Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com. It's guest time on the show and I'm very pleased to have with me Jeff Sandefer, serial entrepreneur, and cofounder and master teacher of the Acton School of Business. Jeff, welcome to the BusinessMakers Show.

Jeff: Thanks Russ, it's great to be here.

Russ: Let's start by you telling us about the Acton School of Business.

Jeff: Acton's an unusual place. We like to think of it as the Navy Seal Green Beret school for entrepreneurs.

Russ: All right.

Jeff: It's a hundred hour a week program for one year where you come to learn to run a real business, to stand between sales and operations and be taught by real practicing entrepreneurs. Every one of our teachers not only has run a successful business, but continues to run one while they teach.

Russ: So you're actually getting a graduate degree in business, an MBA.

Jeff: That's right, it's an MBA program and it's, as I said, an in residence MBA program, so fully accredited, rated by Princeton Review as one of the top programs in the country.

Russ: How long has Acton School of Business been teaching?

Jeff: This is our seventh year of being in operations.

Russ: All right, now, I caught this big number. A hundred hour per week, meaning the students actually work 100 hours per week?

Jeff: They do. It's a program where students will do 350 Harvard case studies. They'll sell door to door for real, put together real assembly lines. It's the real thing. It's like the boot camp for entrepreneurs.

Russ: Three hundred and fifty case studies? Over how long a period of time?

Jeff: Over a one year period, so you'll literally be standing in the shoes of a real entrepreneur, Michael Dell, Bill Gates. You'll be faced with a real world problem and I'll turn and say, "Russ, you're Michael Dell. What would you do and why?"

Russ: Wow, well it sounds real cool, and I definitely want to get into this more. But before we do that, let's back up a little bit and let's talk about Jeff Sandefer. I understand you had entrepreneurship in your blood from an early age.

Jeff: Well, I started my first company at 16. I'm not sure whether I had entrepreneurship in my blood because the truth is, I started a company to get into air conditioning. My father made me work in the oil fields as a freshman in high school and a sophomore and then a junior and I knew I was gonna be out in the hot west Texas sun painting tanks as a senior if I didn't find something to do. So I noticed in my younger years painting in the oil field that the companies took big trucks out to the field. They paid their workers by the hour.

Jeff: The workers didn't work very hard, and they painted about one tank every three days. So to get out of the sun, I went and recruited my high school football coaches. Paid them not by the hour, but by the number of tanks they painted. They hired their football players and we didn't need big equipment. They just put the paint rigs in the back of their pickup trucks and they painted three tanks per day, not one per three days, so with a nine times increase in productivity, we charged 66 percent of our competitor's price and had 80 percent net profit margins, perhaps to this day the best business I've ever had.

Russ: Seizing the opportunity. You hired the football coaches, which were probably eight or nine years older than you and they had no problem working for you?

Jeff: Well, they had no problem because they made more in one summer working for us than they did the entire year working as a coach. Now, they had to be out on the lease at daylight and working 'til you couldn't see and in west Texas summers, that's a long time, but the money was good and so we paid for performance and we got the performance.

Russ: That's a great story. Were you thinking, "Man, this is the way to live"?

Jeff: Well, I mean, I think we all want to be masters of our own destiny, particularly when you're 17 or 18 years old or in your 20s and so in some sense, Acton serves that, "I want to be the master of my destiny, I want to control my fate." Now, as you get older and more successful and you actually realize financial success, you begin to understand, there's a lot of luck along the way. There's a lot of trial and error and success begins to mean something much more than money. So I think early, I was like most young entrepreneurs. I just wanted to be the master of my fate.

Russ: So, carry us forward. I mean, was that business really just a one summer business?

Jeff: It was because I was afraid if we sold it, that the next group wouldn't do a good job. We did make $100,000.00 at age 16 in 1976, which was a pretty good amount of money back then.

Russ: That's a real good amount.

Jeff: In fact, it helped pay for part of my college education and after that, I went to the University of Texas, then the Harvard Business School and then out of Harvard started an oil and gas company that really was my first real company.

Russ: Okay, so you never actually went to work for a big company. You started your own company right out of business school.

Jeff: I didn't. I worked for two years between college and business school for a large oil company, learning the oil business. I was a petroleum engineer and then went back to Harvard after that.

Russ: Okay. Well, tell us about that first company.

Jeff: Oh, it was terrific. Oil prices in 1984 or '85 and natural gas prices were at the bottom. Anyone who started an oil company would have been crazy, except if you've grown up in the business like I did, you realize the best time to start something in the oil business is when prices are low. So we went out and took farmouts from major oil companies in the Gulf of Mexico who with prices low were happy to get rid of them, hired people the major oil companies had given separation packages to leave the companies, and were very lucky to find and raise enough money and went out and drilled 19 prospects, 19 oil and gas projects, 17 of which were successful. So it turned out to be an enormously successful company where luck played a major role.

Russ: Okay, tell me what it means when you say you took farmouts.

Jeff: By taking farmouts, the major oil companies had paid large amounts of money for the rights to drill in offshore blocks out in the Gulf of Mexico. Those had a five year term. They bought the leases when prices were high. Prices were low and now the terms were about to run out. In many cases, they'd already drilled a well and found oil and gas, but they were so large and bureaucratic, they couldn't produce it at a cheap rate. So here we come and we would scavenge and find used platforms and do everything that an entrepreneur would do to be scrappy and find a way to put the fields on at a low enough cost to make money, and then drill another well.

Russ: Sounds very similar to your job painting tanks back when you were 16, you identified an opportunity and seized it.

Jeff: Absolutely.

Russ: That is so cool. Well, I definitely want to tie all this back into the Acton School of Business, and we're gonna do that after this. I'm talking with Jeff Sandefer, cofounder of Acton School of Business and also, master teacher at the school. You're listening to the BusinessMakers Show, heard here and online at thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com, and continuing on with Jeff Sandefer, cofounder and master teacher at the Acton School of Business and serial entrepreneur. Jeff, you were just going through how you got here and you had this major successful story from a Gulf of Mexico oil venture. What was the name of that company?

Jeff: It was called Sandefer Offshore.

Russ: Okay, and so how long did you operate that?

Jeff: The opportunity of drilling these farmouts really was over in five years, so we turned a million dollar investment into $500 million in profits in a five year period and then sold the company.

Russ: That sounds like a success story.

Jeff: It was.

Russ: So what then?

Jeff: Well, then I actually realized I didn't know as much as I thought I knew. I realized we had been lucky, so I started my teaching career and then I started doing lots of philanthropic things.

Russ: What kind of philanthropic things?

Jeff: Well, for example, I went to Russia and we started a company there that had Russians selling soap and shampoo door to door. That doesn't sound like much except the Berlin Wall had just fallen.

Russ: Oh my goodness, so you first describe this as philanthropic, but it sounds like a business to me too, so I guess it was philanthropic in the aspect that you were teaching them how to be business people and entrepreneurs?

Jeff: Well, absolutely. There was a belief among academics in the United States at that time that the Russian people wouldn't get business, that they didn't understand entrepreneurship, and on blind faith, I just believed that everyone understands entrepreneurship. So I really went over there to prove that the Russians could get it just like the Americans.

Russ: Okay, and this was right after the Berlin Wall went down.

Jeff: It was not long after. It was within 18 months of the wall going down.

Russ: Okay. Did you take long on saying, "Well, how am I gonna prove it with the type of business," or did that just fall in place really quickly?

Jeff: Well, it turns out, with the mafia and not wanting to put a lot of capital at risk, the smartest thing you could do was arm Russians who had lots of time on their hands with small amounts of product that they could then go sell door to door. I'll tell you my favorite story when I knew that the Russians got it is we were having in a big high school auditorium and we were telling the story of how you could go out and sell and a big drunk Russian stood up and he said, "You're ruining our country with capitalism. Capitalism doesn't work." And in front of him stood a small man, looked like he was 65 years old and he said, "Two weeks ago, I sold and I was paid. This week, I worked harder and was paid twice as much. This is good and you will not run it down in my presence." And the whole auditorium stood up and clapped and cheered and the drunk Russian ambled off into the night. And that was the moment I said, "Yes, the Russians get it just like we do."

Russ: That is incredible. Would you all actually teach them how to sell door to door?

Jeff: We tried to, but I'd have to tell you, they taught us just as many lessons about selling and about trying hard. I mean, the idea that we were the Americans teaching them really turned out to be the stories of the Russians starting their own businesses and turning around their own lives. I've got to give them all the credit.

Russ: Okay. That is such a neat, neat story. So okay. So, how long did that go on?

Jeff: Well, that went on for a number of years and we finally realized that given the Russian tax situation, it just wasn't gonna work. In fact, we also screwed the business up in the sense of we kept shipping more and more different kinds of products, but we had to forecast out 120 days between the time we shipped something and it arrived in Russia and sales were doubling every week, and so we actually created a business that was too complex to survive. And between that and the Russian tax authorities, we finally sold it to our distributors who even today are still running the business.

Russ: That is so cool. All right, so does that get us to the point where it was time to start Acton School of Business?

Jeff: Well, as I said, I started teaching really right after I sold my business, so that was 1989 and for 12 years along with a group of practicing entrepreneurs, we built the entrepreneurship program at the University of Texas and then seven years ago, and this is a long story I won't go into, we basically either were fired or quit depending – we think we were fired. They think we quit, but we left in a dispute over whether the students were the customers or not. We thought they were. We left the university and we said, "You know what? Maybe we ought to try to start our own school," and so we did.

Russ: Wow. And that's what gave birth to the Acton School of Business.

Jeff: And that's what gave birth to Acton.

Russ: Okay, now I know that Acton is very, very different. I mean, obviously you've already talked about this hundred hour per week commitment for each student and 350 case studies and door to door selling. What was the door to door selling thing?

Jeff: Well, we just decided that students need to learn how to sell, and they had a misconception of the idea of what sales was about. Sales isn't about trying to sell someone something they don't need. It's about listening to your customer, finding the customers that need what you're delivering, and the only way to really get that across was to have students go try it and actually knock on a hundred doors and when that didn't work, knock on the hundred and first door and then you have to just keep selling until they actually understood that selling wasn't something you did to a customer. It's something you did for a customer.

Russ: And this was all in Austin, Texas?

Jeff: It was all in Austin, Texas.

Russ: And what would they be selling?

Jeff: Oh, they sold cookbooks. They sold children's books. They sold cleaning services. In fact, one of my favorite stories, we had a wonderful woman who was a single mother going through Acton with these three alpha males in her sales group, and the three alpha males fought and could never sell anything and finally the woman stood up and said, "Okay, are you ready to do this right?" And they backed away and let her take charge. And she said, "We're going to sell to funeral homes because no one wants to clean a funeral home," and they literally broke the franchise record for sales during that period because of her.

Russ: Great, great story. Did you run into resistance ever from the students not wanting to do that?

Jeff: Not really. We have an incredibly committed group of students. We promise them three things, that they'll learn how to learn, they'll learn how to make money and they'll learn how to live a life of meaning, and that chance to study underneath practicing entrepreneurs, it's the learning how to make money that attracts them at first, but it's the Socratic method and this case study we do in class where you're in the shoes of the entrepreneur and all the teacher does is ask you questions. Learn how to learn keeps them engaged and it's four or five years later when they come back, it's the learn how to live a life of meaning that was, in fact, the most valuable delivery. So with those three promises and the caliber of teachers and students we attract, it's not hard at all to get the kind of commitment we need.

Russ: And all master teachers are practicing entrepreneurs?

Jeff: All teachers are practicing entrepreneurs. In fact, the teachers are paid a very small salary and a bonus that depends completely on student satisfaction even though we force rank our students, meaning we don't give many A's and B's, and the lowest rated teacher each year doesn't come back.

Russ: Oh my goodness, including yourself?

Jeff: Including myself.

Russ: Oh my goodness. And force rank meaning the students rank themselves among themselves?

Jeff: The students rank themselves, the professors rank themselves. What I mean by that is the teachers can't give all A's to get a good rating. We're limited in the number of A's, so the only way we can get a good rating is by serving the students' needs. The only way we can do that is by getting enough commitment from the students that they will, in effect, teach themselves.

Russ: Wow. I assume you still have dropouts and failures from students.

Jeff: We do. We do, and in fact, failure at Acton is a good thing. We want people to fail early, cheaply and often. One of the best lessons from Acton is that failure is a good thing if it's early and cheap, and so we do have students come to Acton that find out even after all the work we do to get them committed, that it's not for them. And in fact, we had one student, a young lady come through and decided after taking our life of meaning course halfway through the program that she wanted to be a psychologist. Her father had always wanted her to be an entrepreneur, but that entrepreneurship wasn't for her. That wasn't a failure. That was a success.

Russ: I'm talking with Jeff Sandefer, serial entrepreneur and cofounder and master teacher for the Acton School of Business, and you're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com and continuing on with a very fascinating guest, Jeff Sandefer, cofounder and master teacher at the Acton School of Business and serial entrepreneur. Well Jeff, you were just talking about requiring door to door selling from your students. Why not focus on marketing?

Jeff: Well, because marketing's about book smarts. Marketing's about looking smart. Marketing's about massaging the data. At the end of the day, the only thing that works if you're an entrepreneur is getting the customer to hand over the cash, and to satisfy a real need. And so this idea of being in the ivory tower of corporation, being on staff in marketing isn't what makes the world work, certainly not the world of entrepreneurship. You have to know how to sell.

Russ: Are you telling me that learning selling is maybe even ranked higher in importance than marketing?

Jeff: Oh, absolutely. I think marketing's a subset of sales. Marketing's about figuring out who to sell to, but somebody has to make the sale. Somebody has to create the sales funnel, the process that you use to try to figure out who really needs and wants your product, to move them down the funnel so you can spend more and more time with someone who has the money and the need that you can serve.

Russ: That is so cool. That is a little bit contrarian in my opinion these days, but totally in sync with how we feel here on The BusinessMakers Show. That's cool. All right, let's say that we've got some people listening to this interview today that are totally enamored with everything you've said and are interested in the Acton School of Business. How would they find out more about it?

Jeff: Well, I'd say the first thing is to go to the website, actonmba.org. Listen to the videos. Listen to our customers, the students, but then don't take our word for it because you're gonna be asking, "Is this for real?" The only way to know if it's for real is to schedule a session, come watch a class, come talk to real students and see if it's for you.

Russ: Okay. Before I let you go Jeff, got to ask you this question. Let's say we have an aspiring entrepreneur in the audience right now. What general advice would you give them?

Jeff: Well, I think the only advice that matters in the end is you have to find your calling. You have to find that place where your most precious God-given gifts intersect with doing something that brings you great joy, something that you would do even if you weren't paid to do it, and serves a deep, burning need in the world, serves others. The only thing that matters as an entrepreneur is finding your own individual calling and it's gonna be special and different for everyone. If you can find that, the rest of life makes a lot more sense.

Russ: Jeff, thank you so much for sharing that and for sharing your time with us.

Jeff: Thank you, Russ.

Russ: You bet. That's Jeff Sandefer, serial entrepreneur, cofounder and master teacher of the Acton School of Business, and you're listening to the BusinessMakers Show, heard here and online at thebusinessmakers.com.