How to Hire the Best Operators for Your Personal HoldCo

Yong-Soo Chung [00:00:00]

4 years ago, a company operator almost STOLE my entire business from me. I trusted him with my company and ended up nearly losing my company, my clients, my employees...

It was a horrible experience but it was also eye-opening. I realized that day how important it was to have an operator you could trust. And how RARE it was to find such an operator.

The entire philosophy of running a PHC - a Personal Holding Company - is entirely dependent on just ONE thing - your operator.

Finding the right operator is like getting a nitro boost for your business. And the wrong operator will not only ruin your business but maybe even STEAL it.

Since that terrible day, I have been taking notes and making observations on my recruitment and my hiring processes. And now, nearly four years later, I think I have managed to narrow down how to hire the right operator.

You see, the right operator needs to have a streak of independence but also needs to be fiercely loyal to you. You see the problem, right?

Well, give me 20 minutes and I'll tell you everything I know about how to find and hire a great operator for your business.

Jet-setters, get ready for take-off!

Hi, I'm Yong-Soo Chung... Let's get down to business!

Yong-Soo Chung [00:01:34]

The next generation of successful founders in this digital age of entrepreneurship will leverage their audience to launch, build, and scale their brands. First Class Founders explores this golden intersection of audience-building & company-building with proven strategies to grow both your audience, which is your distribution, and your brand, which is your product.

Because those who can master both will create a category of one.

Hi, my name is Yong-Soo Chung and I'm a serial entrepreneur who bootstrapped 3 successful businesses from $0 to $20 million over 8 years.

On this podcast, you'll learn timeless lessons from world-class content creators, startup founders, and CEOs. You'll also hear tactical tips & strategies from ME, Yong-Soo Chung!

Are you ready? Then, let’s begin!

Before we begin, we teamed up with HyperPods to bring to you a quick 3-min hyper-visual summary of this episode on how to identify and hire great operators for your business to help you consume faster, understand better, and retain more key ideas and insights.

You can grab the hyper-visual summary for this week’s episode absolutely free at firstclassfounders.com/hypervisuals.

Yong-Soo Chung [00:02:53]

Before I begin today's episode on how to find the right operator for your personal holding company, I want to quickly recount the story of how my operator almost stole my business from me.

The whole drama could have actually been a standard chapter in the official sociopathic conmen playbook.

I was sitting at home, when my phone buzzed...
One of my clients texted me that he just received an email from my operator saying that my company had shut down and that he was taking over.

My first reaction was just pure confusion. What?!

I immediately called my client and asked him for details. What I found out was not only damaging for my business, but quite disturbing.

My operator was quite literally attempting a hostile takeover of my entire business, taking all my clients with him.

Needless to say, I quickly stepped in and righted the ship.

I immediately got in touch with all my clients and assured them that nothing was changing and that I would be taking over immediately as their main point of contact.

Thankfully, none of my clients left and my operator was no longer with us.

It was a harrowing few days, for sure.

But, what doesn't kill you, makes you stronger, right? And I emerged out of the whole fiasco a lot stronger and a lot wiser.

My operator had taken advantage of my complete faith in him and abused it. Did that mean I was now going to be suspicious of my other operators?

No.

In fact, if anything, it was the opposite. I trusted them even more. They had the same opportunities, they had the same free reign. They hadn't stabbed me in the back.

Let's be clear, you NEED to give your operators the freedom to do their thing.

Yong-Soo Chung [00:04:29]

You can draw up all kinds of standard operating procedures and instruction manuals. But, at the end of the day, it is your operator who has to enforce them on a day-to-day basis.

And real-life is much messier than we think - there are always situations that don't go according to plan... Situations that just cannot be covered by an SOP. Great operators are ones who can constantly think on their feet and improvise solutions to problems as they arise.

In fact, the main quality I like to look for in a prospective operator is -believe it or not- their entrepreneurial spirit. Because I WANT the operator to feel a degree of ownership of the business they are handling.

Yeah, I chose my words carefully there.

I want them to feel a degree of ownership but I also want them to be fiercely loyal to me. It is a paradoxical thought, I know. But this rare balance of ‘entrepreneurial’ and ‘loyal’ is definitely achievable.

In fact, I discovered that this balance can be DEVELOPED.

Yeah, DEVELOPED.

Because there are 3 key elements that determine this balance: Autonomy and Mastery, Mentorship and Trust.

Yong-Soo Chung [00:05:45]

If you think of your operator as a plant you need to nurture and grow, then these three key elements are the air, water, and fertilizer for your 'plant'. You need to provide your operator with an abundance of autonomy - that is, air - and provide them with a steady supply of mentorship - that is, water. And, your trust is the fertilizer that will make sure they grow strong and healthy.

But, enough of the metaphors. Let's dive a little deeper into these elements and see what they mean from a business perspective, shall we?

ELEMENT NUMBER 1: Autonomy & Mastery

Good operators follow your playbook. Great operators improve them.

Great operators thrive on being able to own their roles. They thrive on being allowed to stretch the limits of their responsibilities. So, instead of thinking of your SOPs as a rigid structure within which they need to operate, they will imagine them as loosely guided "rules".

Yeah, that sounds scary BUT, then again, anything unexplored is always scary for the first time. If Columbus had never stepped on a boat because the open sea was unknown and scary, I wouldn't be sitting here talking to you!

An operator willing to explore and assert their autonomy is definitely an operator you want to encourage. Encourage their sense of purpose. Praise their accomplishments when things go right. And, most importantly, take the blame and ease the pressures when things go wrong.

But Yong-Soo, won't that give them a sense of inflated importance?

No.

Because the net result of all this is loyalty.

An operator who realizes that you have their best interests at heart will be loyal to you. Because loyalty is a two-way street. And since the power imbalance is in your favor, you need to show YOUR loyalty first before you can expect them to do the same.

Yong-Soo Chung [00:07:32]

Remember, a power imbalance already exists between you as the business owner and your operator. An enthusiastic operator is simply trying to take up greater responsibility as a result of this power imbalance.

Any success achieved by the operator happens only after overcoming the power imbalance. And any errors your operator commits can be attributed to your operator's over-excited attempts to overcome the imbalance.)

Easing some of the pressures on your operator is a way of telling them, "I'm here to help. You can lean on me."

Of course, you can also use a catalyst to speed up this entire process.

Money.

Specifically, profits.

I give 10% profit share to all employees and an extra 5% to my operator, my GM. I have found that implementing a profit-sharing program enhances the sense of autonomy, ownership, and loyalty almost instantly. Because, I am, in fact, directly aligning incentives to benefit everyone involved in the business!

And I've seen it happen at all my companies. I've seen it happen with UrbanEDC, with Spotted By Humphrey, and with GrowthJet. The prospect of earning additional income motivates all my employees to put in extra effort to ensure that the business succeeds.

Give you employees the autonomy they crave and th will return the favor by giving you the loyalty you seek.

Yong-Soo Chung [00:08:56]

Speaking of loyalty, I'm hoping to build a loyal community around this podcast. We usually get about 600-800 downloads per episode. And now I'm hoping we can kick on and reach a bigger milestone, say a 1000 downloads?

So, I was wondering if you could help me reach that number by sharing this episode with one of your friends. I know it can get pretty irritating to pause, hit the share button, hit send, and then hit play again but it would mean the world to me if you could do that!

I mean, I'm pretty sure you have been thinking of someone while you were listening to me speak about giving your operators autonomy and mastery. How about sending THEM this episode?

Anyway, I won't force you to do it but, you know, just saying...

Thank you for being a loyal listener of First Class Founders, I am truly grateful that you decided to accompany me on my journey of building my Personal Holding Company!

Yong-Soo Chung [00:09:55]

Now, what was I talking about?

Ah, yes, the three elements of balance, of which the first was autonomy and mastery.

The second element is Mentorship.

ELEMENT NUMBER 2: Mentorship

I said earlier that the most important aspect of a successful PHC was the operator. Great operators can totally transform your vision, your ideas, your SOPs - essentially your entire business! Therefore, finding a great operator is super important to the success of your business.

But, there is a catch.

You cannot attract talent better than your own level.

That means, if you are just starting out... if you are a first-time entrepreneur, then you will find it difficult to get an all-star employee to become your operator.

Think about it.

If I were to start a local basketball team, do you think I could convince LeBron James to join it? I am pretty sure he wouldn't join it - not for all the money in the world!

Or, how about this example. I do not have any experience building AI-centric software. Now, if I were to announce a rival to ChatGPT, do you think I could get Sam Altman interested in joining my team? Much as I would love to see it happen, I am smart enough to know that this probably won’t happen!

Like Lebron James and Sam Altman, any great operator you discover is probably already working with the best people in the business. Because working with the best people is how you get better. I don't know who it was that said "You are the average of the five people you spend the most time with" but, guess what?

Yong-Soo Chung [00:11:24]

That applies to your operator too.

Sure, you'd like an operator who is above YOUR average but that means, your operator is working for a boss who is below THEIR average. Would you like to work with such a boss?

So, what's the solution? Are you doomed to find people below YOUR average for the rest of your life?

Well, yes and no. Allow me to explain.

There are only two ways to get an all-star operator to join you. Either they CHOOSE to join you. Or, you become better than them. The first is practically a coin-toss. The second is entirely in your control.

You need to elevate yourself to a level where you become a lot better than the all-star employee you are looking to target. And that means, building your own expertise, your reputation, your authority... It means putting in the hours necessary to be better than the best.

Because then you can walk up to the best and tell them, "Listen, I think you might benefit from what I have to share and I can benefit from what you have to offer."

Now that is an offer anyone will find hard to refuse!

The crux of it all is this: if you want this operator to be an all-star player, then YOU need to become better than the all-star player - either economically or practically. Only then will you be able to command their respect and their loyalty.

Yong-Soo Chung [00:12:36]

And, if somehow you find yourself fortunate enough to hire an operator who shows great potential, then consider it your DUTY to mentor them. You'll find that, as they grow into their roles, YOU will grow alongside them!

And, with that, it is time for the final element.

ELEMENT NUMBER 3: Trust

This one is simple but tricky.

You need to have trust that your operator is doing the right thing for your company. And your operator needs to have trust that you have their best interests at heart.

The operator who almost stole my company from under me, there was always something sneaky about him. Hindsight being 20-20 and all that, I can now spot the moments where I felt he was up to something but I couldn't quite put a finger on it.

I trusted him and he abused my trust.

That's why I said that it was tricky. Because trust is a two-way street. And it takes months and years to build. And it can't be built in one gesture - it is an accumulation of several thousands of small actions and gestures... like a house of cards.

And, like a house of cards, all it takes is a single mis-step for it to collapse in a matter of seconds.  

The operator who abused my trust was an incredible employee on paper. He was aggressive and had a maverick streak in him that helped the company grow rapidly. I thought he was simply taking complete ownership of his role.

Yong-Soo Chung [00:13:59]

I was impressed and pleased by his entrepreneurial spirit.

But that's where I messed up.

Because, I failed to realize that he didn't see me as a mentor. He wanted to run the show. His entrepreneurial streak blinded me to the absence of the other important aspect I needed my operators to have - loyalty.

As I've already mentioned, I fired him, managed to retain my clients, and kept my company. And I learned several important lessons along the way too - like this one about the three key elements to look for when hiring an operator for your PHC.

But, hold on a second, you know what to look for, do you know WHERE to look for them?

Well, that's what I plan on tackling next - the TWO paths of hiring an operator for your company.

I'll tell you all about it in a short while but first I want to introduce you to the cutest sponsor we have had on this show my French Bulldog, Humphrey!

Yong-Soo Chung [00:14:56]

Humphrey is my adorable French bulldog. And guess what? He has quite a following on social media! Over 150,000 followers if you’re counting, across Instagram and TikTok at @SpottedHumphrey.

Every time we post Humphrey in a new harness or with a new dog toy, people keep asking us, “Hey, where can I buy that?”

So, what did my wife and I do? We decided to launch a dog boutique named after him called Spotted By Humphrey. Spotted By Humphrey is the destination for all your fur babies’ needs: treats, leashes, dog toys, and even an award-winning dog poop bag holder called Poopsy Daisy, which my wife designed all on her own!

So, check out Humphrey’s shop at SpottedByHumphrey.com and use code FIRSTCLASS15 for 15% off your next order. That’s SpottedByHumphrey.com. I’ll leave a link in the show notes.

Yong-Soo Chung [00:15:59]

And now, let's get back to our episode on the importance of having great operators for your business!

Before the break, we discussed the three key ingredients that make a great operator - autonomy, mentorship, and trust. But the real question is WHERE do you start looking for such a person?

Well, there are two paths.

You can either:
- Promote from within
OR
- Hire from outside

Seems quite obvious doesn't it? I have chosen my operators multiple times using both these paths and I have made my fair share of mistakes with each path. I can tell you from experience that the 'obvious' is where most people trip up.

Over the years, I have collected the pros and cons of both paths and identified nuances that are often lost on you if you are hiring for the first time. If you are looking to hire an operator for your own business, I can guarantee you, there are some things you have definitely overlooked in your search.

Yong-Soo Chung [00:16:59]

Let me explain.

First, choosing to promote someone from within the team.

Of course, this involves evaluating your employees on a regular, near-constant basis and identifying who is fit for the job. You will, no doubt, observe all their interactions, their behaviors, their decisions and keep a running tally mentally of how those bits would impact the business if they were in key positions or key moments.

I chose one of my operators for UrbanEDC from within the team. He started off in customer service five years ago and was a consistent performer over the years. He had a natural aura of a leader which resulted in several people coming to him with their problems. Several times over these five years, I saw him deal calmly with everything that had been thrown at him without being fazed.

Yong-Soo Chung [00:17:43]

Heck, at one point, he was even running the day-to-day entirely by himself!

So, I promoted him.

And that resulted in an immediate boost to UrbanEDC.

Because of several factors.

1. Loyalty rewarded: Promoting him to be the principal operator of my business was a clear reward, which reinforced his loyalty to me. It also sent the message that loyalty was being actively rewarded with a greater paycheck and a greater status within the team..

2. Performance, not politics: My choice of operator was already a natural leader - people came to him with their problems. He had already elevated himself within the team, which is how he had come into my radar in the first place. Promoting him sent the message that I valued people who were head and shoulders above the rest - both literally and figuratively.

3. On-the-job training. He knew the job. He knew the product. He had his finger on the pulse of the customers and the community. He also had a clear grasp of the team and its dynamics. He had spent enough time in the trenches to know exactly what moved the needle.

Yong-Soo Chung [00:18:45]

But, here's something ELSE you need to realize.

To make this promotion happen, I had to wait FIVE whole years. I had to be patient as he learned his role. I had to wait until he could realize his leadership potential himself. Yes, I nudged him along the way but a leader who is not fully ready is a BAD, TERRIBLE choice for an operator.

So, I mentored him as best as I could. I spent tons of time with him, guiding him, advising him, helping him understand. But I made sure to never actually jump in and solve his problems for him. It did take additional time and effort on my part but remember what I said in last week's episode about the 'I/We/They' framework?

"Think of it as you INVESTING in their learning process, their growth."

I invested my time and it yielded a great operator for my business in return!

Promoting from within is THE way to go if you have more time to scale. It is what I would advise for teams that are still developing.

But, what if you DON'T find a suitable operator to promote from within? Or you don't have enough time to let the operator grow and develop into that leadership role naturally? What if you have no option BUT to look outside the team?

Well, then you look outside the team and bring in a SEASONED VETERAN.

You can look within your own network or work with a recruiting firm and you will definitely find someone who is a perfect or near-perfect fit for the job.

Yong-Soo Chung [00:20:09]

It might take you a little bit of time but the odds of finding the right candidate externally are much higher than the odds of a natural leader emerging from within your team.

Just remember, the part about them being a SEASONED VETERAN is important.

A seasoned veteran who has already been in that role elsewhere will be able to hit the ground running, allowing you to scale faster. They will bring with them a wealth of experience which you can leverage for your business. And, since they come with experience, they won't need any training or mentorship from you!

If anything, they will take up the mentorship role for the less experienced members of your team! And that will free you up to deal with the other, more creative aspects of your business!

It's like having a near-clone of you in terms of experience and leadership! Except, in this case you have to pay them a bit more than what you might pay if you promoted someone within the team.

And that's also concerning in the short to medium-term.

Bringing in someone from the outside brings with it the potential for friction, especially if your team is a well-knit unit and has its own group-dynamics. At the very least, it will introduce changes, which may or may not balloon into upheavals over a period of time. And, if the team doesn't mesh well with the operator, it may lead to severe attrition instead of just churn.

This happened with me and my team at my 3PL venture GrowthJet. I hired a wonderful GM externally. Unfortunately, this shook things up internally where several other members of the team decided to leave one by one. And we had to build a new core around our newly appointed GM.

And, the scary thing is, it could easily have gone the other way too.

The new leadership might have felt uneasy walking into what they perceived as a hostile environment in the workplace. Or they could have felt that the incentives of the company weren't aligned with their own. With an externally-hired operator, you start with zero loyalty. Therefore, there is always a non-zero chance that they might leave you for a better opportunity.

I'm not saying it is a major threat but it is something to keep at the back of your mind - just until things get back to some semblance of normalcy.

So, there you have it - the two paths to hiring an operator - promote internally or hire externally!

Yong-Soo Chung [00:22:19]

Finding a great operator for your business is tricky.

You need someone who is entrepreneurial but also loyal.

You need someone who is sharp at navigating the ins and outs of your business but doesn't want to start a business themselves.

You need someone who is willing to grow WITH you and not THROUGH or DESPITE you.

You need someone who is great with people.

Essentially, you need someone who is exactly LIKE you. Or, perhaps, even a better version of you. But you also need them to be okay with playing second fiddle to you.

Jokes aside, here's the simple truth, such an operator exists. And I have been lucky enough to find them time and again. Sure, I had a few hiccups along the way but those hiccups helped me refine my process and sharpen my filters.

And it makes for a great story to narrate in a podcast episode too, don't you think?

If you enjoyed this episode, I suggest you listen to episode 65, an episode on my very own framework, which I call the 'I/We/They' framework. In this episode, I take you through the THREE critical phases of a business - Experimentation, Building, and Scaling, which I have dubbed the 'I/We/They' phases.

Spoiler alert, I talk about the MASSIVE difference a great operator can make in the We and They phases - so make sure you listen to the whole thing! And when you are done listening, drop me a message @YongSooChung on X and tell me what you thought of it, yeah?

Awesome, that's it for this episode. I'll see you next time on First Class Founders!