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Build a Business Worth Buying brings you candid conversations with industry leaders, M&A experts, and successful founders. Learn advanced strategies to scale, optimize, and prepare your business for an acquisition—because building a business worth buying starts with smart decisions today.
Aaron Alpeter [00:00:05]:
Welcome to Build a Business Worth Buying. The podcast where seasoned entrepreneurs, M and A experts and world class operators share behind the scenes stories of building, scaling and selling remarkable businesses. I'm your host, Aaron Altier, and every week I sit down with people shaping the world of acquisitions. Founders who cashed out buyers with both strategies and advisors who help make deals happen. This is not a podcast for beginners. It's for those who know the grind and want actual insights to make their next big move. Get ready to take notes, rethink strategy, and hear untold stories of what it takes to build a business worth buying. Today I'm joined by A.J.
Aaron Alpeter [00:00:37]:
thomas. She is the founder General partner at Good Trouble Ventures and the CEO of the Troublemaker Lab. She helps leaders and founding teams think through what Good trouble looks like and, you know, the kind of trouble that actually drives meaningful impact and lasting enterprise value. Before launching her own advisory investment practice, AJ spent nearly six years at Google X. That's the moonshot factory, if you're not familiar with it. And she helped guide some of the world's most ambitious innovation projects and led the Talent Experience organization across X's portfolio. She's also a Forbes contributor, an executive coach, and a frequent speaker on leadership culture and the future of work. And through her work, AJ helps founders and executives bridge the gap between human leadership and technological innovation, which I think is really the balance that's important for building a business worth buying.
Aaron Alpeter [00:01:22]:
So first and foremost, AJ thank you so much for being on the podcast.
A.J. Thomas [00:01:26]:
Thanks, Aaron. I'm so happy to be here and I'm glad to be in conversation with you and everyone else.
Aaron Alpeter [00:01:32]:
Great. Well, I want to kind of dive in because I think one of the most unique things about your profile is this idea of good trouble. And so you talk a lot about making good trouble. What does that mean in a business context?
A.J. Thomas [00:01:43]:
Yeah, making good trouble in a business context. And so I have to make sure that we root this back to the original troublemaker, who actually coined this term, which was Senator John Lewis, who talked about making good and necessary trouble, trouble in service to equality and humanity. And for us, when we think about that in a business sense, we're all after some sense of humanity in business. And what does that mean? Well, I think from a troublemaker perspective, we like to look at things in a sense of how are you taking it beyond the status quo, how are you pushing and having the courage to ask the right questions about your business, challenging even yourself and your perspective about it to help it grow, and then also thinking both short term and long term, long term around the impact that you want to make. So that I think is the sense of capturing what actual good trouble means in business.
Aaron Alpeter [00:02:35]:
So that's really interesting. I think what I'm hearing from you is that there's a lot of humility that someone needs to have in order to maybe admit that they were wrong or maybe that their idea wasn't a good idea. Is that what you're seeing as well?
A.J. Thomas [00:02:48]:
Absolutely. I think from a perspective of being a troublemaker, you have to have both the gear of being humble and audacious at the same time. So you can be humble enough sense of I'm not always going to be right. So maybe I can ask the next best question that will help me get to whatever that next step is. But then also I can be audacious enough to say this is the vision that I have and what don't I know that can help me de risk it center to being ambitious and making good trouble is really being innovative. Right. Most folks that can be innovative have that muscle of humility because they can experiment and be okay with being wrong with what they initially set out to do and take the risk to say, how do I face this so that I can push the status quo or go into something that might be even more expansive than what I already know.
Aaron Alpeter [00:03:43]:
Interesting. Yeah. I think that so much of what we hear about being a founder or being a leader, Founder Mode is something that's been in the, in the water recently and that talks about being super headstrong and driven and like I'm going to make this happen through force of sheer will. But you're kind of suggesting that that's probably not the right long term way to look at it. What kind of brings you to that conclusion that makes you say that founder Mode isn't the right way to do it?
A.J. Thomas [00:04:11]:
Yeah, I mean, there's no right or wrong way. I think for some folks, founder mode works. And I think for some folks, if you want to think about building a sustainable way in which you can be clear on the way you're decisions and feel really good about how you're creating impact, there is, there is this sense of being able to take a beat, take a pause. Right. And I'm not activating, we're going to go lazy and do none of that. Right. But what I am saying is I think for founders there is an inordinate amount of pressure, especially when you're VC backed, that you make that money work for you, that you return to the shareholders what you've promised whether it's a 5, 10, 20x return, that you consistently innovate, that you consistently work and burn the candle at both ends, because you must do that. And I think what I'm trying to say here is making good trouble means you also have to think about yourself.
A.J. Thomas [00:05:06]:
Because just like they say, you put the oxygen mask on before you do it to somebody else on the plane, there is going to be nobody making the right kind of decisions or sustaining that vision if you are not around taking care of yourself. I've seen this in the work we've done with the Troublemaker Lab, which is why I think our ethos is really centered for founders to think about their self, health and their wealth. Right. Self in a sense of where am I and how I'm making decisions. Health in a sense of how am I investing in making sure that I can have longevity in this game, physically, mentally, and wealth in the sense of. Some founders that we work with go through A round exits, B round exits, IPOs. Money changes you. And so how clear are you around what decisions you're going to make around that when you grow your business and you close a big deal or you lose money? Like, where are you as a founder? And typically, most founders, and I would say some CEOs, but CEOs have teams around them sometimes, right? Or the founder, CEO combos.
A.J. Thomas [00:06:10]:
Typically, what happens is they don't think about themselves first. And I would offer to say you should, but not in a selfish way, in more of a humble way to say, if I am not around, how might I make sure that the impact that I'm making helps me in a place of making clear decisions for what I need to do moving forward. Right. It's not hubris. It's really, let me take a step to make sure I'm well enough to create better impact.
Aaron Alpeter [00:06:39]:
Yeah, that's a great piece. I mean, I have a friend here in Montreal, Jake Carls. He's one of the founders of Midday Squares, and he talks about how his sister, who was the CEO, took a step back for eight or nine months for sabbatical to get right. I mean, she had burnt herself out and was working so hard, and now she's back and better forever. And I think that that's a really interesting piece. What you're saying is, like, you've got to make sure that just like an athlete is making sure they don't have any injuries and that they're at peak performance, you've got to make sure as a founder that you're at peak performance and so I'm just curious, I mean, that sounds really interesting. How do you help founders accelerate or get to a point where they can recognize that maybe they're not in their best state and then they need to take a step back or they need some help to step forward?
A.J. Thomas [00:07:28]:
Yeah. I think what happens is there's a lot of work around being able to not be in the middle of the velocity. It's so addicting. As a business leader, as a founder, as an executive, you kind of lump that all into one. As leaders trying to make a dent in the universe to have activity be the thing that fuels your acceleration. Where I see that piece is really, it's kind of like you're stretching a rubber band, right. You don't want to stretch it so far that it breaks. You want just enough tension to keep you going.
A.J. Thomas [00:08:02]:
So I'm not saying don't lean in and do the all nighter if you need to, but ensure that there's intention around what's going on and not just pressure. And sometimes I think what we've done with founders and with CEOs that we coach within the lab is help them realize when it's actually pressure or tension. They are two very different things. Business pressure is like we don't have a lot of Runway. Our burn rate is really high. We probably have six weeks left. Tension can be manifested as we have planned to this. We know that we are likely not going to have the Runway that we need to continue.
A.J. Thomas [00:08:45]:
What is the best decision we can make with the resources we have to still de risk the long term goal. Right. And sometimes what happens is the difference between asking those questions in two different ways or stating that context is just a few seconds, just a meditation, just taking a breath, doing a box breath. Right? Four counts in, hold for seven, exhale for eight. There's a lot of this practice of getting you back into your body. What happens when you're a business leader and that you're in pressure mode is you're in your head. So you have all these permutations of things that can go wrong and things that haven't even happened, where sometimes what you need to do to lean into the tension, just like an athlete, right, get into your body, where are your muscles, where are you? So that you can then move into whatever that next phase is going to look like for you. So I think that's what we found is in that space.
Aaron Alpeter [00:09:44]:
It's funny as you're saying that my wife has joked with me for several years that my optimism on the business is Directly correlated with how much sleep I got the night before and did I eat? And so it's like, I love what's your hand.
A.J. Thomas [00:10:02]:
I love it.
Aaron Alpeter [00:10:03]:
Yeah. So I think that's interesting. I mean, it is so easy as a founder, especially if you're working toward an exit to, you know, you've probably put years into this and you're kind of working toward this culmination of something you're hoping is going to happen. And, you know, if you're like, hey, I'm tired, I'm hangry, I can't really do stuff, it's difficult to be able to take a step back. So how do you actually help founders think about, you know, yes, you need a break, but you also can't let the business go forward. Is that more about the team that they've built or the systems that they've built to allow them to do that? But talk to me about how you actually help that happen.
A.J. Thomas [00:10:39]:
Yeah. So a lot of the things that we do when we're working with founders is really making sure to also kind of. It's a parallel to how you think about building great technology. Right. So a lot of the folks that we work with are in the technology space. A lot of them are AI founders or folks that have been in a high for a while, by the way, has been around for a while, that we're not just manifesting kind of the benefits of what all that looks like. But for us, we have this mission acceleration ethos, which is really around when it comes to your culture. Think like an architect, right? And I wrote an article on this on Forbes that talks a lot about how you might think of how you build your organization, how you build yourself, your team, and your organizational culture as using the same logic as a technologist and a scientist.
A.J. Thomas [00:11:29]:
Right. So what does that mean? Everybody has mission, vision, and values, Right? That's around how you decide. We Talk to founders, CEOs and teams around that all the time. We in the tech world, that's labeled as your operating system. Just like if you have an Android phone or an Apple phone, there's an operating system that governs all of the applications that perform on it. Right? So your operating system is. How do you decide? It's usually anchored on your mission, vision and values. Then that next layer is the application.
A.J. Thomas [00:11:59]:
That means it's the individuals, the teams, and the systems that bring it to life. How does that answer how you work? So how do you work? What does that look like? So we go in deep and really think about how do you Put your mission, vision and values to work within the individuals and teams and systems that you've created. Right. And that tactically can lead to us maybe proposing a new talent management philosophy for their performance management system, AKA reviews. How do I know my team's performing or getting in and looking at their go to market system? What does that look like? Even down to pricing, what are the philosophies that govern pricing? Right. So like you can get down to the very tactical level on application. Now the next layer after you've done operating system and the application are the features. And that's really.
A.J. Thomas [00:12:48]:
Everyone has goals, OKRs, KPIs, target revenue milestones, right? We all know that that's business language for us. When you translate that on the tech side, that's really your features, right? And that means what do you build? What are the actual things that now interface the customer so that you can advance whatever impact revenue or whatever goals you have? All of that ladders in to what surrounds your entire mission acceleration stack, which is trust. Right. So now you get back to self as a leader. How are you instilling trust and reminding your operating system, your application layer and your feature layer why you do what you do? And so that's kind of in as many terms as I can express how we think about mission acceleration. For folks, making trouble is really just using the logic of a technologist and the heart of a scientist to be able to say, where are we debugging most companies? And I'll tell you, they'll pay hundreds of thousands of dollars for management programs and leadership development programs when they're debugging at the feature layer. Oh, the goal is not enough. The OKRs are not being hit when actually it's in your operating system that you need to address.
A.J. Thomas [00:14:05]:
Or it may be a specific team within the application layer that doesn't understand the operating system. So anyway, that's kind of how we think about that. And it's a surefire way to create a shared language in an organization of where you're at. It's just awareness on are we working on features, the application and operating system? 9 times out of 10 you have a big problem. It's usually in your operating system.
Aaron Alpeter [00:14:28]:
Interesting. And so how do you help people understand if this is a feature level problem or if it's the root value problem? Do you start by looking at the feature and then going layer by layer until you find something you can actually fix, or is it a little bit easier to understand than that?
A.J. Thomas [00:14:45]:
No. We go back to what were the parameters of how we were making this decision in the first place because you can go in and futz with the code, but now you've got all of this burn going to your engineering team or your sales team or whoever where they don't even understand how we made the decision in the first place. In some cases, it's like a customer told us to do it and you know, we need to have this feature because it's a 2 million dollar, 3 million dollar whatever deal that's coming out. Well, you might be cutting your nose to spite your face where sometimes you may have had to say no to that customer or pivoted, but you won't know unless you really agree as a team on how you're making the decision to push features to the next level. Right. So we can usually tell if something's going awry in the goals and the OKRs. We usually will go back and we'll ask the senior leaders, we'll say, what was the, what was the decision making framework on this? Like, what were the things that said that were negotiable and non negotiable? They're very clear. And then the magic is when you go to the teams and you go, all right, do we understand why these decisions were made? Oh, they will have a plethora of things.
A.J. Thomas [00:15:56]:
So it comes down to how do you actually make sure that as a leader, as a business leader, whether your team is small or a large business unit, you're very clear around where in the system you've communicated something. Right. Because a tiny crack here with the leaders where it's like, we're doing this for this customer, but it's only specific, specific to this specific feature can be translated down to engineering and go to market and product marketing, for example, to say, we have to make this happen and it's due by the end of the quarter. And then you've got a whole wonky thing. So it's really anchoring back and continuing to connect. So we do a lot of that with the lab is making sure there's awareness and where your founders, your teams and your mission really is in alignment.
Aaron Alpeter [00:16:38]:
I've got a great story. I think that illustrates that well.
A.J. Thomas [00:16:40]:
Please.
Aaron Alpeter [00:16:42]:
In a previous life, I was, I was at Unilever and I was in a factory and I heard from another factory that the CEO had gone down to visit a personal care manufacturer in Arkansas and he had, you know, was walking through and doing the tour. And this guy's a marketing guy, right? So he's there, he's seeing all the machines and Stuff like that. And it's shiny, it's cool. And he sees a rail yard just over there, like, oh, wouldn't it be cool if we could get the, the trains just to back right up to the factory. They could drop stuff off, we load it, there it goes, like, you know, great idea. And this was a throwaway comment that he had. And he came back about six or nine months later and they said, hey, we've, we've got something we want to show you. And they had this massive deck that they went through and they had all these costs.
Aaron Alpeter [00:17:27]:
And they were like, really apologetic, like, hey, you know, we spent a couple months on this. It's really just not going to be worthwhile for us to, to do it. It's not economical to run the rail line over here and do stuff like. And he's like, hold on, guys, like, time out. This was just an idea. You know, I didn't actually mean that you should, you should go get your shovels out and start playing rail. So I think that, you know, that, that illustrates a lot of, I think what you're talking about where as a leader you have to be very careful about even these throwaway comments. And I know that when I was in a factory, I always had to be very particular about how I came across to people because, you know, when I was leading a shift with 150 people, I could have a really bad day with one person.
Aaron Alpeter [00:18:07]:
I can't take that out on the other 149. So you've got to compartmentalize and do those sorts of things.
A.J. Thomas [00:18:12]:
Yeah, well, also too, I think you tap on the door of positional power that leaders, business leaders, founder CEOs might not be aware of. Right. And as you know, in the founder culture, the founders are revered. Right. It's like they set the vision, they have a whole vibe and a culture and all of that. So it's very easy to be able to say, well, yes, we're going to focus, follow that. And it takes an even braver team member to say, I just want some clarity. Again, just real quick, why are we doing this? That's not rewarded, by the way, in certain cultures.
A.J. Thomas [00:18:44]:
Right. And so I actually think in a troublemaker culture, you reward that to say, good on you for asking. And let's talk about why this is important. That's the founder and the leader or the CEO ever shifting into that storyteller mode to inspire people to create the impact. Those team members are going to know how to do their job the best. Like you said, there's a deck. There's a thing, they sized everything. And the guy was like, oh my gosh.
A.J. Thomas [00:19:10]:
I was just walking by, but how much time did that cost your business? How much effort? How much discretionary effort? How much stress? Maybe that guy on the line was like, or the gal on the line was like, oh my gosh, I need to make sure to get this done where it could just be clarified. And so those open cultures where questions, curiosity, not even questioning curiosity, is what I would say cherished. Those are really good troublemaker cultures.
Aaron Alpeter [00:19:40]:
Yeah. You know, kind of going back to this founder mode discussion, it feels to me that founder mode works when your founder is the smartest person and everybody else is just lucky enough to be around there. And I think there's probably like five people in the world where that could be true. But most of us are not rocket scientists. We're not going to be doing. We're not these generational founders. And so I think that the founder mode positioning is probably misguided. I think it's a wrong thing for most people to aspire to that unless you're a founder and you're the founder of you.
Aaron Alpeter [00:20:11]:
Right. It's just you. But I've tried to build my own company in the sense of I want to hire people, I want to work with people who are better than me, who are smarter than me. And so it's part of this is like I need to own that culture and that decision making framework you talked about, but I can't be the one where every decision is pushed to and every decision is made. And so I'd like for you to kind of go a little bit deeper on the connection between individual leadership and culture. And are they the same thing?
A.J. Thomas [00:20:39]:
Yeah, Well, I think culture stems from the different, what I would say, DNA markers of individual leadership. Right. And so, you know, I love this. I think Matt Oppenheimer, I have to credit him for this because I learned this lesson from him. He's the CEO of a company called Remitly based in Seattle. And he had this story where he was talking about when he was the founder, it's now a, you know, multi billion dollar company. But he scaled this organization, took it to ipo, et cetera, from a founder level founding kind of culture, and found it really hard to kind of scale. And his number one rule was always, if you think about when you're first starting your team and maybe there's two or three people on the team and you're hiring your fourth person, that's 25% of your company, Right.
A.J. Thomas [00:21:30]:
So you've really got to think about how you bring people in, even when it comes to not the company. Say you're a very small team and you're bringing somebody in and maybe it is the third person on the team. Right. That's 33% of that team's culture that affects the bigger thing. And so I think one of the things that people don't score correctly or maybe underestimate or might not see as a value until it hits them in the face or they have a big flat failure on a hire is what are you doing to ensure that you are communicating the realities of the culture and the business to the person coming on board. Everyone's always excited to have like have a job move through. I love the vision, I love the mission. One of the things that I really loved about what we've done and I've taken with me as a practice in any of the teams that I work with now is this idea of having an UN recruiting conversation.
A.J. Thomas [00:22:29]:
I can tell you all day why you should join this company, but I also want to tell you the two or three reasons why you shouldn't. And it might not be for you. That's just a mutual respect of how you might want to do that. And you can take that individual, like you said, like the individual characteristic of leadership and be able to say, if we scaled that across our culture and we trained managers and team members on how to argue the other side of something, you're going to have a better formed decision making culture because they're going to see both sides. Right. No logical person is going to say, oh no, we're just going to continue with this thing without actually saying, actually, let me, let me take a beat and get a pause here. Do I actually want to join an organization that has these three things that probably are not great for what I'm trying to do? And it's okay if people say no, right? I've gotten this pushback sometimes from founders. Well, I need a hire yesterday.
A.J. Thomas [00:23:24]:
I've had this rec open for three months. Absolutely great. Three months. Give it another couple of weeks. Or do you want another year of getting this kind of cultural retrograde? Because you didn't. You weren't really clear around what you really wanted and you weren't clear with them around what you can actually realistically offer. That's how it turns into HR situations. Right.
A.J. Thomas [00:23:48]:
And I've untangled a lot of that in my past life. I was a chro before, I'm doing what I'm doing now. I was in HR for a very long time. And a lot of the conversations we had could have been prevented if expectations were set right and if we had that conversation around. As you know, you're talking about tying the individual leadership to the company culture. You have to have those leaders that are brave enough to say it's okay for us to talk about both sides of the coin. I'm not going to push you away, but I'm going to tell you so you can make the better decision for yourself as to whether or not you want to join the organization, this initiative, go after this decision or whatever it may be.
Aaron Alpeter [00:24:25]:
Yeah, I love that. And I think that there's almost a counter argument that I'd like to get your reaction on is some people may argue that leadership really doesn't matter if you're trying to sell a business, especially if that leader is the one who's planning on leaving after the deal is done. If I'm a founder and I'm looking to exit, and as soon as the ink is dry, I'm out of here, I'm on a plane going to Tahiti, you could argue that, like, my personal leadership style doesn't really matter. How would you respond to that?
A.J. Thomas [00:24:55]:
Yeah, well, I think personal leadership styles always matter. It's just to the degree at which you implement it across your culture and your organization. Right. I mean, you've had founders out there. They're probably rogue founders, where people are like, oh, I would not want to be that. But the product's really good and it would be better if they leave. We've had that. We've seen that.
A.J. Thomas [00:25:15]:
We've seen them on different headlines and who we shall not mention. But I think the opportunity there is to really figure out everybody's replaceable. Everybody is replaceable. I mean, look at this. Like, Steve Jobs was fired from his own company at one point. Right. And I think if you have a really strong mission, it doesn't matter really who the founder is, because the mission will outlive it. Great companies, I think, are built off of people taking that mission and embodying it within themselves.
A.J. Thomas [00:25:49]:
Right. Everybody has heard the story of, you know, the janitor during the launch of, you know, the. The space. The spaceship in. Was it Cape Canaveral where, you know, JFK basically said, what do you do here? And their frame of their job was, I'm helping. I'm helping a man get on the moon. He was cleaning the floors. Right.
A.J. Thomas [00:26:13]:
And so, like, that's a strong tie to a mission. And I think you're right. You know, founders, you know, there are a few out there that you could care less if they leave or not, but they've created a great business, an idea and a vision. I think it's really up to the people that want to continue that vision on how they embody that and how they shape it moving forward. I mean, that's how you get these generational companies as well. Right.
Aaron Alpeter [00:26:38]:
You know, I think you bring up an interesting point here, because there's an element where when you're first starting out, the founder's leadership and the culture are synonymous. Right. It's going to be how that founder treats people. People will want to work for that person, you know, most decisions. But there's a point as the business scales and matures and it goes from being, you know, the founder plus associates to being whatever the company is called, where it's all about building the process and the systems and the culture, and you can start to separate a little bit from the founders. I think that's really the key thing that founders should be looking at as they're preparing to exit or trying to build something that someone else wants to buy is are you building and institutionalizing the processes, the operating system like you're talking about, so that this is a place that can exist beyond your. Your stewardship of it?
A.J. Thomas [00:27:32]:
Yeah. Well, also, too, I would offer this because I've seen this done really well in other companies I've been a part of. You also have to create a safe enough environment. And when I say safe enough, it means there's a lot of trust going both ways, where the founder can also realize it's no longer right for them and that they can not, you know, make the culture backwards because, you know, of ego or whatever. This is my thing that I founded, but that they can actually naturally be able to let go and do another thing and put their dreams or their vision in that moment in their time to another person that can take it to the next level. I have seen people that do that very well. And there are a lot of founders that cannot transition into CEO role. There are a lot of them.
A.J. Thomas [00:28:15]:
Right.
Aaron Alpeter [00:28:16]:
It's hard. It's hard.
A.J. Thomas [00:28:17]:
It is very hard because the skill set it takes to get a vision and a mission to hover are not the same it takes to get a spaceship to do an intergalactic flight, you know, 19 universes to the next. Right. Sorry, I'm using too many space analogies here. But it's a very different skill set for vision and operational pieces. Some people possess both realities, and that's great. Or some founders know how to create a team that can help them so that they're at the center of that vision and still retain that CEO type of role because they can make those decisions. But again, it just really depends on, on how, how much they're willing to lean in to that.
Aaron Alpeter [00:29:00]:
Yeah, I think there's some self awareness too to know maybe I'm not the right person. Right. And so I imagine that's okay. You see a lot.
A.J. Thomas [00:29:07]:
Yeah, yeah. Well, we push our, we push our leaders a lot to that too, Aaron, because I think that's the piece around making sure that you have that humility to know. So we're, when we're doing coaching, so the self piece is where we do a lot of the deeper coaching with the individual leaders or we do the coaching with the teams and it's really being that mirror for them where they can say the things that they're not really willing to say out loud, but we're able to have the permission to challenge them and say, well, is this still right for you? And if it was still right for you, what needs to be true for you to feel that you can go another one to two years on this thing? Or if it's not right for you, what needs to be true if you still believe in the vision for it to continue? So we will often ask very hard questions in rooms. It's hard to talk about Erin, because most of the work that we do in the lab, especially if it's one on one coaching, we'll never see the light of day because there's such intimate conversations about trust and that person reflecting on their own humanity, on the impact they're trying to make. So it's a very vulnerable space.
Aaron Alpeter [00:30:13]:
Yeah, I love it. It sounds like it's work that needs to be done with you and your back. We have to talk about Google X a little bit because I think that's an innovative place. You spent several years there and it was the Moonshot factory. And I would love to know the approach that Google X had when it came to innovation. Was it meant to be disruptive? And so we're just creating technology and interesting solutions for the sake of creating or was the idea to make these become viable businesses on there? What was the lens that people looked at?
A.J. Thomas [00:30:47]:
Absolutely. Well, I mean at the time that I was there and I was in my operator role there for about four and a half years before I transitioned more into kind of advising some of the startups that were being shot out of the factory, it was always that There had to be an intersection of a huge problem, a radical solution, and some sort of technological breakthrough that was always at the center of what we were going after. And the scope of that huge problem really needed to make sure that it was not a 10% incremental advancement in wherever we were leaning into, whether it was autonomous vehicles or whether it was computational agriculture or Internet through light, or mapping the entire energy grid. Some of these projects, by the way, they're all public. You can take a look at them. It was really about how do you actually do the leap of either 10xing the impact that you're creating with that technological breakthrough that could affect billions of people in the world. So you had to feel the weight of that responsibility. And it wasn't just about creating another SaaS application.
A.J. Thomas [00:31:52]:
No shade to the folks that are doing that, because there's a place in that. But we were really positioned to make sure that the top innovators, research scientists, entrepreneurs, investors, builders, technologists in the world would come together with such different perspectives. And again, this is what I learned being in the factory was having a different perspective actually accelerated you and your innovation. But what we talked about and the big lesson I learned there is that no technological breakthrough was going to be possible without somebody going through their own personal breakthrough. I would say that was the lesson coming through that coaching GMs, coaching leaders, standing up some of the different programs. On the talent side, I was the head of people products there for a couple of years before I went into the talent role. And you could see how folks thought about how they perform. I mean, you're very human in a sense of you want your manager and your leaders to tell you you're doing a good job.
A.J. Thomas [00:32:55]:
Right. And you're not quite sure if pushing the envelope is a good job because you kind of have to play the game because you're still in this big corporate machine that was managed by Google and Alphabet. And so you really had to get over yourself to be really successful in the factory. You had to have a sense of getting over who you were so that you can really be about whatever that mission was and whatever the sectors were that we were, you know, de risking. Right. That kind of experimentation and that scrappiness requires, you know, that, well, this is how we did it before in our other organization. That just doesn't fly. Right.
A.J. Thomas [00:33:30]:
But let's question what might we be able to bring in that could be interesting to advance this mission? The price of admission to asking that question is, do I even understand the problem? We're de Risking. Right. So there's a lot of this intellectual honesty that was needed and then this personal intellectual honesty to say, actually I'm not the right person for this, but I know who might be. Right.
Aaron Alpeter [00:33:52]:
Yeah, it's really fascinating. How did Google X decide which ideas stayed as experiments or were curtailed versus which ones would be doubled down on become scalable ventures?
A.J. Thomas [00:34:05]:
Yeah, I mean, I can't speak too much in detail about some of the things that were happening, but I will say that there is a process around ensuring we had really good what I would say kill criteria. Right. Because time is money, money is time. Time is capacity to put your energy towards de risking something even bigger. You don't want to fall into this sunk cost fallacy where, oh, I spent all these years and da da, da, da, da. And you know, there was reward systems also where, you know, when, when GMs or teams would shut down their projects voluntarily, they would be rewarded for it. Right. And that I think.
A.J. Thomas [00:34:47]:
Yeah, that I think. And there's a lot out there. You can look that up. I mean, Astro does a fantastic TED talk on that and he talks about it in a Singularity University link as well. But there is a psychology around how you get people to feel environmentally, psychologically and emotionally safe, to make decisions that would otherwise in the real world feel like, why'd you do that? You just kind of cut off your limbs. Right. And so I think that's the beauty of it though is like you said, how did we decide? I mean, of course there's. It's a factory.
A.J. Thomas [00:35:21]:
That's why they called it the moonshot factory. There's different steps, there's ideas that are being evaluated de risked by some of the most amazing minds in the world. And then of course there's this engineering space of a great design of experimentation. Experimentation. The key is to make sure you do that in the shortest amount of time. You get to know as fast as you can, you thread that needle and then you say, okay, if that didn't work, how do we bring all of that experimentation so that all that cost for turning it down doesn't impact the next thing? So people aren't learning the same lesson over and over. Right. So there is this culture of ensuring we share that and then being very clear on if we don't hit this because this is the impact we're looking for, we're going to shut it down.
A.J. Thomas [00:36:08]:
Right. That was the thesis of ensuring. And again, you have to balance that with the market, with what was going on with the supply chain. If we Were having like a hardware, you know, moonshot. You had to balance that with policy. Yeah. Chip short. You had to balance it with policy and you had to balance it with, you know, how do you actually talk about things thing, what AI is going to look like in this space.
A.J. Thomas [00:36:32]:
So there was a lot of this nebulous thing where we had to be very clear that the experiments we ran had to be super tight so that we weren't wasting time. Right. And we were not afraid to kill things. But just because you moved on doesn't mean you don't take those lessons. And if there's a project out there that's starting to get its legs and it's looking a little familiar, you really make sure you use that, what we called at the time moonshot compost, to make sure that that next idea had the best possible chance of succeeding the next experiment. That would make it a breakthrough. Right?
Aaron Alpeter [00:37:05]:
Yeah. I love that. I think you touched on two things I'd love to learn a little bit more about. The first one is around the kill criteria. And it sounds like a good chunk of that was just one understanding what you needed to learn. Right. That was the nature of the experiment. It wasn't like, we're just going to start this and we'll see if people buy it and whatever.
Aaron Alpeter [00:37:23]:
It's like, no, no, I want to test, you know, in the D.C. world might be, I want to test this copy, I want to test this brand, I want to test this product line. And so there's very specific things you're looking for. And then you're also probably defining out what the success criteria. Is that really what you meant by that is defining the success criteria?
A.J. Thomas [00:37:40]:
Well, it's defining not even success criteria, because if we say success criteria, people get into this kind of mental model of it has to be successful for it to have been worth it. Right. And I think it's, it's. It's more signal. Right. So, for example, if you have an idea. So if I have a little tiny idea and I speak to Unilever, for example, right. And they're like, yeah, we want to partner with you on that, with a joint venture, we'll fund the research of that for you.
A.J. Thomas [00:38:05]:
Because we don't have the Skunkworks team to be able to do that. You already have that. That's a signal. Right. If we're working on something that was in the consumer goods side of the house. I don't know.
Aaron Alpeter [00:38:14]:
Right.
A.J. Thomas [00:38:14]:
But I'm just thinking generally, you know, if you're able to get government or large coalitions or communities to buy in on that idea that gives you a signal that your nose is in the right space. Right now it's up to the experimentation to say, okay, great, we're in the right space, but I'm not going to waste your time. I want to make sure that these signals now need to be true for us to continue to learn. Right. At the end of the day, I think that's the magic. Again, it might be a little bit different now, I'm not sure. But I know the magic of the factory while I was there was you were always going to learn anyway. And so if the thing the what failed the how mattered so much because you were able to take that learning and apply it to something else that created impact.
A.J. Thomas [00:39:03]:
Right. So those skill criterias I would say are not just success metrics because again, that's very corporate speaky. They were signals. And how do we know those signals lead us to the right space? Like I said, some very tactical ones are large partners, large corporations, policies. We could co create some of those different pieces. There's a lot of use cases out there you can read up. Tapestry is a wonderful example of that. And how they're mapping the entire global electrical grid.
A.J. Thomas [00:39:34]:
That requires a lot of collaboration, partnerships, cross cultural working that you have to make sure you, you're in the velocity of and then you have to know when it's no longer right, you have the courage to say no and let it go.
Aaron Alpeter [00:39:51]:
So just to kind of stay back what I'm hearing, it sounds that, you know, part of the kill criteria would be what are the signals that we need to see. Let's like list out all the signals that would point to this being a good idea. And perhaps you say, okay, we need four of these 10 signals, signals to be positive for us to unlock initial round of funding or work. And that you just, you would, you would predisposition what the signals you were looking for needed to be and then you would kind of test into them to see if it was a yes or no.
A.J. Thomas [00:40:19]:
And the key is to make the experiments to those signals as discreet as possible. So you're not saying it's going to take me a year to do this thing. It's like, okay, can we find out if we say it's going to be a year, can we find out in three months? If we say it's three months, can we find what, what needs to be true for us to find out in, in, in, in eight weeks? Oh, if we can, if we can even entertain eight weeks. What's it going to take for us to find out within three weeks? Right. So it's consistently again like creating that good trouble to say, how do I, I know I said this, but what other breakthrough can we do to make the time shorter so that we can take that capacity to something else that could be a radical breakthrough? And this is not about speeding, by the way, because you have to be intellectually honest. Right. You can't futz with it as, oh, yeah, my experiment only took two weeks. Okay, break it down on how we did that.
A.J. Thomas [00:41:10]:
Was it really a quality experiment? So again, it's subjective to what it is you're trying to de risk.
Aaron Alpeter [00:41:16]:
Yeah. And then the other part of that is, you know, having that rigor to say, no, we're not going to keep doing this. You mentioned this idea of compost. And so how did, how did Google X make sure that compost was spread out to the other ideas? Was it a mea culpa email of like, hey, this didn't work and here's what we learned along the way, or was there a more systematized way that you were capturing the learnings and disseminating them for other people to look at, not even just in current state, but years down the road when they go back to revisit?
A.J. Thomas [00:41:48]:
Yeah, so what's really great about this, and I'll do a shout out to this because again, this is all public information. This is nothing I'm divulging, that's, you know, a secret to the factory. We had a project, a mental health project where we outsourced all of our learnings. It's out there on the Internet. You can kind of see, here's where we failed on this, here's what we tried, here's what it looks like to benefit the entire mental health community that was already working on problems in that space. And so that was really, you know, learning is a gift. And if we really care about the mission of what we're trying to de risk and we can no longer take it there because of the certain parameters were required to perform under. Why keep it in when you can take it to a community that can probably innovate on it faster because they don't have as much regulation, for example.
A.J. Thomas [00:42:32]:
Right. But you can look up that project, I think that was like three or four years ago. And there's been some sense that has been in that realm of really making sure. There's a lot of papers that have been published in Nature magazine on the work that Google X has done in certain spaces. Google Glass was another one of those because that came out of the factory eons before I was even there. And so there's a pride of ownership, of ensuring that you can share that information as clearly as possible with others and create that not only as a compost for the internal teams that are working, but the industries that are trying to, you know, go after those same, same things. Right. It's kind of like, I hate to compare it to this, but it's kind of like Elon Musk releasing the patent for all of their stuff.
A.J. Thomas [00:43:17]:
Right. Because if you can benefit from it, then that's great. We're all better for it, you know.
Aaron Alpeter [00:43:22]:
Right. Yeah. You know, it's interesting because I think I'm going to go on a limb and say most of our listeners probably don't have the R and D budget that Google has or you don't have the personal wealth that Elon has. And so, you know, to some extent, if you are really big and you're going to be fine no matter what, it's easier to share these sorts of things. So I guess what lessons can a individual founder, a smaller team take when it comes to, you know, developing these signals or using the compost and maybe not sharing it broadly, but sharing it internally?
A.J. Thomas [00:43:58]:
Yeah. Here's what I would say. You don't have to have an R and D budget to have an R and D mindset. And I think that is. Yeah. I mean, if you think about a founder, they are predispositioned to be innovative already because their hands are tied behind their back. They ain't got enough money, they're not sleeping well or eating well. They're probably on a plane talking to a customer about God knows what for the 19th hundredth time.
A.J. Thomas [00:44:22]:
And they have to go sell that company. I've been in this situation. They have to go fundraise for that company while also knowing all of the things that are going wrong back home. Like, imagine that inordinate amount of pressure. Right. But again, an R and D mindset is just being able to argue the other side of something thing. An R and D mindset is about being able to ask that next best question or even in a case of having a conversation with a customer or something saying, is there a question you wish I would ask you that I haven't yet. That's relative to this product and how it can add value to you.
A.J. Thomas [00:45:00]:
It's unearthing those things that are unsaid. I think that gets you to that point of you would never have known that if you didn't ask. And sometimes it's so crazy. I mean, you can even try this in an interview, whatever. It's a great question to be able to ask, to say, is there a question that I haven't asked you that you wish I would relative to this specific problem? Because then you invite the other person to innovate with you so you're not as alone. You don't need a budget. You can ask the guy from Procter and Gamble, you can ask the person from JP Morgan this same question, because guess what? Their perspective is going to be 9,000 times bigger or more than yours because you're seeing a specific thing and then you have something specifically different. And when you marry that, that in itself is the mindset.
A.J. Thomas [00:45:46]:
Do not be afraid to be both so humble and audacious in your pursuit of your mission as a founder that, like, money doesn't mean anything to say that. Right. Like, it sounds so naive. It's like I said, I'm going to go back to, you don't have to have an R and D budget to have an R and D mindset question.
Aaron Alpeter [00:46:06]:
I think kind of going back to what you're saying too is if you're asking questions and you're looking for signals as opposed to a solution. Right. Or there's a piece here where the metric of success in your RD is a little bit different because it's not about, did I create something that was a huge commercial success? It's more of a did I ask the right question to get a sense of am I pointed in the right direction or the wrong direction? And that's. That's really what you do. You do that enough and you to hone things. I think people do this subconsciously when they're pitching themselves or their ideas. You're always trying slightly different angles and say, oh, that one did well or this one didn't so well, let me do it differently. So I think we're subconsciously doing it.
Aaron Alpeter [00:46:46]:
What you're talking about is pulling that together and being more systematic in how you approach it as a business.
A.J. Thomas [00:46:52]:
Absolutely, Absolutely. And knowing, I think that method of mission acceleration that I gave you, thinking about your culture or your individual leadership, like an architect, right? Are you in your operating system, are you thinking about how you're creating the conditions for making the best decision for your venture, for your startup, for your team, for the individual initiative that you're working on, and then what are the individuals, teams and systems that need to be in place ask those questions. You may not know what they are, but Somebody knows. And so how do you stick your space in those kinds of conversations and then work after the features? Don't be the person looking for the solution. Be the person that is maniacal about the signal.
Aaron Alpeter [00:47:39]:
I love it. I love it. AJ this has been so much fun. Thank you so much for being on the podcast. We've got two questions that we always like to ask our guests as we wrap up, and the first one is, what is the best example of a moat that you've seen a business build?
A.J. Thomas [00:47:56]:
It's not. It's. It's getting really creative around how you think about partnerships and alliances, specifically, like, small businesses. Right. They know they're not going to overtake the market. But for example, I. I love the fact that, you know Zapier. I don't know, this is just like, example.
A.J. Thomas [00:48:19]:
I love the fact that Zapier is a really interesting space. And a good friend of mine, Brandon Sammott, is the chief people officer there. And, you know, they're an integration. You know, you've done zaps before. I'm sure a lot of our business, our audience here, have done the zaps and done all the tech stack and their stuff. But what I love about what they've done is that there's specific partnerships that they've made with different platforms to accelerate the product that they're doing. Right. And then the other piece is that the unlikely department actually became the salesperson for the product.
A.J. Thomas [00:48:51]:
I talk about Brandon because he is the head of hr, but he has completely outsourced his entire AI playbook and how they used Zapier to do that. And so the moat for me is it's not your marketing people doing the marketing. It's that your people are actually using the thing that you're doing. And now, again, that does not apply for other businesses that are doing things that are not on the consumer side of the house. But I just think that's a really great moat when you're able to also do that and you're partnering with different platforms that can help you accelerate into, like, a new customer base. But then it's not your marketing team that's doing the thing. It's. You're.
A.J. Thomas [00:49:31]:
You're actually the user in the company selling it. So I think those moats are really cool because it's not replicable. It's very personal and authentic to the organization.
Aaron Alpeter [00:49:44]:
Yeah, no, that is an interesting. I haven't heard that one. That's pretty good. The last question is, if you had to start today, how would you go about building A business worth buying.
A.J. Thomas [00:49:55]:
If I had to start today, how would I go about building a business worth buying? Well, we are in the age of artificial intelligence, so I'd probably curate all of the amazing LLMs and build an agent to give me a little bit of a layup on what are the best markets to look into now and invest in and then, and then have conversations in each of those markets. Pick maybe the top two or three and then figure out how they can work together and maybe we can have an alliance around what that looks like. But I would say leveraging technology and research as much as possible. I think having the opportunity that we do with all this data in our fingertips, again, it's about asking the right questions to show you businesses worth buying. The big thing for me also as an investor is I also look at the cultural piece of the organization. How are they making those decisions? How well disposed are they to be able to, if they don't have it yet, grow into the kind of organizations that you can create a great foundation with and create a great business with? It does come down to the people and the culture. As woo woo as that might sound for some folks. We often look at that.
A.J. Thomas [00:51:09]:
I mean, that's one of our differentiating values that we audit. We don't just look at your term sheet, right. We look at the people behind it and whether or not the potential for the timing that you have. Like there's a specific score that we sign around that and then it's not about a gotcha, by the way, Aaron, it's about what kind of development do we need to surround that business with to take them to that next level. And that's where the lab comes in as that founder and team accelerator.
Aaron Alpeter [00:51:37]:
I love it. Well, aj, thank you so much and we'll put all of your contact details in the show notes. And thanks again everyone for tuning in to Build a Business Worth Buying. Thanks for joining me on Build a Business Worth Buying, brought to you by ISPA Consulting. I hope today's conversation gave you real insights into scaling smarter, selling better, and thinking like a strategic operator. If you found value in this episode, make sure to subscribe, leave a review, and share with someone who's building their own sellable business. Until next time, remember, the real win isn't just building a business, it's building one worth buying.