On this episode, Josh speaks with Lance Cayko, Co-Founder of F9 Productions. They discuss F9’s 9 foundation principles.

Lance Cayko is a serial entrepreneur and Co-Founder of F9 Productions. They use architecture, real estate, and construction enterprise to enhance lives through design.

As they’ve grown F9 Productions, Lance and his business partner strive to empower the people they hire. They pride themselves on developing employees and growing them into leaders to add to the fabric of professionals in architecture and construction.

In today’s episode you will learn about:

  • Starting a seven-figure business from only $1,000 during the height of the Great Recession
  • What is a serial entrepreneur?
  • How to set yourself and business up for success
  • Habits of successful people
  • Foundations and 9 principles of F9

Transcript

Narrator:        Welcome to Cracking the Cash Flow Code where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when emergency strikes, fully fund the growth program, and fund your retirement program. When you do this, you will have a sale‑ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want, in the way you want.

In Cracking the Cash Flow Code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders, as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.

Josh Patrick:   Hey, how are you today? This is Josh Patrick and you’re at Cracking the Cash Flow Code. And my guest today is Lance Cayko. And Lance is with F9 Productions.

Lance, welcome to our show today.

And Lance is a serial entrepreneur. Looks like he’s done tons of things. He owns an architectural design firm and a construction company. And I love guys like him, so we’ll bring him on and get started.

Hey, Lance, how are you today?

Lance:             Doing great. Yeah, thanks for having me on. I really appreciate you having me on your show.

And I should have actually, before we started recording, told you my last name is pronounced psycho. I totally spaced that out but no gets it right, so it’s all good.

Josh:                Okay. Sorry about that.

Lance:             No, I’m good.

Josh:                Okay, so Lance Cayko.

Lance:             Yeah.

Josh:                Well, you know something, Lance? You’re right along with everybody else I’ve worked with, where I massacre their names. It’s something I’m really good at [laughs], so.

Lance:             If only there wasa way we could figure out how to monetize that, right?

Josh:                If I did, I’d be a very rich man today. So, I tend to massacre everybody’s name and forget them while I’m at it.

So, I’m curious about something. You have like this thing, you have foundations, 9 principles of F9. And when anybody ever has had, I always ask the question, okay, what are they? So, what are they?

Lance:             Yeah. So, our company name, as you mentioned, is F9 Productions and where that came from, if you would like to know, but based on that we have decided, a couple of years ago, to put down some fundamental principles that really guide everything we do. And it goes further than just our architecture company. You know, actually, it goes into our podcasts. And then, also how we teach at the University of Colorado Boulder, how we run our construction arm, and every single entrepreneurial endeavor that we do, because I think that, if you can’t boil this down to maybe starting with the first principle which is F1 is to be brilliant at the basics, if you’re not good at the basic tasks that you’re doing, if you don’t master it, how can you ever teach that to somebody else so that they can follow and you’re leading, you can start to multiply. I mean, that’s the whole idea behind starting any companies, whether it’s service‑based or product‑based, is you need to really hone in on what you’re doing and become a master at it before you can multiply it and then, obviously, make more money, and prosper, and flourish. So that’s really what F1 means.

F2 really comes down to more of an architecture side of things is, before I would say the late ‘90s and early 2000s, a lot of architects or anybody who’s doing any kind of design work was working in basically two dimensions. Meaning, in their CAD program, you know, everything was lines and that was it. And a lot of times those lines could lie to people. And they did. And it really caused a giant rift between architects and contractors. And it started to mend at this point. But the idea is that now, since we’re modeling everything in the third dimension with Revit Architecture, ArchiCAD, or all of these other very sophisticated CAD programs, we actually try to model our buildings, even if they’re additions, you know, new versus old or brand new – it doesn’t matter, exactly how they’re built already. If we’re doing an addition, then we’re to model the addition to how it’s going to be built. So, we’re already virtually testing that stuff. And what it’s done is it just builds on top of the basics of what we’re doing with F1.

Josh:                So, I have a question for you. How many architects are using that sort of technology these days?

Lance:             Over 50%, now. We’re probably hitting about the two‑thirds mark. There are still some old dinosaurs. And I mean that with all endearment because they actually end up hiring us to do everything and model it virtually. So, we are seeing a pretty big shift, industry‑wise,over the past decade, decade and a half, I would say.

Josh:                Okay. So,that’s the industry-wise, not just the Denver area?

Lance:             Yes, sir. Yep, industry. Worldwide, actually.

Josh:                Okay, cool. So, your third principle?

Lance:             Third principle. Training and learning is, again, a force multiplier. We learned the hard way that one of the very first employees that we hired. We just assumed, because he was actually older than us, that he knew everything – he already knew how to use our software and that he would be up to our standards and everything. And it was a kind of a nightmare for a couple of months. So, what we decided is–

And, thankfully, we did hire that person early on so we could learn that lesson, it didn’t cost us very much money. You know, now, if we did that, it would cost us a lot of money. But when we bring somebody in to F9, or even our construction arm, there’s three days of training that happens before they’re ever billable. And it just, again, reinforces that foundation. And then, we can multiply them, again, and they’re a force factor because we’ve trained them properly. So, we’ve set up some internal training methods that we then even, you know, use at the University of Colorado Boulder to make that happen.

Josh:                So, is that technical training you’re doing, or is that values training, or corporate training, or all of the above?

Lance:             All of the above. I would say 75% of it is technical training.

Josh:                Okay.

Lance:             And it’s basically teaching the software that we use, different versions of it, exactly how, again, we model it like it’s built. So, we’re just kind of layering this whole thing on top of it. And then, the last 25% is echoing back to the basics. So, we have some pretty fundamental rules at our firm that have just paid off in dividends. And one of them is, if somebody emails you or calls you, within 24 hours, respond. No questions asked, like you have to do that. Even if it’s just as simple as, “I acknowledge. Hey, I got it. I got your email. I’m too busy to get back to it in detail, but I will get back to you, you know, a couple of days from here in detail.”

Josh:                It drives me crazy, when I’m working with somebody, I send ‘em an email and they just ignore it.

Lance:             Yeah.

Josh:                And they don’t acknowledge that he got the thing. I don’t even know if they read it. So, I’m glad you do that.

Lance:             Yeah, even rejection. You know, that’s one of the things. Even if clients don’t want to work with us, after we’ve given them a proposal. Tell me, no. Please, at least, just tell me no. That way, I’m done.

Josh:                Give me the courtesy of telling me to go away [laughs].

Lance:             Yeah. It’s simple. People are afraid to say no but they shouldn’t be. For sure. Yeah.

Josh:                When I teach people sales, I say, “Look, here’s your goal. You want one of two answers, yes or no. You do not ever want to hear maybe.

Lance:             Right. Right. Limbo.

And, you know, I didn’t even realize that I actually, us talking about the communication, literally, is the next principle, F4. So, we kind of already touched on that. I mean, it’s just– like I said, because we’ve been practicing this way for about a decade and after we sort of wrote it down and, now, we reinforce it with our employees, old and new, it’s just kind of come naturally.

Josh:                So, let me ask you a question. When you hire people, do you focus on technical skills or values that they bring to the party?

Lance:             It’s about half and half. We want well‑rounded people. And what’s really interesting is, I actually prefer if they have zero experience in another firm, construction‑wise or architecture‑wise, because I look at them like a raw piece of clay with a lot of talent. And it’s up to us to set the foundations and the basics out from the outset with them, and train them, and just build them up. Sort of like the army, you know, crawl‑walk‑run scenario. We’re all about giving people their very first shot and really having them skyrocket, you know, throughout their career. And I think it also builds loyalty as well which is very hard to come by these days, right? Like, there is no company man anymore, but we’re trying to reverse that trend.

Josh:                You know something, I think that loyalty exists when you exhibit loyalty towards your employees. And I think it’s the employer’s job to start with that and not the employee’s job, you know. And too many employers I talk to say, “My people aren’t loyal.” And then, I ask them, “What have you done to deserve loyalty?” and they look at me like I’m crazy [laughs].

Lance:             I agree with you, 100%. Yeah. They are just cogs in the wheels to us. You know, we do become a pretty tight‑knit family with our firm. We’re at about 10 people at this point, including– soon to be 11 with the construction arm.

Josh:                Yep.

Lance:             You know, when a when a breakup happens, meaning somebody decides to part ways – and it’s only been employees so far, it’s tough. But we really try to make it, you know, every Friday, we have F9 Friday Lunch. We buy the whole firm lunch. Before COVID, we were going out to eat. Now, we’re just ordering it. But even something as simple as that where we’re around the table, once a week, all of us together, and we ask them a personal question such as, “Hey, what do you got going on this weekend?” And we just, you know, get that interpersonality going a little bit is super helpful.

Josh:                Yeah. You know, the research is really interesting around that is that, if you can get your employees to be friends with each other, they never leave. If you don’t have an organization where people become friends, you’re guaranteed to have high turnover.

Lance:             Yeah. Yeah, well, I believe that. The first job I got out here in Colorado, one co‑worker would not talk to me and I would go home with headaches. It was the strangest condition ever.

And now I look at our firm and what’s one of the best memories I have so far, of all the people in our firm – besides Alex and I, we’re a little bit older. We have families. They don’t quite have kids yet, but they will go up all together and hangout on weekends and go camping and come back and, you know, they don’t skip a beat.

Josh:                Cool. Cool.

So, what’s your next one?

Lance:             Next one is serve the client, the contractor, and the city. And so, we are service‑based. I don’t ever want us to lose track of– No matter how many awards we win, no matter how much money we’re making, we are here to serve all of those people. And the better you serve, you know, the smoother it’s going to go.

And I think a lot of architects lose that idea that they’re serving the client. For instance, Ayn Rand, if you’ve ever read The Fountainhead, Howard Roark, he did not serve his client. He served himself. And I’m not sure that really bodes well in reality.

Josh:                Yeah, well, it is [laughs] becoming an interesting conversation about objectivism and Ayn Rand, if you’re interested, but I don’t think you want to get into my weeds there [laughs].

Lance:             Nah,we’re good.

Josh:                I have read that. I used to be an Ayn Rand freak back when I was younger but that’s a different conversation.

Lance:             Sure.

Josh:                Okay. Next. What’s your next one?

Lance:             Take extreme ownership. I don’t know if you are familiar with Jocko Willink, but he really preaches this.

Josh:                I am.

Lance:             Yeah, he’s great.

It’s just own it. If you screwed up, we know. As your bosses or as somebody who’s working with us, we know mistakes happen and nobody’s perfect. There are going to be mistakes. The critical part is to take ownership of those mistakes. Take ownership of your work because when people hire us, as service‑based professionals, they are trusting us. It’s like when they go to see a doctor or an attorney, there’s no difference if they’re hiring a contractor or an architect. They are trusting us with giant decisions in their life, and their businesses, and their money. So, they want to see us own problems, own solutions, and move towards ‘em.

Josh:                Yeah.That actually fits in with two things which are really core beliefs. One is my core, core, core value is personal responsibility. And the other thing you mentioned was my favorite which is mistakes. And Buckminster Fuller had two great sayings about mistakes. One is, you don’t learn less and mistakes are learning opportunities. So, when someone makes a mistake around us, one thing I always want to make sure they do is they learn something from it and I won’t let somebody go until they tell me what their learning was. That’s a great thing.

So, your next one is?

Lance:             Yeah. Next one is– this is number seven, anybody who’s keeping track, is build the world. Creation is hard. City roadblocks are hard. Construction is one of the most difficult things that you can do – design and build, and we build the world.

So, I think this point, for us, is it’s more to be inspirational and it’s sort of let them take off with the responsibility knowing that you are actually building the world and you are affecting the world every single day with every little tiny design decision and it should be a positive one.

Josh:                So, I’m going to bet most of your employees are millennials. Am I correct?

Lance:             You’re 100% correct.

Josh:                And I’m also going to bet that your employees love what you guys stand for because the millennials are a mission‑driven generation. You bring a millennial in and you don’t give them a mission to be excited about, they’re gone.

I’m a boomer, obviously, as you can probably tell [laughs]. My generation just does not get that. And I keep saying, I say, “Look, you guys, if we aren’t giving our younger employees a mission, they’re not happy, they’re not staying, and they’re going to cause you all sorts of problems. So, start becoming mission‑driven.” And I’m really happy to hear that’s what you guys are doing.

So, I think we’re on number eight now?

Lance:             Number eight. Yes, sir. Yeah.

Deliver value to be valuable. So, what we do is we say, “Ask yourself, what is critical? How can we deliver value? What does the client need to see? How can your drawings help the contractor build a project? What will make the permit review easier for the building official?” So, it’s just a critical analysis of yourself of what kind of value am I bringing to the table.

And what’s been really interesting with our employees, after they’ve recognized this point, is that when we go to do one‑year reviews and we’re looking at improving their current contract with us, you know, raise, different kinds of incentives is, they will come to the table with, “Here’s the value I’m bringing” and they answer that kind of question for us. It’s great.

Josh:                That’s cool. So, do you train them to do that?

Lance:             Because of these principles and they understand the psychology that we’re coming from, as employers, and just professionals, in general, about always being able to justify your value, they just come out and make it happen, without us really saying anything.

Josh:                So, how often do you talk about your principles?

Lance:             I’d say,once a quarter is where we’re at. We will have a roundtable. You know, you mentioned learning from mistakes earlier. We, obviously, do make mistakes. Every once a while there’s a very big mistake that we have to figure out how to solve that problem. And, rather than making that employee an example, we just make it an example. And then, that’s where these kinds of discussions come out and play.

So, when there’s a mistake that happens, we take advantage of that and see it as, “Well, it’s a blessing in disguise. There’s a silver lining to everything. We’re going to capitalize on this.” And not beat into everybody’s head but just get them to understand so that it’s not just one person’s problem and solution. It becomes everybody’s solution so that they remember that, moving ahead.

Josh:                Yeah,I’m a big fan of W. Edwards Deming. I’ve been using his stuff since the early ‘80s. And one of the things he always said was “don’t blame the person, blame the system or don’t blame the person, blame the manager.” And what I’ve learned over the years is that nobody ever wants to do things wrong, they want to do things right. And we, as owners, don’t often set up systems for people to be successful in. And you just brought that up really nicely.

So, your last principle, I bet, is a good one.

Lance:             Yeah, it’s the best one. Have fun. Life is too short to have a bad attitude. And if you’re an entrepreneur, then you know that you’re already doing – if you’re a happy one, anyway, you’re already doing something you’re very passionate about and it doesn’t feel like work. It feels like more of a pursuit. We try to have our employees, you know, treat it the same way.

So, you talk about systems. And I think that’s a great point about– your systems are going to set you up for success or failure. And that’s what these nine principles, you know, are intended to do. And then it goes all the way back to that training and being good at the basics.

If we’re all on the same page, even if somebody leaves, tragically, who knows, because everybody’s on the same page, at our firm, and they understand the training, the systems that if somebody leaves and somebody else has to take the project from them 50% of the way through, they could do it without a hiccup. It’s really great how we can shuffle work around like that and be fluid.

Josh:                So, what type of stuff do you guys do? You do design‑build, I take it?

Lance:             Yeah, we’ve been around for about 10 years. I moved to Boulder 10 years ago and got laid off in the great recession. My business partner moved to New York City, worked for a world‑renowned architect, Daniel Libeskind, who did the first version of the World Trade Center when it was going to get rebuilt.

We’ve landed some of the best jobs until we got laid off. And what we did is we started, basically, from nothing. And that’s kind of where F9 Productions, you know, that name comes in is, the F9 key on the keyboard was how you could produce renderings that was cool. We had no previous work to show people to convince them that they should hire us, so it was all F9 Productions. It was renderings, basically.

And we built the firm from scratch. And I mean we were working out of a garage. We were working out of Alex’s– in his apartment which is kitty corner to mine. We started doing very small residential additions. Started working our way up to doing new builds.

And then, in 2013, the economy started to take off here. That’s when we did our first design‑build project. It was a tiny house. We got featured on HGTV which was really good press for us. And then, we started to multiply because the economy took off, because people saw that we were fully capable. We did two more tiny houses for Subaru, two years later, which is a really great commission.

Then, two years after that, the building I’m sitting in, where you can see behind me, we built that. We did our first real estate development. It was nine condos, eight of which were residential for sale and then our own commercial unit. The bottom half is a shop where we can store and procure like kitchen cabinets, and windows, and stuff like that for all of our build projects. And, after we finished that, we decided to launch F14 Productions. So that’s kind of where, you know, I say we’re a serial entrepreneur.

And one of my favorite things about what we’ve done so far is with our podcast, Inside the Firm podcast– just go to insidethefirmpodcast.com, you can check it out there – it’s on all the platforms, is we documented that whole journey and we laid it out bare bones. I mean, we didn’t really hold back about any kind of information, any kind of struggles we were going through. And that has been– monetary‑wise, we have sponsors. And Dell’s great, and ARCAT, stuff like that. But the best part about it is when I get an email from another entrepreneur and they say something like, “I was scared about, you know, starting my own business, but I started it and it’s three months later, and I’m busier than ever, and happier than ever. And I just can’t thank you guys enough.”

Josh:                You know, I’ve been working for myself for over 40 years now and my joke is, I’m unemployable because I just could not work for anybody else [laughs].

Lance:             I hear you there.

Josh:                And it’s actually not that much of a joke. If you talk to other folks in my firm, they’ll say, “Yep, you’re right. You’re unemployable. You don’t know how to keep your mouth shut [laughs].”

Lance:             We [inaudible 00:19:30] that often. Yeah. Well, I don’t know how we can go back. We have so much fun. We have so much fun every single day.

Josh:                Yeah, I mean, this is a journey I’ve really truly, truly loved.

Unfortunately, Lance, we are out of time. It goes by quickly.

Lance:             That was quick, yeah.

Josh:                You’re an interesting guy. And you have a really interesting– I do have one more question though. Do you do mostly commercial or residential stuff?

Lance:             Right now, we’re about– I would say, about 80% residential and 20% commercial.

Josh:                Okay.

Lance:             And, every year, the 20% grows by a little bit.

Josh:                Yeah.

Lance:             Yep, so that’s mainly our schtick.

Josh:                So, do you plan to grow into being primarily a commercial shop, or primarily residential, or 50/50?

Lance:             50/50. I mean, the market will always dictate everything, where everything’s at. I think, the biggest thing for us is, what we learned from being laid off from those other firms was, that’s why we became serial entrepreneurs. And we try to start new businesses and do all kinds of different stuff to make sure revenue is coming in from all different places. Those other firms had had revenue going from basically one stream. Once that stream was gone, they were gone. We were gone. So, I want to just be as diverse as possible no matter what we do. So, I would say, we would always try to have a diverse portfolio of work.

Josh:                Yeah. And, by the way, we’ll have to end it here, unfortunately, because this is another great topic which is multiple streams of income. If your business doesn’t have multiple streams of income, you are really putting yourself at risk.

And by the way, folks who are listening, that also goes into customer concentration. If you have one customer with over 20% of your business, you have a problem. And, unfortunately, I see way too many entrepreneurs and private business owners where one customer is 50/60. I’ve seen as high as 90% of their business. And, boy, are you at risk.

So, Lance, I have your website up here which is f9productions.com for those who are listening and not watching the YouTube or Facebook Live presentation. And Lance, would you be willing to have conversation with folks? And if so, how would they find you?

Lance:             Anyone, at anytime, I’m happy always. You can email me at lmc@f9productions.com. That’s L as in Lance, M as in Michael, C as in cat @ f9productions.com. Find me on LinkedIn. There is only one Lance Cayko,C-A-Y-K-O in the world. So, I will LinkedIn with anybody. I really don’t deny anybody linking in with me. That’s how you and I got in touch. So, reach out.

Josh:                Yeah, I will.

And I have something I would like to offer you. Actually, I have two things I’m going to ask you to do. One, please go to wherever you’re listening to this podcast and give us an honest rating and review. It’s really important. It helps us out a lot. If you hate the show, you can say you hate the show. You’ll hurt my feelings but that’s okay. And if you love the show, you can say that, too.

We’re in the process of morphing the Cracking the Cash Flow Code to another name which will be the third name. I’ve been doing podcasts for five years now. And it is now going to be called The Sale‑Ready Company because that’s what people actually want. And if they don’t want it, they need it, if they don’t want to sell anyhow. But I’ve written an e‑book on what a sale‑ready company is and how you get there. It’s easy to get. You go to www.sustainablebusiness.co/saleready and give me your name and your email. I know you don’t want to do that but you have to if you want to get this great e‑book. And, again, that’s www.sustainablebusiness.co/saleready. And it’s .co and not .com.

And this is Josh Patrick. We’re with Lance Cayko. You’re at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:        You’ve been listening to Cracking the Cash Flow Code where we ask the question, “What would it take for your business to still be around 100 years from now?”

If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102, or visit us on our website at www.sustainablebusiness.co, or you can send Josh an email at jpatrick@stage2solution.com.

Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.

Topics: sustainable business podcast, Sustainable Business, foundation principals, habits of successful people, serial entrepreneurs, starting a seven-figure business, lance cayko

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