0:00 who are you and where are you going what do you [Music] want hello and welcome to people making money I'm your host Kevin bemel and we're here every Wednesday at uh 10:00 a.m. Pacific time to talk about all matters related to professional success starting and building a business and and
0:36 Building Wealth so um for those of you who saw the show yesterday I'm still kind of struggling with my my voice here uh you know I was I don't forget who I was talking to yesterday I said I uh I was talking to a client I said I I I think I've got that Suzanne St James voice they were a little young to know who she was was but for those of you who remember the wonderful TV show McMillan and and wife and and uh and the absolutely superb Suzanne St James who
1:11 was known for this uh sort of female husky voice I don't know why it occurred to me that maybe that's that's what's going on here so by the way I not at all to compare myself to uh to miss James and I do not not even come close to the level of talent that that that that she displayed as an actress U but uh you know my I guess this is my you know impersonation of her maybe I don't know so you know laughing in the midst
1:47 of uh you know turmoil or whatever so so my topic oh boy you know sometimes so my topic for today is what business are you in and this is a question that I ask myself periodically uh because it really is the most crucial question um that we can be
2:22 asking um if we want to be and stay successful excuse me me so let me give you um a few examples and i' i' I may have used some of these in the past let but let me give you a few examples of businesses that did not understand the business that they were in so one of them was buggy whips now you may be buggy whips you
3:01 know a 100 years ago and and and and even 150 years ago to be in the buggy whip business was a fantastic business because aside from railroads which only uh traveled along certain routes the most efficient way to to travel was by horse and buggy and it was a good idea to have a buggy whip if you wanted your horse to go faster and so the buby buggy whip business was a very
3:38 profitable business and then Along Came something called the automobile and buggy whip manufacturers went out of business and you might say well that that's how it goes well yes that is how it goes somebody innovates and businesses that don't keep up with Innovations a lot of times sadly end up closing okay speaking of another mode of
4:14 transportation I just mentioned railroads there was a time that railroads absolutely dominated the transportation of goods and people uh from the time railroads were first built in what the 1850s I want to say 1840s 50s until probably around uh World War II railroads were dominant post World War
4:52 II they very rapidly lost their dominance and many railroads failed um passenger railroads in particular with again the rise of the automobile failed and to the point where now we only have one passenger Railway system in the United States essentially Amtrak now there's Metro liner which is it's still it's it's essentially um part of Amtrak it's a and and the government runs passenger railroads there are no
5:27 private sector passenger railroads railroads and transportation of goods by rail has declined significantly um it has started to recover as the system of Intermodal um integration has has been developed um but railroads no longer uh control the percentage of Transportation of goods that they used to in both cases these the people who ran these
6:03 businesses did not understand the business in which they were and so sadly they either went out of business or they they suffered a big decline in business and and that's for the for the owners of the businesses the investors in the businesses the employees of the businesses those are all terrible results and the responsibility rests squarely on on the
6:40 people leading those businesses so we you know we can't expect our employees to adapt to changing economic circumstances um that's not their job their job is to pursue the mission and goals of the business as directed by essentially the senior leaders of the business whether it's the SE Suite in a big Corporation or whether it's the owner of the business or the co-owners of the business that that's their job um
7:16 I should say the the job of understanding in what business they are is is is for the leadership and for the other employees they're there to execute based on the vision that leadership sets so it would be a reasonable question to say well what what business were the buggy whip manufacturers and if they weren't in the buggy whip manufacturing business so I I can think of several uh one might
7:52 be um animal implements business meaning all imp ments related to animals not just buggy whips so maybe they should have been involved in saty intact maybe they should have been involved with um the uh uh care of animals um maybe they should have been involved in uh instruments for um guiding Transportation Systems so as the horse
8:30 and buggy was overtaken by um you know by automobiles um they were maybe they you know created devices for directing automobiles I I I I don't know I was not I was I know I look old I was not alive 150 years ago but buggy whip manufacturers should have been looking ahead and saying we need to either be repositioning our business or starting
9:07 new lines of business or buying companies whose products or services or both have a future in light of changing economic conditions those are the choices that are always before us shift our business start new lines of business acquire businesses that are aligned with changing economic
9:43 circumstances okay it's a little bit easier to say what business railroads are in they were not in the railroad business if you had asked leadership of railroads what business they were in they said that they would say we're in the business of running railroads no they weren't they were in the business of transporting goods and people okay and and here's the reality railroads any mode of transporting goods and people comes and goes wooden sailing ships have have come and gone uh you know they just have uh ships
10:21 that stored individual Goods in their hold have come and gone now we have container ships right so what doesn't change is the need for people and companies to transport goods and people right companies need their people to be able to get from place to place in order to do business companies who produce products need those products to be able to get from point A to point B right so railroads were in the business of transporting people and
10:56 goods have they recognized that they should have either uh started trucking businesses as an adjunct to their railroads so that railroads transported Goods over long distances and then they mve the the the products from the you know from the box cars in onto trucks for final delivery to
11:31 customers instead of doing that trucking companies arose who handled both long and short haul uh long and short hauling of of products of goods and railroads lost a tremendous amount of business now the other thing railroads could have done if they didn't recognize the competitive challenge they were facing right at the beginning they could have bought trucking companies and integrated them into into their uh into their the service that they provided and they could have
12:06 developed essentially internally an intermodal system that we see now that's there are various you know companies in which various companies are involved okay but they didn't do that and that's why um railroads saw a significant period of decline so we as business owners and people in professional practices are faced with a number of challenges right now so among them are uh artificial
12:41 intelligence so for lawyers in particular um artificial intelligence is an enormous challenge okay because what people can already do in terms of getting information about legal issues through AI is astonishing I I use it myself to do to do legal research now I was a law clerk in a former uh you know a former life so to speak and
13:17 so uh you know I I have some skill in that area and and I'm able to get the information that that you know I I use chat GPT that chat GPT generates and I know how to confirm if it's correct um but what would have taken me hours to do when I was a law clerk I can do now in minutes right and when I say hours to minutes what what would have what I would have had to have driven to a law
13:53 library to do and then you know research the cases did what's called Shepherd eyes them and all of that would that was at least an afternoon's work four or five hours okay now today with Lexus Nexus I don't have to go to a law library um but still to you know to do the research and shepher eyesee the cases and such still would still probably take at least an hour to two hours okay for what used to take me maybe four hours or five hours to do in
14:28 a law library now I can do that same research in 20 minutes okay so a third to a sixth of the time okay and and I can do it a non- lawyer I don't need a lawyer to do it for me now as more and more people figure out how to do this and with look due respect to lawyers okay the fact fact of the matter is a lot of the um
15:04 inaccessibility to the law has changed because we don't use legal language today anymore we don't talk about in contracts party of the first part and party of the second part and all that kind of stuff that was pretty much designed to make the law impenetrable to anybody but lawyers we don't use Latin in in legal documents anymore again which was used primarily to make the law inaccessible to non-lawyers you know most statutes are written in Fairly
15:39 plain language legal cases are written in written up in Fairly plain language and so you know someone with a reasonably good ability to read and comprehend material they can read legal cases they can read statutes and you know pretty much figure out what they're about and and so where where does a lawyer today add value well the number one area where
16:14 a lawyer adds value today is understanding how statutes and case law are actually going to be handled by a judge okay because they have the experience in court they go there especially if they're a litigator day after day after day and so they work with these judges and they're in a much better position to know what the actual results will be
16:49 than even someone like me who has a legal research background but doesn't go to court and argue cases uh you know before judges okay now uh that's you know that's only in reality a small part of of practicing law and a lot of law practice does not involve going to court so for trust in estate matters or I let me let me rephrase it for estate planning matters
17:24 that doesn't involve going to court right so a lot of basic estate planning which really doesn't necessitate an assessment of you know what would happen if if a particular issue were litigated um you know that can that can be handled frankly pretty well by AI okay so it it it it is astonishing you know you can ask an AI to draft a will will for you and that
18:01 will is going to be pretty good in fact I'm I'm not sure that an estate planning attorney could draft one that's that's much better okay now I'm not suggesting by the way that you draft you use AI to draft your own Wills or your own trusts I'm not saying that at all what I'm saying is that for lawyers okay they need to examine in what business am I am I in the document drafting business because if that's how you view your business you're
18:37 already behind the eight ball AI is going to be drafting documents any as well as if not better than what you can do pretty quickly and someone's GNA figure out a way to to capture the power of AI in a way that steals a big chunk of the business of drafting legal documents that's that's just the reality of the situation so lawyers cannot be in
19:12 the business anymore of drafting legal documents they they need to minimally adapt their practice model in order to I would argue adopt AI as part of their their standard way of working so as to make their practice much more efficient and really understand and capture the power of AI okay but pivot away from their practice
19:49 or their business being about drafting legal documents to something that AI can't do okay so AI I cannot say how particular documents are going to be handled in real life at least not yet okay they can give hints and clues but they don't have the real word of World experience of interacting with other lawyers with beneficiaries with judges with trustees with you know uh probate
20:26 administrators with probate referees they don't have that experience and they're not going to get that experience that's not what AIS do and by the way when I say AIS in this case I'm talking about primarily about large language models which is a particular type of AI and so lawyers need to be in the business of understanding human interactions and using that knowledge and experience in order to provide
21:02 better service to their clients so this is just this is just one contemporary example of how I think this particular profession the law needs to be adapting and understanding the business that they're in okay so now now I'm going to I've talked about some specific examples now I'm going to I want to broaden the discussion a little bit
21:37 fundamentally every Business and Professional practice is in one of two businesses they're in the business of serving human needs or they're in the business of serving human wants so let me give you an example of each one someone who's involved in the provision of food they're growing it they're transporting it they're Distributing it they're selling it
22:12 they're cooking it they're providing a human need because human beings cannot live without food okay that's a human need someone who is involved in uh entertaining whether it's writing shooting a video music Sports all of these are providing a
22:47 human want we don't need to go watch a football game we don't need to listen to a song we don't need to go to the theater or sit at home and watch a movie those are not needs human life can continue without those now they may be import very important to you they may give you a great deal of enjoyment uh fine right but you're not going to die if you don't have them okay so every single one of us
23:22 is in the business of fulfilling a human need or a human want okay so the first step in determining what business you're in is to decide what I do is it filling a human need or a human want okay now it's not always easy to determine let's go back to the lawyers the estate planning lawyers is that a human need or a human
23:57 want well the fact of the matter is if someone dies without an estate plan okay you know they have um they're not going the fact that they don't have an estate plan is not going to cause them to die okay so an estate plan is in the category of a human want people create estate plans in order to have a say about what happens to their estate after
24:35 they're gone okay so almost by definition it's fulfilling a human want okay as opposed to again someone providing food someone providing water someone providing Health Care these are all human needs okay someone providing Transportation okay that's probably also more in the category of a need now obviously Transportation can be used for vacations and such like that um you know we can debate over a bourbon sometime whether a vacation is a need or a want but but at least some Transportation the
25:12 ability to get to the grocery store uh the ability to transport um uh um healthc care equipment uh to our house or to get to the hospital um the these These Are needs okay uh so fundamentally we're in we're in either a human the business of fulfilling a human need or a human want so that's the first thing we have to figure out now merely because you're in the food business or the food and
25:47 beverage business doesn't mean that you're fulfilling a human need okay if you're in the wine and liquor business you're unless you're dealing solely with alcoholics you're not in the human need business you're in the human want business okay and how do we know that because in difficult Economic Times uh the liquor and the wine and liquor business tends to decline which is what we've seen over the last few years okay by the way the Cannabis business too is a want business okay
26:25 notwithstanding that at least in theory a lot of cannabis sold for medical reasons the reality is that most cannabis at least here in California is used for recreational purposes and the way I know that is because the Cannabis business uh has virtually collapsed in California through lack of demand for cannabis because people who used to buy it can't afford it okay they're too busy spending their money or not too busy but they're spending their money on food and shelter and and actual needs not not
27:02 cannabis okay so um be careful in determining whether you're really in a need fulfilling need or fulfilling want business okay so I I'll take my business so my business has aspects of both if someone dies okay there is a need for their estate to be administrated because the law requires it okay now you could say well if no one
27:39 ever files for administration of that estate it'll just sit there forever and that's true and that's why I say mine is kind of it kind of is both it's a both a need and want the reality is you know people want the money that that they get through inheritance okay and and since they want that money there is a need for the probate Administration to happen Okay so uh you know in in in my case you know
28:14 I have human greed going for me I guess you know because people you know want the money and so therefore it needs to go through the probate process now um I'm not kidding myself to thinking that you know without me um none of this is going to happen of course it is there are lots of people who can who can administrate probates okay heirs to the estate can serve as as Executives and personal Representatives uh and and there are lots of people who do what I do there are lawyers who do what I do okay so um
28:53 in general I'm in a fulfilling wants business meaning that the this the uh the the estate administrations in which I get involved usually come about because the people involved with that situation want it handled in a certain way and so they know or they have confidence that I will handle it in a certain way and so that's why
29:28 um I'm brought into that particular matter okay so can you see how we need to dig down into these and be very honest with ourselves okay the fact of the matter is most of us are in human wants businesses okay you know if if if we're working for a local water utility we're in a human needs business because people need water to live I think we can go for what is it 3 days or
30:03 eight days without water something like that it's a relatively short time okay we have to have water okay um so uh you know I would argue that electricity is a human need as well so if we're if we work for a company or a public utility that provides electricity we're in a human needs business if we grow based Basic Foods when I say Basic Foods fruits vegetables grains um uh um what um cows you know pigs sheep um
30:41 the the the you know the sources of basic nutrition we're in a human needs business if we're in the business of chocolate one of my favorites right uh you know cookies cakes candy um as I mentioned before Wine Liquor beer okay these are not human needs categories they're human wants categories okay if we're in the clothing manufacturing okay if it's Basic
31:17 clothing okay you know that's probably pretty human needs because we do need to wear clothes okay but if we work for you know Gucci okay or Banana Republic okay we're no longer in the human needs category we're in the human wants category because once we get in into above the just you know clothing that fulfills the basic need for covering our bodies and
31:53 keeping us warm when it's cold now we're into the human one category okay Health Care okay basic health care human need okay plastic surgery in most cases a human want okay now there are by the way cases where plastic surgery is a human need a child has a clefted lip and can't eat properly okay um or has some other defect that prevents them from living uh
32:29 you know from living out their life okay that's a human need now uh but so I would say you know most health care is a human need uh but um there is some even some as aspects of healthc care that is really more of a human want okay all right so once we've determined which category we're in and assuming most of us are in the human wants category so the next step is we have to figure out okay what is the want that
33:06 we're in okay and that can be very difficult so let's let's let's use a couple of the examples I raised um over the last uh few minutes so uh if if we're a a clothing manufacturer like a Gucci or a Banana Republic okay we're we're we're not in the clothing business okay clothing is what we make but the business we're in is fulfilling
33:42 a a human want what is that want is it the desire to project status is it the desire to buoy uh a person's self-esteem okay is it uh is it the the want to uh fit into a particular uh group of people what is the specific
34:18 want that we're fulfilling once we identify that specific want now we have a pretty good idea of what business we're in okay so for for Gucci uh I think they are in the business of helping people reach self-actualization that's the business they're in okay and that self self-actualization can be a certain self-perception it can be the ability to
34:55 project status it could be the ability to be part of a particular group all of those are functions of human self-actualization okay now you would say well that's that's a pretty Western View yeah yes it is I mean because let's face it uh that's that is part of the western ethos for good or for bad nowadays okay part of it has to do with um the level of wealth that the West in general has attained okay part of it has to do with the focus on the individual that is part
35:32 of of the western ethos that's that's not necessarily the same thing in uh large parts of Asia okay so uh you know the business that you're in may also uh limit geographically the territory that you're going to cover okay so uh let's let's take myself what business am I in so I'm in a human wants business primarily okay so I'm in the
36:11 business of helping people efficiently solve their financial problems or their financial challenges let's say okay so those challenges may be there's a pot of money over here because somebody died and I want it how do I get it okay or it may be I've got this property and it's not operating well it's not giving it's not throwing off the income that I want from it those kind of things okay so like I said I'm in the
36:49 business of helping people solve efficiently their financial challenges that's that's the real business that I'm in okay now when people ask me you know what are you I'll say I'm an independent trustee and probate administrator because that helps them understand my function but I have to keep in mind that being an independent trustee and probate administrator is merely one way that I execute the business that I'm
37:24 in which is helping people effic efficiently solve their financial challenges okay and the same thing is true I'm in the same business by the way as accountants and most lawyers right lawyers are a little bit different because uh they may be helping people Ser um solve other than financial challenges my work is primarily Financial okay um the fact that I may be helping them solve interpersonal
38:03 disputes yes I do that but I do that because there's a financial situation um that that's at stake lawyers on the other hand oftentimes are seeking to uh resolve uh Rel you know relationship issues without their necessarily being a financial aspect to it okay so things like um uh guardianships uh child custody matters
38:38 um um disputes between partners in a business oftentimes although ostensibly they seem to be Financial they're not they're actual people disputes okay so lawyers might have a little bit broader focus on they help people efficiently solve the disputes in which they find themselves where they help people so that's some lawyers some lawyers may be in the business of helping people avoid
39:13 disputes okay some L some lawyers may be in the business of helping people avoid disputes if possible but otherwise resolve disputes efficiently okay we all have to be well not not all of us but many of us have to be in the business of whatever it is we're doing efficiently okay because that's what's going to give us the Competitive Edge that's going to keep us in business okay if I'm just in the
39:50 business of helping people solve their financial challenges I'm going to get left behind because someone's going to figure out a way to do it more efficiently than me since evidently that's not part of my business okay and they're going to be able to do it either more quickly or less expensively or both and if they can do it more quickly less expensively or both they're going to get the business and I'm not okay and the same will work true of you that same is true for you okay
40:28 so um my friend Joshua who's in a similar business with me um a noos in Santa Barbara his plan is to be able to administrate simple Estates twice as fast at half the cost right that's his slogan twice as fast at half the cost now by the way if you know math well you may figure out real quickly wait a minute if he's going to be doing it twice as fast which means at half the time at
41:03 half the cost he's still getting paid as much for what he's doing as he was before and you're right he's making a lot more money because he's working so efficiently whereas let's say you know he could handle uh 24 cases a year now he can handle 48 at half the cost but he's still making the same amount of money I'm sorry he's still making he's making double the money okay because he's making the same amount of money uh for each well no yeah yeah I was right the first time he's making the same amount
41:38 of money um you know he's and he's not working any harder right that's the thing about efficiency he's working the same number of hours making the same amount of money okay um but he's helping a lot more people and on for each of his clients they're paying half of what they would have paid before and so they're going to go to him okay and the answer is I don't we're in different businesses okay he's not in the business
42:15 of helping people solve financial problems efficiently okay he's in and I don't I don't mean this in a derogatory sense he's in the commodity side of estate and of probate Administration okay I'm not on the commodity side okay so maybe I need to tweak the business that I'm in by saying I help people solve uh efficiently complex Financial uh
42:50 challenges okay those can't be done twice as fast at half the cost because they're by definition they're complex and complexity takes individual attention working through all the individual issues all of those kind of things okay so again let's let's let's take take a step back and and review so hopefully you'll you'll find this uh meaningful what business are you in what business are you in is not what you do
43:27 it's fundamentally fulfilling a human need or a human want most likely the second one fulfilling a human want okay once you know whether you're fulfilling a need or a want now you need to determine what is that need or want so what you're currently doing is going to inform the need or want the specific need or want that you're fulfilling okay but once you figure out the specific need or want that should help you open up your
44:04 horizon to see where are my competitors coming from the competitors not the ones that are doing the same thing as me and and just make it you know mean that I have to you know fight for clients the ones that are going to make my business obsolete what are they doing okay right people in the liquor business they are not in the liquor business they're in the make people help people to feel good business help people
44:41 relax business that's why they're suffering in part because of the competition from Cannabis especially among young people okay younger young people younger people uh are not consuming Wine and Liquor as much as say people my age because a lot of them are using cannabis products right and so being in the uh helping people relax helping people escape from
45:16 Life business okay and they're not just up against substances that help people do that legal or illegal there are lots of ways that people escape from the vicissitudes of life it could be sporting activities it could be entertainment activities in some way or another all of these can be competitors okay so as as we plot our ways forward we need to open up our
45:53 apertures once once we've determined what business we think we're in we need to open up our apertures and start looking at what are our competitors doing that could possibly make our business Obsolete and then deal with that okay so thank you very much for joining me today um got off to a laughing start uh but uh um I really be curious to hear what you think about this this concept I think it's very important going forward again with all
46:28 the challenges that are going on so my links will be links to my uh social media will be in the show notes after this episode posts um on YouTube and so please drop a comment uh comment criticism uh any anything you like we would would love to hear what you think about it so uh this is my last show for this week uh next week on Monday at 10:00 a.m. is my show uh trust and Estates weekly and um I'm going to be talking about the estate tax return
47:04 process okay so uh please join me for that at 10: am Monday on Tuesday at 10: am My Show Business lessons from the military my guest is Derek Keller and he's going to be talking about propelling metotic me meteoric I spelled it wrong here in my my schedule I just realized mediatic growth and then one week from today we'll be back with the next edition of people making money and then next week on Thursday is my every other week show
47:40 jiggers is Place 5: PM every other Thursday come and join me for a cocktail while we talk about all the things about life besides business and finances so thanks very much to those of you who join me live I appre appreciate it always great to see you lamman thanks thanks for your uh thanks for your comment really appreciate it always um hoping you're well and signing off as I always do Marie darling you are my bell courage at all times my