21 Hats Podcast

A health scare in 2015 prompted Julia Beardwood to confront a question many business owners prefer to postpone: What happens when it's time to leave the business? Over the next several years, the founder of the New York City branding agency Beardwood explored a range of possibilities, including selling to an ESOP and pursuing a strategic acquisition. But when the time came, the solution turned out to be much closer to home. Years earlier, Julia had implemented a compensation strategy that gave key employees a meaningful stake in the company's success. What began as a way to motivate and retain talent ultimately created a pathway for ownership transition.

The promise is seductive: Implement the right operating system and your frustrations disappear. Your employees become more accountable. Communication improves. Growth follows. Your business finally runs the way you always hoped it would. That's the promise behind EOS, the Entrepreneurial Operating System popularized by Gino Wickman's book Traction. Plenty of business owners swear by it. Plenty have spent tens of thousands of dollars hiring EOS implementers to help put it in place. But does it work?

This week, we’re republishing one of our favorite conversations, one in which Shawn Busse, Paul Downs, and Laura Zander compare notes on their own experiences with EOS. Laura hired an implementer and spent years trying to make the system work. Paul took a more selective, do-it-yourself approach. Shawn has watched EOS play out inside numerous client companies. What emerges is a much more nuanced picture than the one promised in the book. The three owners discuss when EOS can be genuinely valuable, when it's the wrong tool for the job, and why no operating system can compensate for having the wrong people in key roles. As Laura puts it, EOS can be incredibly helpful "for people like me 10 years ago, who just don't know what they're doing." The question is whether that's enough to justify the investment.

For years, Kim Robinson worked on the brand side, helping major companies connect with artists and creatives. Eventually, he decided he’d rather be working for the artists themselves. So he launched 3pts, a company that helps creatives handle the business side of their careers—everything from pricing and marketing to partnerships and strategy—so they can spend more time focused on the work they love.The first challenge, Kim says, is convincing artists that thinking about money and business doesn’t somehow compromise their creativity. The second is helping them understand that even the most gifted creatives still need a framework for pricing, positioning, and building sustainable careers. In our conversation, Kim explains why so many artists struggle with the entrepreneurial side of their work, what brands often misunderstand about creative talent, and why he eventually realized he had more in common with his clients than he expected.

This week, Sarah Segal, Jaci Russo, and Lena McGuire tackle a question many service business owners face: Which is the bigger risk—an employee who feels overburdened or a client who feels neglected? The discussion begins with Sarah explaining why she's had to reestablish boundaries with some clients who were texting and calling her employees after hours and bypassing the systems her agency has put in place. Sarah wants her team to be able to disconnect at the end of the day, and she wants clients communicating with the entire team assigned to their account—not developing overly close relationships with individual employees. In her view, protecting employees from burnout ultimately leads to better service for clients.

Jaci approaches the challenge very differently. Her creative staff rarely communicate directly with clients. Instead, account managers serve as the sole point of contact, much like restaurant servers relaying orders between diners and the kitchen. The goal is to protect specialists from interruptions, keep them focused on their work, and ensure that client communication remains clear and consistent. The result is a lively conversation about competing priorities, client expectations, employee well-being, and the hidden risks that can emerge when clients become too dependent on individual employees. Plus: Have you ever had an employee leave and take clients with them?

Sean Joy is head of M&A at Chenmark, a Portland, Maine-based holding company that acquires a handful of small businesses each year. At first glance, Chenmark may sound like a traditional private equity firm, but it isn't. The company is family- and employee-owned, and when it buys a business, the goal isn't to improve it and sell it a few years later. The goal is to own it indefinitely.In our conversation, Sean explains what Chenmark looks for in an acquisition, how it finds businesses to buy, what it's willing to pay, and how it approaches management after a deal closes. For owners thinking about succession, Chenmark offers a different path—one that sits somewhere between selling to private equity, selling to employees, or passing the business on to the next generation.

This week, we explore some contrasting opinions about artificial intelligence. Paul Downs has serious doubts that AI will ever have a significant impact on his business. Paul, who builds custom conference tables, says his business depends on something AI still lacks: real world experience. While AI can generate impressive images and concepts, he argues that it has no understanding of manufacturing constraints, material properties, production processes, or the capabilities of the people and machines that have to bring an idea to life. “An image of a thing that looks cool is not a design,” Paul says. “A design is a set of information that's informed by intelligence and experience.”

• Ted Wolf, who helps companies implement AI, agrees that AI can't replace the collective creativity and judgment of skilled people. But he believes Paul may be looking at the problem too broadly. Instead of asking whether AI can design and build custom furniture, Ted suggests breaking the workflow into smaller pieces and experimenting with targeted applications. “You know your business better than anybody else,” Ted tells Paul. “But don't look at the big picture and think that's the entire thing. There are many small pieces that people can start doing today.”
• The result is a thoughtful debate about one of the biggest questions facing small business owners: Is AI going to change everything, or are there businesses where human expertise will remain irreplaceable?
• Plus: Channon Kennedy shares what she learned from participating in a Goldman Sachs program for Black women entrepreneurs. And the owners discuss what debt can—and cannot—do for a business: “Funding does not fix a broken business model. It makes it die faster.”

When Bryan Clayton graduated from college, he discovered he had two options: take an entry-level job and a pay cut—or go back to mowing lawns, which was already making him more money. He chose the lawns. Over time, he built a commercial landscaping business that grew to $10 million in annual revenue before eventually selling it. But even while running that business, Clayton had been thinking about another problem: why was it still so hard for homeowners to hire a reliable lawn service?Despite having no background in technology, Clayton bootstrapped a platform called GreenPal, which connects homeowners with lawn-care specialists—essentially an Uber for landscapers. Today, still entirely self-funded by Clayton and his partners, GreenPal serves more than 300,000 users nationwide. In our conversation, Clayton talks about the operational mistakes that trip up many small businesses, how GreenPal uses both incentives and penalties to improve landscaper performance, and how the company is using AI to identify contractors whose businesses may be headed for trouble.

Twenty years ago, Bo Burlingham gave a name to a feeling a lot of business owners had struggled to articulate. In his book Small Giants, Bo profiled companies that had chosen not to chase growth at all costs. Most were bootstrapped, owner-operated businesses that cared less about getting big than about building something enduring, meaningful, and excellent. They weren’t anti-growth. They just wanted growth to be intentional. And for many owners who read the book, the reaction was immediate: “I thought I was the only one who felt this way.” Out of that recognition grew a community—and eventually an organization—led in large part by Paul Spiegelman, whose own company embodied the Small Giants philosophy. With Bo’s encouragement, Paul launched the Small Giants organization 15 years ago to connect owners trying to build great companies without sacrificing culture, independence, or quality of life.

At our recent 21 Hats Live gathering in Cincinnati, we explored where that movement goes next in a Brainstorm session with Jean Moncrieff, who took over leadership of the Small Giants organization last year. Jean—who’s from South Africa, lives in Zurich, but is moving to the U.S.—brings both momentum and candor to the role. He recently led his first Small Giants Summit in Detroit, which attendees—including me—praised for its renewed energy and sense of purpose. He’s also the author of a terrific new book, Finding Freedom: The Business Owner’s Guide to Building a Valuable Company and a Meaningful Life. But as you’ll hear, Jean recognizes there are challenges ahead.

What exactly is Small Giants today? Who is it for? What makes it different from the many other organizations competing for the attention of business owners? Does it need a more formal set of principles—or even an operating system—to help companies put its philosophy into practice? Can it stay true to its founding mission while also attracting businesses large enough to support its events and programs? Ultimately, the conversation arrives at a tension at the heart of the enterprise: Can the Small Giants organization itself become a sustainable, profitable business without losing the values it was created to protect? In other words, can Small Giants become a true small giant?

Show Notes:
The organizations discussed in this episode include: The Great Game of Business, the Tugboat Institute, and EOS Worldwide.

The books discussed in this episode include: Finding Freedom by Jean Moncrieff, Small Giants by Bo Burlingham, Another Way by Dave Whorton with Bo Burlingham, The Great Game of Business by Jack Stack and Bo Burlingham, The Power of Mattering by Zach Mercurio, and Profit First by Mike Michalowicz.

The businesses discussed in this episode include: Smiley Technologies, ITR Economics, Zingerman’s Community of Businesses, Text-Em-All, Tasty Catering, Venturity, ImageOne, and Atomic Object.

When Eugene Khayman first got involved with Million Dollar Sellers, it was essentially a support group for entrepreneurs building businesses on Amazon. Back then, the opportunity seemed almost limitless. Today, ecommerce feels a lot more complicated. Competition is tougher. Customer acquisition is more expensive. And sellers have many options beyond Amazon. At the same time, Khayman believes Amazon itself has changed—and not for the better. In a recent post on X, he argued that Amazon’s growing fees are “destroying the marketplace it created.” He’s now leading a campaign called Save Our Sellers, aimed at pushing back on policies that many third-party sellers believe are squeezing the businesses that helped make Amazon dominant in the first place.In this conversation, Khayman explains what sophisticated ecommerce operators understand that many traditional small businesses still don’t, how AI is beginning to reshape online selling, and why building a business on someone else’s platform can feel both irresistible and dangerous. We also talk about the tradeoffs between selling through your own website versus chasing visibility on giant platforms—and whether Amazon is still worth it.

Michelle Wyatt has replayed the events in her mind countless times, looking for warning signs she might have missed. But even now, she can’t find any. Both employees had passed background checks and drug tests. Both were considered trusted, valued members of the team. And yet, within a span of months, two violent incidents involving employees left Michelle and her company reeling. In this week’s conversation, Michelle joins Jay Goltz, who has dealt with employee violence in his own business, and special guest Sandy Kapell, who’s made a career leading human resources, to wrestle with a question that haunts a lot of business owners: How much responsibility can you reasonably bear for the actions of your employees?

The discussion goes beyond hiring practices and background checks. Michelle talks candidly about the grief her team experienced, the guilt of wondering whether she should have seen something sooner, the relief that the violence didn’t occur aboard her riverboat cruise ship, and the unsettling realization that no amount of experience truly prepares you for something like this. “Please stop torturing yourself,” Jay tells Michelle. “From what you've said, there's just nothing you could have done about this. It's part of business, unfortunately.”