Unlocking Business Potential with Christopher Volk
Subscribe: iTunes / Spotify
Apply to be a guest on our podcast here
Show Notes:
In this episode of Mission Matters, Adam Torres welcomes Christopher Volk, author of ‘The Value Equation: A Business Guide to Wealth Creation for Entrepreneurs, Leaders & Investors.’ Christopher brings over 40 years of corporate leadership experience, including successfully taking three companies public on the New York Stock Exchange. He shares insights on how most companies are only worth what they cost to create and discusses strategies to build businesses that are worth more than their creation cost. Christopher also delves into key concepts from his book, discussing how entrepreneurs and investors can create wealth by crafting effective business models and making prudent financial decisions. Christopher’s experience with Berkshire Hathaway and Warren Buffet offers valuable lessons on investor relations and building successful companies.
About Christopher Volk
Veteran Executive, Entrepreneur, Business Leader & Investor. A recognized business model expert, Chris has introduced and led three successful public companies, two of which he co-founded. Those companies provided more than. $20 billion in growth capital to thousands of businesses, helping them succeed.
About The Value Equation
The Value Equation: A Business Guide to Creating Wealth for Entrepreneurs and Investors, veteran executive, entrepreneur, and investor Chris Volk delivers an engaging, straightforward explanation about how businesses work and provide wealth for entrepreneurs and investors. The author’s signature approach is centered on his award-winning wealth creation formula in a book designed to simplify complex subjects with math no more complicated than what you learned in middle school.
Readers will become acquainted with the characteristics of successful business models, together with insights into how leaders can improve their own models in ways that generate personal and collective wealth. The author’s framework presented in The Value Equation is the foundation upon which most of the largest personal fortunes were built.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to mission matters.com and click on BR Guest to apply. All right, today’s guest is Christopher Vol. He’s author of. The value equation, a business guide to wealth creation for entrepreneurs, leaders, and investors.
Chris is also an entrepreneur himself. He serves on boards and a lot, lot, very dynamic individual. We’ll get into this and just to get us going, Chris, welcome to the show. Well, Adam, it’s a pleasure to be here. Thank you. All Chris. So looking at your background and your history, I mean you could easily do a masterclass on this and looking at your book, the value equation.
But in 15 minutes we’re gonna, pack in a whole lot of content. So, I guess first thing I’d like to talk about, Chris, is your, background as an entrepreneur, leading public companies. Where do you wanna start with that? Oh, sure. I’ve taken three companies public on the New York Stock Exchange and started two of them.
So I’ve had a long history of corporate leadership going back 40 years. Our biggest investor in the last company was Berkshire Hathaway. So I was able to get Warren Buffett to buy 10% of the company. and after leaving, what I, my goal was, was to teach people how multimillionaires get created and how entrepreneurship works from a financial perspective, not just, I mean a lot, you know, I’ve seen your book and and there there are a lot of aspects to creating a business, but, but most businesses in the world aren’t worth more than what they cost to create.
So what I wanted to teach people was how do you create companies that are worth more than they cost to build? Because that’s how most multi-millionaires got to where they got. Hmm. Can you go a little bit further into that? Like, I’m curious about what you mean by that statement. That they’re only worth what they’re, what they cost to make.
Right. Well, most companies, about 90% of companies in in America have fewer than 20 employees like that. Mm-hmm. And many of those companies are kind of vehicles for getting a personal job, which is great. ’cause I mean, you are working for yourself and you don’t answer to anybody. And I’ll tell you what this is, I have to pick on myself right now, Chris, you’re teaching me something.
That’s how this started for me. So accidental entrepreneur, so that that’s what it originally was. Please continue. But I’d just like to call that out to the audience. Right. So, and but if you’re looking at, we’ll start with the Forbes 400. Mm-hmm. I mean, it’s not, it’s not, I don’t want to say this as an example, but it’s enlightening.
So you look at the Forbes 400 and these guys got there by creating companies that became worth. Vast multiples of what they cost to make. So, I mean I mean, if you look at something like Apple, the equity in apple’s worth about 25 times what it costs to create. Mm-hmm. And you say, well, how do you do that?
You know? And the answer is you gotta kind of wrap all your customer deliverables that you have around a really phenomenal business model. and business models don’t just happen by, you know, they just don’t happen to you. They, get created and. They have to be thought through. And so basically what I try to show people is what are the fundamentals of business models?
How many. Levers do you have to pull as a CEO of a company? And and the goal is to kind of create companies that generate the highest returns possible. And those that do that end up being able to sell for multiple times what their values are. And that’s what creates massive wealth in the United States.
And I would say not everybody wants to do this, but People should understand how it gets done, and it will affect what companies you work for. I mean, you, you want to work for companies that have good business models because those mm-hmm tend to do the best for their employees too. You know, really interesting you say that we have we just now attracted an employee that is, let’s just say super qualified and, and our business model and some of the things that we’ve done, I mean, they, could justifiably earn more, right?
Right. This moment working for somewhere else, but. We were able to make the right offer. They were, they saw the vision, they saw what we’re doing. And I wondered, in my head, it’s kind of like, I don’t wanna use the word, I’m skeptical, but I’ve just never on my own company, by the way, I just, I’ve never personally made that choice.
I’ve never had that type of foresight, to be honest. Like what you just said. Like, I, just worked in big corporations and that was that before starting this company. So I’m kind of curious on the other side of it, , like how you, where you think that, entrepreneurs or leaders, like kind of maybe, I don’t wanna use the word, get stuck, but they just don’t see that vision and they get stuck at that under 20 employee or count if that’s the metric.
I’m sure there’s many metrics, right? But whatever that is that keeps them from creating a company that’s of more value than what it costs to create as you were to, what do you think keeps people stuck in that rut, if you will?
I think the people can look at their business as being more than just an ability to create a job for themselves but to create true wealth. And, and then you say, well, what’s it gonna take to make that happen? Well, that’s, that’s where business gets creative. And mm-hmm. And as you’re thinking about growing a business and, and creating the wealth, the value equation in the book has six basic variable, or six that.
And the goal isn’t really to create the highest rates of return. ’cause sometimes when you do high rates of return, you limit the size of your business. Mm-hmm. The goal is to create the most returns. and that creates the most wealth. And, and of course you’ve seen, you’ve got so many guests on your show and, and you’ve seen that not all businesses are created equal.
Some are just flat, better than others. And so the good news is that you can. Be a multimillionaire without coming close to having apple’s business model, right? Mm-hmm. I mean, there are lots and lots of companies. The company I ran ended up, the last company I ran ended up being worth about 1.4 times its equity cost.
Mm-hmm. Which I would call an equity value multiplier. But, our equity value was approaching $10 billion on the New York Stock Exchange when I left. So. That means that we created about $4 billion out of thin air just because we had a, a really phenomenal business model and we spent a lot of time crafting it.
Hmm. What do you, and I know there’s only so much time that we have in this particular interview but what do you hope that your readers of the value equation walk away with? I hope that they walk away with an understanding about what the dynamics are for wealth creation in businesses and that it helps people who are employees of companies choose the right employers.
It helps people that would like to be entrepreneurs. Think about what the variables are in entrepreneurship and how you can make your company better from a financial perspective. And then for investors looking at companies, you can use the same exact tools to kind of create financial metrics for looking at businesses and making prudent investment decisions.
So I think. A three-pronged effort on my part to help people become more financially knowledgeable and hopefully create wealth for themselves and their families. Hmm. And what’s next on the horizon with, for you yourself? Are you working with leaders one-on-one? Are you doing something on a corporate level in a group setting?
Like, like, what’s next? What are you up to? I serve on some boards. I write a fair amount in social media. I’m doing a series of videos that are extrapolated from.
Christopher h vol.com. And so you read, your listeners can look at that. And my goal is to teach things that necessarily aren’t taught in business school and to elevate people thinking about what it takes to create a successful business. Mm. I’m a big fan of corporate leaders like yourself when they’ve had success and now they decide to through their own different means, whether it’s publishing books, whether it’s creating videos like you are or, or otherwise.
I feel like once upon a time there was. The I don’t know how far back we go to make this generalization, but you know, after retirement or after you’ve had a certain point in your career, maybe you were focused on certain things, maybe you did some philanthropy, which is great, and I still recommend to people of course.
But when you’re creating content and when you’re really solidifying this knowledge, that’s not common knowledge. it’s a big deal to me. And it’s not easy, like creating books or creating video content. What motivates you? Like what keeps you going to keep doing this work? Well, I first wrote the Value equation and the piece in around 1999.
Mm-hmm. And then I just wrote more and more pieces on it. And by the time I was doing our final public company my final public company, I was disclosing our business model to investors. So when Mr. Buffet and Berkshire Hathaway invested, they understood the business model and it was a. Key reason why they bought the sheriffs.
And, I thought, you know, this isn’t really taught this way in in academia, you know, in business schools. They don’t necessarily teach it this way. And I thought, you know, I should help people elevate their thinking about how companies succeed financially. And and so I thought it was a way for me to give back and this is what I’ve been doing.
Yeah. What was it like working with that team? that’s the one actually now, you know what? I’ve done over 6,000 interviews approaching 7,000 actually. And you’re, I think you’re the first on the show that I could think of that that had sold some shares to the Berkshire Hathaway guys.
What was that like? Well, you know, I approached them, I actually cold, cold emailed Mr. Buffet in 2011 or no. Yeah. Actually 2014. I cold emailed him and wow. He responded to me right away and. Did not end up doing what I proposed, so I had a proposal for him. Shocker. That’s not a shocker, by the way.
Of course not. Go ahead. He’s gonna always have something different in my mind. Go ahead, please. Yeah. But you know we took the company public that year and then they kept following the shares and he referred me to Ted Wexler, who’s one of his senior investment managers. and in 2017, our stock started hitting a, slide.
And they’ve been tracking the stock for a long time. And so Ted called me up and said that they’d like to buy 10% of the company and. I didn’t like the stock price and we didn’t really need the money. But we sold it to ’em anyway because it’s always nice to have a company like Berkshire Hathaway own 10% of you.
And the minute we did that, our stock did really well, popped about 12% that day, and then did well for the rest of the year. So the investors who were with us were doing what we were trying to do for them, which is to generate double digit rates of return for them every single year. and so having a good housekeeping seal of approval like Berkshire Hathaway as a shareholder was important. Wow, what an amazing story. I love a good Warren Buffet story. one of the people that, I mean, I was in finance almost 14 years before getting into media and I love a good story.
I used to read his, and I had a book at one point. I don’t have anymore. I might have to look for where that’s at, but it was a compilation of all of his shareholder letters that he do every year. Somebody. Yeah, somebody put it together. It was this big old book and I’d read it and I was like, man, you can, it’s really like a, it’s a time capsule.
It’s like a, just a moment in time in history of decades and decades of his opinion through the years and his best thinking. It’s just even just, I highly recommend for anybody listening, even just reading those things, whether you’re an investor or not, just to it really, I feel like. It taught me how, how to think, like, how to think and how to process what’s going on in the world from a macro level and sometimes micro depending on, you know, he gives some very specific opinions, but highly recommend it.
So well, no, no question. And the other thing about. His letters is that he actually writes letters and he writes them himself. And and they’re long. I mean, if you they’re very few short, short Hathaway annual letters. They’re and half men, and they’re introspective. Right. And yeah. And, and they’re also honest.
So yeah, that was the thing that caught me about it. Yeah. Yeah. So Warren Buffet is really good at saying where he messed up and what he did wrong and and what he’d like to do better, and. As a CEO of a company in a time where nobody produces annual reports anymore. I wrote extensive letters every single year.
Mm-hmm. And I would not only release them, but I’d post them on websites like Seeking Alpha so that people could look at these letters. And I was very detail oriented about what we did right, what we did wrong. And I took pages from him, from both a communication perspective, but just a sheer honesty perspective in terms of being able to you know, have an open book about how the company’s run and, and what’s, what’s doing well and and what our prospects were.
And so I would say that he was a, personal inspiration for me on that front. Amazing. Well Chris, really, I’ve enjoyed our time together here today. That, that being said, if somebody is interested in learning more about your book, the Value Equation, or wants to connect or follow you in general, how do they do that?
They can go to the website, christopher h folk.com and contact me through that website and I’d be happy to talk to groups or talk to I’d like to talk to both college and graduate students and work with professors and really add to the curriculum of just business education so that people understand what the leadership levers are to create wealth.
Amazing. And for everybody listening, just so you know, we’ll put all the links in the show notes so that you can just click on the links and head right on over and connect. Speaking of the audience, if this is your first time with Mission Matters and you haven’t done it yet, hit that subscribe or follow button.
This is a daily show. Each and every day we’re bringing you new content, new ideas, and hopefully new inspiration to help you along the way on your journey as well. So again hit that subscribe or follow button. And Chris, thanks again for coming on Adam. Thanks so much for having me. Appreciate it.