Michael Cox, Zag Worx

[00:00:55] Sanjay Parekh: Michael Cox has been recruiting for over 20 years. In 2019, he went out on his own and founded Zag Worx, where he helps sales professionals hire the best possible B2B sales executives. Today on the show, I’ll talk with Michael about the nitty gritty of side hustle finances, why pivoting your business model is sometimes a solution, and what inspires him each day.

Michael, welcome to the show!

[00:01:20] Michael Cox: Sanjay, thank you very much. Glad to be here. Glad to just be talking shop with someone.

[00:01:27] Sanjay Parekh: I'm excited to talk to you about sales because that's like really the most critical piece for all founders. But before we get to that, tell us a little bit about your background and how you got to where you are now.

[00:01:39] Michael Cox: Yeah, I grew up in deep South Texas. We're talking like the area called Rio Grande Valley, right on the border with Mexico. And left there, went to university here in San Antonio where we live now. During university, I would dedicate my summers to working. And I found what I didn't know was recruiting back then, but I was doing recruiting every summer and then did that after graduation. And then started migrating into a sales role and then grew my sales knowledge and grew that experience for several years doing sales for a very large tech firm, or research and consulting firm. And then wanted to marry the two. And since then, have been doing recruiting and sales recruiting. And like for the past, goodness, many years, I've been just focused on sales recruiting.

[00:02:41] Sanjay Parekh: Yeah. So, over time you just honed in on that niche. Why that niche of all things?

[00:02:48] Michael Cox: Yeah, I would say, some people say niches are really good, but it's scary also. Because I can't do anything else. I don't really know anything like I know sales and recruiting. So, it started making sense for me when I left the recruiting world. Went to work in sales for a company called Gartner. I did enterprise sales for them for about four or five years, and then I made the mistake of, I started asking a bunch of people, how'd you get this job? How'd you join on? And I didn't know recruiting was a thing while I was actually in recruiting right out of university. And so, once I figured out that this is a massive industry that's when I started wanting to merge the two. So, I got good at sales, I got pretty good at recruiting. Don't know how to do anything else. That's what I'm going to do.

[00:03:40] Sanjay Parekh: Merge the two together. So, now you're running Zag Worx, but before that, was this your first entrepreneurial venture, or did you have something that you'd done when you were younger?

[00:03:52] Michael Cox: Spent several years in recruiting agency and corporate and all that. So, I figured I could try and make a buck off of the dust that settles into the crevices of your brain. I had looked at thousands, tens of thousands of resumes, and I could tell, this is good, this is bad. This isn't going to get you the respect, the attention that you deserve. You should change these things. So, I started doing that for friends and family, and then started trying to make a buck at that. But it's the return on time investment on that was pretty small. So, I was doing little things like that before I really started going into considering doing this, like actual recruiting independently. Does that make sense?

[00:04:38] Sanjay Parekh: Yeah. But did you do anything like when you were a kid, entrepreneurially, or anything like that?

[00:04:44] Michael Cox: We had avocado trees. And sold avocados growing up. Fill the Red Rider and hit the streets and see what you can do. I did a little market research. I went down to the local grocery store and checked to see what the price there was. Figured I'd mark it up a little bit because you don't have to drive here to do this. Yeah, did that, whenever avocados were in season.

[00:05:11] Sanjay Parekh: And that was farm-to-table avocados.

[00:05:15] Michael Cox: That's right.

[00:05:17] Sanjay Parekh: So that deserves a little bit of a markup. Were there any other entrepreneurs in the family?

[00:05:20] Michael Cox: The closest to an entrepreneur that I was exposed to, I have an uncle who is a pediatric nurse practitioner, and he went through school, and he did that, went all the way and then started his own clinic, started many other clinics, sold a bunch of clinics, retired for a little while, but I was never really close enough to that to actually get into the nitty gritty as you'd put it earlier as to how entrepreneurship works. But the fears of making sure that you make payroll, all of the stuff that goes into dealing with landlords and whatnot.

[00:06:00] Sanjay Parekh: Yeah, making payroll is probably the biggest fear for a lot of entrepreneurs, but we'll talk about fears in a minute. So, when you decided to kind of branch out and go on your own, what was the impetus to make you do that? What was the thing that was like, oh, okay, I got to go. Just quit and go all in. You were doing these things a little bit on the side. What caused you to go all in?

[00:06:27] Michael Cox: Yeah, I call those the push factors. In any kind of a career move, there's push factors and pull factors. The push factors were, I was getting, I would say stubborn and bigheaded about the way I should be doing sales recruiting and it wasn't matching up with the powers that be. And at one point I was leading sales recruiting for several organizations owned by Xerox. And we just weren't seeing eye to eye, so, it was working out, but I wasn't agreeing very much with the way they wanted it done. That, coupled with the fact that in the last few years that I was there, I started doing some splits with another sales recruiter that trusted me enough to say, I've got clients, I don't have enough candidates, help me, and we'll split a fee. And so doing that, goodness, five or 10 times in a year, nearly doubled — we saw a significant increase in our earnings and so quickly that was like my wife, and I said, yeah, we got to do this. And so that was the kind of the trigger like, oh, this would make sense financially. And so that's when at the end of 2019, those two major push factors came together and I thought, you know what? 2020, that's going to be a good year, man. We've got to do this now. So, I jumped and then the pandemic hit. That's a big story right there.

[00:08:05] Sanjay Parekh: Yeah. Let's talk about that first part of it. Was it that you were seeing that you were able to do this and generate more income for yourself with less work? Is that really the crux of it? Because it sounds like 5 or 10 times you did it and you were like, oh, this is a lot of money.

[00:08:23] Michael Cox: Absolutely. So, as a corporate recruiter, I always carried what they call a rec load. I always had my jobs to fill, even though I was leading other teams. You could fill 10, 15, 20, 30 jobs in a month. And that is busy. I think my record was like 25 jobs in a month, but it was nuts. But your compensation typically, in a corporate recruiting role, never really changes. The amount of work does. So, that was one factor in that. And that, coupled with doing much less work, filling one job, seeing a significant ROI on the time that I would spend on my nights and weekends, having those conversations, sourcing and speaking to individuals and being their tour guide through the interview process. It was way less work. It is more difficult sometime, in some aspects, but it doesn't eat up as much time and the return is much greater.

[00:09:34] Sanjay Parekh: Yeah. You alluded to this already, but I'm going to take it in a little bit different direction. When you started this, you probably had a set of fears and things that, that worried you in 2019. But then, how did those fears change in March of 2020 when the pandemic hit, and everything got locked down? So, talk to us about your fears and how you dealt with those fears.

[00:09:59] Michael Cox: Oh man. So, the primary fear was, do we have enough in the bank? And so, we got to about six or nine months.

[00:10:07] Sanjay Parekh: And is this in March of 2020 that you're talking about or at the very beginning?

[00:10:11] Michael Cox: No, I'm talking about middle to end of 2019. So around, let's say, August to December, was when we really started saying, okay, yeah, we need to do this. So, it's okay, we put a freeze on any frivolous spending to make sure that we had enough in the bank still. And we made enough in a couple years prior, and we kept that, realizing at that moment, man, we're going to have to do this someday. We need to hang on to this. And so, when I ended up jumping, we had about six or nine months. Another fear was, where am I going to get my clients? I don't have any clients. And so, I made sure that I had one when I was walking out the door of my corporate job.

Another thing was benefits. My wife and I, and three kids, how are we going to pay for benefits? How are we going to make sure that if something happens and with kids, they're three under the age of 10, things happen. How are we going to cover that? Others were, where's that next paycheck going to come from? And so that's a big fear. And the way I handled that was we saved a lot. We stuffed a lot away. We did not spend. I didn't spend very much on the business to get it started, so a lot of those things were helping to mitigate those fears and try and account for those. But fear is a great motivator, I'll tell you what.

[00:11:49] Sanjay Parekh: So fast forward a few months. March 2020 hits.

[00:11:52] Michael Cox: That was brutal.

[00:11:53] Sanjay Parekh: How do those fears change and how do you deal with it then?

[00:11:56] Michael Cox: Yeah, I remember the day, like it was yesterday. Right in the ides of March. It was March 15th. I get a call from my client and client says, hey man, we are excited about those four candidates. This is going to be a huge payday. We're excited about those four candidates. I just got a notice though. We're going to hold off on those offers that we're going to make. We're definitely going to make those offers. And they're excited. We know they're going to come on. But I got to attend some meeting. I'll be right back to you. This was a VP of sales. All I deal with typically is VPs of sales. And I said, hey, no worries, Jim. Talk to you soon. I'll keep these guys; I'm going to let them know that an offer is imminent. And I did. And he came back to me a couple hours later and, we’re not hiring anywhere globally, this is done. So, the great line that we usually hear from hiring managers. Just go ahead and keep them warm. I'll keep them warm, but for how long? And it ended up, at that point, all hiring froze within that client. And just any target client that I was working immediately says, and again, these are VPs of sales, hey Michael, not only are we not hiring, we're laying off. And oh, by the way, can I send you, my resume? And so that that was frightening. And there was no way to really deal with that. But the slight pivot that I made, I’ve got to build these relationships because nothing lasts forever. And so, I was just focused on helping as many people as I could get through this.

[00:13:45] Sanjay Parekh: Yeah. I guess little do these people know that if you keep bread in the oven warm too long, it becomes inedible. And it's going to get burnt to a crisp.

[00:13:54] Michael Cox: Yeah. It's hard to keep a human warm too. It's weird.

[00:13:59] Sanjay Parekh: Humans need to move on too. Okay, so, as you're thinking about this, obviously, like keeping costs, you talked about that in the beginning. Hey, we're going to cut out all the frivolous spending and everything. How did you think about that? How did you do that? How did you make sure that, and did you cut even deeper when March 2020 hit?

[00:14:21] Michael Cox: Yeah, so I started this little business of mine, just bare bones. I figured I need to be able to communicate. So, I need a phone, I need email. Email tied to a website would be nice. Going to find a cheap website. I created a little list of all the things that I spend money on a monthly. Now that list was like two lines long. What do I have to spend to make this business work? And you quickly realize it's not as much as you would like. Some people go crazy and think we need that — it's all the bells and whistles. And so, I made sure. I treated my business like an employee that isn't quite producing yet. And so, if you want to get paid, business, if you want those things and you need those things, you're going to have to produce. So, when I would make enough money to pay myself keep the lights on here at the house, I might set aside a little bit to invest in the business, in some of the software products that I needed. That would make my life a whole lot easier. And we got to be careful with the word ‘need,’ because sometimes most of those things are ‘want.’ And at the beginning, yes, I could really use those things. They would make my life easier. But easy is a luxury that I can live without for an extended amount of time to make sure that we have all of the things that the kids need and that maybe the wife needs and maybe some of the things that the wife wants. And so, we have to make sure that we don't spend too much.

[00:16:11] Sanjay Parekh: Yeah. That that makes sense. And a great way of kind of thinking about it because, yours really is a business built on relationships. So, then coming into the pandemic, you decided to keep going the way you were, or did you pivot the business model to figure out how to make more revenue and how did you make that decision and what did you do?

[00:16:35] Michael Cox: Yes. Had to pivot because really, anybody that I spoke to would say the same thing. We're not hiring, not only that we're laying off. Not only that, can you help me with my resume? So, there were a couple things. Number one, I was going to build those relationships because if I see Sanjay and I know he's a VP of sales and he has been for the past 20 years or 10 years, I know his next job is probably going to be the same. So if I help him out as much as I can with absolutely everything, considering that it's just giving him, what do they say, the sleeves off of my vest. It's things that I know already. Hopefully I'll build a relationship in that and, when a need arises in the new future. Maybe he'll remember his old pal that helped him out, and so I was very much focused on the first pivot, which was help everybody as much as you can. And try and keep your commission breath out of the way. I wasn't doing it for a buck.

And number two, another pivot that I made was I had to create a new service offering that would be beneficial to a client that may might need to hire. Might need to hire more than just sales but can't justify a 20-25% fee. And so, I created a new service, which was like, I was doing RPO, just basically taking pieces of the recruitment process and allowing them to outsource that headache to me. And so, whether it was sourcing and engagement, or the whole thing, now they were paying to have a very skilled, I'd like to think, a very experienced sales recruiter join their team for a very short period of time and ramped them up. And so, I did that for a few clients. And that helped towards the end of 2020 and all of 2021 as well.

[00:18:41] Sanjay Parekh: So, basically what you did was you took the hey, you have a rec, I'm going to fill it. And instead, you took that process and broke it up and said, I can do whatever segment you need me to do instead. So, how did that affect your revenue and your commission? Because normally a recruiter takes commission and says hey, you've got a rec, I'm going to fill it. And it's based on that part. But if it's only on the filling the funnel portion, then how are you getting paid?

[00:19:11] Michael Cox: Yeah. It's not the same payday. Unless you siphon your hours out to those clients and have multiple clients in that type of RPO, recruitment process outsourcing. I had at one time one client and man; they got a lot of attention. I had a few clients and maybe they didn't get as much attention, but I made sure that they understood this is exactly how much time I'm going to dedicate to this. This is what it's going to look like. And I'll even help consult on how to work with an external recruiter because sometimes, some of the hiring managers didn't react timely enough to secure the talent that they need to be successful. And it was a lot of work with the heads of sales organizations to tell them, honestly, this is where your team needs assistance. And it became very consultative. But again, I find that the more time I spend with clients and prospective clients, they tend to realize, yeah, he kinda knows what he is talking about. And I become a much more valued resource to them either now or in the eventual future.

[00:20:41] Sanjay Parekh: Yeah. Yeah. Okay. So, let's switch gears a little bit. You started your side hustle, small business at an unfortunate time in retrospect, but maybe it was fortunate. Now looking back at it, now that you've gotten through it all. Through all of that time, how have you balanced the stress and demands of doing this with family life and personal life and all of the other commitments that you have? Because this kind of thing could really eat up every waking moment and then some, if you let it. So, how did you manage that?

[00:21:17] Michael Cox: So, poorly. For a time. And justifiably so, like we’ve got to make some money or else I'm going to have to go find quote unquote a real job. And my wife understood that, and the kids understood that. But eventually when we started to see things moving again and we started to see checks coming in the mail, then we have to decide, okay, Michael is going to work from this time, after dropping the kids off at school, from eight-ish in the morning till five-ish, sometimes taking a break in the day. I'm going to have to tack that on to the end of the day if I got more work to do. And then spend time with the family till everybody's asleep. And then I might work a couple hours and do it all over again. But, a business that you actually care about will eat up every minute and hour that you give to it, and will not apologize. And sometimes may not even pay out. So, we had to be very careful with how much time I would allow myself to work and we would set the boundary on, you are going to be available from five o'clock or 5:30 until this. And then you're going to attend all of these events. You're going to take the kids to soccer practice and you're going to be at soccer practice and you're going to make sure you do these things. And ballet, and tennis, and piano. And so, we have to decide, as individuals, what we're going to actually give over to the business that can become very demanding. And we can also just go down so many different rabbit holes of, man, I'd like to do that. Oh, we should do that. That sounds like a great idea. Great ideas are difficult. And time consuming. So, we have to pick our battles carefully.

[00:23:22] Sanjay Parekh: Yeah. So, thinking about those boundaries. How do you set them and how do you make sure that you maintain them? Is there something that you do? You talked about the hours and making sure, but there's other boundaries as well. And how are you making sure that you're maintaining those?

[00:23:40] Michael Cox: So, yeah, we set time limits. I'm going to be available to my family after 5:30. And after 5:30 I'm calling it quits for the day. And I'm not going to touch it again, unless everybody's out of the house. And then I can go play again and do work. But the important thing is, when you are at work, just work. Take advantage of that. Because if you don't, you can burn through an entire afternoon of watching things. Because here's another problem that we see in the world of work, everybody wants to work from home, but to self-control and be able to actually work. And that intrinsic drive isn't present in everyone. So, we have to be very careful with what we wish for. But yeah, we're very intentional with deciding, you're going to work only until this time and everything that doesn't get done is going to have to get done tomorrow. And we were very clear and that was difficult. Really hard because I can pour importance into absolutely anything. So, we had to be careful with that.

[00:25:04] Adam Walker: Support for this podcast comes from Hiscox, committed to helping small businesses protect their dreams since 1901. Quotes and information on customized insurance for specific risks are available at Hiscox.com. Hiscox, the business insurance experts.

[00:25:26] Sanjay Parekh: So, let's switch gears a little bit. You talked earlier about investing in technology and apps and systems and things like that as you got revenue, what are some of those things that you've done that have made your life easier or made your abilities more because of the capabilities they've given you?

[00:25:47] Michael Cox: Yep. Absolutely. So, the big thing is, these software subscriptions can bleed you slowly. And if you take a look at what your monthly spend is on your business, you can see that everything from Gmail to Zoom and all of these different tools, they add up very quickly, especially when you have other team members. That starts to multiply your costs because of the number of licenses that you need to have. The first thing that I'll share with everybody. Bit of advice. What I took advantage of is a site called AppSumo. appsumo.com. I go there and gosh, I sure would like to have the latest in screen recording, screen casting or email or anything else. Tons of software that you can spend your money on. If you go there, you might get an LTD, a lifetime deal. Maybe you pay 30 bucks, 50 bucks, a hundred bucks, but you're never going to pay for it again, so long as that organization is around. And that's the risk that you might take if that company folds, you no longer have access to that software. It hasn't happened to me yet. And that's where I've purchased most of the software that I use and have cobbled together to get my business processes flowing smoothly, sometimes even without me. So, I look at my business process and think about all of the stages and then, when the money comes in, I might make a little micro investment there and then somewhere over here. And so, then that starts to develop an actual flow of your actual business. Does that make sense?

[00:27:44] Sanjay Parekh: Yeah. Yeah, absolutely. That's a great piece of advice and AppSumo is actually absolutely a great place to go check out. And try to get deals on services. So, two last questions for you. First, what would you tell somebody that's thinking about taking a leap and launching a side hustle or like you taking that side hustle and going into a full-time business?

[00:28:09] Michael Cox: Absolutely. So, I think starting a side hustle. Number one, take care of your main hustle. Whatever it is that you're doing, take care of that job. See if you can advance within that organization. Because you need to build margin in your life and in your finances. The margin in your life, meaning you got to have the extra time to actually side hustle. And then the finances, you’ve actually got to have the money to actually make some investment. And also start building a like a launch ramp that, that time where you're not going to have a steady paycheck. So, build those margins into your life to make sure that you actually will have the freedom to go and start the side hustle. And then, if that starts to pay off and you realize that there's a significant opportunity to continue building that, but it's going to require all of your time, build up your bank even more so that you can actually make that jump.

[00:29:19] Sanjay Parekh: Yeah. Yeah. I like that. Okay. Last question for you. For our listeners that might be looking for salespeople to hire. How should they make sure they get somebody that is really good? Other than hiring you to find them for them. Like how do they make sure that they don't get a dud salesperson?

[00:29:42] Michael Cox: Yep. So, typically you hear people talking about how you need to take your time in hiring. Hire slow, fire fast. The fact of the matter is there's so many opportunities out there. Right now, in early 2023, the big thing that everybody's talking about is layoffs, and how much talent there must be in the market. But you still have to be very attractive, and you still have to offer great opportunity, and you still have to be able to connect with those individuals that are now actively possibly connecting with other companies. And so, think about how you're going to stand out and move quickly. Lest you miss the opportunity to bring on that talent that you need to hit the goals that you're responsible for, that you've been charged to achieve for your organization as a sales leader. So, don't move slow. Maybe be intentional. And pack in as much as you can to the short amount of time that you have with that candidate before that candidate moves on to another opportunity. So, be outbound. I would say be outbound with regard to engaging with the talent that you are going after, that you would like to have within your organization. Do not wait for them to come. Do not expect to have the right person apply for your position. That is a dangerous thing to rely upon — over relying upon job posting. We call it post and pray or post and hope is not a good recipe for success. So be outbound, definitely.

[00:31:31] Sanjay Parekh: Great advice, Michael, where can our listeners find and connect with you if they want to Zag Worx?

[00:31:37] Michael Cox: Spell it right or spell it with an x. Doesn't matter. It'll take you to the same place. Or even easier connect on LinkedIn. And rather than trying to find me, Michael G. Cox. Just go to thesalesrecruiter.com. That'll take you directly to my LinkedIn profile, and we can connect there.

[00:31:57] Sanjay Parekh: Awesome. Thanks for coming on.

[00:31:59] Michael Cox: Sanjay. It was great, man. I loved it.

[00:32:03] Sanjay Parekh: Thank you for listening to this week's episode of the Side Hustle to Small Business Podcast, powered by Hiscox. To learn more about how Hiscox can help protect your small business through intelligent insurance solutions, visit hiscox.com. And if you have a story you want to hear on this podcast, please visit www.hiscox.com/shareyourstory. I'm your host Sanjay Parekh. You can find me on Twitter @sanjay or on my website at www.sanjayparekh.com.