0:01 Who are you? And where are you going? What do you want? Hello and welcome to Business Lessons from the Military. I'm your host, Kevin Bemel, and I'm here every Tuesday at 10:00 a.m. Pacific time to talk about military history, doctrine, and leadership practices and then distill from them information, ideas, concepts
0:36 that we can apply to our businesses and professional practices in order to make them go better. So, I I don't believe I don't remember if I mentioned this uh last week kicking off uh the 2026 season, season four of the show. Wow. But uh you know, having spent uh um 16 years uh in the United States Navy with the tremendous support uh that I received from you, my fellow citizens, as well as my colleagues in the military. This is a way for me to give
1:11 back to you um some something of uh what you gave me. I I I will tell you just to share a a brief personal note out of the blue. I believe it was on Friday of last week. I got an email from a shipmate uh from when I was deployed in 2011 on the USS Ronald Reagan. And uh uh it it was very it was very touching. Um he had been uh he had he had some unfortunate things happen to him. He was really
1:46 struggling uh during the deployment and uh you know he came to see me as as many of you know I was a chaplain in the military and we we talked over a number of we talked a number of times and you know typically that's kind of it. I never know what happens. So, here is this uh this young sailor uh you know, now it's what 14 15 years later. He's happily married and uh he's he's in civilian life and and really uh you know he's been able to recover and
2:21 move on uh from those troubles. Extremely gratifying uh to know that that that is the case. And uh so in a in a way this is me kind of uh continuing my my chapency if you will. So last week I I started a a four episode uh track if you will talking about uh Alfred the Mayan and in particular his book called the influence of sea power upon history 1660 to 1783
2:59 which he wrote in 1890. It is one of the most influential books on navies and sea power and indeed one of the most influential books dealing with the military o of all time. And it was it was read not just by uh people in the United States Navy and and naval lead civilian naval leadership here in the United States, but it was it was um read and consumed and the ideas were adopted really all over the world
3:35 including uh Japan and and uh European nations etc. So it's it's it's hard to overestimate the impact that Mayan had uh by by writing this book. And uh to the best of my knowledge, no one has ever uh broken down the concepts that he talked about and applied them to businesses. Although as as these episodes are titled, how empires and companies rise and fall. So I I I
4:14 wouldn't say that countries are literally the equivalent of companies or vice versa, but there are a lot of parallels. I I was having this conversation with uh my friend Michael last night. We meet almost almost every Monday night. um have now for gosh uh six or seven years I believe at this point. And you know the reality is the United States this year is celebrating uh its 250th birthday. We were trying to come up with uh countries specifically
4:50 as they're currently being governed that have been around longer than the United States. So, Great Britain, of course, has been around a long, long time. One could make the argument that it's been kind of the same government since 1066, Magna Carta, although not strictly so. It transitioned from an absolute monarchy to a constitutional monarchy during that uh you know thousand roughly thousand years. Uh the French Republic postdates the United States by a few years. The French Revolution actually
5:26 occurred after the American Revolution. Um, you know, um, Germany, you know, was was really not a modern nation state until the latter part of the 19th century. Italy somewhat similar. Um, China um, it in its current iteration was founded in 1949 with the takeover of of of the country by by communist forces. Um, Japan too was largely rebuilt post World War II. So, so while there are there are
6:02 probably some, you know, perhaps uh smaller countries that maybe have been around um as long as the United States, um not a whole lot. Um and and you know, kind of the major players on the field today. Um you know, not not a lot of them. Uh the US, Russia, right? Russian Revolution 1917 overturned by 1991. Uh you know again so the you know major players uh the United States at at this
6:37 point I think has has the longest uh history. So companies too they they're built they exist for a while they they fall. Um there are companies that have been been around for um a long long time. Um uh um there's a a an Italian uh perfume company um S Nolla that's been around for roughly I believe it's 800 years. Um there are other European companies that have been around for literally centuries. Uh but but they're
7:15 rather the exception uh to to to the rule and uh you know companies are are are created built they most you know don't don't last for a whole for a very long time. So um there's there's kind of a a a cycle would be the wrong word. Um but a but a sort of um I I don't know what you would call it. uh a a process by which companies are built. They last and then they decline and and move off the you know the the stage of commerce
7:52 if you will. So uh that's why I decided to use uh um Alfred uh the Mayan's work as the basis for a discussion about um the the the the uh how how empires and companies rise and fall. So I talked um in in episode one about uh five concepts. Um sea power is a system not a fleet. Uh trade follows security. Geography creates opportunity and
8:29 constraint. Long-term strategy beats tactical winds. And national policy shapes commercial success. So those are the five I talked about in episode one. In episode two, I've got five more uh about which I'm I'm going to talk. And let's let's start off with control of trade routes equals control of wealth. So this is something that Mayan saw uh I would say both with respect to the the Royal Navy, the the Navy of Great Britain and uh to
9:07 a lesser extent because of the the time that he was well I mean yeah the United States Navy really wasn't on the stage at at the the the time that he was uh writing. Um but but clearly Great Britain was the dominant uh economic power in the world at this time. There were other countries that that um certainly had prominence among them the Dutch, the Spanish, although not at anything like their former glory.
9:42 Uh the French um they those were probably the major uh powers at the time. But there's there's no doubt that because of the strength of the Royal Navy that Great Britain controlled in many cases trade routes and therefore controlled uh wealth. And so you know the ro now the Royal Navy was not uh selfish in the sense of they controlled trade routes purely for the benefit of Great Britain. What the Royal Navy sought to create was freedom of
10:18 navigation. So that uh so that people could uh you know ply the seas so to speak free of of things like piracy and such that um that that made it difficult for companies to uh to conduct uh international trade. And so in many ways um England's dominance of of trade routes and and and the control of wealth that it gained by
10:55 doing so it was almost more economic war warfare if you know kind of capital W warfare than it was you know u decisive combat actions. So countries recognized the strength of the Royal Navy and they realized that they were not going to be able to successfully challenge it and so they didn't. Right. Um and and and of course the reason that Great Britain could uh maintain such a powerful navy
11:33 was it had the wealth the economic vitality to do so. Now it's interesting to note that the transition of power from Great Britain to the United States starting at the beginning roughly the beginning of the 19th century had at its genesis the cha the ability of the United States Navy to challenge the Royal Navy. initially um and primarily
12:08 in waters adjacent to the United States. Um but but even even in local waters, I I would um recommend to you the show that I did on uh John Paul Jones um in in the the battle uh with the the Sarapis and the Bonom Rishar um that I did I believe last year. Right. So the American Navy was able to sort of take it to Great Britain with the help of the French to be sure. Uh but but you know that was the beginning and it was a small
12:45 beginning to be sure of the loss of the Royal Navy's control of trade routes. Okay. So how does this apply then to business? Well, control of distribution really creates a durable advantage. I think the best place that we see this is with a company like Amazon, right? So, I can't tell you exactly what the percentage is, but a lot of what is sold on Amazon is actually sold by independent merchants. Okay? But Amazon
13:23 has such a powerful distribution system between its website and its logistical support etc that it is absolutely dominant in the retail space. Now after a long time of being an also ran Walmart is starting to challenge Amazon right and so these are kind of the two big competitors in this space and it'll be interesting
13:58 to watch this play out. Now that's you know kind of on the huge macro side. So what does this mean for us who have small businesses? we're not going to dominate distribution for example if we're a retailer right so um what we have to do is find a way to sort of dominate in our niche so that in essence we have a platform that that
14:35 cannot be to use a Navy term sunk unk right by a larger competitor. Either because the resources it would have to expend relative to what it could gain by doing so do not make it worthwhile. or they're actually benefiting from the strength of our small platform within the larger ecosystem perhaps of distribution and logistics that they've created. I'm going to talk about logistics next. Okay. So, so how do we
15:13 do that? Well, um I I'll going to talk about an example from my own practice. So, uh, the end of last year, um, I needed to do payroll, uh, for for my company. And, uh, since I use ADP, the largest payroll service provider in the world, I thought, well, I'll just use it for my company. Any, you know, too, it's it I just have one employee, one W2 employee anyway, me. But, you know, what the heck, you know, I'll just hire them. It probably won't cost that much. and
15:49 uh you know and and be done with it. And you know kind of in the event because I I started the process in December um after consulting with my accountant and and him telling me what I needed to do uh came a few days before the end of the year and ADP dropped the ball on me. Right. And so here's here's a company with platform distribution, if you will, dominance, right? Largest payroll company in the world, right? They dropped the ball on me. And so I made a
16:27 frantic contact to my accountant and said, "Hey, what do I do?" He said, "I don't do payroll, but here's someone who does. Uh her name is uh Tammy Sidling. I'm going to give her I'm going to give her a you know a plug here. Uh because what Tammy does is although she's certainly tiny compared to ADP, she's created a platform within her accounting and bookkeeping business. She's not a CPA, regular accounting and bookkeeping business so that she can compete effectively with the behemoths.
17:05 And especially for a small business owner like me, I can send her an email. I'll get a response usually pretty quickly, certainly within, you know, a few hours. Okay? And if need be, we can get on the phone and have a conversation without the the hassle of trying to find someone at this at a huge company with whom to speak. Here's the kicker. she can do my payroll for less than what ADP would charge me. Right? So
17:40 this is this is what I mean by control of of trade routes kind of you know um redefining that into the business sphere. Tammy has created uh a platform and it's it's really kind of a series of uh technology solutions, if you will, that she's put together that that create the situation where she can she can act quickly, effectively, and provide a level of service that the huge competitors just they're not going
18:17 to deliver. First of all, they're not they're they're just not going to care as much as Tammy does because it's her own business. Okay? So, that's what we can do to create our control of trade routes. We can offer something that even huge competitors cannot. Okay. Next, um chokepoint um uh sorry, logistics are a strategic weapon. Okay. So fleets failed when the supply lines to them collapsed.
18:56 Okay? Now, you know, picture a fleet uh back in, you know, the, you know, 17th 18th century. We're talking about uh squarrigged sailing ships, right? The distances were long. The the speeds at which ships could sail was relatively slow compared to today. Okay? And yet they had to be supplied. Okay? And while for the most part these ships brought their own supplies with them, if it was
19:31 the Royal Navy and they were in the on station in the Caribbean, so they might supply ships would periodically, you know, be sent out to resupply them so that they could stay on station and not have to go back. Okay? And because the British Navy, the Royal Navy had the ability to do that, they were able to project naval strength much more effectively than navies that didn't have that resupply ability. Okay? And so
20:06 the robust logistical support that the Royal Navy had, okay, allowed them to endure far away from home ports and keep that power projected. Okay, so here's the the reality then for a business, right? So reliability will beat innovation when it can't scale. So we can come up with all kinds of new stuff, but if we're able to deliver effectively
20:44 day in and day out, month in and month out, year in and year out, okay? And what we're delivering is something that people need. that is going to be far more effective than if we come up with some spanking new product that maybe will sort of catch people's eyes for a while. Um but then you know they're looking for the next hot thing. Okay. And so, uh, you know, these these traits that I just mentioned,
21:19 things like reliability, um, really make a difference, especially for us small businesses. You know, can we what I found is oftentimes I just as a small business can't really rely on large organizations. I'm not and look there it makes perfect sense. I'm not large enough that if they lose my business in the end they really care, right? Um because I'm a micro factor of
21:54 a percent of their business, right? And so and they don't make enough off of my business to spend a lot of money supporting it. Okay? So whereas if I'm doing business with as I mentioned, you know, Tammy, okay? So I'm not saying I'm I'm an appreciable percentage of her business either, but I'm a much larger percentage of her business than I am of a large company's business. Okay? Same with my bank. Okay? My bank is I bank with a
22:29 a a boutique business bank here in Los Angeles called American Business Bank. Okay, they have one branch downtown and they are very very good at what they do. Okay, in fact, uh right right before I I started this show, I sent an email to my banker because I want to have him come on one of my other shows, Trust and Estates Weekly, and talk about how they do banking so well. Okay? Because I've been with Wells Fargo, I've been with US Bank, would never bank with them again.
23:05 I am too insignificantly tiny a fraction of their business for them to really care about helping me solve the problems that arise in my business. And indeed, in the past, they've been a source of problems for me. They've created problems for me. Okay? American Business Bank or refer them as ABB. Okay. They're they're they're upfront. They told me when I was first introduced bank, we're not always going to be able to solve your problems, but we are going to do our best to help
23:40 you solve them. Okay? And you're going to get a straight answer from us and I can pick up the phone and call my banker and I can have a conversation with David and if we can work it out, we can. And if we can't, this is one thing I know. One of the large money center banks is not going to be able to help me either. Okay? That's just the reality of the situation. And I'm never going to have a relationship where I can call up my own banker at a bank like whatever it is, Bank of America, City Bank. Okay? I'm
24:16 I'm too small for them. Okay? So these are the kinds of things that we can do. We can create a reliable business or product. Okay. where that reliability allows us to support the operations, the needs, how however we would describe them of our customers in a way that we're important in their life. We're important to their success. So I believe
24:52 it was a a investment banker by the name of Felix Roy Hatton who once said if you want to be successful in business make yourself indispensable to your clients and customers. We can do that through logistics. not the logistics for our own business but the the the sort of logistical support writ large that we give to our clients and customers. We can be the service provider or product
25:27 provider that they know they can always count on. Okay, let's take a break and come back and talk some more. America is a maritime nation. Our freedom and security depend on strong sea services. The Beverly Hills Council of the Navy League stands with our Navy, Marine Corps, Coast Guard, and Merchant Marine through community support, education, and advocacy. For over 120 years, Americans of all walks of life have heeded our call. No prior military
26:04 services required to join our mission. the Beverly Hills Council of the Navy League of the United States. Help us support those who serve at sea. Visit navyleague.org. Okay. So the third idea that I want to share with you today from uh Alfred the Mayan's uh the influence of uh sea power on upon history is choke points decide outcomes. Okay. So in a naval context,
26:44 okay, narrow passengers concentrate power and risk. Okay, so we we can see this in many places throughout the world. Think think of the straits of Gibralar which which is at the entrance to the Mediterranean Sea. Okay. England had to take control from its perspective had to take control of the straits of of Gibralar in order to maintain its naval dominance. Okay. Um um the Suez Canal is another choke
27:21 point. When the Houthies were lobbing missiles at ships traversing the Suez Canal, it became untenable for cargo ships to use that choke what amounted to a choke point. As a result, instead of taking that shortcut up the Suez Canal, they had to sail around the Cape of Good Hope at the ba at the southern end of Africa, elongating their the time it took for them to get from one point to another and
27:56 significantly increasing the cost of seaborn transit. Okay, those are just two examples. I could give examples uh in uh eastern Asia as well where uh oh here's here's one the the straits of Hormuz right in the um um in the Persian Gulf, right? I've traversed the Straits of Hormuz. I did so on when I was on my ship that I mentioned at the beginning of the show, the USS Ronald Reagan. And there's a game that the Iranian Navy uh
28:32 plays with US ships uh tra um that are transversing uh the straits. And that is they send these little patrol boats out with their machine guns on limbered like they're going to attack us, you know, a nuclear aircraft carrier, right? And so then the captain of the ship sends down crew members to unlim our 50 caliber twin, you know, machine guns. And these little Iranian patrol boats, they they sort of play chicken. They get as close to the boat as they think they can without getting blasted out of the water essentially. And then they go back to
29:08 their port and they say, "Oh, we really harass, you know, the United States Navy." Right? It's it's silliness. But the fact of the matter is the United States has for a long long time maintained at least one aircraft carrier in the Persian Gulf to see to it that oil leaving our allied countries in that region have freedom of the seas so they can transport their oil. Now you might say, well wait, why would we want that? Let their oil be bottled up and then we can sell our oil more expensively. Well,
29:44 there's a balance because high energy prices it cause the cost of all kinds of goods to increase, right? And so, better to let the oil markets operate uh relatively free flow and and and that way oil prices can settle where they they're they're best meeting market demand. That's a more effective way to deal with it. Okay. But choke points give navies an opportunity to create uh
30:19 to to to decide outcomes basically. Okay. And those outcomes may or may not be favorable uh to a particular country. Okay. And and the other thing is small forces at a choke point can exercise an outli outsized influence. Okay. Now, Iranian little patrol boats are not going to stop a nuclear ai a US nuclear aircraft carrier, okay? But they they were successful in capturing some small US patrol boats uh that were on the I
30:56 believe it was the western shore of the straits at one point. They took some sailors captive, right? And and it was it was a big incident at the time. Okay. So, choke points give an opportunity to create a power advantage that wouldn't exist but for that choke point. Okay. So, how do we deal with so-called choke points? Well, we may not call them choke points. We may call them uh bottlenecks in uh supply, in data, even in
31:31 regulation. So, we see this in particular here in California where the regulations to build housing are so difficult, we have a huge housing shortage. I I've heard it estimated as high as 600,000 units. Now, in a in a state that has a population of whatever California is, 10 20 million people, that may not sound like a lot, but it is. Okay? And the housing shortage is profound in California and it's driven housing prices up very high. Right. What is the
32:09 bottleneck? It's it's not a magic there's no magic formula. It's that it is so costly and timeconsuming to get entitlements to build housing that unless you're going to build a very expensive home, it's hard to justify the cost of going through that entitlement process. Okay? Even when there's government incentives to offset the bottleneck, a lot of times it's still not worth it, right? And so
32:45 this is what we have to look at in our own business. Where are the bottlenecks that we face? Now I know for myself because I'm a small business, I don't have resources for you know political lobbying and that sort of thing. So I estu as much as I possibly can anything that involves having to deal with the government because so much of how governments operate these days come down to uh being able to lobby them
33:20 successfully. I'll give you a small example from when I had my prior real estate company business. I I think I've told this story before, maybe not on this show, maybe it was on People Making Money, but uh my cousin and I at the time were working on a small development project. And like any development project, and it was residential, it was a it we were we were intending to build, I think it was four to six loft uh you know, residences in in a an old uh uh storage building, moving and storage building. um up in uh
33:58 Eagle Rock to be to be precise. So, anytime a developer is going to do that, he basically needs the blessing of the councilman for that district. And so, my cousin set up a time for us to meet with the the councilman for that district. don't remember what his name was, but he was smart enough to talk with the head of the neighborhood uh homeowners association in advance of that meeting to see if she was on board with what we wanted to do. And here's why. So, the two of us show up at the
34:35 meeting. We're at the councilman's office. They take us into the conference room. And interestingly enough, the councilman himself was not there. Okay, now this was a I think it was going to be like a $3 million development. So it wasn't huge, but it was certainly big enough to take the councilman's notice, but he was not there. So we we we which is what we had thought was going to happen. His staff was there. And we're sitting and we make our presentation about what we're going to do. And the staffers say to us,"Well, we're not really sure whether we should recommend this to the council member, the council
35:12 member or not." We said, "Well, you know what would um what would motivate you to recommend our that the council member get behind our project?" He said, "Well, you know, the council member has an election coming up, right? You hear what they're asking for? They're asking for a campaign contribution. Right now, you can say, "Oh, that's completely sleazy and scummy, and I would agree with you." And that is the way the process works here in the city of Los Angeles. rather than play that game,
35:49 uh my my cousin Ross said, "Um, I I think there's someone that you need to speak to." There was a a a speakerphone console sitting in the middle of the table. Without asking permission, he dialed the telephone number of the president of the Homer's Association. And she gets on the line. He says, you know, "Hi, I don't remember her name. June, whatever her name was. This this is Ross." Oh, hey Ross. How you doing? Great. He said, "We're sitting here with the council member staff. I think I mentioned we were going to be meeting with them today." She said, "Oh, yeah." And she and he said, "Would you tell the
36:24 council member staff the, you know, your thoughts on what we discussed earlier this week?" She said, she said, "Be happy to," she said, "the the members of the homeowners assoc homeowners uh not association, homeowners uh group, they want the council me the councilmen to be behind this project. We want this project. It'll be a benefit for our neighborhood. We've we've we've talked with Ross and Kevin extensively and the council member needs to get behind this, right? So, we had to outflank him. Otherwise, we would have had that
37:00 bottleneck and we would have been pay to, you know, make donations to this council member's reelection committee in order to get them to get behind our project. So that's what I mean by identifying choke points in our businesses and doing what we can to either mitigate the choke points or control the choke points. Now I don't I don't know did we mitigate or did we control that particular you know uh choke point in the story I just told. Uh I'll leave it for you to decide but in one way or
37:35 another they have to be dealt with. We can't ignore them because they can destroy our businesses. Okay? And so we've got to learn what are the choke points, how do we deal with them effectively. Okay? Uh number four, the interdependence of commerce and protection. So there es especially with the Royal Navy which is again was the dominant sea power uh at the time that that uh man you know was was u uh not
38:12 writing his book but it was the it was that was the dominant navy uh during the time period that Mayan covered in his book. So it's there was a very interesting sort of symbiotic relationship. So merchant fleets required protection by navies. In this case the Royal Navy. But the Royal Navy also needed merchant fleets in order to get supplies to distant ports so that they could stay on station. So it was a mutually beneficial
38:50 relationship that merchant fleets and navies had and it was that interdependence that made them strong. So in in the same way okay when we look at a similar issue from a business perspective right growth and risk need to scale together. Okay. So, uh, last week on my show, People Making Money, I talked about essentially scaling too fast. And I used
39:26 as the example Crispy Cream which had done a huge with a huge growth period in the very early 2000s to the point that they outstripped their ability to provide the kind of products that people had come to love about Crispy Creams. They were not able to deliver on their promise and the whole thing basically fell apart. Krispy K Cream ended up having to shutter hundreds if not thousands of locations
40:02 and and really go back to sort of core principles, right? So they overexpanded without the safeguards that were necessary to protect what it was that was so attractive about crispy cream, which is of course those amazingly delicious glazed donuts, not to mention all the other flavors, right? So as we look at our businesses, as we look at for example growing our businesses, okay, how do we create an indep
40:39 interdependent relationship between what we need to sustain the growth and what those things that are necessary to sustain the growth need from us. Okay. So, I'm going to go back to my uh I example of of my having to uh do payroll the end of last year, right? It almost turned into was a disaster for me. If I hadn't been able to get my payroll done before year end, I would have owed a lot more taxes and and in so
41:16 doing, I would have reduced the resources that I had available to myself for myself to live and for my business to operate and grow in this year. Okay? Because I would have had to pay it to Uncle Sam instead. by creating an interdependent relationship with with Tammy. Okay, who cares about me as an individual business owner, right? So, on the one hand, I can I now don't have to worry about payroll
41:51 anymore. Tammy has it, right? Once once a year, the beginning of December, I'll give her the numbers I that my accountant gives me for doing my payroll for the year. I'm done. Don't have to worry about it. I can count on her support. Tammy can count on regular payments from me. Okay, we we're set. It's all set up to be automatic, so she doesn't have to worry about chasing me down to get an invoice paid. Nope, not at all. Number one. And number two,
42:27 we've already discussed one potential source of additional business for her. It it wasn't something that she did. Um but yesterday, I emailed her about another potential source of business for her. So, I'm I'm a big believer in creating interdependence because this is what allows the entire tide to rise. And so, that's what we have to look for. in our businesses. Where are there small businesses especially, where are there opportunities for us to create interdependent relationships that that
43:03 then provide mutual support for both sides to grow? Okay. All right. Finally, scale enables endurance. Okay. So large economies from a naval perspective, large economies can absorb losses that smaller powers cannot. Okay? Again, one of the reasons why the Royal Navy and Great Britain were able to be so dominant for so long was they had probably the largest
43:38 economy in the world. This is before the time we measured GDP and all this kind of stuff. Almost for sure, Great Britain, a tiny island nation by any measure, you know, in terms of the, you know, the world had an outsized effect because it had such a huge economy that could then provide the funds that were necessary to pay for a very strong navy, but also uh because it could support a huge
44:14 merchant fleet. Okay, smaller power powers just couldn't. Germany, it was not a unified nation during this time and although it had aspirations or or different parts of Germany had aspirations to have an impact on the world stage, it could not. Okay, it just didn't have a large enough strong enough strong enough economy to challenge Great Britain. That was one of the reasons for World War I is Kaiser Vilhelm thought that at that point in history, the early
44:52 20th century, his kind now now Germany is unified. He had he he was the leader of a unified Germany that he had the kind of economic power that would allow him to challenge the biggest powers of the day including France, Great and Great Britain. and and in so doing kind of um write what he felt was the slights he received from these other countries, right? And and in the event it turned out not to be the case. Okay, Germany was just not a
45:27 large enough economy uh to be able to absorb the losses that the allies, especially once the United States joined World War I in 1917, Germany just could not sustain the losses. And by the way, a similar thing happened in World War II um with the United States being the what what they what was called the arsenal for a democracy. And then once uh Russia was able to build up its industrial prowess, there was no way Germany was
46:03 going to win. Germany by itself could not outproduce the United States, let alone the United States and Russia. So even though France's industrial uh strength was basically um you know taken over by Germany and and England's was was not particularly large at that point although it was it did add to uh the material available to the allies. Germany just could not overcome uh that disadvantage. Okay. And so
46:39 attrition favors the wellresourced. So the an interesting I'll I'll use an example from World War II. So the tanks that Germany built, the Tiger tanks in particular, were much more powerful than the American Sherman tanks and the T34s that that Russia was building. Okay? They were a much better tank when all is said and done. According to a lot of, you know, military historians, the the problem for Germany was it could not produce them at a high enough rate
47:18 to overcome the massive numbers of Sherman tanks and T34s that were being produced by the United States and Russia respectively. Okay. And so all you know in essence Sherman's multiple Shermans would o overwhelm one Tiger tank right uh and and that became so that scale enabled the ability to produce at scale is what enabled the allies to win World War II. Okay. So how do we apply this then to our businesses? Well,
47:56 number one, cash reserves equal the ability to continue operating and competing. Okay? So, it's critically important, especially for those of us who have small businesses and practices, that we have significant cash reserves available, right? Because there will be times when we may lose a client or more than one client. There may be downtimes when a business just business dries up. COVID is is the ideal example. I was
48:32 talking to uh um a friend of mine uh his name is is is Reggie. He's the area manager for this clothing store that I go to called 11T. And I I dropped by the store. I had just gone for a haircut. Can you see my hair is shorter than it was last week? Right. And and and I met he he and he he he asked me, you know, kind of what I was up to. I said, "Oh, I just got a haircut." He said, and I I kind of pointed to where my barber he says, "Everybody always points to a haircut over there." And I said, "Yeah, yeah, the Barber Lab is there." So Barber Lab is owned by my friend Jesse Kentio. Now,
49:10 I I met Jesse right I think maybe the year before COVID hit in 2020. I mean, I met him in 2019, a year before COVID hit in 2020. Now, if you remember during COVID, uh, hair stylists and barbers and such, they were practically dead in the water because essentially, I know in the city of Beverly Hills, which is where Jesse had his shop and still does, uh, basically the word went out, you can't see customers. what is a small business to
49:45 do? Okay. And so from Jesse's perspective, fortunately, he had some reserves on hand and then he had some customers like me who basically went to him and said, "Okay, how can we help you get through this? How can we build up your reserves?" Right? And so a bunch of us uh paid for haircuts in advance so he had the cash to carry him through. Otherwise, it's, you know, doubtful whether he would have made it. Okay. And it would be a shame. Greatest barber I
50:21 ever had. Okay. I'm giving plugs to a lot of businesses today, I guess. But but whatever. My my point in in telling the story is who anticipated that COVID was going to happen and and and COVID having happened, who was going to who would have anticipated that it was essentially going to shut down commerce. Okay. So, while maybe we, you know, we're not going to have enough reserves on hand that will sustain our business, our small business if it's shut down for six months. We should probably have enough
50:56 on hand that if our businesses shut down for one to three months, at least one to three months, we can get through it and then rebuild, right? And so cash reserves mean strategic freedom to a business. Okay? And the flip side is if we have very thin margins, okay, this will tend to magnify risk over time because if the the cost of our inputs goes up, our margins disappear. If marketing costs have to be increased to
51:32 sustain our position in the market, our margins disappear. Right? Any change in the financial p picture for our business means margins will disappear if we're starting out with thin margins. And so we have to be mindful of that in order for us to sustain our businesses. Okay. So reviewing real quickly the five concepts that I covered today uh based on Alfred the Mayan's book the influence of sea power upon history. Okay. Control of trade routes equals control of
52:07 wealth. Logistics are strategic weapons. Uh choke points decide outcomes. Independence of commerce uh the interdependence of commerce and protection. And finally, scale enables endurance. If we apply these principles to our businesses, we will be more likely to be successful. We will build an enduring business. maybe one that will one day celebrate its 250th birthday like the United States of America. So, thank you so much for
52:43 joining me today. Really appreciate it. I wish you a Oh, uh tomorrow at 10 a.m. is my show uh People Making Money. And then on Thursday at uh 5:00 p.m. is my show Jiggers's Place. Okay. Hope you'll join me later in the week. Again, thank you so much for joining me today. I appreciate your viewership. If you have questions, comments, criticisms, links to my social media will be in the show notes when the episode posts on uh on YouTube. Happy to hear from you. Wishing
53:18 you a wonderful rest of the day and signing off as I always do. Marie darling, you are