Key Idea #1: Attract A Courageous Team.
Bob and Steve offered a deal that only the guys with courage would take. This was because they had no paychecks to offer. People had to bet on the come or they would not have been able to be part of XTO Energy / Crosstimbers.

Topic for Discussion: Do people with courage get more done that people without courage?

Answer: Without question. People with courage act now and ask later. While they make a bunch of mistakes, they will also hit some homeruns and that's what this company needed at the beginning. They were not reckless as they had a strategy but the entire team was fired up to build something and to get rich individually and at the same time have fun being with smart, agressive people. We are happy to report today that their dreams have come true.

The reason that NO government agency works very well is that they are full of scared, nervous people who are waiting to be told what to do. And even when they are told what to do they get away with not doing it. Granted, there are some jobs that need a person who is careful and cautious but they are not needed in the startup of a venture that wants to grow and grow fast.

You think about it: Where can you go to find some courageous people and what would you have to do to get them to come to work for you?

Key Idea #2: Go With Your Strengths.
Bob and Steve made a perfect pair. Like all partners we have studied, each had their set of strengths which the other partner valued.

Topic for Discussion: When do we have to work on our weaknesses?

Answer: When we can't find people to work with us who can do what we can't do and when we are so bad at communicating with people that our turn-over rate holds us back. The problem with spending too much time on work that you don't natually do well is it is depressing and because it doesn't come easy to you it takes you much longer to accomplish a goal.

You think about it: What are you doing now that someone else could do better?

Key Idea #3: Tell Your Story With Passion.
The reason Bob and Steve launched XTO / Cross Timbers was because they were forced out of the company they had helped to build. It makes perfect sense that even when they didn't have any money, Bob and Steve bought the sculpture titled, "I'll Be Back."

Topic for Discussion: Can a piece of artwork really affect the results of a business?

Answer: Yes. When you are working on a near-impossible goal, it is easy to become discouraged. When Bob and Steve look at this art, they are reminded that their goal is to build back to where they were when Southland Royalty was taken away from them.

What is at work here is the technique of visualization. Athletes are taught to visualize where they want the ball to go. A golfer "sees" the ball go into the hole before he or she hits it. When you surround yourself with the pictures that remind you of what you want to achieve, these pictures work on your brain even when you aren't conscious this is going on.

Audra McDonald, the Tony Award-winning singer recalls that when she was four years old, she pretended that she won this award. By holding this image in her mind throughout her development, she was able to stay focused on voice lessons and getting herself in a position to win the Tony. When offered a scholarship to UCLA, she turned it down to go to the Julliard School of Music in New York City. This put her in the place she needed to be to win the award. The experience she had as a four-year-old guided her life because she was able to hold that picture in her mind. Einstein said, "The imagination is more powerful than knowledge." This is why the artwork works.

You think about it: How can you use metaphors and art to inspire and motivate you and your team?

Key Idea #4: Make A Bold Statement.
In this industry, predominantly big business, image is important and where you office can communicate volumes.

Topic for Discussion: Did the acquisition of the W.T. Waggoner make a difference?

Answer: Yes. It made a difference for everyone who worked within the building; they knew its conservative-but-robust leadership within this industry. The building made a difference to the city of Fort Worth; it extends the image of their city as the place "where the West begins." And it makes a difference to all the big businesses and other clients who work with them; they know that the people of XTO Energy / Cross Timbers see themselves as leaders.

You think about it: What kind of bold statement can you make?

Key Idea #5: Use Technology To Reduce Risk.
Each year technology takes us deeper within "inside space." We see things that have never been seen before. Even today, the genomics research is opening the way to hundreds of new start-ups based on things that were not even imagined just a few years ago. And, this work is just beginning.

Most of our common sense world view is based on the sciences that describe things outside of ourselves. The new world of science is an ever-increasing exploration of that which exists deep within. There are various starting points for this exploration, however, to date there are no generally accepted "first principles" of interiority or interior states.

Here is a domain rich for exploration and for new business opportunities. And Google, with its complexity of new algorithms that create order out of massive blocks of data, is an excellent example to study and to use to explore this domain further.

Topic for Discussion: What makes XTO Energy / Cross Timbers Oil different from the "big" oil companies.

Answer: Bob and Steve go into an oil field after the big companies are finished with it. A big company will drill holes and if the site doesn't produce a certain number of barrels per day, they declare it a "dry hole." Big companies have big overhead and they must have a certain production level to stay profitable. XTO / Cross Timbers buys these "dry holes" from big companies and is able to make a few changes in the hole and drilling techniques in order to pump enough to make money. It is like feasting on the crumbs from the King's table.

Topic for Discussion: Is there a place for 3D -- three-dimensional geometries -- within your business modeling?

Answer: Yes. First, examine your database. Typically databases are two-dimensional, a spreadsheet of columns that describe various facets of a business. Now, take that information and place an active time stamp on each piece of information, then place the names of the people who have updated the information with an additional time stamp. You are now looking at a simple, but relatively complex 3D model that could give you an amazing ability to parse a 400,000 name list and get just the 20 businesses you desire. We are all heading in this direction! Make sure you have a robust database. Ours is DB2.

You think about it: What new technology should you be considering now?

Key Idea #6: Use Other People's Money To Launch.
Bob and Steve did not have the cash to launch an oil company so they went to Wall Street, not to go public, but to find venture capitalists whose money they could use to get them off the ground. Their connections won them $35 million in three hours and they were off and running. This does not happen often and only happened because they had a proven track record and plenty of friends in the finanical community.

Most experts agree that the main failure in business is undercapitalizaion. It is part of the triad that keeps small businesses small: markets, money, and management. One of our goals as a television show is to open up the discussion about capital. If the banks only loan $9 out of every $100 to small business, we need to know all our options (besides bootstrapping). One of our weakest links is in the area of equity financing.

Other People's Money should engender the same respect as your hard-earned cash. If you have big plans for growth and your business is sustainable beyond your involvements, and you are sure that you require a substantial infusion of cash to your business, consider equity financing. Equity financing means you are actually selling a portion of your business for a price based on what the value of the business will be after you use the proceeds from the sale of your stock to achieve your business plan.

Topic for Discussion: What kind of equity financing is available to a small business owner?

Answer: As with bank financing, there are a variety of different sources of equity financing. Venture capitalists, angel investors, qualified investors, and the general public all invest in small businesses. To seek equity capital, you'll have to prepare some sort of offering memorandum. You are offering to sell your stock at a certain price. The offering memorandum will include your business plan, financial information, anticipated use of proceeds, and the risk factors to the investors. Both the form and content of offering documents are regulated by Federal and State securities laws.

Topic for Discussion: How does a small business obtain equity financing? Answer: You will have to prepare a written document that tells your story effectively and in great detail. If you are successful, much of what you write may well be incorporated in an offering document. Get working on that document, and begin weighing the "costs" of each type of equity partner. All but the SEC's SCOR, a private placement memorandum, requires what are known as qualified investors. The most expensive is the initial public offering on a securities exchange like the NYSE (Wall Street) or the NASDAQ.

It all depends on how much money you need and how the stock in your company will be marketed. Whether or not you will be successful is dependent on the soundness of your business idea, the strength of your management team, the size of the target market and your ability to capture that market, the all important numbers and potential return on investment, and, of course, the risk factors. If you believe you can excel in each of these areas and you pound on enough doors and make enough telephone calls, you will find the OPM you need.

You think about it: Do you have big plans that require big bucks to turn your dream into a reality? Could you give up part of your business to make that happen? For more discussions and links to other shows, explore Steps 6, 7, and 8 on the pathways of growth. Also, be sure to look at the corresponding pages about money: 6, 7, and 8. This page is linked back from each of these pages.

Key Idea #7: Use Other People's Money To Grow.
This business started with venture investment then went public so it could pay off the initial investors.

Topic for Discussion: If the upside of "going public" is that you get a huge infusion of capital, what is the downside?

Answer: You no longer own the company and you must comply with extraordinarily complicated rules put in place by the SEC (Securities and Exchange Commission). Just the process of going public can cost in the hundreds of thousands of dollars and often well over $1 million. These dollars go to the investment bankers, the attorneys, the CPAs, and to "investor relations" (marketing/public relations) people who will polish up your image to present you to investors.

Topic for Discussion: When would an entrepreneur need to go public?

Answer: When the idea has the potential of capturing a large group of customers. Keep in mind that Bob and Steve worked in a public company and they had been through a hostile take over, so they knew what they were in for. Also, everybody in this industry knows that the oil business requires huge dollars up front. Very few individuals drill for oil with only their own money.

To learn more about the money part of growing your business study our special episode, All About Money.

You think about it: Where can you go for money to grow? Is your idea big enough to merit outside investment? Is it big enough to take the company public?

Key Idea #8: Turn Employees Into Owners.

Topic for Discussion: Why does stock ownership work as a motivational tool for XTO Energy / Cross Timbers when it often doesn't work for big companies?

Answer: By comparison with the ExxonMobil's of their industry, XTO / Cross Timbers is a still small business in a sea of sharks. They see themselves as the underdog. Most of the people who started the company are all still involved. The newer employees catch the enthusiasm of the older employees and buy stock because the stock has done well since they've gone public. As we see so often, when a company gets too big, the enthusiasm of the founders is diluted. Employees don't feel close to the pulse and don't feel they can personally affect the price of the stock.

There is pride in ownership. This is just one of the things that Karl Marx got wrong, and it just could be at the heart of the next great debate between capitalism and socialism: "What is the power within ownership?"

Though we may only dance on this earth for a short time, while we are here, something remarkable happens when you actually "own" a piece of it. The nature of one's stewardship changes. It is as though we are saying, "Here I stand." And, then we go about the process of improving the quality of life in that place.

So much of our self-definition seems to be contained in what we believe we own. As children, possession is truly 9/10 of the law. As teenagers, our clothes and cars, tangible possessions, help to define us. As adults, our home. For an increasingly large number of people, "the company, and the company we keep" helps us to answer those basic questions about life.*

Topic for Discussion: What is that power within ownership?

Answer: Roots. We all need to be grounded, to believe in something bigger than ourselves. Ownership gives us a sense of stability. It is a way to define the present moment. It pulls the past, present, and future together. When we own some of the assets of a business, we have grounded ourself to its past and we anticipate participating in the unfolding of its many-possible futures. Balance.

Although starting, running and growing a business can throw anyone off balance, there is a place for seeing ownership as a means of providing balance in one's life. This is a difficult discussion. We need to talk about first principles. About the foundations of foundations. As a culture it seems we have become reluctant to seek to define and use first principles. We have forgotten that there is a structure to thinking, to good thinking and poor thinking. And certainly if we are ever to achieve any balance within our global family, we need to find a structure to thinking, a conceptual groundwork, that we can all affirm.

Of course, with several factions that believe the capitalist model is wrong, that seems to be a long way off. But maybe not. Let's look at two groups in particular that believe we are most out of balance.

First, there is one group who seems to have utter disdain for personal ownership. These are the folks who now make it a habit of protesting at the G8 conferences; many believe capital and property are the antithesis of their communitarian ideals. These folks are drawn to the wisdom of people like Thoreau, Gandhi and Buddha, and their philosophical, historical, and theological insights into universals, including understanding the concept of nothingness. However, I would argue that they really have misusunderstood even that concept.

The other group are the literalists among religious groups. Within one particular religious faction, their protests have taken a different form; 9/11 was their declaration of war against our basic ideals, rights, and freedoms; and they appear to be absolutely assured that their own sense of probity is utmost. Most of their utterances reveal a profound disdain for capitalism.

To find a common ground with each of these two groups seems to be quite remote. However, if they were to understand the power of ownership, at least we have a starting point for an alternative to the madness we seemingly face in our forthcoming years.

So let's have them all fess up to one fact: It is all about business. All of us are moved and challenged by our respective business. We understand much of life in terms of our business. Every business is first a system of beliefs, and those beliefs have got to sustain a certain economy. If we allow our language to have a little fluidity, each person in each group "buys into their business." They "own a piece of the action" and they are associated with "a group of people with a common cause."

Now here is where we begin to get into balance and roots: What happens if we define business as "the sustained creation of something of value, relations with people who value that value creation, and dynamics that encourage these relations to be extended through time"?

Of course, we exclude many so-called businesses in the world, the Enrons, and we exclude the most radical of the literalists where killing is part of their value statement, but we may open enough common ground to really begin considering first principles together. Now, this is a working document. We have a ways to go yet. We'll be looking at ownership as stewardship. We will also be looking at why this dicussion is important.

One of the reasons is that we want to encourage international export among small business owners, especially into some of the places where people seem to dislike America most. If we are ever to live in peace in the world, each of us has to take a part. And we believe that small business can have one of the most influential roles in settling down so much of the misunderstanding about who we are and where we are going. There are hints of where we are going with this discussion in a document about incorporating a business.

You think about it: Why does it seem, at least in the USA, that truly within one's lifetime, we all have ideas for businesses?

*The four Kantian questions, "Who am I? Where did I come from? Where am I going? And, what is the meaning and value of life?"

Key Idea #9: The Lightbulb-Do What You Know With Whom You Know.
Seems simple, but all great ideas are simple. When Bob and Steve were ousted from Southland Royalty by a hostile takeover, they took a breath and started over doing the same thing with many of the same people. They had built Southland Royalty and established themselves in the oil and gas business. They had long-standing relationships with people who trusted them and whom they could trust. When they were ready to start Cross Timbers, it only took a few hours to raise the start-up funds and people lined up to follow them wherever they were going to go.

On this program, you've learned that, if you have a good idea, the most important ingredient to success in business is people. Starting with nothing and working on borrowed furniture, Bob and Steve attracted a person such as Louis Baldwin, who was willing to bet on the outcome. No one took salary in the early days because everyone had faith. Bob and Steve had done it before and they could do it again. Do what you know with whom you know, and you'll build a better business faster.

Topic for Discussion: What leadership qualities do Bob and Steve have which obviously helped them raise money to start Cross Timbers and also helped them recruit good people?

Answer: What we learned from the tape is that Bob grew up excelling in school and that he was a "businessman" at the age of four. Even though he admits his egg business was totally subsidized by his father, at least he was interested in earning money and he had the courage to go selling eggs door to door. Steve liked numbers and knew when he went to college that he wanted to be a CPA. He was a goal setter early on, and people don't change much as they go through life.

Steve said he has always been an achiever. A geologist by training, he was vice president of a publicly traded oil company when he was thirty years old. In the interview, you can see an intensity that Steve can obviously apply to goals he sets for himself and the company.

Also, they were willing to start out with nothing. On furniture they brought from home, the two plotted the course they envisioned for Cross Timbers.

During the years they spent with Southland Royalty, they formed relationships that they were able to depend on when they needed help. They must have a track record of doing what they say they are going to do or they would not have found people willing to back them.

Topic for Discussion: What does the phrase "success breeds success" mean to you?

Answer: People who accomplish one goal are likely to accomplish the next goal they set. Bob and Steve have what it takes to build a company because they have already done it. Also, success builds confidence and this quality is absolutely essential for a small business owner. If you don't have confidence that your idea will succeed, you will not attract employees or customers.

Sometimes confidence appears as arrogance to others. Gerhard Von der Rhur told us that a business owner needs a strong ego, not a big ego. He said that a person with a big ego is arrogant and doesn't see the value of others, whereas a person with a strong ego has deep belief that he can accomplish the task at hand. A strong ego is attractive to others while a big ego is off-putting.

Topic for Discussion: Why did Bob and Steve recruit so many of their former employees?

Answer: The people part of a business is the most difficult because it is the most mysterious and unpredictable. People are complicated and during a job interview, it is impossible to know if a person is going to fit into your organization and if that person is what Marc Moore calls a "10." In Small Business School program 332," Leonor Ferrer says to hire attitude, not skill. In another episode, Wanda Brice said her best strategy is simply to hire nice people.

Attitudes and personalities are hard to evaluate quickly, so Bob and Steve hired all of the people they had worked with in the past who had already proven themselves. This saved them time and helped lower their risk.

You think about it: Who have your worked with in the past that you should recruit to join your team?

Key Idea #10: Think Positive.
People ask us all the time, "What does it take to start and grow a business?" Besides those qualities that we examined in the episode called Staying Power, we add "a sense and control of the moment" and "tenacity." The first is the ownership of a thought, word and deed. You take control of the moment. Then tenacity is when, even though someone else has control or some of the control, nothing holds you back or keeps you down for long. Bob adopted that attitude at a very young age, and it was instilled within him throughout his childhood years.

Topic for Discussion: Can anybody be an entrepreneur and start a business?

Answer: No. There is too much pain in the process for many people. People can possibly learn tenacity and to increase their thresholds for pain, but it is ever more difficult in our culture when there is always a fast, easy way to eliminate pains and aches, and so much of Hollywood depicts a "get rich quick" exploitative mentality.

This episode ends with Bob Simpson's words -- a statement he shares with Steve about seeing a big picture, huge realities, and fearless pursuit. This is the reality of the start-up on its way to become a big business.

You think about it: Do you have a positive attitude? Can you see possibilities where others only see problems?