But if there isn’t a good why behind all that work it’s pointless.
Scott: Yeah. I’m with you on that. You’ve got to have the why. Until you’ve got the why don’t even worry about the what or the how.
David Andrew: Exactly. Are there any books or resources you recommend or are there any that have helped you on your journey?
Scott: I think probably some of the best books… Oh, I have one that probably nobody’s ever heard of before from your audience because I’m sure everybody’s like oh, read The Lean Startup and stuff like that all the time.
David Andrew: Of course.
Scott: But, you should check out this book called Conversational Intelligence. I forget who the author is but this book was like the one book that allowed me to really understand people at a totally different light. It’s been one book that’s kind of like unlocked a lot of keys for me of like what’s going on with people and also help me see when people are really like masking their personalities. You know what I mean? Yeah, people can have like personas and you’re like “Oh.”
After reading that book I just became really acutely aware of like “oh, that’s a persona you’re putting on.” And then trying to dig in and try to find out and chip away who is that person, and watching them like push back at that. No, I don’t show anybody that. You just get my persona.
And there’s this book called Conversational Intelligence is about how do you… It’s just to give you a better framework for seeing people in what they do and why they you know. What type of strategies people are using in different circumstances.
I don’t know. Does that make sense? I think that’s like my off a cuff explanation what that was because I didn’t really prepare for that. Anyway. But check it out. You’ll really like it. If you like to nerd out about stuff it’s really cool.
David Andrew: I think it actually makes a lot of sense in light of what we’ve been talking about which is all of these stories that we create and the meanings we attach to all the events so that’s actually a great recommendation. I believe the title is Conversational Intelligence: How Great Leaders Build Trust and Create Extraordinary Results by Judith E. Glaser and Karen Saltus. So, there it is.
Scott: Yeah, that’s it.
David Andrew: Perfect.
Scott: You got it. Nailed it.
David Andrew: Well, this has been a great conversation. I’ve enjoyed it very much. Thank you for your time and generosity. Is there anything else I should have asked?
Scott: No. No. I think were good, man. I’m feeling pretty complete about this one. It’s good chatting with you getting it all out. I never get a chance to just get it all out anymore. Blow it out on the podcast.
David Andrew: I know and that’s what this podcast is for. So many are very structured and let’s get it under 30 minutes. I get where people are coming from. I totally understand. You’ve got to test your marketing and figure out what works for you but I like having these informal discussions as well.
Scott: Yeah. Way more fun. I love it.
David Andrew: Awesome. Well, thanks again for joining me.
Scott: Yeah. Yeah. Thanks brother. I’ll be in touch.
David Andrew: All right.