Leaders Podcast

The Dying Art of Hard Work Ethic

Crexendo CEO Steve Mihaylo

Show notes

What would you do with $750 million? 

Could you imagine selling your first company out of college for that much money? It sounds like a dream, but for this episodes LEADER, it was his reality. Steve Mihaylo was a foster child, but he never let that define him.In James' interview with Steve, you start to understand the secret to his success was all about hard work ethic, consistency. Steve shares some game-changing ideas around mentorship and serving others. Enjoy our interview with Crexendo CEO, Steve Mihaylo. On a side note, this interview was especially special to James because he is a Mihaylo College of Business and Economics Alumni.

Read the Interview

Episode Transcript

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James Fratzke: Steve, welcome to the show. How are you doing today?

Steven Mihaylo: Good morning, I’m doing great James. How are you?

James Fratzke: I’m doing well, thank you for asking. It’s a beautiful day here in Southern California, and I’m excited to be on the phone with you so thanks for making the time we appreciate it.

James Fratzke: So I was doing some research before this interview Steve, and there’s this great story about you back in the day when you were a paperboy breaking the subscription record. You sold 53 subscriptions. The prior record was 15. Can you tell us a little bit about that story?

Steven Mihaylo: The week before, our manager said that there was going to be a contest and we were going to see if anyone could break the old record. I asked what the old record was and he said it was 50. So I devised a plan, I’d start at six o’clock in the morning. I’d make most of my calls in apartment buildings where the residences were closer together instead of single family units and I’d shoot for three sales per hour from 6 am to 12 pm, which would have been 54 and I missed it by one. Anyway, when we all got together the next weekend, everyone was telling how many subscriptions they sold and one fellow had sold 12, and the other one 13, one nine, one 11, and so on. When it got to me I said 53. The manager said, “53?! How on earth did you do that?” I said, “Well, you told me the previous record was 50, and I thought I’d break it.” He says, “I was just kidding it was only 15. So anyway that’s how it happened.”

James Fratzke: I love that story, and I think behind every good story there’s usually a lesson, so what lesson did you learn from that experience?

Steven Mihaylo: I guess the lesson there is always exceed your expectations or exceed expectations. I always keep moving the goal post a little bit so that I’ve never quite arrived. You know, a lot of people think success is a destination. I think it’s more of a process than it is a destination.

James: I think that’s pretty powerful, because it’s like you get to the top of the mountain, and to your point there’s another mountain right next door that’s a lot bigger, and that’s another opportunity for you to try something new to grow your business. There is no finish line so to speak.

Steven: Absolutely.

James: By most people’s standards, I don’t think anyone would say, if they read your history, they wouldn’t say you had an easy life growing up. When you were a young child, your parents got divorced, they couldn’t afford to support you and your other brothers, so you found yourself in a foster home. This might be a sensitive subject, but did you learn any lessons that you carried with you through life and into business through that experience?

Steven: I’ll give you one example. We had oatmeal everyday for breakfast in the foster home. I was always hungry after the meal, and oatmeal is very cheap and I’m sure that’s why they fed it to us but it’s also very good for you. I simply asked one day if I could have another helping, and the lady said yes. That was a huge win for me. But there were times in the foster home that I had a lot of doubts. Times where I cried myself to sleep. But you know what? When I woke up in the morning, everything was new. Everything started all over again, and it was the way you approached things. I got a paper route and started making a little bit of money and started helping others. It’s amazing that how some of things you thought were issues became opportunities, and that’s what I would recommend to anybody, that they look at any challenge as an opportunity for improvement.

James: I want to take a moment to unpack that, Steve. I think you made a great point about asking for more oatmeal. I think that comes to the adage we’ve all heard: you miss 100% of the shots you don’t take. You were hungry, so you took the shot, you said, “Hey, can I have more?.” I think that’s such a great lesson that I hope people walk away from this interview, if nothing else I hope they take that away. Ask more questions, be curious, take a chance.

Steven: Exactly. I think that’s why sales turned out to be something I really enjoyed. So many people that call themselves “sales people” aren’t sales people at all, they’re “order takers.” A salesman asks for the order, and if the prospect says no, they just look at that as an opportunity to find out why the answer is no so they can improve themselves. Too many people take no for an answer. I never took no for an answer and I don’t think anyone else should.

James: Well, what if they really meant it, Steve? When they said no?

Steven: Well sometimes they do but you have to be prepared to ask them a bunch of questions: “Well was it this? Was it that? Was it something else?” Eventually they’re going to say “Yeah, that’s what it was.” And you say, “Oh my goodness, if I can change that, does that mean we can do business?” And if they say no, you say, “Why?”

James: The power of asking why, right? They say you should ask it five times to get to the bottom of any situation. Is that kind of how you live your life?

Steven: Well five is just warming up, James. I would think 25 times might be more correct.

James: Well that makes sense, but I think the more important part Steve, and you kind of highlight it, is not just ask the why, but actively be listening, understand before trying to be understood, and then taking that information and doing something with it.

Steven: Absolutely. And you really have to believe in what you’re doing, whether it’s selling something or implementing something, you have to believe you’re doing the best job, it’s the best product, it’s the best service. If you don’t believe that, you should be doing something else.

James: Well I think that’s the tough part is figuring out what that “something else” is. And I think there’s a lot of pressure, or at least people think there’s a lot of pressure, that they have to figure that out, you know, while they’re in their twenties. Is it ever too late?

Steven: No it’s never too late. We started this endeavor about eight years ago, and eight years ago I was 66. So it’s never too late. Ray Kroc was I think 64 or 65 when he started McDonald’s. The founder of Kentucky Fried Chicken was in his 60s. There’s no reason why you have to be a certain age. Just look around. There’s a lot of needs that need to be filled, and if you can fill them better than the next guy, you’ve got a business idea, you’ve got a business plan. But make sure you’re qualified, make sure you’ve got a good grounding, a good education in business or you have people around you that understand how a balance sheet works, how a P and L works, how waste works, and all the things that go into running a business.

James: Let’s talk about education a little bit. You went to Cal State Fullerton, I went to Cal State Fullerton. Today, there’s two trains of thought: Either A, go to college, or B, start getting real world experience and start getting work. Some people say that the college system is broke, and it’s a waste of time.

Steven: A college education will jump-start your career. Having said that, there’s people like Richard Branson at Virgin Group that have done very well, but they’ve also surrounded themselves with very talented people, which I recommend no matter if you have an education or not. With those kind of people, you’re much more likely to succeed.

James: I think in today’s culture, you have so many people that want to start a business, they want to be an entrepreneur. They have what they think is a great idea, and then they want to hold onto it because if they tell somebody, that other person might steal that idea. What advice do you have to that person?

Steven: You have to take the first step in a journey of a thousand miles, but more importantly you need to share with your associates, those who are helping you in the endeavor. You have to share information with them. If you don’t share information with them, there’s no way you can figure out where you’ve been and where you’re going. You have to share the vision with them. In our case, we provide a better service than our competition and we care more about our customers. It’s not that our solution is that unique, although we’ve done some things that are pretty exciting, but anyone could do the same thing. It’s sort of like the airline business. Southwest has been profitable just about every quarter of their existence, and they make more money than their competitors and they have a much higher bond rating than any of their competitors. And yet they’re flying the same aircrafts their competitors fly, they’re putting the same fuel in it, they have the same pilots, the same employees. What makes them more profitable and more successful than some of their competitors? I believe it’s execution. Unless you have everybody on the same page, you can’t execute as well as the next guy. That’s why I think that’s very, very important to share information, to share the vision, and to share all of the aspects of the business.

James: From an execution standpoint, that can certainly be the most difficult part. Are there any habits that you have that help you execute?

Steven: I read a lot and I see how others do things or did things. I use the ideas that a lot of successful people have shared. A lot of the biographies that I read are of our presidents, of our great military leaders, great corporate leaders, just people in general that have been successful in life. People like Mother Theresa and others. Those people may not have been in business, but they helped millions and millions of people.

James: When we talk about success I think Mother Theresa, I think Abraham Lincoln. They had great missions they were on. I think sometimes when you look at people that had these great missions, it’s hard to kind of relate that back to your life and say, “Well what’s so special about me? I’m not Mother Theresa, I’m not Abraham Lincoln. What does success look like for me? So let me ask you Steve, what does success look like for you, how do you define success? What is your guiding light?

Steven: Well I think you have to be in service of others to be successful. It doesn’t make any difference whether it’s a business or career unless you’re serving both your internal and external customers, you’re unsuccessful. If you’re serving just one or two or three other people within your influence, then you’re a successful person. So it’s all about service.

James: Do you consider yourself successful?

Steven: Well you’re only as successful as your last win. So if you’re successful today, you have to win, you have to serve somebody tomorrow in order to be successful. Find something that you’re passionate about and then serve others.

James: Let’s talk about starting a business. What do you think is the biggest mistake that people make today, because you know, a large percentage of businesses that get started don’t succeed. What is the biggest mistake people are making?

Steven: Well I don’t think there’s one thing you can point to. I think people need to understand the balance sheet. I just happen to believe - and it’s not just because I have my degree in accounting and finance - but I happen to believe that if you’re going to start a business, you better know something about the components of a business, especially with balance sheet and the profit and loss statement. You better know what your true costs are. You better know your product and service and you better really believe in it. You better price it competitively but fairly so that you make a profit, and you’ve got a little reserve to serve your customers. There’s not just one mistake that people make. It’s either a lot of mistakes, or if they’re doing things right it’s a lot of little things that contribute to a great business.

James: Let me shift gears a little bit and talk about millennials. What is your take on the millennial generation?

Steven: I think the millennial generation is like any other generation. The only thing that concerns me about the millennials is that there seems to be two types. There’s the one type that’s just like the last generation and the generation before that, and then there’s the type that just wants to have fun and wants to have the government do everything for them. Some of the millennials are more interested in serving themselves. There’s not too much gratification in that at the end of the day. The millennials need to roll up their sleeves and be more like previous generations and just get the job done, and that’s the difference in my opinion.

James: Okay Steve, I respect your opinion of the millennials, but let me pose this question to you. In your vision of the millennial generation, let’s pretend for a minute that you’re now speaking to a room of millennials that have decided that they’re going to accept your way of thinking, that the millennial generation needs to roll up their sleeves and get to work. What would you tell them? What are the first three things that they should do?

Steven: Well first they need a mentor or several mentors, and one of the best ways to find mentors is depending on your field. Read about successful people in your field. In other words, read a lot. Even today I still read quite a bit. My eyes aren’t as good as they were, but I would probably say I read two or three hours a day minimum, maybe even longer, like four. The second thing I would do is I would pick something that you enjoy. You know it doesn’t have to be finding a cure for cancer or heart disease, or curing world hunger or anything like that. I mean if that’s your mission, be prepared to probably not make a lot of money, but if you can help people doing that, you’ll be happy. Third, never give up. That’s what Winston Churchill said. We’ll fight on the land, the sea, and the air. We will never, never, never give up. That’s always been my guiding light all these years.

James: Has there ever been a moment though Steve, where things were too hard, and you said you know what, I’m going to throw in the towel? Have you even had that thought cross your mind, or no?

Steven: I’m the only person who knows the answer to that one, and you know human nature as such is that we all want to give up. People in general seem to quit too early or they make choices that don’t work out and as a result they’re pretty well put off by it. But I’ll tell you what it’s the athlete that gets that extra kick and gets across that finish line first, or that person in business that works the extra hour a day, or the swimmer that practices more, those are the things that separate the winners from the losers. I can tell you that it’s human nature to want to give up and to want to throw the towel in. But if you know that you’ve got a good service or product and that it’s helping people, there’s no reason to give up. You just have to execute better than your competition, and eventually you will succeed.

James: S you have to be tenacious, you have to have grit.

Steven: Yeah true grit, tenacity, all of those things are things that separate the people that succeed from the people that don’t succeed.

James: I think sometimes people will say, “Hey I want a mentor, but I don’t know how to get started. How do I reach out to that person? How do I ask them?” That’s kind of a vulnerable moment. Like, “Hey Steve, will you be my mentor?” You know I think you’ll find a lot of people that will say that’s embarrassing for them. But you’re basically saying, hey if you don’t have what it takes to go ask a living person, pick up a biography. Let Abraham Lincoln be your mentor.

Steven: Exactly. Abraham Lincoln has had I believe over 10,000 books written about him, so that’s a good one. Churchill, I’m not sure how many I’ve read, probably three or four books about Churchill, I’m sure there’s hundreds if not thousands. Some of our great military leaders, Patton and Eisenhower. Eisenhower is a good one because it’s both about when he was a military leader as well as our president. We had a very stable situation during the Eisenhower administration and the Interstate Highway system was devised and executed during his presidency. So those are some of the ones I would read. But there’s a lot of great business leaders like Jack Welch and Sam Walton and others. A lot of these millennials are probably enamored by more recent successes like Steve Jobs or Bill Gates or Mark Zuckerberg or others. They kind of had one-offs. They came up with an idea that hadn’t been done before, and it was time for that idea. Whereas a lot of the other military leaders and business people and presidents, they had a problem which was fighting evil and they had to take unpopular decisions and unpopular positions in order to win, and they did. By staying the course, being tenacious, and explaining to the people of their countries what was going on. Those are some of the important things that people need to understand. Human nature has not changed at all since men started walking upright, men and women, mankind. What has changed is technology and how we approach things, but as far as human emotions I don’t think they’ve changed at all in centuries.

James: I think one of the interesting things about the mentor, mentee relationship, or any relationship for that matter, is actively seeking feedback. I know that’s something that sometimes I’ll struggle with in my own personal life. As a leader, Steve, do you actively seek feedback from your people?

Steven: Well of course I think it’s very simple. The best way to get that feedback is by empowering people, by delegating to them. It builds self-sustainment, it makes them feel better when they get a win under their belt, and they know if they’ve done a good job. They way they know is because their customers tell them. It’s important to walk around and do the one-minute manager thing, where you talk to people and you find out how they’re doing and what’s happening. But they will find out quicker from a customer than they will from their supervisor or an associate.

James: Let’s talk about work-life balance real quick. That’s another popular topic these days. Do you think there’s a such thing as work-life balance?

Steven: I’m sure there is. I’ve probably violated the rule if there is a rule. I’ve spend a little bit too much time at the office. But I’ll tell you what, in my second career, which is at Crexendo, I’m spending less time at the office and more time with my family. So it’s never too late to teach an old dog new tricks.

James: What are some of those moments today that you look forward to when you’re coming home from the office? What are some of those traditions that are life-giving and put a smile on your face?

Steven: You know just spending time with friends doing things that are non-job related. It can still be work whether it’s if you have a hobby like gardening, or if you like to spend time with your friends or just go to the movies. Spend it with your growing kids in my case, or your wife. Those are the types of things we do. We take at least one, maybe two vacations a year to just get away and enjoy yourself. But I’ll tell you this, I like work as much as I like play.

James: When you started Inter-Tel, were you married at the time? Where were you in life during the early stages of that business?

Steven: No I was single. I was right out of college. I’d been in the military, I worked a little bit after the military and then I went to school. I was still 25 years old when I started Inter-Tel and I didn’t get married until seven years later. So that was probably a good thing.

James: (Laughs) Right.

Steven: People tend to want to play and want to do a lot of things. Well, maybe you should work for somebody else where you have an eight-hour job if you’re gonna do that. If you’re gonna have your own business you need to be focused.

James: That is so true. You know, my brother and I starting our own business I think that’s the challenge: how do you stay focused when there are so many opportunities to go out and have fun, and do different things, and go on vacations and trips and spend lots of money? Steve, there’s so many opportunities for young people to get out and work today. I’m talking about high school students I’m talking about folks that are in the middle of their college careers. They could work at Starbucks, they could work at McDonalds, they could work just about anywhere but I think often times the response they get is, “I’m worth more than the $10 an hour” or “I’m not going to learn anything there.” But I would argue that hey, that’s another opportunity. What would you say to those people who say, “I don’t have time to work while I’m going to school”?

Steven: I would say that’s nonsense. I carried a very heavy workload at school and worked eight hours a day at a regular job so it can be done. And I don’t consider myself Superman.

James: Right, and you finished school in 30 months.

Steven: I did.

James: So again not Superman, but that’s pretty super-human to be working eight hours a day and then also finishing school in 30 months. How did you do it?

Steven: Just put my head down and plowed ahead. I didn’t listen to people that said it can’t be done. I had a goal, I had a mission, and the faster I could complete it, the faster I could get on with living my life.

James: Steve in a lot of interviews, you mention that you don’t like when people tell you something’s not possible or that you can’t do something. In those situations, do you just let your actions speak louder than your words? How do you handle it?

Steven: I think you have to do it by action. I’ve had people tell me all my life, “You can’t do that.” I don’t disagree with them I just go ahead and prove them wrong.

James: One of my favorite quotes is from Leonardo Da Vinci and he says that, “Simplicity is the greatest form of sophistication.”

Steven: Absolutely.

James: What are some of those things in your life that you’ve simplified in order to serve others better, in order to be more successful - can you think of any some examples?

Steven: You break your business down into processes, and then you figure out how to do those process better. Either fewer steps, which is usually the best way to make a process work better. Fewer steps and incremental improvement. It’s as simple as that, but sometimes the simplest things are the hardest things to master. One example I can think of is social security. They were having a very high rate of errors and processing claims, and when they looked at the situation they had 16-18 people involved in a single claim. They streamlined it and took it to one person that processed the claim and one person that checked the claim, and their error rate went down per thousand by several hundred. If you can believe that, if they had a thousand claims, they’d have as much as a couple hundred errors, and they went down to handful of errors by doing it the way that I just described. A much simpler way of doing it, but a lot of times we think the elegant or the best solution is one that’s very complicated but it’s just the opposite. The best solution is very simple.

James: Steve thank you so much for your time today. I think there were so many great nuggets that you shared. Before you leave us today, could you just share with our audience, what’s the best way for them to follow you, keep up with all the Steve Mihaylo updates, and engage with you online?

Steven: Follow me on Linkedin. That’s where I talk about some of the things that made me what I am. I talk about my family and I talk about the business.

James: Do subscribe and follow Steve on Linkedin, and Steve we hope you have a great day.

Steven: Bye-bye

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