Why Emotional Energy Is the Real X-Factor in Scaling a Business (Not Strategy)

Kayvon Kay (0:00)

22% of pre-tax profit every month, handed back to every employee proportionate to their income. Not a bonus program, a philosophy.

Lee Benson ran that philosophy through a company he took from zero to $100 million in aircraft parts of all things. Zero outside investors sold it for more than double the multiple anyone in that industry gets. But money is the easy value to create. The two Lee spent decades chasing are harder to measure and impossible to fake. Emotional energy and connection. He calls it holistic value creation. In this one, we get into why $166 billion a year gets spent on leadership training that changes nothing. And why Lee thinks the biggest shortage on the planet isn't talent, it's leaders who are capable and moral at the same time. This is The Vault. Let's unlock it.

Lee, welcome to the show.

Lee Benson (1:08)

Good to be here, Kayvon. Thank you.

Kayvon Kay (1:11)

I'm seeing, I'm looking at watching you. For those that can see, we got music behind you. You got like a full stage behind you. Tell us a little bit about that.

Lee Benson (1:19)

I do. Music's been part of my life for a really long time. I started playing guitar so young, I don't remember not knowing how to play.

Played over a thousand shows in the first half of the 80s in a rock band playing guitar and singing and I still play music today. So I'm actually sitting in my home music recording studio. It's this really cool 4,000 square foot building where I still have music projects I work on. I'm actually in the middle of writing an instrumental guitar album right now and a lot of fun.

Kayvon Kay (1:48)

Love it. But that's not what we're here for today. I know we were talking about it earlier before, was this idea about holistic value creation.

Lee Benson (1:59)

Yeah. I built eight different companies from scratch. I'm currently CEO of two businesses. I'm invested in a number of others. I coach about 30 CEOs in my execute mastermind groups.

Everything we do is about holistic value creation. It's material, it's emotional, and it's spiritual value creation. So material is important. We need cash flow, we need all that profit, we need it to be able to grow.

Emotional energy to me, when it comes to value creation, it's the scarcest commodity on the planet. It supercharges everything else we do. I think it's the X factor for leaders. It's literally the X factor for all of us. And then spiritual value creation is about connectedness. And then all of my businesses, I've always really made an intentional point to make sure we had programs where people had the opportunity to really strengthen relationships. And my companies that I personally started from scratch have ranged from 10 employees to about 540 I think it was the biggest one.

And these programs worked amazingly well. In fact, the biggest one I sold in 2016, went from zero to $100 million business, sold it, it was in the aviation aftermarket. So imagine repairing, overhauling, manufacturing, aircraft parts to keep aircraft flying. It wasn't for new manufacturing. It was maintenance to keep the mission ready at any point in time. It went from zero to $100 million, very profitable business, and sold it for a 21.6x multiple of EBITDA. And that's because of the way we led that business, the way I led the business. I owned the majority of the stock. I controlled it. The only employees at Equity were ones that earned it over time. There were no outside investors, never took a dime of anything to grow this thing. It was a very capital-intensive business, but managing through this holistic value creation lens, which evolved for me over the decades, I would say, helped me create so much more value in terms of the value of the business, but also what it felt like to work there, what it felt like for me. Like the harder I got, the harder everybody laughed. It was amazing.

Kayvon Kay (4:06)

Wow.

All right. Well, The Vault Unlocked is all about this. And I'm excited because I want to actually go behind this. And I'm not going to let you get away with the surface level stuff. So I want to start off with, you said one of the biggest one is the scarce or the X factor that we have is as an entrepreneur or maybe as a CEO or as leader is the emotional side, the emotional energy. What does that mean? How did you find out? Where did all that come from?

Lee Benson (4:36)

Yeah. Think about the days where you feel like you can do anything. And those are the days where your emotional energy is on 10 on a scale from 1 to 10, it's on 9 or 10 Doesn't matter what happens, you'll get through it, you're calmer, you're confident, you're just flying towards this value or this thing that you're trying to create or accomplish. But when it's on 1 or 2, you get a flat tire and it can ruin your week, you're irritated by just about anything. So whatever we can do to keep our emotional energy, positive emotional energy, as high as possible, it does supercharge everything. I think for leaders, we are creating an environment from which all of our team members are creating value. If we come in with really low energy, it's infectious, so it lowers the energy of everybody else.