SPEAKER_01 0:00

Welcome everyone to another episode of Beyond the Case. This is a podcast where global leaders from Harvard Business School's OPM community join in a personal capacity to share the real decisions, lessons, and mental models which go behind building enduring companies. The guest today is Kayo Zapata. He is in OPM67 with me. Kayo, it's a pleasure to have you here. Thank you, Sophie. The pleasure is all mine. Just for anyone who's listening, could you introduce yourself and let us know what company you run? What kind of an industry does the company operate in?

SPEAKER_00 0:39

Sure. My name is Kayo. I'm originally from Mexico. I run now my own company in infrastructure and logistics for fuels and raw materials. So we build pipeline stations, terminals, and sell what goes through those pipelines, terminals, and stations. I would say here between New York and Mexico, back and forth. Okay.

SPEAKER_01 1:07

Talk to us about your early experiences, uh, all the way from childhood, you know, and your family environment. How do you think that shaped the way that you think about business and entrepreneurship today?

SPEAKER_00 1:18

Um, sure. Well, I um I started working in my family's business. Uh, I was the fourth generation. So I would say growing up, there was um already an expectation of working there and nowhere else. There was also an expectation of working hard because uh even though in the fourth generation, I was able to meet the founder, my great-grandfather. And um he was still alive. He he he died uh 99 years old. Let's say the the family culture was still much around getting things done, working all the time. You couldn't differ differentiate, uh, let's say between lunchtime and work time, or family time and work time. Everything revolved around the family business. Um that was it. I I would say the only difference in my case, I didn't have the same passion as my grandfather or my father for what they did. My family business was in the packaging business. So they made the food can, aerosol, the metal crowns for the beer. Actually, that was uh any crown that you see that have a plastic liner, that was a patent that my family invented a long time ago. They were very proud. And uh yeah, I mean, it's uh that was the family culture. Going to the factories, and uh um I would say a lot of uh maybe engineering mentality more than any other type of career. And that that's what I was expected. I was also the oldest grandson, so I would say was in line in the same same tradition. Is that family business still around? Um yeah, I do it it is. Um I worked there um till what was it, 20. At that time, my grandfather had died, my great-grandfather had died, my grandfather had died, and my dad was now in charge of it. Actually, when I did my MBA in in Spain, we had some factories there. He wanted me to do the MBA and work at the factory, and I think it was the one of the first few times that I put my foot down and say, you know what? No, I'm just wanna be, I just want to be a student. I want to have the full experience of just studying and not having an additional responsibility. And in the end I did that and then came back to the main office, which was in Mexico City, to continue work at the family business. That being said, for me, uh always has had this thing on the back of my mind. And uh I wanted to do something else. I didn't know what it was. I didn't have a specific idea. I was just looking for opportunities. I would say unfortunately, even though I had I thought I had an in with the family's customers or friends, no one was really uh looking to sign a long-term deal with me. But we had an opportunity to supply the natural gas to this customer and the power, let's say a potential customer. And when he didn't have a pipeline, I discovered what was LNG, a liquid natural gas I didn't know existed, and I liked it much more. And I stopped what was what I was doing in the co-generation business and went all in on the LNG. And I remember I went all in because I also felt bad trying to be trying to work in the family and doing things on the side by myself. Um and I remember calling my dad, it was in late October, beginning November, and I remember I told him, Look, dad, the last day of work for me in the company is gonna be December 12. And he just said, you know what? Don't put all your eggs in one basket. Uh good luck, good luck, thank you, and bye. And that's when I quit and went, let's say, all in with my my project at that time. Um also had a couple of failures there. I uh thought I was gonna have a partner buy into uh let's say startup into it. And uh when that failed, I had to do it on my own from scratch. And uh that's really how I started the company that I uh that I work on now called Inestes. Wonderful. So you're a solo founder, the the only owner? Yeah, yeah, yeah, yeah. Uh I would say not by preference, I would have loved to have someone be a partner with me, but I at that time needed uh, let's say, hands and money. And I couldn't find someone that was willing to do both. Some people were willing to put some money but not work on it, and some people were willing to work but didn't have any money. And uh so since I couldn't find that right mix, I I went on my own. I started hiring just people. And yeah, I mean, right now we are over uh 500 employees, and I would say it's uh it's a bit um it's a to be a solopreneur, it's a very lonely job. Um, and I love it. Obviously, there's a huge benefit to that, but I think in the end, it's not about a payout, or it's not about even having your own way, it's it's about building something. And I do believe that if you have someone else, a partner on that, building that something, it's uh it's much more easier. And even though you'll have a lot of issues, obviously, trying to get two people to understand each other or three or more, I think it's also a uh a grateful experience, even though I haven't haven't had it myself.

SPEAKER_01 7:33

Very well said. And Stas has grown rapidly and helped companies transition towards cleaner energy solutions. Um, when you look back today on your journey, what are some of the decisions or principles that you think were most responsible for that growth that your company and you experienced?

SPEAKER_00 7:52

I would say that the first principle, especially when you're talking about fuels and raw materials, is trust. Because even in some cases, for for most factories, maybe fuel is not their principal cost, but it is obviously necessary. It's necessary to have it. If not, you would stop their machine or stop whatever their production line. So trust is uh one of the important principles. Education also. Because in most cases, as LNG was new to me, it was also new to the customers. So educating on how that fuel worked, what were their benefits, what was gonna change, how could I guarantee their supply. I think in all cases, you start with also some friends and family that are willing to give you the benefit of the doubt to try it a little bit. And from there, you start building some word of mouth. But yeah, in the in the beginning, it's it's it's trust because, you know, as in any case, some people might know your father or your grandfather, but that doesn't mean that they know you or that you're gonna deliver the same thing. It might open the door, or or it might get uh someone to help you pick up the line, the phone line. But that's it. I mean, the rest is you need to do the work, you know, uh prove them that you are gonna be a professional about it, and that you are you have your contra your uh the customer's interest at heart.

SPEAKER_01 9:30

What does success mean to you today as opposed to 10 years ago?

SPEAKER_00 9:34

I think independence. I was reading a a book not not that long ago um that that mentions that the true purpose of money or of wealth is having independence. It's not really just having more money, it's being able to do what you want when you want it, being owner of your own time. Um and and that that gave it to me. I mean, uh uh obviously in my family business, I've uh I don't know, I wouldn't have the same independence as I would now. First, because of family expectations, even though um, I don't know, if you have uh cousins or brothers who don't work who don't work at the company, um, but they see you take a vacation, you know, there's always this expectation of is he really working or is he being responsible or is he just slacking? You know? Uh the same would be, no, with with my father or or or or whomever. And as in any case, when things go well, we are all heroes. You know, when things go bad, it's your fault. So being an entrepreneur gave me that independence. And also gave me that passion. I would say I wasn't born with an LNG passion. I learned to love it by doing it. But the more I learned from it, the more I worked on it, the more I started to love it.

SPEAKER_01 11:18

I love that response. Independence is your definition of success. So, so true and uh resonates a lot with how I think. As your company scaled from being a startup to being a bigger organization and today having 500 employees, how do you think you have personally evolved as a leader?

SPEAKER_00 11:37

Well, I I would refer that answer to the people that work with me, but hopefully they say a lot. I read a lot, think as an entrepreneur. I skipped some some steps. So I've tried to retrace my steps and learn from creating a company and let's say all their not their requirements, but all the work that needs to be made. You know, sometimes you hire a marketing guy and you just expect him that or or her that they do whatever is needed to do marketing and that they do it well. And if they don't do it well, then you'll hire someone else and that's it. But I think you first need to learn about marketing, to do it or know what the basics are, the principles of it are. So you can really be a judge in are you doing good or bad marketing. And that's what I did. So even though I had an engineering background, I went and read books about compensation. I went and read books about marketing, went and read books about sales. As an engineering, I knew something about logistics, but also read about that. Read books about disciplined entrepreneurship, raising money. All of that. Since I didn't raise, let's say, uh, I don't know if you say professional money, let's say, but from institutions, I did it more from family and friends. I think you get away with certain things. And uh, but that's not right. You need to know how the world really works on the on those basic principles. So you can also be uh a guide and an expert and be able to make uh I don't know to discern who's also a professional on the job they're doing and how you can bring all of those different personalities, all of those, all of that different work that the people do into a cohesive team. So yeah, I think I've changed a lot just because I've uh I went and got books to read about all of those things I didn't know before.

SPEAKER_01 13:55

You're self-taught in all verticals.

SPEAKER_00 13:58

Well, trying to. I've uh I'd say I've I've learned also, and I think that something happens, to drop off some books that doesn't that don't mean anything. You know, sometimes you get a book, and once you start it, there's this you feel compelled to finish it. But you know, time is limited, and then you need to understand saying, you know what, this book is not bringing me anything. And I should just drop it off and try to ask friends, ask people who are experts on their field, which books do they recommend. And uh I think in the in this case, OPM is a bit about the same. It's about learning from experts. I think it's some information you get from books, some information you get from speakers, some information you get from peers. I think you just need to be open to l always listen because you never know from where you might learn something.

SPEAKER_01 14:50

Kyle, you've been referencing books, so I I have to ask this question. Talk to me about some books which you've appreciated a lot, which have shaped your mindset as a leader. Sure.

SPEAKER_00 15:00

For example, uh, a good book about life is the is Jordan Peterson's 12 rules. That's actually a very good book. Um a book that talks about independence, and I just uh let's say that freedom that money should bring, the independence and passion. It's called The Art of Spending Money, which is also a very good book. I mean, the rest are more how-to. So unless you have a subject on saying, hey, which book do you recommend for organization? Work rules, last little book, which book do you recommend for sales? Sales different from uh Lee Sal's. Yeah. There's the there's the one-page marketing from Alan Deeb. I mean, there are several. And I try to read a bit of everything. But yeah, I would say the the the the I think as the company evolves, certain subjects start to come up. And that's when I, let's say, switch my reading and try to, you know, target or fix that area and start reading books about a specific subject. Do you prefer reading digital books, Kindles, or are you I like the old-fashioned because I write at the back of the books. So I think writing about what you thought interesting brings extra retention than if you just, you know, highlight it and and leave it there. So if I wanna go back into something, you know, I I can go back to the pages that I marked, I can go back to the notes that I made. And since I made them by hand, I think I remember them a little bit more. Yeah. I'm a bit old-fashioned in that.

SPEAKER_01 16:43

I want to go back again to your professional journey. Uh you're a self-made entrepreneur. You spoke about some of the challenges early on, you know, with a business partner maybe who may have joined you and not joined. Can you think of some lessons that failure has taught you as opposed to success?

SPEAKER_00 17:03

Yeah, I would say the first things is anything to develop takes more time and more money than you expect. For sure. Secondly, if you need to fire someone, just do it. There's no need to wait for the substitute or something different because a bad apple quickly rots a tree. I would say the same people that you start the company with are not necessarily the right people with whom you'll grow the company or take the company to a different level. Some people do adapt and uh and let's say learn now to follow policies and procedures, and some people don't. And uh, you also need to make those top decisions and let's say change, change whoever's not working, whoever's not helping you get the company to a different level. I would say be always be careful on how fast you grow, because that also can bankrupt a company trying to grow too fast. And I say because you'll end up with assets that are not being used, but you're paying rent or you pay or you're paying a loan that you got, and because you thought you were gonna get to certain goals, that that was the right move. So And I would see the last the last one is have a budget. It is important, it is important for you, and it is important for the team. Because I think it brings a I would say scarcity mentality, and when you're in a startup and you're growing, the mentality is usually that you can do anything you want at any time. And to have focus and to get people to control the cost and expenses, it's important to have a budget. And even for yourself, um, I would say be maybe the last one, and that would be the last one, is hire people that are also willing to tell you the truth. Sometimes as a solopreneur, everyone will just go like, okay, yeah, let's do that. And if you say, let's go to the right, they'll take a right here, everyone will take a right. And if you say let's take a left here, everyone will take a left. And you're like, no, people, I need you to tell me the truth. And I don't know if it's a cultural thing or or a solopreneur thing. Most people won't do it, won't tell you if you're on the wrong path. So be careful on let's say with with whom you hire and try to have those people that are willing to tell you the truth or that, you know, have your ear and can counsel you a little bit better on the decisions that you're taking.

SPEAKER_01 19:56

So, how do you validate your decisions? Is there a checklist you have or any principles you have on, you know, uh making your own thinking go through the asset test?

SPEAKER_00 20:10

I do the numbers. So I do the work, I do the calculations. So when I have an idea, I also do the numbers. So that has also helped me bring in a bit of a reality check on what I'm doing. I think you can, you know, when you're on a pure-pure startup, you are doing a bit of everybody, uh let's say a bit of all the work from collecting to payments to all of it, and you knew the Excel sheets. You probably made some of the Excel sheets. But as you grow, you stop doing those administrative work, let's say, or those we call it uh fine detail on the accounting. And um maybe I'm not doing it right, but I still do most of the, let's say, the calculations. I try to think it through all the way. And if the numbers don't add up, then I know I'm not on the right path. That's really what helped me. And obviously, I mean, I've never stopped hiring and I've never stopped looking for better people in the company. I've changed operations, let's say COOs three or four times, CFOs two or three times. Yeah. And books also help you to know if you're on the wrong path or not. Because there are a lot of lessons of people who've probably screwed up some things that I haven't screwed up, but then you uh you, you know, when you read about it, you now have a warning sign. And that is also an important source of of knowing what not to do or if you're or or learning if you're on the wrong path.

SPEAKER_01 21:49

Amazing, uh Kyle. Thank you very much for all of the all of those insights that you shared. Uh I want to come to OPM, you know, with everything going on. In your professional life, what made you consider the OPM program?

SPEAKER_00 22:05

I wanted, I think continuous education is very important. And um, I'd say being in one of the best places, the best schools in the world with the best teachers. Well, I'm sure that the best topics were gonna be there, and that I was on the right path for my continuous education on that. And second, uh, networking. I mean, in the end, companies are about people. And if you let's say network is one of the most important jobs that you can do as a as an owner, as a director, as a CEO, or whatever position that you have, because that's where opportunities come about. You might know your you might meet your future customer, your future supplier, or your future uh venture partner. So that's that's why I want to do it.

SPEAKER_01 22:58

And through the unit one that we were part of together, were there any takeaways that still stand out for you? Or any professors, you know?

SPEAKER_00 23:08

Yeah. Um I've always remember the and and I like that word because I hadn't heard it before, adjacencies. So, so you know, but I start with this company of I would say now raw materials and fuels or infrastructure for your raw materials and fuels, but now we have a transport company. We have a company that physically builds those infrastructures. We have a trading company. And when I started to grow about, let's say, spreading myself a bit too thin and looking what the opportunities are, the first opportunities should be those adjacencies. So it also helped me try to see if I was going too far on something or not. And I think uh Professor Das was one of the best teachers that we had.

SPEAKER_01 23:57

If you could speak to a younger version of yourself today, what advice would you give him, knowing everything that you've learned now in your in your life?

SPEAKER_00 24:07

I would say two things. I think be grateful. You know, uh when I was younger, I was just always looking forward to the next thing. And uh and I think being grateful brings you to the present, brings you to to to a moment of appreciating where you are, what you're looking at, the city that you live, the trees that are outside, the friends that you have, the health that you had you have. I think that is also very important. And second, I would tell him that no, that we are built for adventure. You know, my my father always told me that the object, the objective in life was happiness. And uh I think that was wrong. I think we are built for adventure. As human beings, we are built for that. And it's ongoing, let's say, going through those trials, errors, going out on that adventure is that you find happiness. But that is as a consequence of what you're doing, you know? Yeah. I'd say those those two are the best.

SPEAKER_01 25:15

It's such a refreshing moment when you have a conversation with someone who likes to read, introspect. I truly, truly appreciate some of the words and uh bits you shared around uh, you know, purpose being free, around happiness being uh sorry, around um adventure and gratitude being some of the bits you would share with your younger version. I think that was quite refreshing for me to listen to. Because in our community as business owners, I think we come across a lot of people chasing growth, reflecting on how I could have grown faster if I could speak to my younger version 10 years ago. So I think your responses were quite refreshing for me. Thank you for sharing this. Thanks for your time as well. Thank you, Zofin. It's uh my pleasure. Happy, happy to talk with you anytime. Okay. Feel better. I'll see you soon and definitely, you know, at Unit 2. All right. Thank you. Bye. Have a good day.