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#27 – Ted Gutierrez: Discussing the difference between entrepreneur and business owner. We welcomed Marine founder and CEO of Contra Group, Jeremy “JB” Soles to the show. JB shared a ton of perspective related to special warfare-related training and the application to law enforcement. I would highly encourage you to follow him and the work he and his company do.

AUTO-TRANSCRIBED

Aaron Spatz  00:05

I’m Aaron Spatz, and this is the Veterans Business Podcast. A podcast centered around the stories of US military veterans, and their adventures in the business world following their time and service. Its stories of challenges and obstacles, and an inside look at how veterans find their life’s work, their purpose, and their post military lives. Thank you so much for tuning in to the Veterans Business Podcast. Super excited that you’re joining us this week. And if you haven’t taken the time to subscribe, I would highly encourage you to go ahead and subscribe to the YouTube channel. If you’re listening to this on Apple podcasts or Spotify or wherever you listen to your audio podcast. Please note that this is actually now in video form so you can actually watch the show. But I’m so excited to announce and introduce to our guests this week. Our guest is Ted Gutierrez does a five year Army veteran army officer graduated from West Point will will will forgive that syntax. It’s all good man. He completed assignments worldwide, before closing on his time at Fort Benning, Georgia. Ted is an oil and gas industry veteran. He’s worked in a variety of capacities within the industry. He’s co founder and CEO of security gates, a company focused on cybersecurity threats related to operational technology, specifically industrial control systems. Ted, thank you so much for joining us.

Ted Gutierrez  01:27

Yeah, appreciate the opportunity. So it’s great to be here. Are you doing today?

Aaron Spatz  01:31

Absolutely. Yeah, no, it’s a it’s a real treat. Thanks. Thanks for carving out some time in your schedule. You know, we’re both in the US in the state of Texas. I used to live in Houston. Now I’m up in the DFW area, man. It’s just we are in the middle of the heatwave. And I’m feeling it but

Ted Gutierrez  01:50

maths and easy to wear in the heat. I’ll tell you that. No, I’m not ready for all this. No.

Aaron Spatz  01:59

Yeah, I I’m definitely ready. And yeah, we’re the mascot starts to bring back memories of like going to the gas chamber doing like mop training.

Ted Gutierrez  02:07

places we’d rather rather not be a real pleasure. It’s a pleasure to be here. Thanks for making the time interested to share in any way I can man help the community out?

Aaron Spatz  02:17

Yeah, for sure. Well, let’s let’s just dive right in. So share with us a little bit about your background, like Where where are you from? What was the what was the childhood version of Ted like? And then what, what compelled you to join the army?

Ted Gutierrez  02:29

Yeah, so I’m originally from Houston, born and raised, my parents were entrepreneurs. And my dad, and my mom and dad didn’t go to college. And so my dad always broke, but he was in the army. He started off as an NCO. And then he went to OCS. And, and, you know, all of his stories that he would tell me when I was a kid were about obstacle courses that he would do, or some sort of firing exercise. And so that was, you know, that was my childhood growing up. And both my parents said that I was going to go to school and one day for a weird set of reasons. I put two and two together. And so what if I could get an army and go to school the same time and so I decided to go to one of the service academies really didn’t have a plan. Beyond that. It was kind of like, let’s just get him in. I remember going to the website, it was one of the first times that I used my dad’s computer in his in his office, you know, typing in to learn how to apply online. And we were one of the first classes to get actually laptops. So it makes me feel a little bit old when I started saying that, but, you know, grew up around the Houston area. I’m a parent, like I said, my parents were entrepreneurs. And I truthfully didn’t have a very robust plan about what my education was going to be or what I was going to do. I was looking at all the Texas schools, but there was an element of passion that I had taken on, like, follow my dad’s footsteps. So we went ahead and did that. And I was, and I think it was the right decision for me.

Aaron Spatz  03:55

Wow, no, that’s, that’s fantastic. And then you saw obviously, you go to West Point, and then you just share with us quickly about, you know, what was your What was your experience after West Point? What did you do in the army? And then, yeah, so I was, I was

Ted Gutierrez  04:09

on the five year plan. I couldn’t get into West Point. The first time I actually took the PSAT seven times, which I thought was pretty funny. I remember exactly where I was in Houston, when the guy call me from the, from the admissions office, he says, Listen, you’re definitely not going to get into West Point, you’re gonna have to go to another place called the prep school. And I ended up going it was where a lot of sports and military transfers went, a lot of minorities went there. And I fit in a couple of those categories. So let’s do and they ended up being one of the best decisions I’ve ever made. Because they tell you how to march they taught you how to salute, they taught you how to do all these things military, but you didn’t have you know, the clamp on you. You know, you could actually go out on the weekends. So by the time I got to West Point as a plebe, I mean, I knew how to do all these things that that really helped me not breezed through the initial phase. based training, but I mean, I was a little more prepared than, than other people. And then so, when I did that, I mean, it’s easy to just gloss over four years, you’re the first person that has asked me about my experience in school in a long time. So I’m like, looking back, I’m like, man, it’s a good place to be from. But, you know, for four and a half, five years, I mean, we’re always worried with every single quarter, whether we’re gonna get kicked out, or if our grades were high enough, but built some unbelievable relationships with friends that I’m still friends with now, learned a ton about, you know, waking up early, and having a real core focus. You know, when I, when I think back into the military, and specifically back in the West Point, I don’t think I was ever around that many human beings at all had one singular focus. And that was my personal success. And so, you know, people say, Well, how did you do this? Or how did you do that? I mean, I think a lot of folks in the military need to look back and say, What’s because somebody else guided us, right. And so for me, in my early 20s, or really late teens, that was really important. I think I could have been successful a lot of things, but the, the Army gave me a process to follow and steps to follow. And it humbled me to, to, you know, to do things longer than I probably wanted to, and that was every single year. So when I got into the army still didn’t know, generally what I wanted to do. And I knew that I love talking on the radio, and I love the power of of tanks. And so I ended up going armor at a great time at in Kentucky developing out those skills. But when I went to a Combined Arms Battalion, I ended up becoming a scout platoon leader. And that really just, it wasn’t for a caveat, it was just a straight, heavy combined arms unit. And it just changed my life, I went to all the cool schools over there on the East Coast, just just really learning how to weather it was Pathfinder school, whether it was airborne, you know, just learning these skills really, really put me in a position to take care of the boys over there. And Iraq, went over to Iraq for a time or two, ended up coming out and, and truthfully just sort of lost my passion about about being in the military. And it wasn’t because I was I was not passionate about the mission. It was just, I felt like there was some other things that I wanted to get done with my life. And we weren’t deployed at all much. And so I decided to get out, I think, right at the five year mark, but I said goodbye to a ton of great people that really helped me out and kept me safe and kept me humble throughout those those years, you know?

Aaron Spatz  07:27

Oh, yeah, no, it’s a, it’s a brotherhood. It’s a, it’s a community like none other and just regardless of whatever branch of service you’re in, I mean, there’s, there’s these little sub communities inside of each, each branch of service. And so it’s, yeah, it’s a very, very special place. And then the, the transition process is a very emotional process. For some, it can be very tumultuous for others. And so it’s a it’s a unique, it’s a unique process. So just would love to, then just let’s just dive into what did your what was Secretary of life look like? And then leave

Ted Gutierrez  08:05

leaving into what we’re doing now. You know, I didn’t know this at the time. But the best question that I could probably that I learned to ask people when they’re getting out of the military is what kind of shoes do you want to wear people? Like, why would you ask somebody that and I said, I can tell you more about your job and where you’re going to be if you tell me what kind of shoes you wear. And so I chose to wear steel toes ended up getting out and getting into the inspection world inside of oil and gas, I liked big heavy moving things. I liked the complexity of oil and gas. I liked at the time in 2011, it was pretty hot, there was a lot of a lot of growth and I got in but also like the the risk management space you know, I felt like as leaders in the in the army, we had to move really fast with big heavy pieces of equipment, we had to rally our our folks but we also had to make sure that we you know, take care of our equipment, whether it was a really small weapon or whether it was a an 18 wheeler or a Blackhawk and so I saw that really nice balance between risk management, heavy machinery inside oil and gas and specifically quality risk management and, and then eventually cyber. So I found myself at a company called THL that ended up getting acquired by Bureau Veritas. I transitioned from there directly to Shell where I traveled the world in a really unique job where I was conducting assessments of vendors to make sure that the vendors of Shell met the engineering requirements of some upstream and downstream engineering groups. And so I started learning how oil and gas worked. I started to learn how risk management systems worked. And so just like the army has really great transition those three or four years where I was working for really big companies, so I knew how to how to how to operate within those confines that but I was in a really, really individual contributor role, or I could just travel the world and and have a pretty subjective view of risk management and engineers trusted me to do that. learn so much in doing that, but After four or five years post army, I started to have that itch again. And that itch, I just didn’t know what it was, truthfully, I kind of looking back, I really didn’t like a lot of rules. You know, I didn’t like the rules in the army I, for a while I was a round peg in a round hole. But once I got to be about, I guess, about 30 years old, and I had my first kid, I had my son when I was 30, my whole life changed, and I needed a new playground. And so I had gone from big army to, you know, big company, I had gone from, you know, armed forces to the oil and gas, but still something, something was missing. And I had no idea what it was. But I ended up realizing I needed to be a business owner, I needed to have the responsibility of building companies, I needed the responsibility of truly, truly taking care of the responsibility of building jobs, and found myself in, in an industrial chemical manufacturing company that wanted to grow. And one of the scalar was my first what I call business ownership exercise. And I left Shall I want to say in like, 2012, when I did that. And when I, when I did, I went to a group that was looking to scale their operations, it was still in risk management and wanted to get into oil and gas. I was about a 25 person company, and had a lot of challenges internally, it needed to change it needed to become a more robust professional organization. And so for about three years rolled up my sleeves, as the Chief Operating Officer, we rebuilt our sales and our marketing program, worked a lot with some really, really great folks. And, you know, my hats off to those to those to those folks that I worked with, because even though I didn’t know it, I was like a fire breathing dragon. I wanted to change everything, I wanted to fix everything. The truth is, I learned how to run a business and learn how to run a p&l Learn how to work with banks, I learned how to do loans, all the things that, you know, it’s going to take you some time, and you can’t learn it all in bucks. That was my first engagement as a business owner.

Aaron Spatz  12:04

Wow, that’s a that’s a great, great opportunity, because you’re able to someone else is paying you to learn and obviously paying you to execute, but at the same time, there’s, there’s a ton, there’s a ton of things that you’re able to learn and pick up in the process. So like no doubt, like a really valuable, really valuable, like real life education.

Ted Gutierrez  12:26

Yeah, and I think that what bothers me the most is a true story. Back in that time, Shark Tank was like kind of becoming a thing. It was like, really, I think it started somewhere else. It was like, it was called something else in another country. When they brought it here. They call the shark thing. And I remember sitting and watching YouTube, and I used to get so upset watching Shark Tank, not because I wasn’t interested, I was so upset because I was not on that stage. I didn’t have a company, I didn’t have a product. And one day I found myself so upset that I was turning the TV off emotionally. And I was like, well, maybe maybe my problem is that I haven’t taken that jump, I haven’t taken that risk. So you know, you know, the real big stuff that I took was actually leaving a really stable job with one of the I think one of the greatest companies out there are really fit in well at Shell, they you know, incredible work life balance, incredible mission. And instead of even looking internally in that company for ways that I could not become an entrepreneur, but maybe ways that could add more value. I just decided to literally jump into cold water. I cashed in my 401k my wife cashed in her 401k We took every dollar that we had, and then we went to go borrow more money. And that’s the day that I learned don’t borrow money to buy a company, you. You borrow money to grow a company and but it took me a couple years to learn that. And so taking that financial dive that emotional dive that marriage dive that family dive into a company that, truthfully, I didn’t know too much about. There was a lot of lessons learned, but man it there’s nothing like flipping the switch. I mean, it happens on the Tuesday and you really feel wow, I’m in business now. And, you know, what do I was I ready for this? And the answer is you’re never ready for it. So I enjoyed that plunge. There’s a lot of things that I learned about becoming a business owner. And in truth, you know, I traveled the world I traveled, I did hydroelectric power plant projects in India. We grew that company and I started becoming the vendor where I used to audit vendors. Then I became the vendor. It was it was different, learned a ton about how to run a business, but then I still had the itch. It took me about two and a half, three years. And I kept feeling this itch and I didn’t know what it was. And it truthfully bothered me a lot and what I came in a later part of my career to realize is that whether it was the army and transitioning out of the army for an unknown reason, transitioning out of shell for an unknown reason transitioning out of Marvel for an unknown reason. It had to do With my desire to create a very distinctive path, in a really scalable manner, and that’s when I decided to build a tech company. I did. So, you know, that’s what how I got to security gate is, you know, I was in a super corporate with the army, then I’m moving into corporate then I went into kind of my own company, that that was really a business ownership. And then when I took the next dive, it was actually into what I call entrepreneurship. I have a belief that entrepreneurship is creating new products in a brand new market. If and business ownership is something that people generally understand, somebody has done it before, you’re simply bringing another element of uniqueness or you bring an element of efficiencies. And so people always tell me and be like, Well, I have, I have an idea and a civil Tell me about it. And I have no idea what the ideas are, how it’s going to be used. I’m like, okay, they’re a budding entrepreneur. Because that’s generally what it takes is a lot of people telling you, that’s a crazy idea. And that’s what happened with security gate. Wow,

Aaron Spatz  16:00

no, it’s uh, yeah, there’s a lot. There’s a lot there that you just you covered a ton in a very short period of time. So I want to

Ted Gutierrez  16:07

go back. Should we go back?

Aaron Spatz  16:09

Yeah, no, it? No, this is all good. This is this is this is fun stuff. And this is what I love to do. So yeah. So so the first company that you referenced when you, you cashed out 401, KS, and went and borrowed money with which company was up,

Ted Gutierrez  16:24

that was a company called Marvel industrial coatings. And so,

Aaron Spatz  16:29

so, so tell me what and so? Go ahead. Yeah, no, I was just gonna say, just share it. Share with me some of the lessons. I mean, you already you already gave me one lesson there, which was, yeah, don’t borrow money to buy a company borrow it to grow it. But what what were some other things that you learned seen as that was like a big coldwater plunge for you?

Ted Gutierrez  16:49

Oh, it was a cold water plunge, I had a really close relationship with a couple of founders, and, and they said, hey, look, we want to grow the company. And I said, Well, I’m the right guy, I’m a sales guy. You know, it took me a couple years to realize I’m actually not a sales guy. I have a, I think I have the one skill I have is my ability to kind of clearly picture something and tell a story about it. Right? So I’m a storyteller kind of person. And some people take that as sales. But I walked into that company thinking I could sell anything. So I learned a new product, we were selling chemical products to him for risk mitigation to major chemical companies, and major, you know, operational facilities. And one of the first things that I learned in that company is that we had services, we had products, and then we had technical services that were sold in the form of machines. So we sold machinery, we resold the chemical to us and machinery, and we sold services to teach our clients how to do it all. It’s hard to be good at one thing, being good at three is really challenging. And so I think one of the things that I learned in that company is we were trying to attack we were trying to attack the market by being the best of services, the best of hardware sales in the best app, chemical sales, and you can put chemical sales, you could, you could intertwine that with anything else. And I said, you know, it is very challenging to build the support mechanisms, the marketing, understanding your go to market strategy, if you don’t have a very clear vision of each. And so I would say that they are complementary in nature. I like complementary companies, where you can say, Oh, we can sell this service to oh, we can hire one person and take on this, this market here. But I will tell you that it’s very resource intensive. And if you’re not willing to really build a strategy, fund that strategy and have what I call a budgeted initiative, to go build those, those different wings of your company out there, you probably out of focus, right, I think that we probably could have saved some money, I’m probably increased our margins, if we would adjust, probably bought some machinery from somebody else or bought services from somebody else and focus on our core business. You know, I made a lot of mistakes. We went from, like 37, product lines to five. And I thought that was a really good combination of all the leaders in the organization come and said, Hey, look, all of these different products haven’t sold, what’s the inventory turns. And we decided to just focus our core efforts on a couple products. I thought that was a great move. We switched over at that at you know, at the year two, we were working with pretty much a no name, individual wholesaler of mechanical equipment. And we trashed that relationship. And we went with one of the biggest equipment manufacturers in the world. And it was a very healthy goal. They said, Look, you got to do X amount of million in sales, and we were like, you hit like 400k Last year, how are we going to do this? We’re in a, you know, shooting big. And I think today that company is actually one of the top resellers in the nation of that particular equipment time. So you know, that that’s a lesson that I learned. The other lesson that I learned is quality of personnel really matters. And I don’t mean that to say that not everybody needs a job but when you’re selling a highly complex service a software, if you have a very complex sales cycle, if you have really complicated customer challenges, then the quality of the people solving those challenges is a positive is positively correlated to your success as a company. And so should have hired hire should have hired up and should have probably, you know, elevated the the not the education level, but the professionalism of the overall group that would have helped a lot. And I say that all the time, when you can’t, if you think you can’t afford them, you probably try to afford them. Because I think in this in any game, it matters. The other thing that that I think I learned really well was two things. I learned this for the CEO at the time, I learned how to leverage things, capital assets, POS, I learned how to leverage those against a bank for lines of credit to fuel growth. You know, security gate.io story is really unique, because as a six month nine month old company, we’re the only product company, the only tech company that I knew in existence in Houston that actually was able to leverage a line of credit. in its infancy, before we even got to an angel or seed funding, and I look back to Marvel, because I learned how banks work, and I learned how p&l is work. And so being able to utilize a bank for the purpose that they their banks are not there to hold everybody’s money. If you really understand how banks operate, they’re there to give loans so that they make interest on that. And then the circulation of all that capital is how the economy still keeps running. I learned that really, really effectively at that first company. And I had something else when I think I forgot it. I think I forgot it.

Aaron Spatz  21:46

That’s all good. If it comes back to you let me know. But yeah, those are, those are some awesome lessons learned.

Ted Gutierrez  21:54

Yeah, if you’d asked me to try three things and write them down, I probably wouldn’t have them. But now that you get me talking about it, I start remembering Oh, I’ll give you an example. There’s I remember what it was. So I learned how to chase accounts receivable. So very, this is a big lesson. So after a year at Marvel industrial coatings, our sales were up, profitability was up, team was on a high, and I was floating on air. And I said like after a year of being my own business owner and working with my partners, I was like, we’ve really reached a pinnacle. And I truthfully thought hard and long about leaving. And there was something else inside of me that was saying, you haven’t been challenged enough yet. And I never really put that on paper. But I just felt like it was almost a crime to try to walk away from that company have all these accolades. And if but know deep down inside that there was never really the core challenge. A month later, the oil and gas industry just tanked. And I had a bunch of oil and gas customers. Accounts receivable was horrible. I mean, we had, you know, six figure bills, and our clients couldn’t pay him I was in West Texas, literally, I think is the red iguanas calling in PECOS, Texas, and they were trying to give, they brought me land grants, there’s a here’s a piece of land, and it covers half of our bill. And we want to we want to bestow upon you this piece of land. So what you know, that was a real big challenge. And that was the first challenge that I started dealing with as as a business owner is you may not be open three months from now, because all of your clients weren’t able to pay their bills. If you fast forward, getting through that, you know, six months or a year, there was a critical infrastructure project in India, that was about $2.3 million. And they had a million 1,000,002 on the hook with us. And yours truly, we had been chasing them. We had been doing everything we can’t can’t sue somebody in another country very effectively. And so I took a one way trip, took a one way ticket to New Delhi and I didn’t come back for 11 days. And I waited outside these, you know, I went to 17 different offices. I mean, it was it was it was a journey. It was a hike, but we got paid. And so, you know, when I started my own tech company, those were the experiences that helped me, you know, kind of have the resiliency to get through tough times. And those are not things that I would recommend anyone do. There are reasons those things happened. We were good at collecting but you know, things happen and that was when the world downturn and the reason India have got so bad is that there were historical monsoons in the Himalayan Mountains where the project was that okay, literally tore down the bridges to get the chemical that we sold to the hydroelectric power plant and because the bridges had broken, they had all of this chemical stuck and because they got the chemical stuck on the mountain they couldn’t Spray, which means they couldn’t complete the project. But these are the things that we had to deal with. And so, you know, I tried to, I tried to at the time, it was very challenging, but I tried to bottle that up. And I tried to use that and, and I figured when it was time to start my own tech company, I had absolutely no clue what I was getting into. But I figured if I got through that I could get through anything else. And I will tell you that Sure, I will take you on a ride too. So,

Aaron Spatz  25:25

yeah, well, I mean, so so. So share this a little bit about that path. So it’s like, in before jump on that. So like when we’ve we’ve covered a lot of ground. And so you you’ve shared with us some really, really interesting perspective and insight, in experience with just dealing with some of the challenges. I mean, like the nitty gritty of, you know, the people we hire, the product lines, that we that we want to establish the vendor relationships that we want to build out or break. And then I mean, nobody talks about this, but like, you know, you’re getting your accounts receivable, like, in Go stand boring, and

Ted Gutierrez  26:02

it’s the boring stuff, everybody wants to be on the cover forms. And people don’t realize that people pay to be there, you know, I mean, it’s a marketing thing. You know, I look at, you know, you’re gonna have scars, if you if you run your own business, and, you know, I my hat is off to traditional business owners that maybe are not breaking ground with the next Tech, but they are providing unbelievable services, and they’re doing so efficiently taking care of families. You know, if I had to sum up all the things that I’ve learned, I mean, number one, you know, when it comes to product lines, what I would share with people is that you can pretty much be good at one thing. And then once you get really good at that, what you want to make sure is that anything that you provide after that is either directly complementary, or it’s, it’s kind of an add on. And if you build too many add ons too quickly, then you’re going to lose and dilute your core value, you know, and no one’s immune to it. So I think that’s important. The thing I would say about vendors, you know, some people can’t pay some people, they, they, they lose their abilities, let’s just segregate those off as, as kind of outliers. At the end of the day, I had a coach one time he taught me, when it comes to selling services, when it comes to provision of your product, whatever it is that you do, you have to be an amazing teamwork, with your vendors, and with the people that you sell to. And so you demand that teamwork of your of your folks. And so, you know, it would be as easy as saying, hey, Ted, you’re going to be on a podcast with me, I need you to show up at this time, you need to be wearing this kind of clothes. And if you’re not in that, I’m walking, because you demand such a high level of of preparedness, which obviously was not the case today, if our listeners knew, right. But when it comes to managing your vendors, they, you don’t always know what’s happening in their world. And if you don’t force them to live within these confines of this is how we’re going to do business together. It seems off putting but it actually creates in time, a very symbiotic, highly respectful relationship. And you have to demand respect. When it comes to team and hiring and partners and all that I would tell you that the the people and the relationships that you have with your employees, with your partners, with your with your founders, with your board, it is 100%. About the people that makes you successful. So I think one of the reasons we were able to succeed in any business have been a part of is because at some level, that teamwork was solid. And in other situations where it didn’t work out, the Teamwork was not there. And so choose wisely, who you do business with, and be ready to walk away from a relationship if you think if it’s not mutually beneficial. I’ve had to do both.

Aaron Spatz  28:57

So. So I’m going to jump in on that then. So he talks about demanding teamwork. So does that apply? And I may have I may have just missed it. So if I did, it’s all good. But because we’re talking in the context of a vendor relationship, what about the other way around? Like with a with a client? Like is there is there that so if you so if you are the other veteran that service, that’s what I meant, okay, then. That’s exactly what you okay, that’s what I thought you meant. But I

Ted Gutierrez  29:25

also want to make sure talking about Yeah, that’s a good question. So let me clarify. Yeah, I learned this is a funny story. So in one of my first businesses, I learned how to make more money as a company by pushing vendors if you have like commodity based businesses, how you handle your vendors, your long term relationship, you’re going to make a lot of money by pushing those vendors, they can fight against each other, earn your business, you know, it’s not really it’s not really fun to me. What I like is I like I like vendors that that understand my core business and are going to help me along the way, when you flip that And I actually have two or three clients to choose from, there’s a lot of times where I will actually walk away from a deal because I don’t feel that the client is willing to put forth the relationship effort. So any relationship, whether it’s, I’m buying from you, you’re buying from me, I always like to look at any of those budgeted initiatives in three lenses. And it’s all about resource allocation. The first lens is people. The second lens is money. And then the third is, is is, is time, so people money and time. And so when we want to start allocating security gates resources towards a given initiative with a client, if, if they put forth the money, but the team keeps changing, people keep changing people, then we never get to deliver the deliver the value that we want, if they don’t put the time in, and they’re never going to learn how to use the product. And you’re, it’s very challenging to always get this right. But if you can get it, right, that’s the best way to manage your clients. And so I think, you know, what I have stressed probably in the last year has been, hey, look, let’s look for clients and let’s qualify prospects that are really willing to put the people the time and the money behind this objective. Otherwise, nobody’s going to be successful.

Aaron Spatz  31:23

I mean, that’s, that’s, I mean, that’s gold. That’s a great, that’s a great point. And I’ll just go ahead and ask, so like, how does that how does that prospecting process look like for you? And well, I would say, trade secrets. But I’m just

Ted Gutierrez  31:37

because we’re all we’re all learning. I, you know, I had two engagements today. And I think I had to engage with some really great companies, and it came up to my level. And when I got on the phone with a key decision maker, we were never talking about the product, you’re never talking about how much it costs. What we were talking about, as I was trying to establish a really, really trust based engagement, where I just asked him, I said, Look, what does success look like in 12 months? What does it look like in 24 months? And I tell folks, I’m like, Look, we’re looking for a multiple year engagement. So let’s put, what I’m trying to do is is I’m trying to find clients that will grow with us, that have a large enough initiative, that they really do want to partner. I think that, you know, you and I were speaking before the podcast started, he said, Hey, look, it’s hard to build a brand around a product that sucks. Well, it’s hard to build a long term relationship, on a relation, it’s hard to build a long term relationship between two companies, if the two human beings and those companies don’t really partner themselves. So that’s when I prospect Well, what I’m looking for is somebody that’s not so much looking for a product, they’re looking for a solution, because their pain, and sometimes people don’t even understand their pain. And so, you know, you’re you’re diving into a little bit more of, you know, how do you help companies discover the pain they have? Do they even know it? You know, if somebody says, Wow, I’m hungry, I need to go eat. That’s why there’s a McDonald sign that’s so high, right? If somebody if you know, the person that has, you know, a different type of buying cycle, if somebody can come and tell you, hey, look, I think you should be eating this food because of this, this and this, you know, they’re helping you uncover an unlock a real pain point that you may not know about. And because they did that, effectively, you trust them. And that’s why they don’t need the billboard to catch your eye. They’re going to work on a referral type basis. And so I hope that makes sense. I think I think

33:38

no, right?

Ted Gutierrez  33:40

Yeah. Yeah. I’m trying to think I’m making any sense.

Aaron Spatz  33:46

No, you’re making tons of sense. I mean, and I’m always like scribbling notes down during during these during these interviews, but like, you talked about establishing trust based relationship, and you’re looking for multi year engagements, multi year partners. People want to grow with us. And but you’re you’re already setting the tone, right? You’re already you’re already setting the groundwork from from the get go. Like you said, you’re talking about the product or the service, not not about the price. And I actually I really love what you said about Yeah, because we so this is a this is for those that are watching. Right. So this is an offline conversation we had in the pregame to the actual show pregame to the show, I love it. Which is, which is why I hate doing pregame. I will. It’s just my nature, I’ll start to ask questions, or it’ll just it’ll just start to flow and like crap. But like no, I mean, me being in the marketing branding space, right. That’s what I do. I love helping companies connect to their people or to their to their target audience. And the point that you made was, well, but if we can’t, I mean, it goes back to in some aspects, right goes back to your resource allocation model. And that’s and that’s the people part of that. So if if you’re not Jelen, right if you’re not it If you’re not have the chemistry or the trust, or that foundational good, like a good relationship, then that’s, that’s done. Like, that’s not gonna help anybody long term. I mean, they can throw the money at it, they can put the time into it. But I mean, maybe they’re rotating Pete like, I mean, as example, you might think,

Ted Gutierrez  35:17

like, let’s say you’re, you’re gonna go to a gym, like, they don’t really ask you to commit too much time they ask you for your credit card number and they’re just gonna, they’re just gonna take the cash, take the cash, but is the relationship really going to work out? Hey, look, we’re not going to sign you up for this gym unless you commit that you’re going to come at least x amount of time, if you don’t, your subscription cancels. Just take that for a moment, just think about it. So that would be crazy. But I guarantee you their business model would work. Why? Because they create a level of accountability, which is what you need anyway, to go to the gym, let me tell you story, the best sale that I ever I learned more from getting really pissed off to a guy that was trying to sell me something. So he was he was he was selling me a service. And he was pretty, pretty direct in why he wanted to sell me that service, why I was a fit for him. And we had gone back and forth three or four, probably like two times he gave me a taste of the the product a little bit and I used it a little bit. And I let him go. I like I didn’t I didn’t call him back. And then I started thinking like two months later, like, oh, man, I really could use that guy’s services. And it was for the business. Well, I called him up. I got another 15 minute session. I told him the truth is and then some of the things you taught me in that consultancy gig that you did were pretty awesome. And he says, Well, if you want more of it, here’s what the pricing looks like, here’s what the program looks like. And I listened to the whole pitch. And I’m kind of like in charge in this at this point in the meeting. And I am interested, but it’s really expensive. Like it’s expensive. And I said, he goes, so do we, are you ready to move forward? If so I’ll take payment via this, whatever. And I said typical answer. I said, You know what? I appreciate it. I’m gonna think about it. I’m gonna go talk to my team about it. And you know, I’ll probably let you know. I mean, that’s like the standard answer everybody gives, right? I mean, that’s the standard non committal. I’m not really sure. Like, that’s everybody does that I don’t care if you’re buying socks, or if you’re hiring somebody like, and this guy cut me off. And he said, Listen up, Ted. And I just remember the way that he talked to me. He was on the phone, he said, Listen, I’ve said, I like hot, or I like cold, you’re being lukewarm, and I don’t accept it. Now, here’s what I am going to demand of our client relationship. You can tell me that you need more time. But you’re going to give me a date that you’re going to tell me an answer. And if you deliver on that date that you don’t want to work with me, then I’ll be a LinkedIn buddy with you. And I’ll support you in any way shape or form. But I won’t be talking to you. But if you do, I’m going to need full payment within 12 hours of that delivery. The question is now up to you. And it was a little bit more eloquent than that. But it was direct. And it basically said, I want to, I want you hot on this or I want you cold, but I will not accept anything in the middle. Man, I got off. And I said, Okay, I’ll let you know, at five o’clock on Sunday, or something like that. And I was stunned. I was absolutely stunned. And I was kind of pissed. I was kind of shocked. I was kind of intrigued I was, I mean, here’s somebody that I didn’t know, well, that really laid the law down saying if we’re going to work together, you’re going to start being direct. And I ended up working with him, I ended up saying, Okay, I’m going to make this work. And it was one of those chances where I said, I don’t know how I’m gonna pay for this, but I’m gonna do it. And it transformed the way I thought about this one piece of the company and it was one of the best investments I’ve ever made. And so it was that engagement that taught me you’re not saving yourself any time or money by not committing either be all in or all out. And you know, that’s that’s advice that I would give people about anything, either you’re all in or you’re all out being in the middle. Just waste a bunch of time, energy and money.

Aaron Spatz  39:03

Yeah, man. That’s a that’s an epic story, man. I’m like, like sitting here on the edge of my seat. Just like, like, I can just see it. I can see it happening, man. Because I’ve. Yeah, I mean, I deal with ideal sales calls on a weekly basis. I mean, so ever. Everybody wants to sell you something. So well. I

Ted Gutierrez  39:20

think he knew I was a decision maker. Right. And so I you know, I would not Yeah, business development reps that are out there. Please do not do this to a prospect, right. I mean, you really have to light things up. This was a very unique sale, but I mean, generally, I think it’s words to live by, you know, either be hot or cold on this, but don’t be in the middle. You can get hurt. You can get hurt. If you if you just don’t move, you know?

Aaron Spatz  39:44

Right. Yeah, that makes sense. So, alright, so let’s so then let’s transition over then to the story of security gate. Give me a little bit insight into how it was started. How did you get the sucker off the ground? Like how did you get it from nothing to profitable like that whole The whole journey.

Ted Gutierrez  40:01

While the journey continues, the journey is a daily journey. You know, I equate, you know, I equate startups, I equate tech companies, I equate most product companies, especially when you’re coming from the beginning stages, that you’re, you’re traveling up a mountain. And sometimes there’s, the higher you go, the more clouds there are. And you can’t see the path you’re walking on. Sometimes you got to use a machete to create a little bit of a path. Sometimes there’s a rock in there, and you have to climb around it and and you pick up people along the way you fall down a little bit. Bottom line is, there are going to be times when you just can’t see your footing. And you have to have a combination of things to get to the top of that mountain where you can get above the clouds. And you actually can say, Wow, we we still have a long way to go. But we can see above the clouds. And I think that, you know, the story of security gate is absolutely no different. It was it was when the elections got hacked in 2016, that I realized that, you know, forever The Internet has changed. And there’s a lot of data, there’s a lot of impacts to cyber attacks. I’m not a techie by nature in any way, shape, or form. I’m a business guy. And I just recognized in that in that moment. When the DNC got hacked, I said off man, this changes things. This is the moment where people are gonna start treating cybersecurity the same way do they do different roles in their company. And I think that was an accurate hypothesis four years ago, today, cybersecurity is a business problem, and more people are spending money on it because they recognize its importance. So I saw it as a market opportunity. I saw it was a down market. And I saw that if I can build a product company, you know, by the time 2018 2019 comes around, I think the market will be in a place where it would people would benefit. So we saw that critical infrastructure, you know, oil and gas, chemical companies, maritime companies, manufacturing companies, wastewater, you know, a lot of these very, very necessary human systems that are not human centric, or more machinery centric, we’re prone to a cyberattack as much as you know, your computer at home was and I thought that that was a really interesting, underserved market. So we started assembling a team, myself and my co founder who was really the the technical boss of the of the company, we started assembling a team to take a new product and a new vision out out into that. And so we help, you know, security gate.io helps business and risk management leaders become better managers of their cyber risk program, we don’t, we don’t turn them into cybersecurity experts, we really serve as a software that they use in tandem with other softwares to really make better decisions. Because at the end of the day, business leaders, how many people should I put behind that challenge? How many resources of time and money should I put beyond that? What’s the impact if I don’t? These are questions that boardrooms that C suite personnel are having in every company across the globe. And we see over the course of the next decade, that we’re positioned really well to help companies answer those questions more effectively. So they just keep their businesses running. So based out of Houston, we’re really tapping into the Houston ecosystem and tapping into some of the other resources in Dallas and Austin and San Antonio, and really excited about the path that we have carved out, really starting to get looked at by some of the other players in the market. And it feels good, it feels good to after two and a half years to have a product that is being recognized as not only useful, but really important. And I can say with some of our partners that we have now we’re not going anywhere, we’re focused exactly where we’re going to be and, and it feels really good. Primarily because of the team we have. Fundamentally, our team is our number one asset. Our product is is is is number number two or three right behind vision. So have an amazing squad of folks that that that are really the ones responsible for for what we’re doing is really exciting.

Aaron Spatz  44:15

Wow. No, that’s a it absolutely is an exciting, exciting journey. And I mean, no doubt, taking it from nothing into something. And you don’t and I mean, obviously you’re you’re still on the journey. I mean, every business is always on that is on that journey. But it’s great to see. It’s great to see that hard work paid off. And it’s great to see just all the every time

Ted Gutierrez  44:40

you get past one door, another bigger door opens. Right. And so I always thought that there would be this like magic moment whether you get some sort of funding, whether that’s private equity, whether it’s venture, whether it’s Angel doesn’t matter. Somebody believes in what you do, they put dollars behind it. Okay, well, when that happens, we can take a breath and we’ll feel better And I can only tell you, I can truthfully tell you that I made a mistake five or six, seven times, we can only get that client, if we can only get that feature bill. The truth is, is it’s it’s an evolutionary program, at every step that you grow, where you take on another client, a larger client, you take on venture capital, you take on new investors, you bring on smarter people, let me tell you, people don’t realize that the debt that the company owns, once you bring on what I consider, consider an A level player, somebody has done this two or three times, you bring them into that position. So they teach us not the other way around. You know, I think that in my younger years, it was like, Well, let me come in and, and I’ll teach you how to do that. It’s like, once I got a little smarter, I was, I like hiring people that want to teach me things. Well, there’s a, there’s a debt that you owe them. So like, I love smart people in my squad, and it takes a lot of work to feed them. And so it’s like, just because you hire somebody really great in that position doesn’t mean that your challenges go away, your challenges actually get bigger, because they’re gonna challenge you. And so it’s just, this is nonstop amoeba that keeps growing, whether it’s a new client or, or somebody in your team. And the challenges evolve, you know, look at COVID. Yeah, what COVID is doing to all of us, we’re having to really rethink, how do we, how do we do business? You know, how will we facilitate discussions? And so it’s a never ending journey. But I love it.

Aaron Spatz  46:34

Yeah, no, no, it’s awesome. It’s awesome. I want to, I’d like to circle back to comment you made earlier. And I just want to, I just want to get a little bit more perspective on this point you made. So you talked about business owners, and entrepreneurs. And I, and I wanted to understand, because I think you’re making a point about there actually, is a difference between owner and entrepreneur. Yeah, I

Ted Gutierrez  46:59

think they’re, I personally think they’re a big difference. So, um, so it’s a personal view, sure to think that business owners can have elements of innovation in their business. But they must be very good at a core set of principles that traditionally can be taught with books, right? So do you know how to manage your p&l? Do you know how to hire people? Do you know how to manage your inventory, you know, if somebody has built a business that looks like it walks like it and talks like it, chances are, that’s a business ownership opportunity. And when you come to own that business, whether that’s a franchise, or whether that’s a dry cleaning, or ice cream shop, or it’s a consultancy, there’s a lot of people that have probably walked that path before you. And in business ownership, your challenge, I think is efficiencies, it’s finding a more efficient way to run a generally non sexy business. So you can create a lot of value for a lot of people, you know, the best advice would be I and I like businesses like these, I like taking really robust old types of industries. And maybe you do one tiny thing different, and it makes you really unique. The alternative space is I have a brand new idea in an evolving market. Not many people understand that. But I have this real I’m really passionate about this idea. And I think I could create massive change if I if I implemented this. And so, you know, a good idea would be like, let me create a brand new way to do something that no one ever knew was interesting, right? Podcasts would be a good example of that. I mean, who in the world did podcasts I mean, I guess maybe they’re like an evolution of broadcast news, maybe. But being able to, with social media and challenge the world to think about things in a different way. I mean, I think that’s very entrepreneurial, because you’re using a new medium, talking in a new language, reaching people in a new way to give them an insight about things they didn’t know, were important. Whereas I look at, you know, running a dry cleaning service, I can find some efficiencies in there. When you look at, you know, what we’re doing a security gate, I would say we are entrepreneurs, because we built a product. You know, it’s really challenging building a product from zero to one. But I like that, you know, we’re taking old business processes like spreadsheet based assessments and remediation, and we’re digitizing that in the cloud. That requires a different, you know, balance of business skills, as well as entrepreneurial, you know, you make something so whiz bang, flashy, nobody will ever buy it, right? That’s way over here to the right. But if you don’t do anything different than the guys before you then then you know, it’s challenging to be unique. I hope that answers your question and maybe provide some insights as to why

Aaron Spatz  50:00

Absolutely no, that’s, that’s exactly what I thought. And I just Yeah, I was curious because you’d mentioned just just for a brief moment, I’m like, Man, I would love to go back and just get you know, Ted’s perspective on this just to just to see what you think. So no, thanks for thanks for sharing that. And, yeah, I can’t believe we’re already. We’re already getting towards the end here. But I mean, I, I would, I always love to give the last segment back to the guests. So if there’s anything, I mean, if there’s any other any other challenges, or any other war stories you want to share or lessons learned, or parting comments to veterans that are that are looking to, to run with an idea or run with a business? Whatever may be hanging on, like, what would love to get this last segment back to you?

Ted Gutierrez  50:47

Wow, well, if so, whoever is still listening? That’s a big question. What would I tell onto veterans that maybe want to be entrepreneurs is that what you’re

Aaron Spatz  50:58

seeing whatever you want to do, man, whatever, what however, however, however you want to take this?

Ted Gutierrez  51:03

Well, I will say that, you know, there’s a real value in always remembering where you came from. But at the same time, you got to shed that skin and create a new one. I learned pretty quickly that although there’s a lot of resources for veterans that are out there, it’s harder to shake the veteran clothing, the veteran way of talking the veteran syntax, the veteran way of thinking, there’s value to stay in that. And I would never encourage somebody to shed that away. But I think that there was a, there was a pivotal moment for me where I just had to say, Okay, I’m not going to align myself just with entrepreneurs, I’ve got to, I’ve got to build out and I’ve got to grow into something new. And, and I think that there’s, there’s a, there’s a lot of people that say, Well, I’m gonna stay in the veteran community, and there’s enough resources in the veteran community for me to either build an entrepreneurial company or build my own company. And, and I think that we’re a small group of people, when you really look at the percentage of people that have served it. And I know people that run companies that are very focused in the veteran space, it’s challenging man. So what what I always tell people is that in order for you to bring all the value of your veteran career to usage today, you have to learn a new skill. And only when that skill is valuable to the company you’re in, or that product is valuable to the sector you’re in, then and only then will all the things that you’ve built in your military time really be applied, because then it’s going to take you from here to here. And a good example of that would be, you know, we had to build a product, we could tie manage all we wanted, we could have leadership, we could have great strategy, we could be great bill, you know, we could do all those things. But until we built a product and really clearly defined how we were going to deliver that product, nobody cared and keep your head down, focus on you know, building those new skills. And then once you can have the confidence to present that skill or present that that new person in the suit or present that new image of yourself out, be successful that then combine the military. And that’s what I think a lot of people ask the tough advice I’d give people is shed the shed the the AC use for what do they still call ACs? I don’t know if they do or not, you know, shed the ACS for a while, go build that other skill, and then in time, bring back that veteran. I mean, that’s, I hope that makes sense. That’s what’s worked for me. And and when I do that, I think it makes a lot of people proud along the way that you got to build that new image of yourself.

Aaron Spatz  53:41

Absolutely. No, I think that I think you’re hitting on a point of you don’t you don’t exit the military, having all the requisite skills to be successful in business, you have, I think, a foundational framework to work from, I think you’ve proven that you can deal with adversity. You’ve got a fig, like, figure it out at all costs, never give up type of type of mindset. And so like that, that in and of itself is incredibly valuable, but then some of the actual tangible skills of running a business. And that’s a whole nother, that’s a whole nother skill set. And so well, like you said, it’s like developing something else.

Ted Gutierrez  54:21

Well, for me, I was, I can honestly look back and say, you know, I was I was I was a round peg in a round hole. I got a lot of great reviews. I had accolades from all my commanders. I mean, I was on top of my game when I left the army. And it took me honestly, four or 56789 years I had to, it was more of a personal growth, but I had to shed just like when I got in the army, and I had to shed who I was before I got in the army and all the accolades and all the wins that I had. Nobody really cared. And so it took me a couple years to realize that the civilian world I got to redefine myself here. And so to me, I think Don’t be afraid to, to keep those skills inside. But you’ve got to, you’re going to have to redefine yourself and do so effectively. I think you restated what I tried to say a little bit more eloquently. So appreciate the opportunity to be here. Always happy to give my two cents if it’s valuable love any feedback you can provide happy to help some veterans that are out there. Trying to get into business. Yeah.

Aaron Spatz  55:26

No, I love it. And I yeah, I just I just want to just sincerely thank you for for spending so much time with me thanks for, for sharing some of your insights, some of your some of the challenges that you’ve had to overcome and some of the lessons that you’ve learned and that you’re continuing to learn. But yeah, thank you. Thanks so much for, for spending some time with me.

Ted Gutierrez  55:42

Appreciate it, man, have a wonderful day, stay safe out there.

Aaron Spatz  55:50

And what a great, great conversation, I loved just the various different ways that Ted went and just ran with a couple of these points. And so definitely go back read, listen, I love his perspective on business ownership versus entrepreneurship. I don’t know if I’ve seen anybody just break it down like that simple and that binary. I love that. I loved hearing his his thoughts on resource allocation. So people money and time, I thought those were some just great points in that the partnership capabilities doesn’t just rest at the company to the vendor relationship level, but also you to your customer. And so make sure that it’s a great fit, building a trust based relationship being the primary thing I mean, that’s these are the things that I harp on all the time, when it comes to business development is we’re in the business of developing relationships. That may not get you the short term win today, but it will absolutely give you the long term Grand Slam. So anyway, I’m just grateful that you watch the show, again, would so appreciate. If you’re a subscriber at least it tell tell your community tell your network about it. But anyway, thanks again so much for tuning in. We’ll see you next week. See ya

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