The Biggest Common Mistake of Entrepreneurs with Tripp Watson
Today’s episode of Bottom Line Faith features Tripp Watson, founder and CEO of The Watson Firm.
“Strive for something bigger than you that will outlive you. I didn’t want to sit down at the end of my days and say ‘I wish I had worked more’; what I did want to say is I wanted to build something that would live beyond me.”
Full Transcript of Podcast Below
Ray: Well, hello, everyone. This is Ray Hilbert, your co-host at Bottom Line Faith, and we’re excited about another edition of the program where the word picture we like to share is that we like to lift the hood and tinker around in the engine of Christian leadership. And so we have the incredible privilege here to travel all around the country and interview some of the top Christian business entrepreneurs and marketplace leaders in the country. And I’ll be introducing today’s guest in just a moment. This is going to be a really unique program, and you’re gonna, If you are a business owner listening to this program you are going, you better take notes. If you’re driving, I want you to stop right now, pull over, grab your notepad, your ink pen; you’re going to learn a lot. This could be a session that you will be so thankful that you listen to. If you have a partner in business, you’re going to learn a lot today; I promise you that.
So if you’re driving, pull over, and make it safe so you can take some notes. But if you’re sitting at your office, at your desk or whatever, you’re going to want to take notes as well. I’ll get back to that in just a moment. If this is your first time checking out the Bottom Line Faith program, you can listen to and sign up and subscribe and receive all of the interviews that we’ve done here at Bottom Line Faith by visiting our website at bottomlinefaith.org. Also, if you’re a Christ follower in business, and you’re looking for tools and resources to help you live out your faith and integrate your faith in the way you run and lead your organization, and perhaps you’re interested in learning about a Truth At Work roundtable group. Truth At Work is the sponsoring ministry for this Bottom Line Faith program; check out our website at truthatwork.org. Well, folks, our guest today is Mr. Tripp Watson, and I am in beautiful Birmingham, Alabama. It is a somewhat rainy day; it’s been pouring outside this morning. But we have an incredible interview today with Tripp Watson. Tripp is the founder, CEO, runs the whole place of the Watson Firm, the entrepreneurial law firm practicing in Alabama and in Tennessee. Tripp, welcome to Bottom Line Faith.
Tripp: Morning, Ray.
Ray: Are you doing okay?
Tripp: Doing well.
Ray: I am excited about our conversation today. I’ve already learned from you. So thanks for that. And so as I mentioned in the opening of the show here. What we like to do here is we really like this to be a learning environment. There are great programs out there: leadership podcasts, teaching podcasts, seminars, those sorts of things. One of the unique things here at Bottom Line Faith is we want to learn from practitioners: people who are in business, running businesses, talk about lessons learned, talk about best practices, and those sorts of things. And that’s kind of your area of specialty, is it not?
Tripp: I’d like to think so, yeah I try to.
Ray: And by the way, probably not sure if I should mention this or maybe I’m not sure if I should mention, Tripp’s a millennial.
Ray: You’re 32 years old.
Tripp: Are you allowed to say that on the air? It’s a dirty word.
Ray: I don’t know, I don’t know. But something tells me you’re pretty special, and all Millennials are. But I’m a Gen X, you know, but that’s going to come into play later because you are really right on the cusp of many transitions that are happening in the marketplace. So we’re going to be talking about that. So Tripp founded his law firm in a very unique way. Tell us a little bit of the story, Tripp, of how and why you founded your company and the unique perspective that you’re trying. bring to what you do as a practicing attorney.
Tripp: Yeah, so I’m like, I think, a lot of attorneys that start their own practice. When I started mine, I started it as a business that just happened to provide legal services. So I come at it in a very different way than a lot of other attorneys. So I while I am an attorney, while I do have professional responsibilities, I try to run my practice like a business, and I try to think of it as a business. So that’s really kind of the way that I approach it is I work with business owners, I’ve advised business owners, and if I was not a business owner myself, I probably would not be in the best position to advise them. So that’s what, I can have a little different approach to practice.
Ray: What I love, and you shared this with me before we started recording our interview is you actually come from a line of entrepreneurs in your family. Tell us a little bit about that, because you come at this approach with some perspective.
Tripp: Yeah, so you know, you might know a lot of attorneys out there who might be third generation attorneys. I am the very first attorney in my family. So my family is littered with entrepreneurs, folks that started their own businesses. So my dad started his own business. I saw it at the very early days, early stages, where we didn’t have enough money to put paint on the walls. As I was telling Ray earlier, the primary color of our house was drywall for several years. But I’ve also seen the company be very successful. So I’ve seen every single stage of a business, so I try to approach that with my practice as I’m working with entrepreneurs. So I can tell them from personal experience in addition to being able to tell them from a professional standpoint of what they’re probably going to be looking at.
Ray: Yeah. So that gives you some unique perspective because you’ve got context, not just education, not just case law, that kind of thing. But you have real context because through your family, you’ve seen mistakes that were made, you’ve seen wise things that were made, decisions that were made, and so forth. And so we’re gonna hopefully, on today’s program, we’ll get to a few of those things that you might be able to give some tips, you might be able to give some best practices that all business owners should be taking in account. Is that right?
Tripp: I hope so.
Ray: We will, we’ll get there. But before we do though, Tripp, tell me a little bit about your faith journey.
Tripp: So the short version of it is born and raised in the church. You know, the glossy exterior is that everything’s fine, everything’s good. I’ll be honest, though. So I was born and raised in church, my parents, my dad was the deacon of the Baptist church. And so I grew up in the church, was there every single Sunday, basically, whenever they did youth events, I was there.
So I accepted Christ when I was about 13 years old. And other than that, it would seem like a pretty standard course. The truth of it is, is that when I went to college, having grown up in the church, having gone to Sunday school every single weekend, I just assumed that I knew the Bible pretty well. During my freshman year of college, I took a New Testament class, and I really quickly learned that I didn’t know as much as I thought I knew. But one of the things that fascinated me was my professor, she was pointing out all these issues, these potential contradictions, even, sometimes even these things that would really make you question a lot of a lot of things that you would believe.
But every single Sunday, our local service was five o’clock in the college town, so she was there every single Sunday, when the lights were on in the church, she was there. And that really kind of struck me, somebody that knew from an academic standpoint. So I knew that there was something else going on. And so I’ve always been involved. My wife and I are now associate deacons, and I’m always looking to learn more things. And so Truth At Work has been great, finding out different things about other folks and how they believe, because I know that they struggle with the same. It’s not as easy as it often looks when you’re a child or something like that. So that’s kind of the way that my experience has been.
Ray: That’s, that’s really interesting. And you’ve been married four years. And you met your wife where?
Tripp: In law school, so I broke the rule for her. I had a policy of not dating girls in law school, but she just dinged it out because I just graduated.
Ray: And I would bet at home, you have some really interesting debates and discussions.
Tripp: Yeah, debates is friendly. I don’t think those are debates.
Ray: Just remember, she’s always right. She always wins.
Tripp: Oh, yes. She’s much smarter than I am. I’m willing to admit that.
Ray: Oh, that’s good, smart man, smart man. Very wise, very wise. Well, folks, we are talking with Tripp Watson. He started the entrepreneur law firm here in Birmingham, Alabama – the Watson firm – and really they specialize in entrepreneur law, as, really as he’s going to share with us. So tell us a little bit about, you used an analogy before we went into recording here, about that you said everybody understands about houses and restoration and remodeling as it compares to what you do with business owners.
Tripp: Yeah. So, you know, most people have a house, and they’re either renting, owning, thinking about remodeling, thinking about buying it, a lot is similar with a business. And so that’s the analogy that I use a lot. So you what I do for businesses is I’m basically a business contractor. I build them up, tear them down, remodel them, restructure them. And that’s basically the way that I work with companies. And so a lot of folks don’t think about their company that way. But when you think about, hey, well, we want to add on a partner, what you’re actually doing is you’re basically creating a business marriage, and you’re moving into a house together.
And so what is that house going to look like? How many rooms is it going to have? Are you going to own it? Is it going to be an apartment? Is it going to be, and there’s a lot of similarities in business that way. So when you’re looking at it, is it going to be a franchise? Is it going to be an LLC that you’re going to own? So what I typically work with my clients on is to say, “Okay, what is it that you want to do? What’s the best way to do that?” And then let’s actually make it happen. And so that’s a lot of the questions that I end up getting asked, and a lot of the advice that I end up giving is, what’s the house supposed to look like? And how do we get from where it is to where it needs to be?
Ray: I love that analogy because that just makes so much sense. As you said, we can all identify with that; it’s a part of our everyday lives. And so Tripp, there’s a really good chance that someone listening to our program today is contemplating starting a business. Maybe they already have another business that’s been up and running, and maybe they’re looking to start a different business. Or maybe someone’s listening to the program and they’ve never started a business before. So if you wouldn’t mind, on the borderline of asking for free legal advice, but we are in an interview, what would be some of the biggest mistakes that you see prospective entrepreneurs make in the start-up phase, and what would be some good counsel for them to make sure, what are the main things they need to make sure are in place at the start-up phase?
Tripp: So at the risk of being self-serving, good advice doesn’t come cheap, and you get what you pay for. So a lot of times, so one of the biggest mistakes that I see is that people are unwilling to even seek out advice. It’s not necessarily from an attorney, but it can be from a lot of thing. It can be from, “I don’t even know the questions to ask when I’m starting a partnership with somebody.” And it’s not seeking out a lot of that. There’s plenty of resources that people can seek out that they just don’t. Don’t assume that you know it all.
I mean, I’ve been doing this for five years. I don’t know anywhere near as much as I should or could. Because I’m still finding out things that are even minute, little things that can have big impacts. And if you’ve never done this before, there’s no way that you could know it. So at the very early stages, seek out somebody that can help you out because honestly, the biggest, the biggest mistake that you can make is not knowing the right questions to ask. Because a lot of times I get folks, you know, and there’s a lot of analogies between business partnerships and marriages. I get a lot of folks that come out, and they’re in the honeymoon phase of their business. They had this great idea, they have their buddy that they’ve gone to school with, that they’ve been friends with forever, that they’re going to go start their business.
And as sad as it is, in Alabama, at the end of the day, it’s a lot easier to get an actual divorce than it is to get a business divorce. And so when you’re going to go and make these decisions with somebody, you know, marriage is supposed to be forever; Business divorce or business marriage is not supposed to be forever. And so asking the questions on the front end, “Hey, what is our expectation going to be when we’re actually running this business? Who’s going to be doing the work who’s bringing in the business? Are we going to value those equally?” Because they can be very important on the front end to understand because some of the best partnerships have two different personality types that work beautifully together. But if they are not working well, it’s going to be nuclear. And so you’ve got to have two different skill sets, and they’re going to clash.
So, you typically see somebody that’s, you know, we always say that you need a finder, a minder, and grinder in a business. You need somebody to find the business, you need somebody to actually grind out the work, and then you need the minder to make sure that everything’s working at the end of the day. Those are three different skill sets that are spread across two different people. And each one of them is important, and everybody thinks that their contribution is the most important. And so making sure that you’ve understood on the front end what that contribution is because, you know, if you’re in a marriage, you know that both of your contributions are important to that marriage. There’s not even that expectation a lot of times in businesses, and so not understanding that on the front end can be very difficult. But that’s honestly the biggest issue that I run into with partnerships is a good partnership can be amazing. A bad partnership can absolutely ruin not only a good business, but really cause a lot of stress I somebody’s personal life and cause a lot of downstream problems.
Ray: Yeah, I think that is so valuable, what you have just at Truth At Work, I see over and over again, partnerships, particularly, it’s like you said. It’s a honeymoon. we come in on the front end, “Oh, it’s going to be great. Everything’s perfect. Oh, this person’s that, and I’m this, and it’s just what could possibly go wrong,” right? Yeah. And boy, then a year or two, and then all of a sudden, there’s little things that start to eat away at that trust, that start to eat away at that excitement. So why is it so important not only to ask those questions, those important questions that you’re talking about but have documentation to it?
Tripp: Oh, yeah. I mean, at the end of the day, everybody remembers things differently. There’s actually some interesting studies where eyewitnesses compete misinterpret what they’ve actually seen. And that’s from something that might have happened a few hours ago. There’s actually another study that somebody that was told by a family member, a life event that had never happened, but they had vivid memories of that event. So like a trip to Disney World or something like that, that it never actually happened. What’s the likelihood that you’re actually going to remember that conversation that you had over lunch five years ago, where y’all decided that this is how we all were going to handle that? Nobody’s going to remember that. And so a lot of times, hey, I’m an attorney. I see when these things go south. If it devolves into a he-said, she-said, that’s going to be not only difficult to determine but expensive. And so a lot of times, having something in writing, even if it’s writing it down on a on a napkin. It’s not ideal, but it’s better than nothing.
Ray: And also there’s not only the memory issue, but there’s intent, right, it’s well, that’s not what I met. I know I said you are 70% of the business, but I didn’t really understand that or mean that. So, folks, we’re talking about, you know, if you’re contemplating starting a business, starting another business, it’s so critical on the front end to have these conversations, particularly in a potential partnership. And as Tripp is walking us through here, how critical it is to have excellent documentation around that. Because we get in the heat of the battle, we get building the business, and we forget, or things change. So we need to go back to kind of our founding documentation. Well, folks, this is Ray Hilbert at Bottom Line Faith, and I am interviewing Tripp Watson, who founded and runs the Watson Firm, the entrepreneur law firm headquartered in Birmingham, Alabama. Tripp, before we move on. If someone wanted to learn more about you or the company, where would they find you on the web?
Tripp: Yeah, check me out at birminghambusinesslaw.com.
Ray: Well, we’ve talked a little bit about the start-up phase. Now let’s say that someone’s been in business for a while, and maybe they have developed processes and systems that are very important to the success of their business. Or maybe they’re beginning to think about transition out of the business later on. That’s a whole different set of issues than on the front end, on the start-up, right? Would you tell us a little bit about some of those dangers, or key things to be keeping in mind at that phase in a business?
Tripp: The very first thing is, a lot of folks don’t think about exiting their business until it’s too late. I had a brilliant businessman, who was actually my father’s partner, basically put it this way. He said, when you’re running a business, you’re fighting a war. And if you’re fighting a war, then you need to have a clear wind condition, or else you’re just going to have a perpetual battle.
And so if you’re looking at it that way, then you need to understand, “Okay, well, this is what I’m looking for. This is what needs to happen.” And at a certain point, either one, maybe I want to have something that I’m looking for, I want to have that retirement. Which can be difficult If you’re a business owner, we’ve talked about that. But the other thing is, is that you might get to a point where you’re really kind of stretching your own capabilities in getting the business to the next level. This is something I run into a lot with business owners, is some have a very good personality that is great for spooling up a business. But it’s not really great for doing the day to day management of the business once it gets to a certain size. And so it might be in the best interest of the company for you to actually step down.
And so you’ll hear serial entrepreneurs that spool up businesses every five years. I see a lot of those guys. But honestly, the big question is, is really being upfront and honest as early as you possibly can about what you’re looking for. Is this going to be a business that you run forever? Is this your retirement plan? Or is this something that you say, “Listen, I want to get it spooled up, and I want to look for somebody to sell it to?” Because those are two very, very different strategies. The way that you staff, the way that you structure your business, those questions will lead to dramatically different answers. So first, be honest with what it is that you want to do. The second thing is, is that talk to the key players. A lot of the times that I see what most people want to do is they want to transfer their business to their sons and their daughters. Do they know that? There was a situation; I think it’s about a year or two ago, where the oldest operating general store had been inherited by a 21-year-old in college. And his parents had never asked him whether or not he wanted to continue to operate this business that had been in operation for generations.
And he said, “No. He didn’t want to do that.” And nobody had ever had that conversation. And because nobody had had that conversation, they were having to shut the store down because nobody was able to run it. Have you talked to somebody that’s a key player, that would be able to carry on the business once you leave, if that’s what you’re looking to do? And then the last step is to actually get advice on how to do that. So once you’ve actually talked to the people that are involved, seeking out somebody that has experienced on doing that, whether that be a business broker, whether it be a financial advisor, whether that be a lawyer or something like that. Get you advice on how that actually works. Talk to other business owners that have done that and say, “Listen, what did you do? How did that work? What worked well? What worked poorly?”
Ray: Well, the reality is every business owner is going to exit their business, right? It’s either going to be by design, by intention, by death, some court, some event, a transfer to the next generation, or what have you.
Tripp: Yeah, absolutely. There is an exit plan for your business. It just may not be your exit plan. I tell folks, what’s going to happen if you’re starting a business and your business partner, who was responsible for bringing in 80% of the revenues because they are a fantastic sales guy, what happens if he walks out of my office and gets hit by a bus? What happens? Is the business is going to continue on? You got to be able to answer that question. And when you die without a will, it’s called dying intestate. When you die in a business, even the structure of your business dictates how that’s going to be handled. So as a practical matter, your company might be forced to close up.
A court might say, “Listen, this has gotta close.” It might also say the exact opposite: “It has to continue on; you have to continue operating.” Oh wait, now you’re in business with your business partner’s ex-wife or wife or sons or daughters or somebody that you don’t even know, might not even like. And now you’re forced to do business with them and they need to sign off on everything that you do. So yeah, just because you have a business, there’s a whole downstream effect of what happens when something bad happens. Now of course it’s not something that you’re thinking about on the front end because everything’s sunshine and rainbows, and you’re not expecting for the rainy days.
Ray: So I’m gonna be a little bit blunt, audience, at this point, because you know, here at Bottom Line Faith, we are really speaking to you as Christ followers in business and in the marketplace. And we have the pre-supposed position on this, that we are stewards, that our businesses have been entrusted to us by God Himself, and we’re to run those businesses to his glory. So I’m just going to go ahead and say it. If you’re not thinking and planning upon the exit, it’s either voluntary or involuntary, in my opinion, and you can write me, email me, call me, whatever.
I think you’re being a poor steward, let’s call it what it is. And Tripp is really gently nudging us, and I know his conviction behind this is strong. You’ve got to do this if you’re going to be a good steward over the business that God has entrusted you. Whether you’re on the front end, starting it up, you’re in the middle of a story, and you’re building it, or you’re nearing the back end as far as transitioning, and you can see that finish line coming. If you are not doing what you need to do to steward those resources through proper planning, I’m going to say it; you don’t have to, Tripp.
Tripp: I will.
Ray: Fair enough. We agree they’re being a poor steward. So if that acknowledgment is enough to spur you on, I’m okay if you’re a little frustrated and upset with me and maybe even Tripp right now. But I want you to pray about that, and ask God if that’s being a good steward over the resource that he’s entrusted to you. You want to add anything to that?
Tripp: I absolutely, 100% agree. You know, I’m a Christian capitalist, I believe that a business is the best way to not only meet the needs of mankind but also to meet our spiritual needs. And part of that is, is that there are people that rely on you. Your clients, your customers, but also your employees, your family, there are other people that count on you to be able to continue operating this business. If there’s a cure for cancer out there, I’m convinced that a business is going to be the one that provides it. And if your mission stops because your business’s mission is separate from you. If it stops because you’re no longer allowed to or able to pedal that wheel, then you don’t have a very good mission. You don’t have a good contingency plan on your mission.
Ray: Folks, that’s millions of dollars of counseling, that our brother Tripp has just offered to us. And he knows; he sees this every day. You see the pain and the heartache and the agony and the despair and the disappointment when this isn’t done.
Tripp: Oh, absolutely.
Ray: On a daily basis. Tripp, you just offered a comment I thought would be a great transition for us as we kind of enter the last segment of our time together. But you’ve talked about this whole idea of being a Christian capitalist, right, and that it’s a great, probably one of the best tools to meet not only the physical but the spiritual needs of mankind is through business and capitalism. How does your Christian faith on a daily basis play a role in how you advise your clients, whether or not they’re believers or followers of Christ? How does your faith play a role in what you do?
Tripp: I mean, that’s difficult. It’s difficult, I think, for business owners generally. But I think it’s especially difficult for folks that are in my position in law because what we’re dealing with as a lawyer, and what I deal with as a lawyer, is conflict. And I deal with conflict every day. And it might surprise folks to hear this. But even though I’m a lawyer, even though I deal with conflict, I avoid conflict. I don’t like conflict anymore.
Ray: You seem like a pretty, pretty nice guy to me.
Tripp: Right now, at least. I’ve gotten my coffee. I’m well right now. So, you know, I try to avoid conflict. But the human experience is conflict. Everybody has something a little bit different that they’re looking for. What I typically run into is that I got, I have folks dealing with conflict, they’re in conflict, they have a problem with somebody else. And one of the issues is that I need to recognize or what they need to recognize a lot of times is that we still want the same things; we just may disagree on that last little bit.
So let’s not let that last little bit throw out everything else that we agreed on, because we still want to look after our families, we still want to provide for our mission through our business and personally. We might disagree about the price that’s going to be charged. We might disagree about when that was supposed to be delivered. But we can still agree that we’re still looking out for basically the same thing. So as far as being a Christian capitalist, one of the things that I look at is I look at a way to say, “Listen, is this really going to contribute to the mission? Is this mission-critical?” Because at the end of the day, you know, I’m a lawyer, I could say this. A lot of times, the lawyers are the only ones that win. So that’s going to take you away from your mission. So a lot of times, one of the things that I deal with is to say, “Okay listen. Is this really, really important? Because if it’s really important, then let’s fight about it. If it’s mission critical, let’s fight about it.”
Ray: If it’s a hill worth dying on.
Tripp: Yeah, yeah. But if this is a tricky, tacky little thing, you know, let’s, let’s take priorities. And so that’s where it really comes in is I deal with conflict on a day to day basis. And so what I try to say, and what I try to keep in mind myself is, is this mission-critical or is this just something that we can fight over?
Ray: In Song of Songs, it says that it’s the little foxes that destroy the vineyard. And I’m sure you see that a lot, that things that really aren’t mission critical become the big molehill, the big thing. Man, that’s probably rooted in pride a lot. You probably see that.
Tripp: Oh, absolutely. And it does. It absolutely comes down to pride. I’ve been hurt, and it’s hard to get over that. It’s hard. It’s hard to say, “Okay, listen, I’ve been hurt. It stinks. Let’s focus on what really matters.”
Ray: Yeah, folks, we’re talking with Tripp Watson, the CEO and founder of the Watson Firm, the entrepreneur law firm out of Birmingham, Alabama. Believe it or not, Tripp, we are at the end of the program. But I promised before we recorded, there was one question I would absolutely ask. And for those of you who are regular listeners here at Bottom Line Faith, you know that every guest, my last question is what I call my “4:23 question.” And if you’re a first-time listener, this is your first episode of Bottom Line Faith, let me set a little context for this. The reason I call this my “4:23 question,”
It’s rooted out of Proverbs 4:23, where Solomon writes, “Above all else, guard your heart, for it determines the course of your life.” And Tripp, there’s some biblical scholars who believe that these may have been some of the last words that Solomon penned. We know he gave us Proverbs, he wrote much of Ecclesiastes, and the Bible describes him as the richest, wisest man who ever lived. And we don’t know for sure, but maybe he’s gathering around his friends, his loved ones, those who are most precious to him, and he’s conversing and saying, “Look, I know I’ve given you all these pearls of wisdom, all these principles to live by, all these truths that are important in life and serving God. But above all else, remember this. This is like the one thing, if you forget all the others. Above all else, guard your heart, for it determines the course of your life.” So Tripp, we don’t know how much time any of us have on Earth, but let’s just wind the clock forward, and you’re at the tail end of your time this side of eternity, and you’ve gathered your family, your friends and your loved ones. And it’s now your chance to pass along your” above all else advice.” So Tripp, fill in the blank, above all else…
Tripp: Strive for something bigger than you, that will outlive you. That’s a common issue with millennials, is we often look at that. I grew up and saw my dad work, you know, 70, 80 hours a week, working at a kitchen counter. And one of the things that I recognized was that at the end of the day, I didn’t want to sit down and say, cause my dad passed away when he was relatively young. And I didn’t want to sit down at the end of my days and say, “I wish I’d worked more.” What I did want to say is that I wanted to build something that would live beyond me. So try to figure out what that is. I’ve tried to figure out what that is. And just continue to work towards that mission and build that mission, because if it’s a truly worthwhile mission, it’ll outlive you. And that’s the most important.
Ray: Love it. Well, folks, I hope that you have, like me, taken a lot of notes. Tripp, this has been fantastic. Thanks for joining us.
Tripp: Thank you.
Ray: And I hope this has been an encouragement to you, Tripp, but I know that it’s been an encouragement to our listeners, particularly those who are contemplating starting new business, have an existing business, and you know that the Lord has convicted you in this episode that you need to be a good steward. And one of the ways to be a good steward is through proper planning and documentation, moving that company forward.