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0:00I've been in business for 13 years. I've
0:01sold nine companies. My last company I
0:03sold for 46.2 million. I own
0:04acquisition.com, which right now does
0:06about $17 million a month across our
0:07portfolio. I'm going to compress 13
0:09years of brutal business truths and
0:12lessons into this one video. Brutal
0:14business truth number one. Sell to rich
0:16people until you have the money to sell
0:18all the poor people. The middle is where
0:21you get killed. Elon said, "You can
0:23either do a lot of good for a small
0:24amount of people or a little good for a
0:26large amount of people." And I will tell
0:28you personally, it's a way harder to do
0:30a little good for a lot of people than a
0:31lot of good for a small amount of
0:33people. There is a reason that Tesla
0:36started at the top. They started only
0:39selling to rich people. They had the
0:40Roadster, which was $250,000. And so
0:42they sold those, and then he was able to
0:44go down market one and sell $100,000
0:46cars to just upper echelon of society,
0:48the wealthy. And then after that, he
0:50made the X, which is a little bit
0:51cheaper than that. And then underneath
0:52of that, he made the Model 3, which was
0:54going to be the mass model car. Right?
0:55And each time, it was significantly
0:57harder to do the one before because if
1:00if you want to sell based on value in
1:02terms of low cost,
1:05you need to build the infrastructure for
1:07huge amounts of demand because the only
1:08way that you make money selling to poor
1:10people is selling tons and tons and tons
1:12of them. Look at Walmart. Look at
1:15Amazon. These are businesses that were
1:16built for volume day one, and they win
1:19on efficiency. That was the whole point.
1:21Amazon, he wanted to have the best
1:23selection and the lowest prices.
1:25Walmart, everyday low prices. They want
1:27to They win on efficiencies. Like, they
1:29all fly coach. They use fold-out chairs.
1:31They drink out of paper cups. They
1:33purposely breed the culture of
1:34efficiency because it's the only way
1:35that you can win if you sell to poor
1:37people. And I say poor people to be
1:39hyperbolic in terms of my language so
1:41that it drives the point home.
1:43Obviously, I buy from Amazon. But the
1:45point is is that the strategy is based
1:47on volume.
1:49And you've probably heard some of my
1:51other tweets around this, which is solve
1:53rich people problems, they pay better.
1:55Or if you solve rich people problems,
1:57you get to charge rich people prices.
1:59This is what I think the key inside is.
2:00Is that to someone who only has a
2:02thousand dollars, when they pay you a
2:04hundred dollars, they pay you ten
2:05percent of their net worth. Their
2:07expectations of what they're going to
2:08get for that hundred dollars is the same
2:10as a rich person giving you ten million
2:12of their hundred million dollars. It
2:13would be gigantic, right? In terms of
2:15their expectations. But getting a rich
2:17person to give you a hundred dollars,
2:18they might not even notice. And so the
2:20thing is is that it's actually easier in
2:22some ways to solve rich people problems
2:25because they're willing to pay more in
2:26an absolute sense for lower relative
2:29value.
2:31And so with that extra profit or gross
2:33margin, you can absolutely over deliver
2:36for them and still make money and not
2:37have to learn all these things with
2:38infrastructure. So for example, if I
2:41wanted to start a bank, I would have to
2:44have twenty-five to a hundred million
2:45dollars to start it up. But if you do
2:47that, then you have to build the
2:48infrastructure that you can handle money
2:50for zillions and zillions and zillions
2:51of people. A very hard business to get
2:53into. And so the idea is that you want
2:55to sell, at least this is my belief, is
2:57that you want to sell premium, you want
2:59to sell to wealthy people, you want to
3:01sell to a niche person that you can do a
3:03lot of good for in a very small slice
3:05because you don't have to compete
3:05against everyone, you can have
3:07inefficiencies and still make money
3:09without having to have tremendous
3:10infrastructure and skill around building
3:12it.
3:13Once you make a ton of money doing that,
3:14you can obviously just do more of that,
3:16which big fan.
3:17Or you say, you know what, the next
3:19thing I do, I want to do for zillions
3:22and zillions of people.
3:24And so then you build a business like a
3:25Netflix that Think about how insane
3:27Netflix is, just as a concept. You pay
3:31thirteen dollars or fifteen dollars a
3:32month or whatever it is now.
3:34And they create movies and shows and
3:36they spend millions of dollars and they
3:38sign comedians and they've got all these
3:40shows that are streaming and you pay
3:42fourteen dollars a month. It's absurd.
3:45Think about if you were said, hey mom
3:46and dad, I want to start this video
3:47subscription and I'm going to just pay
3:49millions of dollars to get all these
3:51shows and movies made for us, and I'm
3:53just going to charge 14 bucks. It would
3:54be absurd.
3:56That's how much value you have to
3:57provide to someone who doesn't have
3:59money to capture huge slices of the
4:01market. How are you going to beat Prime?
4:03$99 a year or $129 a year, whatever it
4:06is now, right?
4:08And with Prime, you get basically all of
4:10Netflix with Prime Video. You also have
4:13next-day shipping, same-day shipping
4:15with anything that you want to buy.
4:1899 bucks a year, 100 $129 a year.
4:22If you build to sell to the masses, you
4:24need to build like you're going to sell
4:26to the masses, and you're usually going
4:27to have to put a ton of money in for a
4:29long period of time because you have to
4:30have that infrastructure up front to
4:32deal with that volume, to have such a
4:35crazy value discrepancy that someone who
4:36has no money still never wants to
4:38cancel.
4:40That's the key.
4:41Whereas, if you go to wealthier people,
4:43you can get a premium. You can have five
4:46clients that all pay you $5,000 a month
4:48and make an amazing income and have the
4:50resources to actually do a good job and
4:52hire a couple people to help you out who
4:53are competent. And you can do that when
4:55you charge more money, and those people
4:57are out the ones who are like and you
4:58Everybody's heard seen this meme where
5:00the $50 a month customer is like, "Hey,
5:01so for this $50 a month, what am I going
5:03to get?" Now, we make fun of that.
5:05That's the reality of if you're taking
5:075% of someone's paycheck,
5:09it means a lot to them.
5:11Whereas, if you're going to somebody
5:12who's making a million a month, and they
5:14pay you five grand, if they get one good
5:16thing a year, they're stoked.
5:18And they're like, "Oh, yeah, I sent the
5:19wire. Did you get it?"
5:21Like the difference between working with
5:23somebody who's on the lower end versus
5:25the higher end.
5:26And so, being very clear about who you
5:28serve, not serving other people, going
5:31down market only if you have the
5:33infrastructure to support huge amounts
5:35of volume, and usually the capital to
5:37front it.
5:38Either you build for volume day one and
5:40win on efficiency like Amazon or
5:42Walmart, or you build for a premium,
5:43which means you niche down and you
5:44completely solve problems for people.
5:46So, you completely solve a problem in a
5:47very narrow niche. And so, let me give
5:49you a completely polar opposite examples
5:52here, which I literally live on both
5:53sides of the spectrum. On one side,
5:55acquisition.com is my premium brand,
5:58right? This is the brand that we do
6:00deals with. This is where we have
6:01hundred million dollar companies and
6:03stuff that we invest in that we own it,
6:04right? That's my family office and we do
6:07one or two deals a year. Just to be
6:09really, really We make very rich people
6:11way wealthier, right? That's what I do
6:13there. So, someone comes in is already
6:14worth 50 million bucks and we're like,
6:15"Cool, how do we get to 250?" And that's
6:17what we invest in and that's what we we
6:18scale the company.
6:19On the other extreme,
6:21we've got School.
6:23So, School is for everyone who's
6:25starting out. Now, School took 5 years
6:27to get to the level of product that it
6:29is now and millions and tens of millions
6:32of dollars of development where it lost
6:34money the entire time and still loses
6:36money right now
6:38in order to create such an absurd value
6:42for the 99 bucks a month or whatever it
6:44is. Cuz we know that that 99 dollars a
6:46month for somebody who's trying to start
6:47their business, that's the entirety of
6:48their business budget. And so, we have
6:49to solve all of the business problems
6:51that those people have at that level.
6:54And so, these are two completely This I
6:56mean, honestly, the most polar extremes
6:58of value creation in terms of
7:01who we're selling to or who we advertise
7:04to and who we're attracting and how we
7:06help them. And so, there's no
7:08coincidence that I did acquisition.com
7:11before investing in being a co-owner of
7:12School
7:13because I had to make enough money to be
7:16able to afford to sell to people who
7:18don't have much
7:20to be able to to help build the
7:22infrastructure and invest millions of
7:24dollars to build that so that we could
7:26accommodate millions and millions of
7:27users. Right now, we have many millions
7:29of users on the platform. If you are
7:31confused about how to sell rich people
7:33stuff,
7:35first off, the easiest hack for selling
7:37to rich people is
7:38do what somebody else is doing that
7:40sells to rich people and do it in half
7:41the time and charge twice the price.
7:43Number one,
7:44rich people pay for time above all else.
7:47But if we look at the value equation,
7:48you've got the outcomes, you got to make
7:49sure they want the outcome that you're
7:50promising. And then you got the three
7:51other variables. You've got risk, how
7:53likely is it that they're going to get
7:54what they want when they buy,
7:56time, delay between when they buy and
7:58when they get, and the effort and
7:59sacrifice. The richer they are, the more
8:01guaranteed they want it to be. Now, you
8:03don't have to guarantee things, but you
8:04need the perception of the guarantee.
8:05That's why reputation matters. If you're
8:07the best plastic surgeon in the world,
8:08you don't give a guarantee, they just
8:10have a high perceived likelihood of
8:11achievement. They believe that if they
8:12pay you, the likelihood that their nose
8:14isn't up when they do the surgery
8:15is high.
8:16If time delay, they want it to be as
8:18fast as possible. If they give you money
8:20and have it tomorrow,
8:21rich people pay a lot of money for that.
8:23And then, you've got effort and
8:25sacrifice. Well, I don't want to do
8:26anything, I want you to do everything.
8:27And so, the thing is is that a lot of
8:29times it makes sense to have very white
8:31glove, concierge, high touch things for
8:34people who are willing to pay for it
8:35because for them, the incremental
8:37difference in cost for them is actually
8:39very small. So, the difference between
8:41$5,000 a month and $10,000 a month to a
8:43multimillionaire, not a huge difference.
8:45But if you're just better for $10,000 a
8:48month, they'll happily pay you than the
8:49$5,000 a month guy. You're not going to
8:51sell somebody who's wealthy on how much
8:53money you're going to save them, you'll
8:54sell someone who's wealthy on how much
8:55time you're going to save them.
8:57Brutal business truth number two,
8:59you lack priorities, not information.
9:02Problems are easy to solve if you know
9:04what you're after. If you know what
9:06problem you're actually trying to solve.
9:08I'll tell you a story. So, I was talking
9:09to an entrepreneur who's doing about 10
9:10million a year. And that was between all
9:12of his companies. And we were talking
9:14and he mentioned a one and then he
9:15mentioned a second, he mentioned a
9:16third, he mentioned a fourth. I was
9:17like, "Dude, how many companies do you
9:17have?" And he's like, "Oh, I don't
9:19know." I was like, "You don't know?"
9:21He's like, "Yeah, I have an Excel
9:22sheet."
9:23And so, I was like, "Well, pull it up."
9:25And so, he pulled up his Excel sheet and
9:26he had like 56 companies that in total
9:29were making like $10 million a year. And
9:31obviously one of them was the biggest
9:32one that was doing like half of that
9:34revenue. And that was was the company
9:35that I had heard of that that he that he
9:37founded. I said,
9:39"Dude, if you just only had that one
9:40company, how
9:43easy would it be to like 5x that
9:45business?" He was like, "Oh my god, if I
9:46didn't have the other 55 companies, it'd
9:48be a it'd be a joke." I was like, "So,
9:50if I waved the magic wand and that
9:51happened, you think you could do it?"
9:52And he was like, "Yeah." And I was like,
9:54"Then do it. You can wave the magic
9:56wand. You can end these other 55
9:59partnerships so that you can do this one
10:01thing."
10:02And what's crazy is that a year later I
10:05talked to him
10:06and he had done just that. He was like,
10:07"Dude, I like didn't sleep for 3 days
10:09after we talked because I was like, 'Oh
10:11my god, that's it.'" So, I see strategy
10:14as priority. It's prioritization of
10:15resources, right? You have unlimited
10:17options, but you have limited resources,
10:19time, money, people, etc. And so, how
10:21you choose to allocate those resources
10:24against the unlimited options is your
10:26strategy. It is how you prioritize. And
10:29when you have one clear goal for one
10:32clear company for one clear customer,
10:35the prioritization actually gets pretty
10:36easy.
10:37And so, a lot of people will keep
10:38looking for these unique insights when
10:41the reality is you don't even have a
10:43goal.
10:45Have you defined the problem that you're
10:46trying to solve?
10:48And most people have it. And that ends
10:49up being usually the first question I
10:51ask someone. They're like, "Hey, I'm
10:52stuck with my business." And I just say,
10:53"Well, what's the goal?" And then they
10:55say something. I say, "Well, what
10:56problem are you solving right now?"
10:58And so, if you can't clearly state
11:00current state, desired state, obstacle,
11:03you're running around like a chicken
11:03with your head cut off. You're not going
11:04to solve anything. You're going to do a
11:05lot of work,
11:07but you're not going to move forward.
11:08So, I had a media company approach me.
11:10They've got 40 million subscribers
11:12across their channels. Obviously very,
11:13very good at media. They said, "Hey,
11:15we've been listening to your content and
11:16we think that our constraint, like the
11:18problem that we need to solve, that will
11:19get us the most bang for the buck, is
11:21that we need to optimize our SOPs for
11:24the media company." I said, "Okay, well,
11:26what's the goal?" I was like, "Is it to
11:27just get more famous or is it to make
11:29money?" And they're like, "No, know,
11:30want to we want to shift into
11:31monetization now." I was like, "Okay."
11:33So,
11:34let me ask you this, what product do you
11:35sell?
11:36And they were like, "Well, we don't have
11:37a product."
11:39I was like, "Okay.
11:40So, hear me out, crazy idea.
11:43If you had a product,
11:45you would make a lot more money than
11:47trying to get your 97 out of 100 media
11:50company to 98 and a half. Not to say
11:52that there's nothing like if they said,
11:55"I want to be more famous." then I would
11:56have said, "Absolutely, you should do
11:57that. That makes sense." because
11:58monetization isn't the goal. But, if
12:00they were trying to make money, they had
12:01nothing to sell. And I promise you, if
12:02you have nothing to sell, you make a lot
12:03less money than if you do have something
12:04to sell.
12:05And so, they could be a two out of 10 on
12:07product, but with that amount of media,
12:10that amount of traffic,
12:12they would be able to get so many sales
12:15that they would they would blow it out
12:17of the water. And so, they were spending
12:18all this time trying to get in the
12:20intricacies, trying to get information
12:22on how to solve the wrong problem.
12:25And so, most times, it's not that you
12:27lack insight, it's that you're solving
12:29the wrong thing.
12:30And I think the reason that that
12:31happened so frequently is because those
12:33entrepreneurs are media entrepreneurs.
12:35They like media. They feel comfortable
12:36in media. And so, they like solving
12:38media problems. And so, they like
12:39solving problems that they know how to
12:40solve because they've solved them
12:41before. I'll tell you a different story.
12:42I had a
12:44guy who came out for a workshop here at
12:46acquisition.com and he said, "Hey, can
12:48you go over the closer framework?" And I
12:50said, "Okay. You flew across the
12:51country. You've been here for a day. You
12:53have this one opportunity to ask this
12:54question to me." I was like,
12:56"Is sales a problem in your business?
12:57What's your close rate?" He said, "40%."
12:59I said, "So, sales is not the constraint
13:01in your business." He was like, "No." I
13:02was like, "Then why are you asking me
13:03about the closer framework?"
13:05And I actually think that that lesson
13:06was way more powerful than me trying to
13:08go over the closer framework because the
13:09reality is this, he was a sales guy. He
13:11loves selling. And so, he wanted to hear
13:13me talk about sales, but sales isn't the
13:15problem in his business.
13:16There's something else that's the
13:17problem. He might not be getting enough
13:18leads or people are turning out to to
13:20click on the back end or he can't even
13:21take on more customers cuz he doesn't
13:22have enough team. Like, those are all
13:24other examples of problems that might
13:25exist and I'll bet you one of those
13:27three probably is the problem in his
13:28business, but that wasn't the question
13:29he asked. He asked about the thing that
13:30he enjoyed reading about, the favorite
13:32thing he enjoyed learning about. And so
13:33right now, if you're an entrepreneur, it
13:34is true that you want to double down on
13:35your strengths, but the business as a
13:38whole has to be balanced. So hear me
13:40out. If you think about business like uh
13:42like a body, okay? And you're a
13:45bodybuilder, and so you want to have
13:47ideal ratios for everything in terms of
13:49like if your arms were like this big and
13:51your and your your quads were tiny, then
13:52you look weird, right? So you want to be
13:55a specialist. Like you, sure, as an
13:57individual contributor, keep doubling
13:59down on your strengths, but the business
14:01as a whole will only be as strong as its
14:02weakest link. And so this is where
14:05people get confused with double down on
14:06your strength versus be well balanced.
14:07The business needs to be balanced. Your
14:09physique in total needs to be balanced,
14:12but you as an individual contributor can
14:13double down on your strengths. You want
14:15a team of people who are all doubling
14:16down on their strengths, but you as the
14:18organizer of the business need to make
14:19sure that the business as a whole is
14:21balanced, otherwise it will get
14:22constrained at some point, and then that
14:23point will be your point of failure.
14:25That will be the weak link. That will be
14:26the part of the bridge where only $1 can
14:28get across, even though you've got 10x
14:30the front end and 10x the back end, that
14:31one bottleneck is what's bottlenecking
14:33the business. And so making sure that
14:35often times the thing that you're not
14:37the most excited about, if you're a
14:38marketing entrepreneur, marketing's
14:39probably not your problem. If you're
14:41product-driven entrepreneur, product's
14:43probably not your problem. If you hate
14:44people,
14:45and that's like that's probably your
14:47issue. Like I hate meetings, I hate
14:49leading people, I hate trying to
14:50reinvent my team. I'll bet you that you
14:51probably are having limits on your
14:53business because you don't know how to
14:54recruit, hire, train, manage.
14:56And so that's actually what you need to
14:58either learn or recruit someone who
15:00already knows how to do that. And so
15:02people spend too much time mentally
15:05masturbating to the concepts that they
15:06love in the idea that because it worked
15:09to get them to where they're at, because
15:10they needed to start marketing to make
15:12money, they think, "Okay, now if I 10x
15:14marketing, that that's what it takes to
15:16make more money." And unless that's the
15:17constraint, that's not true. And often
15:20times businesses do grow to the
15:21constraint of the founder, they do grow
15:23to the
15:25constraint of that individual founder's
15:28highly specialized skill, and then at
15:31that point it's constrained with
15:32something else that the founder doesn't
15:33like as much. And so either you got to
15:35learn it and get comfortable learning
15:36stuff that you don't like as much
15:38initially, or you got to find someone
15:39who does.
15:41And so if you're like, "Okay, well, I'm
15:42either a product entrepreneur and I need
15:44more marketing or I'm a marketing
15:44entrepreneur and I need more product or
15:46I'm either of those things and we don't
15:47have an operator, we have somebody who
15:48likes to lead and manage people and
15:50invest in teams." Then how do you know
15:52what good looks like? So first off, one
15:55of the biggest advantages of business of
15:56of doing this for a while is that you
15:57start to recognize patterns. So you hire
16:00five guys that suck and then finally you
16:01find a sixth then all of a sudden you're
16:02like, "Okay, so this is what a good
16:03sales director looks like." This is why
16:06the businesses, for example, that we
16:07start now grow so much faster because
16:09one, we know who's going to be needed
16:11next and two, we know what that person
16:13looks like. And so think about how much
16:15time you save where if the constraint,
16:16let's say, is sales and you hire,
16:18onboard, train and that takes a month
16:20and then that person sucks and it takes
16:22you six months to fire them. And then
16:24you do it again and that takes another
16:25six months to fire them. You do it again
16:27and then this time it works. Well, you
16:28just wasted a year and change of growth
16:31that you should have been growing but
16:32you weren't because you had the wrong
16:33person at the point of constraint. And
16:35realistically, this is why so many
16:36businesses get stuck. And the wrong
16:38conclusion is the person says, "Oh, I
16:40tried hiring sales directors. That
16:41doesn't work." No, you tried hiring
16:43John. And John sucked. It doesn't mean
16:45that there is no sales director. It
16:47doesn't mean you're the special
16:48snowflake that no one can ever replace
16:49you or that no one can do this role.
16:50It's just that you can't. Like there's
16:52Microsoft, there's Facebook, there are
16:54gazillion-dollar companies. Someone out
16:56there on Earth is better than you
16:57literally at the thing that you're best
16:58at and definitely better than the thing
16:59that you suck at. Now, how do you
17:01actually tactically find these people
17:03when you don't have the experience? So
17:04I'll give you the the tactics how I
17:05think about this.
17:06One is that interview lots of people.
17:09And so if you think about the interview
17:10process as an education process in
17:13asking them as much as you possibly can,
17:15act like an ignoramus. Just be like, I
17:17don't know anything about this. Tell me
17:18about it. And then
17:20don't then immediately jump on the first
17:22person. Go on 10 dates. Go on 20 dates.
17:24I'll give you a little sideline story.
17:26For school, Sam, the founder,
17:28interviewed 600 developers before he
17:31found his co-founder.
17:33600.
17:35And the way that he did that is the
17:37process that I'm outlining. So, first he
17:39said, "Hey, who here knows anything
17:40about development in his network?" So,
17:41he got he started interviewing those
17:43developers. And then he said, "Hey, can
17:44you introduce me to the best developers
17:46you know?" And so then those people
17:47introduced him because they had a better
17:49contacts. He's like, "I'm not hiring any
17:50of you.
17:51I want to know the best people you
17:52know." And so eventually he kept going
17:54up the ladder of he'll talk to those
17:56people say, "Who's Who's the best one
17:57you know?" And he kept going up and kept
17:59going up only to fact-find, only to find
18:01information until he found somebody who
18:03was like, "Oh my gosh, I this guy has
18:05said more things and made more sense."
18:07And at this point in the process, he'd
18:09already spoken to so many people he had
18:11a good context from which to make a
18:12judgment. And so that is the process. I
18:15will tell you what I personally look for
18:17now.
18:18I look for the quantity and quality of
18:22metrics that someone has to describe
18:24their role. And so I'll give you a
18:25binary example.
18:27So, on one hand, if so I was hiring
18:29someone for customer success. Let's say
18:30that's like you're getting a lot of
18:31churn, you're not getting a lot of
18:32ascensions, you're not getting good
18:34reviews, your NPS scores are low, etc.
18:36You're then saying
18:38"Okay, Mr. customer success candidate,
18:40tell me about customer success.
18:42What metrics do you measure?" Now, if
18:43they say like, "You know, I just want to
18:45make sure people are happy, that they're
18:46having a good you know, the good time,
18:48and that they're you know, they're
18:49getting results and they're having a
18:50good experience." I'd be like, "Cool,
18:51well what do you measure?" And if they
18:52start squirming around like, "Well, what
18:54do you measure?" and they can only come
18:55up with one or two things, then I
18:57already know that this person obviously
18:58can't drive an outcome cuz they can't
19:00even define an outcome.
19:01Now, on the flip side, if that person
19:03says, "Okay, well we like to define an
19:05activation metric up front that we can
19:06do within the first 48 hours."
19:08Then we have like, "What is our time to
19:09value and what's our you know, what's
19:10our North Star there?" We also like to
19:12measure C-Stat, but I don't like to do
19:13it too often because then customers
19:14don't like filling out the surveys. And
19:16so, we want to make sure that we can do
19:17it ideally within the customer journey
19:19during a value-driven exchange that
19:21they're going to have with the customer
19:22service rep or some sort of account rep
19:24that they have to manage, and then we
19:25can just tack it into that process. I
19:27like to look at churn, but churn I see
19:29more as a lagging indicator, and I look
19:31at it and look at these other things,
19:32especially what's our time like? How
19:34long does it take from sale to
19:35onboarding? What's that handoff look
19:36like? What percentage of customers are
19:38backing out in the first 24 hours, 48
19:40hours, 72 and what percentage of these
19:42customers were leaving us a review by
19:44day 30? And so, all of a sudden I'm
19:45like, "Okay, well he just said like nine
19:47different metrics and had reasoning for
19:48that." And said then the follow-up to
19:50this question of understanding the
19:52quality and quantity of the metrics that
19:53someone's going to bring to the table
19:54is, "Awesome. This is going to freak
19:55some people out.
19:56How does what you do make the business
19:59money?"
20:02And if the person cannot accurately
20:05describe how their function cuz every
20:07function of a business makes a business
20:08money. That's why the function exists.
20:10Now, the thing is is that some functions
20:11of a business are indirect versus
20:13direct. So, if I asked a CFO, "How do
20:15you make the business money?" they
20:17should say multiple things. Well, one, I
20:19control expenses. So, everything that I
20:20save goes to the bottom line, and I have
20:22a process of consistently cutting out
20:24excess costs every 30 days. And so, by
20:26doing that, I can usually drive an extra
20:283 to 5% to the bottom line, which more
20:29than pays for me. So, I'm like, "Okay,
20:31great. They're already even thinking
20:31about my return as an owner versus
20:34them." On top of that, they say, "Okay,
20:36also, I see finance really as a function
20:39of decision-making. And so, if we can
20:40collect the metrics that drive decisions
20:42around what things have the highest
20:44gross margins, what's our utilization
20:45rates,
20:46how can we make the decisions that will
20:48get us the highest return on capital
20:51both human and money capital in the
20:53business, then we will grow faster."
20:56And so, if someone talks like that, then
20:57I'm like, "Okay, they understand how
20:58finance is actually a data function." By
21:01the way, it is. Literally, that's what
21:03my finance does. It gives you reports.
21:04It's reporting.
21:05So, that you can make decisions about
21:07the business so that they we make more
21:08money. Cool. Now, sales is going to say
21:09like and I'll give you an example for a
21:11sales director.
21:12So, if I say, "Hey,
21:13how does what you do make us more
21:15money?" Now, if they say, "Well, we're
21:17I'm going to I'm going to drive sales."
21:19I'd be like, "Well, duh, but like you're
21:22not going to sell anyone cuz you're a
21:23director. So, how do you you make the
21:26company more money?"
21:28What you want them to say is that I'm
21:30going to increase the average conversion
21:31percentage across our leads for the
21:33team.
21:35Because that is the output of the sales
21:37manager is closing percentage. Like at a
21:38fundamental rate, it's closing
21:40percentage is one of the metrics, but
21:41just total conversion rate of leads. So,
21:43if I get 100 leads and there's lots of
21:45mini steps. You got to schedule, you got
21:46to show, you got to close, you got to
21:48offer, whatever. There's cash collected.
21:49There's other mini metrics along the
21:51way, but you just want to see what
21:53percentage of eyeballs and or ear balls
21:56and people who give us their information
21:57we can contact do we convert into sales.
22:00And if you say, "I as a sales director
22:03will be able to increase that
22:04percentage,
22:06then that's the job and that's how I
22:07make the business more money." Because
22:08here's the thing, if they cannot
22:10describe
22:11an output of their job that ties to
22:14revenue for the business or ties to
22:16profit for the business,
22:18then you can be absolutely certain that
22:20they don't know how to do it
22:22and that they're not going to do it for
22:23you cuz they can't even tell you how it
22:25works.
22:27And so, I use those as the litmus test.
22:28One, I interview as many people as I
22:30possibly can so I can get a basis from
22:31which to make a judgment. Two, from
22:33there I'll learn the metrics because I
22:35won't know them um that people use to
22:37describe the role to drive outcomes. And
22:40I will look for the quantity and quality
22:41of metrics that people will track and
22:43what they would do to influence those
22:45metrics. Step two.
22:47And then step three, how does what you
22:49do make the company more money? Don't
22:51let them get away with like with the
22:52sales example, "Well, we're going to
22:53make more sales." No, but how do you you
22:56influence that?
22:58Business truth number three. Things are
23:00hard because your team isn't as good as
23:02you think they are, and that's because
23:04your standards are too low.
23:07Metromind said this to me and I've
23:08always kept this in mind. He said, "Your
23:09best talent you haven't even hired yet.
23:12Your best talent is in the future."
23:15And so, let's run a thought experiment
23:17for a second.
23:18Everybody who's listening to this has
23:19that one teammate who's just an absolute
23:21stud, hopefully. If you don't, I'm sorry
23:23for you. But, at least one person on
23:25your team is pretty good.
23:27If you had 10 of those people, would you
23:29be able to make way more money?
23:31The answer is almost always
23:32unequivocally yes, I'd be able to make
23:34way more money. And so, then the
23:35follow-up is, then why is all of your
23:37attention not to getting more of those
23:39people?
23:39If you listen to the Steve Jobs, the
23:41Bezos's, the the Bill Gates's, Elon's,
23:44so many of them, Zuckerberg, so many of
23:47them talk about talent.
23:49And in the early days of
23:50entrepreneurship, I thought that they
23:51were trying to hide the secrets.
23:53But, it's really that they were talking
23:54about what they're focused on now.
23:56And as I continue to do business,
23:59the more I just care about who rather
24:01than what or how, because if you really
24:03do have the right who, you're one hire
24:04away from somebody who's 100 times
24:06smarter than you, who's done this way
24:08longer than you have, who can help you
24:10grow the business. I'll give you this
24:11story that really drove this home. So,
24:13when we were looking at selling Gym
24:15Launch,
24:16we had a lot of conversations with
24:18investment bankers, and then finally
24:20fixed, you know, we picked an investment
24:21banker to represent us, and then we had
24:22a lot of conversations with prospective
24:24buyers, so acquirers,
24:26um meaning people who like fund
24:28managers, people who have big funds of
24:29money who buy companies for a living.
24:32And I remember
24:34a moment on one of the first of these
24:36meetings where I it was it was in
24:38person, they'd flown out, and all of
24:41their team was on one side, and all of
24:42my team was on the other. And I was
24:44sitting at the head, and the managing
24:45partner was at the other side of the
24:46table. And I just remember just kind of
24:48sitting there silently looking down the
24:49table, looking at both sides back and
24:51forth, back and forth, and being like,
24:54"No wonder these guys are going to make
24:55$3 billion in the next 5 years.
24:58versus my team. And the thing is is to
25:00be clear, that wasn't that my team was
25:01bad. I mean, we built a, you know, $100
25:03million plus business. I saw the
25:05discrepancy. This is not a slight to
25:07anybody on the team. We obviously had
25:08stars. But, seeing the average level of
25:12talent on their team versus mine was a
25:15huge moment for me to understand just
25:18how important people are. And so,
25:20there's a story in Google. I think it
25:23was Larry Page or Sergey Brin, whoever,
25:25typed into Google like parachutes,
25:27whatever. And the ads that came up were
25:28for like buy a radio, buy a car.
25:31And he screenshotted it, and he puts it
25:34on the cork board in the engineering
25:36room and said, "These ads suck." He just
25:39wrote it on the screenshot, and he hit
25:41the board, and he walked out of the
25:42room.
25:43And the story goes that the next night
25:45one of the developers just like stayed
25:47up all night and came up with AdSense.
25:50And AdSense more closely paired what
25:53people were searching for with the ads
25:55that they were shown. He didn't say,
25:56"Here's the 100-step process that we're
25:58going to do to solve this problem." He
26:00just said, "You guys are intelligent.
26:02This is the problem. Go fix it."
26:05And so, one of the telltale signs that
26:07you have bad people on your team or
26:09people who are too dumb or your
26:10standards are too low is that you have
26:12stupid rules. And I And I I'm a I'm a
26:14I'm somebody who's done this. So, this
26:16isn't me preaching here. This is
26:17something that I've I've now realized is
26:19that if you have to ever rule that's
26:20like, "Hey everybody, you have to show
26:22up on time. Hey, don't drink while
26:24you're on the job. Hey,
26:26um like you can't watch Netflix while
26:28you're working. Like that's not a good
26:30thing." By the way, all of these are
26:32rules that I have implemented at some
26:33time in a business that I've owned. And
26:35I'm telling you this now because it
26:37seems so painfully obvious that if I
26:40have to say,
26:42"Don't watch Netflix while you're on a
26:43customer service call with a customer,"
26:46that shouldn't be a rule. That should be
26:49an obvious thing that anyone with half a
26:51brain cell can figure out. But what that
26:53really meant is that if you start making
26:55stupid rules, it's because your
26:56standards are too low and you're hiring
26:57stupid people. Rule number four, lots of
27:00rules means you have dumb people. So,
27:01let's talk about that for a second.
27:03So, one of the things to prevent against
27:04this is a rule from Amazon, which is
27:09that every person you hire, you want to
27:11raise the average bar of the team that
27:12they're getting hired into. I literally
27:15used this yesterday with someone that we
27:16were interviewing.
27:17Uh Leila was like, "What do you think
27:18about this person?" I said, "Well, do
27:20they raise the bar of the team?"
27:22And he was like, "Hmm."
27:24I was like, "All right. Well, then
27:25there's our answer." Because the thing
27:27is is that all companies will, unless
27:29controlled for, dilute down talent. So,
27:33people, you know, sixes will hire fives,
27:35fives will hire us fours, fours will
27:36have higher threes, and people will
27:38always hire people that they're not
27:39threatened from.
27:41Because they want security first. And
27:43so, you have to implement something like
27:45this because the reverse can also be
27:47true. If imagine if every single time
27:49you hired somebody, it raised the bar of
27:50the team, then the team will just
27:52continue to get better and better and
27:54smarter and smarter people, and then the
27:55company will grow and grow and grow. And
27:57I have a fundamental belief that the
27:59level of a business grows kind of like a
28:01Christmas tree, where you've got the the
28:04number and intelligence of brains that
28:06goes up. So, if you have lots and lots
28:08and lots of really intelligent brains,
28:10the the the size of this business is
28:12huge. If you only have one brain that's
28:14intelligent, and everyone underneath of
28:16that has a subset of the skills
28:20of that one brain, then it's only one
28:22brain that's competing against companies
28:23that have a hundred smart brains.
28:26And that was something that in my early
28:28days, every person I hired, I could do
28:30their job better than them, and I
28:32trained them to do everything they did,
28:34which meant the limit of the business
28:35was me. I had to literally keep learning
28:38things, which you always have to do, of
28:39course, but I had to learn everything
28:40from scratch. And so, the business then
28:43had to suffer what a a day one customer
28:45success rep would deal with, because I
28:47didn't know anything about customer
28:48success.
28:50And so
28:51the idea is I would rather bring someone
28:53in who has 10 years of experience in
28:54customer success so that we can start
28:56the business on year 10
28:58of customer success. I want that person
29:01to have learned all those lessons on
29:02someone else's dollar. And then when
29:03they come to me, have all those lessons
29:06so I don't need the scars.
29:09And so one of the one of the telltale
29:10signs also of an early company is that
29:12you've got people who have zero
29:13experience in leadership roles for a
29:15function they've never done before. And
29:17that's because it's like, well, this is
29:19my COO, Sarah. We have five people in
29:21our company, but she's our COO. It's
29:22like, don't use the term COO cuz she's
29:24going to look at salary.com and she's
29:26going to say that she could she'd make
29:28more than the entire company that makes
29:29in revenue, right? No, that's not the
29:31case. Like, she's a manager, right? And
29:33realistically, she probably doesn't
29:34manage the whole business. She probably
29:35just manages this portion of it or he
29:37just manages a portion of it. And so the
29:39thing is is like just because it's your
29:41mom or it's your brother or your best
29:43friend growing up or that guy who you
29:45hired first and has been with you since
29:46the beginning,
29:47it still doesn't mean that they're right
29:49for the role.
29:51And so this is where a lot of the money
29:54that you want to make is on the other
29:55side of a few hard conversations and
29:57many people never have.
29:59They're willing
30:00to just
30:02accept mediocrity at the point of the
30:04bottleneck and never get de-bottlenecked
30:06because they can't say, "Hey Sarah,
30:09I don't think it's working out and I
30:11think it's my fault because I put you in
30:13a position without the resources to win.
30:16And I think and this is how you this is
30:18how I manage it. What I want to do is I
30:20want to keep investing in you. And
30:21here's how I want to do it. I want to
30:23bring someone in who has a ton of
30:24experience. They know more than both of
30:25us put together.
30:26And I want you I'm going to basically
30:28pay for you to learn from this person so
30:31that you can become more skilled in your
30:34career.
30:35And then you I want you to get
30:36laser-focused on this thing over here
30:38that you were doing before and
30:39absolutely tune it up. And so this way
30:41we're you're going to crush what you're
30:43currently doing every day and it's
30:44absolutely within your scope and
30:45experience that I think you can do
30:46really well with it. And I also want to
30:47build out your future by bringing this
30:49person in. So think about it like me
30:50paying $100,000 a year for you to learn
30:54from somebody who has 10 years of
30:54experience.
30:56It's about the biggest gift I can give
30:57you.
30:58And so if you frame it like that, it's
31:00not like this is a demotion or like you
31:02suck. It's like I'm trying to invest in
31:03you and I'm going to invest in you by
31:04bringing this person in who's going to
31:06teach you. Now, if that person has an
31:07ego, which is usually the next common
31:09thing, which is like "Why I thought I
31:10was doing great." Then it means you
31:12probably have a communication issue.
31:13Like you're not telling them that
31:14Sarah's not doing a good job. And then
31:16Sarah gets upset. And the thing is is at
31:17that point, Sarah might have an ego
31:19because she started at the front line
31:21and then became a manager, then you give
31:22her another title progression too fast.
31:24And to be really clear, I've done this
31:26two times
31:27with executive assistants. Um just with
31:30executive assistant within the company's
31:31a zillion times. With me personally,
31:32I've done this and I don't really even
31:34deal with a lot of personnel in general.
31:36And it's like I just I promoted someone
31:38too fast. I think it's the Peter
31:39Principle, which is that people will
31:40advance to the point of incompetency.
31:42And so
31:43someone does really well at sales and so
31:45then you put them in a sales manager.
31:47And then they've never managed a sales
31:48team and they don't do really well at
31:49that, but they get promoted to the point
31:51of incompetency. So I lost a good sales
31:52person and I got a bad sales manager.
31:55And this is how most of corporations are
31:57run. People do well and then their role
32:00changes into something they've never
32:01done before and then they do poorly and
32:03they get stuck there or they get fired.
32:06And most times because the person who
32:07promoted them feels bad, they just get
32:09stuck there. And so you got all these
32:10people who you still have positive
32:12associations with the work that they did
32:14and you feel like you owe them because
32:15they did do a good job one time before,
32:17but now they're doing a poor job because
32:18they're not properly equipped and you
32:19didn't give them the skills to succeed
32:22and they don't have the experience. And
32:23yes, that's your fault. But the thing is
32:25is you can't fire you because you own
32:26the company. So somebody's got to go.
32:28And so either you got to move them
32:30aside, you redefine the role and move
32:32someone ahead of them or you have to get
32:34rid of them.
32:35And again,
32:36this is what makes business hard. It's
32:37not that it's complicated. It's that you
32:39don't want to hurt someone's feelings.
32:41And I get that. That's what makes hard
32:43conversations hard. If you hate
32:44somebody, firing them is very easy. All
32:45right? Like, if someone stole from you,
32:47firing is not
32:48Personal experience there?
32:50I slept fine that night. All right?
32:53It's the conversation with someone that
32:54you know is trying their best,
32:57that you really like as a human being,
32:59but isn't cutting it. And even if you
33:02think you could get them there, you're
33:04not willing to invest the resource to do
33:07it because it doesn't make sense. I
33:09could wait for someone to learn
33:10neurosurgery.
33:12And I think people could, but it might
33:13take a decade. And I don't know if I
33:14really want to invest all that time when
33:16I could just go find a neurosurgeon. And
33:18yeah, I might have to pay more, but I'd
33:19rather pay that than pay 10 years.
33:22And so to to to to loop this back around
33:24to the story that I was talking with the
33:25private equity firms when I was looking
33:26at them, one of the big obvious things
33:28too is that
33:29many of the people on the other side of
33:30the table were making 1 million, 2
33:32million, 5 million dollars a year. And
33:35you know, people who were in their 20s
33:37making 300,000, 500,000 a year. And I
33:39was like,
33:41okay,
33:42I need to reset my bar of what I have to
33:45compensate in order to attract A-level
33:48talent.
33:49And
33:51once I really understood the value of
33:53people,
33:54the way that we grew businesses
33:55completely changed. It stopped being
33:57about building businesses and became way
33:58more about assembling the teams that
34:00build the business. Like one of the core
34:02functions we do at Acquisition.com,
34:03probably the thing that we invest the
34:04most resources into is recruiting
34:05talent. Like there's a reason that we go
34:07really hard on LinkedIn.
34:08Because people respond to our messages.
34:10And we're like, "Hey, you ran all the
34:13ads at this $200 million per year
34:15direct-to-consumer business.
34:17We have a direct-to-consumer business
34:19that's at 20 million. Would you be
34:21willing to take it from 20 to 200
34:23because we think you have the
34:24experience? Or do you know anybody who
34:25does?"
34:26And because we have a following there,
34:28we get the responses and we can get that
34:29level talent. But that level talent's
34:30not coming in for 100 grand a year. You
34:32can moan all you want that oh, these
34:35employees want so much money. But
34:38there's a marketplace. There's a rate.
34:41And if you're not willing to pay it,
34:42there's a company that is smarter than
34:43you that is willing to pay it because
34:44they know the return on it. And I still
34:46think to this day one of the biggest
34:48arbitrage that exist in business
34:51is paying A talent A wages to get 10X
34:55the output. So, let me let me drive this
34:57home.
34:58So,
34:59you can get a B player. Let's say let's
35:00use $100,000 as the baseline. So, I want
35:03to hire a role for $100,000 for this
35:05thing. And a B player in the role will
35:08take 80.
35:10And
35:12uh
35:12a B plus might take 90 or 100.
35:16But there might be an A plus plus guy
35:19who's like 170. It's like whoa,
35:22that's like twice our budget for this
35:24role.
35:25But if that guy or gal
35:28has the output like an A player can get
35:30you 5X, 10X the output of a B player,
35:34meaning
35:35five people who are B players at
35:37$100,000 a year equal one A plus plus at
35:40170.
35:41That's still a great return.
35:44And better than hiring five Bs. And
35:47especially in knowledge work, so if you
35:49have anything that has to do with
35:50thinking and not like where literally
35:52more hands are are required to do the
35:54work, the outsize return on intelligence
35:56is so high that I still see it as one of
35:59the fundamental arbitrage that exist in
36:01business. How much time you save by
36:03hiring somebody who knows exactly what
36:04to do, how drives revenue in the
36:06business, and then you can use 10 years
36:08of experience that you don't have to
36:09pay. So, I would rather pay 25%, 30%
36:13more for somebody 50% more for somebody
36:15who can move me 10 years forward. Like
36:17it seems almost silly when you frame it
36:19like that not to. But the thing is every
36:20day small business owners want to save
36:22$5,000 on an annual on an annual salary
36:25for somebody who they know is perfect
36:26for the job.
36:28This is truth number five. If you want
36:29to get bigger, get better. Better leads
36:32to growth, bigger leads to bloat.
36:35So, I was reading S. Truett Cathy's uh
36:37book Wealth Is It Worth It, and he talks
36:39about the story of Chick-fil-A. And he
36:41said that what his his number one
36:42pursuit um was better, not bigger. And
36:45that he believed that if they were
36:47better, and they just kept getting
36:49better, he said, "Our customers will
36:50demand that we get bigger."
36:52versus trying to get bigger for the sake
36:54of getting bigger. And so, he tells the
36:55story between him, Chick-fil-A, and
36:57Boston Market. So, for those who don't
36:59know, Boston Market was actually a very
37:00big chain when I was growing up um that
37:03grew really, really quickly. And so,
37:05Chick-fil-A was, you know, privately
37:06held. They They took on almost no debt.
37:08Uh they grew really responsibly, one
37:10location at a time. And Boston Market
37:14was like, "We're going to franchise, and
37:15we're going to raise a ton of money from
37:16Wall Street, and we're going to make all
37:18this stuff." And for a period of years,
37:21they outgrew Chick-fil-A by a mile. And
37:23they were like, "Oh, Chick-fil-A's going
37:24to get left in the dust. They're going
37:25to get outcompeted. They're going to get
37:26crushed."
37:28But,
37:29because
37:30Boston Market grew so quickly, because
37:32they didn't They diluted their talent
37:33because they had to hire so many bodies
37:35and not enough brains.
37:36And because they wanted to grow, because
37:38they wanted valuations, they wanted
37:39money, they were what I would consider
37:41mercenaries. Whereas Chick-fil-A and S.
37:43Truett Cathy was a missionary. He
37:45believed in the product. He believed in
37:47the experience. And because he's a
37:48faith-driven entrepreneur, he wanted his
37:50restaurant to represent the tenets of
37:53Christ. This isn't me getting religious
37:55on it, but he believed in his mission.
37:57That's the point. And Bezos talks about
37:59this. He said, "You've got mercenaries,
38:00you've got missionaries." And the
38:01missionaries always win in the long
38:02term. And so, what ended up happening is
38:04that the money guys, some of these guys
38:05cashed out early because stock got
38:07inflated, all the stuff. They took on
38:08tons of debt, and then the the company
38:10ended up bankrupting out of something
38:12like 10 years later. But guess what
38:13happened in that period of time?
38:14Chick-fil-A just kept growing. And the
38:16thing is is that Boston Market couldn't
38:17outcompete Chick-fil-A in their market.
38:20They just grew faster. But the thing is
38:22is that if you've got a Bojangles market
38:24and Chick-fil-A, if you know that your
38:26chicken sandwich is better, you still
38:28always win. It becomes an inevitability.
38:30It doesn't matter if they get there
38:31first. If you win in the end, who cares?
38:34Because quality will always win.
38:37Provided it's priced appropriately and
38:38things like that. But
38:40better leads to bigger. Bigger leads to
38:43bloat. And so this has been something
38:45that was really hard for very hard for
38:47me to learn as an entrepreneur because,
38:49you know, we we like them I mean, I like
38:51the feedback of how much money we're
38:52making this month. I want to make sure
38:53it goes up. I want to make sure it goes
38:54up because that it's a it's a proxy for
38:56growth. Okay. And I used to say this and
38:58I I like it, which is either the
38:59business is growing or I am. So if the
39:01business isn't growing or the business
39:03is going down, I'm growing. I'm learning
39:05what I'm I'm messing up. And if the
39:08business is growing, sometimes you're
39:09not learning because the it you're
39:11getting rewarded for the work that you
39:12did while you were learning while you're
39:13eating
39:14Sometimes you get both and that's the
39:16ideal thing is that it's growing and you
39:17continue to learn and you stick you keep
39:19your learnings ahead of the growth. So
39:20the train's coming and you're building
39:22out the track, you're getting around the
39:23ditches, you're going through the
39:25mountain, you're digging the hole,
39:26you're doing that stuff so the train can
39:27keep running and keep growing.
39:29A big lesson that I have taken from
39:31Chamath Palihapitiya and some of the
39:32best entrepreneurs like Elon. If you're
39:34going to enter a market, so Elon talks
39:35about this. If you're going to enter a
39:36new marketplace, you want to be an order
39:39of magnitude better than
39:41the existing solutions. And so I'll give
39:44you an example Elon just recently did.
39:45Uh he talked about getting into candy or
39:48chocolate, which you might think, why
39:49would he even bother getting into that?
39:50I think it's cuz he had a gripe with
39:51Warren Buffett and Charlie Munger, which
39:52is really sad cuz I like both of them.
39:53He had a little bit of a rift with them.
39:55Oh, he was like, "Well, fine. I'll take
39:56out See's Candies."
39:58And so he was like, "I'm going to get
39:59into chocolate." And so he had all these
40:01people send him different recipes and
40:03all this stuff and he decided not to do
40:05it. And the reason he decided not to do
40:07it is he said that there was no product
40:08there was no version of chocolate or
40:10candies that was an order of magnitude
40:12better than what already existed. So he
40:14just didn't want to play. If you think
40:15about how he entered each of the other
40:16markets, he got into space and was like,
40:18"Oh, we're going to redefine how space
40:20flight works when you use reusable
40:21things and we're going to drive down the
40:22cost 10x compared to the competition."
40:24That's an order of magnitude better.
40:26With cars, the first real Tesla, not the
40:29the Roadster, the high-end one, but the
40:30first one he made for mass commercial
40:32use, was literally the highest rated car
40:35that auto whatever auto magazine, the
40:37premium magazine had ever rated. It got
40:40the highest overall score of all time.
40:43Because he focused so much on making it
40:44order of magnitude better. And the thing
40:46is is that Tesla makes great cars, by
40:48and large. And so, customers have
40:51demanded they get bigger because they
40:52continue to out buy, out purchase their
40:55supply.
40:57And so, that forces supply to increase.
40:59So, you grow.
41:00And so, if you're stuck
41:03and you're like, "I keep trying to grow
41:04and I can't grow." Sometimes you just
41:06have to think,
41:07"Let's not grow."
41:09What if we didn't want to grow at all,
41:10but we just had to make this thing
41:11absolutely insane from a quality
41:13perspective? Just get better. And the
41:15way that you do this tactically is that
41:17you look at each function of the
41:18business and you say, "What's one thing
41:19we can do better?"
41:20That we absolutely very high confidence,
41:22like we're just going to go from
41:23contacting our leads within 30 minutes
41:25to 5 minutes. That's the one thing we're
41:26going to do for the next 12 weeks for
41:28lead for sales. For marketing, what
41:30we're going to do is we're going to make
41:31sure that every single ad has a hook
41:33that's been tested before.
41:35That's what we're going to do. We're
41:36going to make sure every ad that goes
41:37out is going to have a hook that's
41:37tested and we're going to make five
41:39times more of them. Great. That's what
41:40we're doing in marketing. And every
41:41single one of them, here's the key point
41:43is that once you start that new that one
41:45thing, the next quarter you add to that.
41:48You don't just swap it and this is what
41:49most people do. They do that one thing
41:50and then they forget what they were
41:51doing. Is that you end up creating this
41:53checklist of what creates amazing ads.
41:55You create this checklist of what makes
41:57amazing follow-up. You make this
41:58checklist of what makes an amazing
42:00handoff between sales and customer
42:01success. You make this checklist of how
42:03to activate a customer. And so, it's 100
42:05golden BBs, not one silver bullet,
42:08that creates the outsize returns. And
42:11then, once you have 100 golden BBs, you
42:13start getting the word of mouth, you
42:15start getting people who keep buying
42:16from you. And then all of a sudden your
42:16LTV skyrockets. And then you might find
42:18out if your LTV skyrockets, maybe you
42:20don't have a marketing problem. Maybe
42:22you just weren't making enough per
42:22customer. And I can tell you this, the
42:24amount of times I talk to more
42:25businesses who are like,
42:27"We need cheaper leads. We need cheaper
42:28leads. We need We need to lower our
42:29CAC." The reality is,
42:32they just don't make enough per customer
42:33because they're not that good.
42:34And either you're mispriced, which does
42:36happen for sure,
42:37or your thing's not that good.
42:39Which is 100% under your control.
42:41Fundamentally, growth is a lagging
42:43indicator.
42:44The things you do to create growth are
42:46the leading indicators. And the things
42:48that create growth are the things that
42:50make you better.
42:51And so having growth as a desired
42:54behavior is trying to make an outcome
42:56into an input.
42:57And then what happens is you have
42:58{quote} growth for growth's sake. And
43:00here's the problem with this just as a
43:02big big picture is that if the reason
43:04that you're in business is to {quote}
43:06make money, if that's your real mission,
43:11so many things make money.
43:13And so what happens is you become
43:14distracted as an entrepreneur. This is
43:15why the mercenaries fail compared to the
43:17missionaries. Because if you just want
43:19to make the best chicken sandwich,
43:20anything that's not a chicken sandwich
43:22isn't a priority. They could have
43:24Chick-fil-A credit cards, right? Or
43:26Chick-fil-A miles. They could do that
43:27stuff and it probably make them money.
43:29It's not core. Now, go find out if they
43:31probably have a credit card, who knows.
43:32But like, the point is is that
43:34it's not core to what they know. If
43:36money is the goal, then there are so
43:38many paths to getting there that it's
43:40difficult to stay focused, which is why
43:42companies get spread thin, which is why
43:43they grow for growth's sake, and then
43:45all of a sudden they have five
43:46initiatives that are going on that all
43:47aren't working that well because they
43:49couldn't focus on the thing that
43:50mattered most, which is getting better
43:51at the core promise that they make to
43:52customers.
43:54Business truth number six.
43:55You work all day, but you can't get
43:57anything done because you allow too many
43:58things that don't matter to distract
44:00you.
44:01Sometimes you have to let fires burn.
44:04And so what that means is that you have
44:06to block time for work that moves the
44:07ball forward because a month later it'll
44:09be the only thing you have to show for
44:11the month before.
44:12And so one of the things that took me a
44:13long time to realize is that there are
44:15very few things that are existential
44:16crisis within hours, even within
44:18minutes, right? And so the idea that
44:20everyone in the company and all of your
44:22customers, etc. can have immediate
44:24demand from you as or responses from you
44:26as the owner is not a good expectation
44:28because then it means that you're on
44:30demand for everyone else's needs, but
44:31the business needs you.
44:33And so I'll give you a story to drive
44:34this home. So at my first gym
44:37I had just started sleeping not at my
44:38gym, which was wonderful for me.
44:40And so right as like I get my first few
44:42nights of sleep, I get a call that
44:44everybody hates at 5:30 in the morning
44:46cuz that's when sessions happen. And I
44:48was like, "Hello, what's going on?" And
44:50he said, "I've got bad news." And I
44:52immediately go to
44:54someone died from a heart attack in our
44:55gym. That was the like the immediately
44:57went there.
44:58And I'm just silent and I was like,
45:00"What is it?"
45:02And then he says, "There's a a water
45:04pipe that broke and it's leaking on the
45:05floor."
45:06And I was like, "Okay.
45:09What do you want me to do?"
45:11He's like, "Well, I don't know what to
45:12do. I just I called you." And I said,
45:13"Well, what do you think I'm going to
45:14do?"
45:15He's like,
45:16"I I guess call a plumber."
45:19And I was like, "Okay, what what would I
45:20do in the meantime?" He's like,
45:21"Probably get a bucket." I was like,
45:23"Yeah."
45:24I was like, "Have you done that?" He was
45:25like, "Well, no, I called you." I was
45:26like, "Okay.
45:28Well, why don't you do those first two
45:29things because there's nothing I can
45:31do." There's a story of uh
45:34Eleanor Roosevelt I think uh when I
45:37think someone in her family died in the
45:39middle of the night. She gets woken up
45:41by her servant or whatever, you know,
45:43however they did it back then. And he
45:44says, "You know, Mrs. Roosevelt, I have
45:46some terrible news." And it's like 3:00
45:48in the morning. And she's like, "What is
45:49it?" He's like, "Your cousin, you know,
45:51John died." And she said,
45:53"That could have waited till morning."
45:56There's nothing I can do about it. And
45:57so
45:59there is very few things that will
46:00actually kill a business. And so,
46:03if you allow everything to be urgent, it
46:06means that everything's a priority,
46:07which means nothing is. And priorities
46:09literally mean prior. They come first.
46:12And I literally prioritize my day by the
46:14things that matter most. And so, I start
46:16my day, I do prior
46:18to my day, the thing that I think will
46:20actually move the ball forward. Because
46:21when I look back at my last month to see
46:24the progress that I've made, I never
46:26think about, you know, Susan who I had
46:28to give a refund to because she was
46:29dissatisfied for something. Or we got a
46:31one-star review and we need to, you
46:32know, deal with that. Or
46:34uh you know, our our chat support uh
46:37went down for, you know, 2 hours in the
46:39middle of the day and people were like,
46:41you know, why did the chat support to
46:42like, none of these things are
46:44existential crisis for the business in
46:46the short term. There's almost nothing
46:47that kills a business in the short term.
46:48And like, the only real thing is that
46:50your payment processing goes down, so
46:52you literally your ability to accept
46:53money goes away. But beyond that, like
46:55there's not a lot of stuff. And so, what
46:57you have to get comfortable with is
46:59letting some fires burn.
47:01And being able to say, yes, this sucks,
47:04but not getting the important work done
47:06will suck more. And so, I
47:09spend, and I still do this, the first
47:12four to six hours of my day working on
47:14the things that I believe matter most.
47:16And I think that if I had a single habit
47:18that has gotten me the furthest in my
47:19life, it's that I
47:21I work uninterrupted for the first four
47:24to six hours of my day on the things
47:26that I think have the highest leverage
47:27in the business.
47:29And I like to think about that as,
47:31what's the one thing that if it were
47:32true,
47:33all of my other problems would go away?
47:35And then I put all of my effort into
47:36making that one thing true, or making
47:38that one thing happen.
47:40But that can't happen if you have 20
47:43other mini priorities that are urgent
47:45and not important. Every entrepreneur
47:46suffers from this. And so, you have to
47:48draw a lines in the sand, or you will be
47:50spread too thin. You will work all day
47:52and you will get nothing done.
47:55To protect that first four to six hours,
47:57in the beginning I had to wake up early.
47:58So that meant I woke up at 4, I worked
48:00for 6 hours till 10, and I start my day
48:01at 10. As I made a little bit more
48:03money, I was able to like sleep in until
48:06like 5.
48:08Or, you know, and then start working at
48:10like 6, and then I'd work from 6 to
48:11noon. And so everybody on my team, this
48:13has been for years, everybody on my team
48:14knows there's nothing until the
48:15afternoon. They're like, Alex only takes
48:17meetings in the afternoon. And so for
48:18me, I do my thinking work in the
48:20morning, and then I do my meetings in
48:21the afternoon. As I hired more people,
48:23more directors, more leaders, more
48:24executives, a lot of those meetings also
48:26were able to disappear. And so now it
48:28just became like I have meetings day,
48:30and the remainder of my week is just
48:31completely open. Here, like let me show
48:33you how this plays out in the real
48:34world.
48:35Someone reaches out and says, "Hey, I
48:37got to connect you with Jimmy. I think
48:39you guys would have a lot of synergies.
48:40I think that this would be a really
48:41important connection." And
48:44I say, um, I take meetings on Mondays.
48:48And they're like, "Oh, I don't think you
48:50can do that." And I say, "Okay, I guess
48:51we won't meet."
48:54We just sit there, and that's it. And
48:57you'll be amazed often times that if
48:58they really want to meet you, they'll
48:59make it work on Mondays. And if it means
49:00that it's also 3 Mondays from now, then
49:02it's 3 Mondays from now. And I will say
49:04this, if I don't meet Jimmy, you meet
49:06people out there on Earth. There's 8
49:08billion people. I'm not going to meet
49:09most people. And
49:11the likelihood that Jimmy's going to
49:13actually do something that cuz like if I
49:14know what I need to do to grow my
49:15business,
49:16there's not a lot that Jimmy's going to
49:17offer me there. Like if I'm very clear
49:19on my strategy, and I'm very clear on my
49:21execution, anything that's not that
49:23fundamentally loses me money. It
49:24certainly doesn't make me money. And so
49:26just being okay with
49:29saying no. And so I'll give you the
49:30tactic around this, which is just say, I
49:32like to say, so this is how I do this in
49:33social settings, I'd say, "Hey, I'm
49:35actually not taking meetings until after
49:37my book launches."
49:39And then once my book launches, I'll
49:40say, "I'm not taking meetings until we
49:42sell this company." And I'll just always
49:44have something that I'll just push out
49:46that's really far in advance that seems
49:48very important, that gives people a
49:50social reason to feel okay that I'm
49:51saying no to them, not saying you're not
49:52important, it's saying I've got this
49:54other thing that's really important to
49:55me. Um and so that tends to work pretty
49:58well with entrepreneurs.
50:00But you have to be okay with it. Like if
50:02you have a team where you people manage
50:03your schedule for you,
50:05I like I had to explain this to my we
50:07have three executive assistants that
50:09manage Leila and I's calendars. And
50:11I was like, if I if you put a a meeting
50:14in the morning at like 10:00 a.m., I was
50:16like, you've killed my whole morning.
50:18It's shot. Like I can't get into any
50:20kind of deep work and then I'm going to
50:21have 2 hours and I'm going to have lunch
50:22again and then I'm going to have other
50:23stuff out like no, like we don't do
50:25that. If they are going to do something
50:27and it's quote very urgent and they have
50:28a very strong argument, then I put it
50:30the very end of my day and I and I book
50:32from the back forwards. And so that
50:34means that if I say I want to end my day
50:36at 5:00 or whatever, then it means
50:37they're going to put my my first meeting
50:39the day at 4:00. So from 4:00 to 5:00
50:42if it's an hour-long meeting. And if I
50:43have a second meeting that day, then
50:44it's going to be from 3:00 to 4:00. And
50:46so I still get my whole day until 3:00
50:48uninterrupted so I can work on the
50:50things that matter most. And we have
50:52just learned, Leila and I working
50:53together, that basically the more she
50:55takes off my calendar, the more money we
50:56make.
50:57And that's because that's where I'm most
50:59effective. Now the flip side is Leila is
51:01such an exceptional operator and leader
51:03that her form of productivity is an
51:04actually stacked day so that she can
51:06delegate, invest in the team, prioritize
51:09resources, deal with small small
51:10decisions that have to move the ball
51:11forward, check in on projects, hold
51:13people accountable, reward them for the
51:14the behaviors they've done, like
51:16interview new candidates that we need to
51:18bring into the company. Like that's a
51:19super time consuming something that's
51:20very very high leverage and very high
51:21value. Like think about it. If you have
51:23to take 20 interviews to find the right
51:25person who can then take an entire 20
51:27hours a week off your plate, I mean,
51:29jeez. You spend 20 hours once to get 20
51:31hours a week for life?
51:33What a great return. And this is why
51:34entrepreneurship at the highest levels,
51:36I'm going to go on a side drain here,
51:37but I think it'll be important.
51:39Entrepreneurship at the highest levels
51:41is
51:43always hiring ahead of where you're at.
51:47And for people who don't like their
51:49current business, I can promise you that
51:51if you grow it enough, you're just going
51:53to be dealing with people. All
51:54businesses at the top are you got a
51:55marketing person, you got a sales
51:57person, you got a product person, you
51:58got finance, you got legal, you got
52:00tech.
52:01And that's that's the business. And so
52:03whether you're selling widgets, you're
52:04selling services, you're selling
52:05software, fundamentally, you're just
52:07going to have a bunch of people that are
52:09executing those things. And so at the
52:10very highest levels, business is all the
52:12same.
52:14And you have to learn how to play
52:16business at that level to keep
52:19playing at that level.
52:21Business truth number seven.
52:23Brand takes a long time to build, but
52:25it's the most valuable thing that you
52:26can own. It gives you the ability to get
52:28insane returns on advertising, price far
52:30above the market, and keep people only
52:32buying from you. It's very hard to
52:35imagine something that is better than
52:36that. It just takes time.
52:38And so this was I mean, this is probably
52:41the lesson that took me so long to
52:43learn. Like
52:44you I mean, many many many many years. I
52:46mean, I think I would say it took me a
52:47decade to learn this. And it's I've only
52:49been able to reap the fruit of this in
52:51the last couple years.
52:52And
52:54first off, I didn't even understand what
52:55branding was. Branding is simply an
52:56association people make between
52:57something they know and something they
52:58don't know. The thing they don't know is
53:00your business and the thing they do know
53:01should be something they like. And then
53:03over time, that rubbing of the thing
53:05that they like rubs off on your brand
53:06and eventually you can drop this thing
53:08and only have your company and they will
53:10make that positive association with you.
53:12And so there's three ways that people
53:14will make associations. So that's how
53:15you build a brand. One is what you say
53:17or show, so that's controllable. So
53:19people will associate this hat with me.
53:20And if you got value during this thing,
53:21then you'll associate the value with
53:23acquisition.com. Cool. So that's what I
53:25can say or show. This is advertising. Me
53:27Me making this content is advertising,
53:28right? I'm letting people know about my
53:29stuff.
53:31The second level is what other people
53:32tell them. And so that means like either
53:35someone who's interacted with your
53:36advertising or someone who's interacted
53:38with your product. So it's like, "Hey,
53:41uh I saw this this uh trailer for
53:44Mission Impossible, you know, 306.
53:48And and you're like, I think I'm going
53:49to go see it. Now, if your friend says,
53:52"Oh, I saw it. It was it was bad. Don't
53:53waste your money."
53:55The likelihood that I go see it, if I if
53:57I agree with that person's taste, that's
53:58you know, key side note there. If I tend
54:00to like the same movies they like, then
54:02I would take that really heavily. If
54:04it's like my mom and I don't agree with
54:06movies that she likes, I might just go
54:08see it more because I'm like, "Oh, if
54:09she hated it, I'll probably love it."
54:10Right? And so, what you say as the
54:12company owner is thing one that you can
54:14control the most. Thing two that you
54:16can't really control is what other
54:18people say about your stuff, which then
54:21goes to C or three, which is what the
54:24customer ends up saying once they
54:26experience it. So, it's what you say,
54:28what other people say, and what they
54:30actually experience. And so, as you can
54:32imagine, what they experience is going
54:34to be the strongest thing. So, you see
54:35the ad, you think about going to the
54:37movie. Someone tells you something about
54:38the movie, maybe that influences your
54:40decision. Once you see the movie, then
54:42you you have a much stronger opinion.
54:44And you can see another ad about the
54:45movie, but you're like, "I don't care
54:46what the ad says. I saw the movie. I
54:48bought the sandwich. I went to use their
54:50marketing services." You have a very
54:53informed opinion because you had an
54:54experience. And so, this is why brand
54:57and product are always going to be
54:58interrelated because how do you get what
55:00other people say to be good to your
55:02potential prospects? You make sure that
55:04their experience was exceptional so that
55:06when they do see it, they say, "Hey, the
55:08movie was awesome. You should go see
55:09it." Now, if someone who I like a lot
55:12says, "Hey, the movie was awesome. You
55:13should go see it." and I'm like, "I saw
55:14the ads. I don't think it was that
55:15good." and they're like, "Dude, believe
55:16me. See it." Now, all of a sudden, I had
55:18poor advertising of a high likelihood of
55:19seeing. And then if I go see it and I
55:21say, "Wow, he was so right. This was
55:22awesome." then I'm like, I tell other
55:24people. Now, here's what gets kind of
55:25interesting.
55:27If I go see it and I think it sucks, I
55:29that influences the brand of my friend
55:31who told me about it. Cuz now I don't
55:33actually believe their opinion of movies
55:35anymore. And so, that's why, as a side
55:37note, when people refer people to your
55:39business, they have to be treated so
55:41well because that person who made the
55:42referral risks relational capital. They
55:45risk their personal brand to the friend.
55:47And the reason they make that risk is
55:48they actually want to get a return on
55:49it, right? Like, "Hey, you should see
55:51this movie." because they want the
55:52friend to associate the good experience
55:54with the movie with them.
55:56And that's why people do things. That's
55:57why you do refer products that you
55:59actually like because you want people to
56:01associate or have that problem solved
56:02because of the thing that you connected
56:04them to, right? And so we want to be
56:06that connection and that's how we make
56:07money. Now, if we're thinking long-term
56:09though, from a branding perspective, if
56:11you make a big promise and you deliver
56:14on that promise consistently, people
56:16will say, "Wow, they are what they said
56:18they were." which is one of my biggest
56:19rules of marketing is state the facts
56:21and tell the truth. Don't make promises
56:22you can't keep. And just say, "Hey, this
56:24is why I like using Historic." which is
56:25like, "This is what has happened. I
56:26don't know if it'll happen for you, but
56:28if if you're willing to take that bet,
56:30then there you go." And so if we think
56:32about the things that are some of the
56:33strongest levers in business, price is
56:35the strongest lever on profit of all
56:38things that you can control business. If
56:39you get people to buy something for a
56:41million dollars that other people buy
56:42for $10, you're going to make a lot of
56:44money. And so price is one of the
56:46strongest things that has a lever on
56:47market. And you can measure the strength
56:48of a brand by how much above the
56:51commoditized price or what other
56:52competitors charge you can charge
56:54because of your brand premium. So if you
56:56look at like a Nike versus a generic
56:59brand for t-shirts, shorts, shoes,
57:01basketballs, whatever, they will charge
57:04a premium and they will get that
57:05premium. And so they're able to sell
57:07more units at higher prices
57:11because of their brand and because the
57:12associations people have with them.
57:14And so then the ROI from the brand
57:16becomes how much does it cost me to make
57:19these associations that people find
57:20positive and then you spread that out or
57:23you fractionalize that against how much
57:25of an increase in price you can have
57:27against the commodity. And so if I sell
57:30a million units of something and I can
57:32sell it for $3 above market, then I have
57:36$3 million of excess that that brand
57:39buys me. And so, if I can get an
57:41association that yields me that outcome
57:43for, let's say, I can get a championship
57:44fighter for 250 grand a year to be in my
57:47ads,
57:49then I get a 10:1, or I'll say 300,000
57:52to make the math simple. If I pay
57:53$300,000 that association, and I can now
57:56charge and make $3 million extra, I get
57:5810:1 on that branding. ROAS, you get
58:00return on advertising spend. Absolutely
58:02still All the metrics makes count the
58:04same for branding as they do with direct
58:06response advertising. You just have to
58:08measure over a longer time horizon.
58:10That's the difference. And the And I
58:11will say on a personal level,
58:13branding gets you far better returns on
58:15advertising than anything else. It just
58:17takes longer. And so, think about the
58:19direct response world as like your
58:21paycheck. It's like your You write a
58:23check in, and you get money out. You
58:24write a check in, and the moment you
58:25stop uh spending that money, you stop
58:27making money. Brand is like your
58:29long-term investment. In the beginning,
58:31you you're investing money into your
58:33IRA. You're investing money into your
58:34401k. You're investing money in the
58:35stock market, but it's not really
58:36compounding yet. But the thing is is
58:38that you keep doing that. You keep doing
58:40that. You keep doing that. And all of a
58:41sudden, the compounding starts to become
58:43this monster that you couldn't even You
58:44couldn't even You can't even spend
58:45enough marketing dollars to make up for
58:47that level of compounding. And that's
58:48what happens over time. It just takes
58:50time to get there. But the way that you
58:51control it are that you make sure that
58:53the things that you were saying about
58:54yourself are associated with things that
58:56the people who you're trying to sell to
58:58associate positively. And this happens
59:01in content, and also the people that you
59:03associate with publicly.
59:05The second part that you can control is
59:07how much you deliver on the promise.
59:10Because the experience is always going
59:11to be the heaviest weighted thing that
59:12people have. Now, the approximation of
59:15an experience is a review. Right? The
59:17reason reviews matter so much is because
59:19we see that like, cool, they say they're
59:20great. Now, I go to their site, and I
59:22read reviews to see, are they telling
59:24the truth or not based on approximate
59:26reviews? And then I say, okay, well,
59:27this guy had a one star, but it looks
59:29like he isn't a lot like me. Now, I look
59:31at these other guys. Oh, these are a lot
59:33more like my use case, and they had five
59:34stars. Okay, well, then I feel like my
59:36risk adjusted on making this purchase is
59:37low." Now, I buy it, and then I decide
59:39for myself.
59:40But, the branding is a loop. It helps
59:43make the purchasing decision, and if you
59:45fulfill on that, then guess what they're
59:46not going to do. They took a risk by
59:48buying your product not knowing who you
59:50were. They don't want to take that risk
59:51again. And so, if you deliver on the
59:53promise, they will just buy again from
59:55you even with the premium. And this is
59:57how you start how branding in of itself
59:59can create a competitive moat. People
1:00:01who buy Apple become Apple buyers. They
1:00:03just only buy Apple.
1:00:05And so, even though somebody else's
1:00:06product might even be better, they don't
1:00:08want to risk trying it. They don't want
1:00:09to have the cost of learning a new
1:00:10interface and all this other stuff.
1:00:12And so, brand gets you higher returns on
1:00:15advertising, allows you to price far
1:00:17above the market, and get people that
1:00:19once they buy from you, they keep buying
1:00:20from you. And you do that by what you
1:00:22say, what other people say, and what
1:00:24customers experience at the very end
1:00:26when they use your product. And that
1:00:27either gets them into the buying loop
1:00:28again forever, or kicks them out. If you
1:00:31look at the cutting-edge direct response
1:00:32world, the strategies that they use
1:00:35approximate
1:00:37a brand. And so, let me explain what
1:00:39that means. So, if you go to quote cold
1:00:41traffic, people who don't know who you
1:00:42are, you have no association. Once those
1:00:44people go into your world, oftentimes,
1:00:45unless it's like a widget or something
1:00:47that's a very impulse purchase, you have
1:00:48something called like a warm-up
1:00:49sequence, or a nurture sequence, or you
1:00:51deliver value, or you give lead magnets.
1:00:53These are all things that actually
1:00:55approximate branding. So, if I give
1:00:57someone, let's say, a PDF
1:00:59that is very valuable, well thought out,
1:01:00has lots of research in it.
1:01:02Someone would get a lot of value from
1:01:03that, and then I approximated a purchase
1:01:07with them. They get They did an
1:01:09exchange. They got something, and then
1:01:11that thing was valuable. And they used
1:01:13that to extrapolate into what a decision
1:01:15would be like, or what a product would
1:01:16be like, if they made a purchase from
1:01:18you. And so, you have these things like
1:01:20five-day challenges that people will run
1:01:22to try and have lots of people for five
1:01:24days because if you spend, let's say,
1:01:26five hours with someone, that might be
1:01:28the same in terms of their warmth to you
1:01:31or the associations they have with you
1:01:33as somebody who might have spent a year
1:01:35consuming a 60-second clip, you know,
1:01:38twice a week, right? Now, I will say I
1:01:40think that it's saying that the time
1:01:41horizon over time actually does have
1:01:43elements of trust that I won't get into,
1:01:44but they try to approximate what a
1:01:47trusting relationship would look like,
1:01:49which is exactly how you build brand.
1:01:51But, they just try and condense the time
1:01:52window. And so, this is why if they want
1:01:54to sell you swampland, they invite you
1:01:55to a vacation for free and they spend
1:01:57two days with you pitching uh swampland
1:02:00because at the end of two days you're
1:02:01like, "Wow, I spent 24 hours with this
1:02:03person. Like, I feel like I can trust
1:02:04them." And so, they actually build a
1:02:06reputation in a very minor in a mini way
1:02:09in a tiny audience to make the sale.
1:02:12Whereas, if you want to build, in my
1:02:13opinion,
1:02:14big big brand, you want to build that
1:02:16same level of trust across millions of
1:02:18people. And then when you say, "Hey,
1:02:20I've got something," they all act as
1:02:22though they've been with you for two
1:02:23straight days to make the purchase. And
1:02:26if you spent two days with someone say,
1:02:27"Hey, buy my basketball," they'll all
1:02:28buy it. But, you just do that times a
1:02:30million. And that's what big brand looks
1:02:32like. Business truth number eight.
1:02:34You need to know what inputs and outputs
1:02:35your money-making system are, broken
1:02:37down to the absolute smallest action,
1:02:39and that way you can crank the hell out
1:02:41of it. So, let me explain.
1:02:42So, if I say, "All right." So, this
1:02:45happens all the time. So, we we want to
1:02:46invest in a company, we come in, and a
1:02:48lot of times, right, like in we're we're
1:02:50in like the diligence part of the of the
1:02:51deal cycle and I say,
1:02:53"Okay, so you've got five sales guys and
1:02:55you're spending 5,000 bucks a day on
1:02:58ads. That's your primary way of getting
1:02:59leads.
1:03:00Why aren't we spending 50,000 a day?"
1:03:03I just ask the question like, "Why like
1:03:05what stops us from spending 50,000 a
1:03:06day?"
1:03:08And then a number of things will come
1:03:09up. And then the question is how
1:03:11solvable are these things? Now, if they
1:03:12say, "Well, whenever we spend more
1:03:13money, our ROAS goes down." I'd would
1:03:15"Okay, I would see that as your ads
1:03:16suck. Great. If they say um we can't
1:03:20handle the call volume then I'd be like
1:03:21oh you don't know how to hire recruit
1:03:23and train sales people. Cool. If they
1:03:25say oh we could it's just that we
1:03:26couldn't deliver based on
1:03:29the promises that we make because we
1:03:30have a lot of high touch service. So
1:03:31like okay, so you need to we need to
1:03:33systematize more stuff on the back end
1:03:35and get better training in place on the
1:03:36back end. Ideally maybe bring someone in
1:03:38who's ruling you know ruling that
1:03:41owning that rather than the founder
1:03:42who's split between too many places.
1:03:44Right? So like you can you can quickly
1:03:46understand where the constraint of the
1:03:47business is by simply asking why can't
1:03:48we 10x this? Right? Now
1:03:52The skill of an individual is inversely
1:03:54proportional to how vague your direction
1:03:57can be.
1:03:59So let me explain. So if if someone
1:04:01comes to me and says hey Alex
1:04:04I have this product can you promote it?
1:04:07I have no marketing department can you
1:04:08just promote it? He can just say that or
1:04:11she can just say that and I will know
1:04:13everything else that that means.
1:04:16At the absolute lowest level if you say
1:04:17that to a five-year-old you'd be like
1:04:19okay. So this is what promotion means
1:04:22and there's all these different ways we
1:04:23can promote and I need you to learn how
1:04:25to turn on a computer and then this is
1:04:27how you create an email and this is how
1:04:28you like you'd have to go step by step
1:04:30by step and so the more vague your
1:04:33direction the more skilled the
1:04:34individuals you need to have in order to
1:04:37do it which by the way is why smart
1:04:38people is a great investment because
1:04:40it's actually more efficient from a
1:04:41communication perspective. I can say hey
1:04:44John fix churn
1:04:45and I can just say fix churn and he
1:04:47knows all the sub tasks underneath of
1:04:49it. But over time it's valuable for you
1:04:51as the entrepreneur to know as much a
1:04:52much of that dirt as you can so you can
1:04:54level check and say how good is the
1:04:56person they're really doing their job
1:04:57etc. Now let's go to advertising as a
1:04:59simple example.
1:05:00Actually let's use the example I had
1:05:01earlier. So we had three different
1:05:03problems that I presented. I said why
1:05:04can't we 10x this thing? So the first
1:05:07version of the problem was their ads
1:05:10suck and I say okay, you can't scale
1:05:12your ROAS there. So, either I So, it's
1:05:14not just that they're out there. It's
1:05:15like the the the TAM could be bad as in
1:05:17like they could be a local market and
1:05:19you can't 10x your ad spend from 5,000
1:05:20into 50,000 a day cuz there's just not
1:05:22that many people in the local market.
1:05:23But, assuming that that's not the case
1:05:25and it's just that their ads suck, then
1:05:27I say, "Okay, walk me through the
1:05:28process of how you make ads." And so
1:05:30then what we say is, "Okay, usually you
1:05:32can nail it down to like you're not
1:05:33doing enough pre-work and pre-work is
1:05:35defined as I need you before you start
1:05:38to sit down and write ads that you're
1:05:39going to look at the top 20 ads you've
1:05:41done of all time. You're going to
1:05:42rewatch them. Step one. Step two, you're
1:05:45going to go through all the ads that you
1:05:46saw this week across all your platforms
1:05:47that you thought were interesting that
1:05:49you would like to model. Step two. Step
1:05:51three, you're going to recreate the best
1:05:54ads you've done. You're literally going
1:05:55to remake them. Step two, you're going
1:05:57to take the best ads and just reformat
1:05:58them. So, old footage, new edit
1:06:02versus same message, new take.
1:06:06And then we're also going to create 30
1:06:08more ads that are completely new net new
1:06:10takes using the ideas that you had
1:06:13inspiration from
1:06:15and just inspiring from old ads that
1:06:17you've used before that you're not
1:06:18actually redoing the same messaging.
1:06:20You're mixing and matching and doing a a
1:06:22remix, right? And so it's like, "Great.
1:06:24This is the process and you're going to
1:06:26do this every week." And so that means
1:06:27that you're going to spend half a day
1:06:29prepping and half a day filming every
1:06:31single week. Now, it's very easy for me
1:06:34to say when I say, "Hey,
1:06:36are you doing the ads process that I I
1:06:38outlined?" They're like, "No, I we are,
1:06:39but it's it's not really working." I'm
1:06:40like, "Show me the hooks that you wrote
1:06:44from the ads that were already working.
1:06:46Show me the remixes that you did from
1:06:48the best performers. Show me your album
1:06:50that you've been saving for all the ads
1:06:52that you like." If they can't show me
1:06:53these things, they're not doing the
1:06:55fundamental actions.
1:06:56So, that's like example one. If I said
1:06:58that it was the like they can't scale
1:06:59the sales team, then I'd say, "Okay, how
1:07:01do we scale the sales team?" So, oh,
1:07:04well, we just got to go get people.
1:07:05Well, what does that actually mean from
1:07:06an action level? Well, it turns out it
1:07:08means that we need to reach out to 100
1:07:10people on LinkedIn in order to get uh
1:07:14one person hired. Okay, so based on our
1:07:17churn rate for sales guys, let's say we
1:07:18lose one person a quarter, whatever,
1:07:20that happens more with bigger teams as a
1:07:22side note. Um
1:07:24So, okay, well, if if we do uh
1:07:27three reach outs a day over 90 days,
1:07:29then we're just going to replace our
1:07:30churn. We're going to have 90 reach outs
1:07:32to get one good guy, and we're going to
1:07:33lose one guy. So, we're never going to
1:07:34grow the team. They're like, "Oh, it's
1:07:36like so if we need to 10x this team,
1:07:38then we need to do
1:07:39well, 100 gets us one,
1:07:41and we lose a third of a sales rep per
1:07:43month, which if it's we had a
1:07:44five-person team, we'd be losing 20% per
1:07:46month, by the way. You get employee
1:07:47churn the same way you get customer
1:07:48churn.
1:07:49And so, you say, "Okay, so our rate is
1:07:5120% churn out. Is there things we can
1:07:52fix that?" Sure, but just for the sake
1:07:54of this this example, we say, "All
1:07:57right. So, we need to get, if we want to
1:07:59double this team this quarter, we need
1:08:00to do 500 reach outs."
1:08:02Now, 500 reach outs is going to result
1:08:04in, call it uh 50 interviews.
1:08:08And 50 interviews is going to take them
1:08:09some time. So, we need to take at least,
1:08:12call it 10, maybe 15 interviews a week
1:08:14cuz we want to be ahead.
1:08:16Um because I don't want to get it by the
1:08:17end. I want to get I want to have these
1:08:18people done and on board and productive
1:08:21by the end of this quarter, not just
1:08:22finished. And so, if you're like, "Wow,
1:08:24going from five to 10 is a lot." Dude,
1:08:27we put four we went from zero to 40 in a
1:08:29company. Like, it's 100% just your
1:08:30belief set of what's possible. And I
1:08:32will tell you this right now, this is
1:08:33just a uh life hack for making more
1:08:34money.
1:08:36You will so many entrepreneurs are like,
1:08:38"You built a five-person sales team, and
1:08:40you immediately scale whatever business
1:08:41you do next to a five-person sales team,
1:08:42and then you stop there." Because you
1:08:44just don't know how to grow up past
1:08:45that. And so, you just do what you're
1:08:46comfortable with. You're a lot of you
1:08:47guys are comfortable at $1,000 in ad
1:08:49spend, and you just know how to do that,
1:08:50and you can't get past that. And so, you
1:08:52have to break these these these limiters
1:08:54that you have, and say, "Why can't I
1:08:56spend 10,000 a day? Why can't I hire 30
1:08:59sales guys to do outbound in 90 days. I
1:09:01heard a story
1:09:03um
1:09:04of a uh uh multi-billionaire
1:09:05entrepreneur, ex-Blackstone guy, has
1:09:08raised billions and millions of dollars,
1:09:09whatever. And he became
1:09:11I can't share the company. Um
1:09:14Company's worth over 100 million now,
1:09:15and it's not Shopify cuz if you think
1:09:16about Harley, it's not him.
1:09:17Um
1:09:19and he started this new fund, and in
1:09:21order to start it, and he raised I think
1:09:23like 20 billion his first lick, like
1:09:26high-level dude.
1:09:28What he did was he flew out
1:09:31I think he did 200 interviews in 7 days.
1:09:35And so he said, "Everybody come here,
1:09:37fly out to my warehouse." He had his
1:09:39team of five killers with him that he
1:09:41knew from that he took from his last
1:09:42thing, and he did 200 interviews in 7
1:09:45days.
1:09:46And then he got his team to start the
1:09:48next thing. That's the difference in
1:09:49terms of level of execution that higher
1:09:51high-level entrepreneurs do that it
1:09:52would take a junior entrepreneur 3 years
1:09:56to do that because they choose to
1:09:57believe they can only take two
1:09:58interviews a week. If it is the
1:09:59constraint of the business, it is your
1:10:00job.
1:10:03And so you have to be able to break down
1:10:06what the inputs of the business are
1:10:08at the most actual level that yield
1:10:10output. So figure out the problem, and
1:10:12then figure out the action that you
1:10:13actually do, not not the not the output,
1:10:16the action that you have to do, the
1:10:17inputs at the most basic level so that
1:10:19you can crank that out of it.
1:10:21Business truth number nine, stop looking
1:10:23for hacks. And I mean hacks differently
1:10:25than like shortcuts. I mean, you know
1:10:27when you when you see something and
1:10:28like, "Oh, the there like start doing
1:10:31these hashtags cuz that's what's working
1:10:32really well." Or um
1:10:34start doing this this new
1:10:37uh messenger thing that's only going to
1:10:38work for 60 days.
1:10:40The thing is is that like if you have to
1:10:42jump from these little mini trends to
1:10:43mini trends to mini trends, the moment
1:10:45that little mini arbitrage thing is
1:10:46done, you're done.
1:10:48You want to focus on what the overall
1:10:50objective of of the platforms that you
1:10:52advertise on are.
1:10:54And so
1:10:56if I know that for example, YouTube
1:10:58wants people to click and they want them
1:11:00to watch and ideally watch something
1:11:02else, then if I just always optimize all
1:11:05my effort to getting those big things
1:11:08right, whether something's trending or
1:11:10like, oh, yellow yellow uh yellow
1:11:13backgrounds are doing really well in the
1:11:14short term. We're like, you want to make
1:11:16sure that you respond to every single
1:11:17comment well within 6 minutes, otherwise
1:11:20like it it changes the Anytime someone
1:11:21tells me algorithm stuff, I basically
1:11:24ignore it. Because unless the goal of a
1:11:27platform has fundamentally changed, all
1:11:29of this other stuff is just is just
1:11:31distraction. Because again, what's the
1:11:34one thing that matters most? If I make
1:11:36something that's so good that everyone
1:11:38is going to share it and the moment they
1:11:39watch they can't wait to tell other
1:11:40people about it,
1:11:42the platform's going to is going to want
1:11:43to distribute that. I don't care what
1:11:45the algorithm is. It's going to want to
1:11:46distribute that.
1:11:48And even if it doesn't, so this is a
1:11:49real talk, even if it doesn't, the 100
1:11:52people who saw it will get what I want
1:11:54out of it.
1:11:56And so, the thing is is that it's so
1:11:58much better to spend 100 hours making
1:12:00one exceptional thing than doing 100
1:12:02things mediocrely. And now, some of
1:12:03that's like, wait a second, how does
1:12:05that contradict with you got to do lots
1:12:07of quantity?
1:12:08Quantity matters because it teaches you
1:12:10how much work it takes to create
1:12:11quality.
1:12:13And so, once you learn, and this is like
1:12:15if you look at I like YouTubers because
1:12:16it's if they have really well-documented
1:12:19like work cycles and you can see all
1:12:20their product and marketing in the same
1:12:22place,
1:12:23is that
1:12:25in the beginning many of them make more
1:12:26videos. And then over time they realize
1:12:29that if they make a better video, it has
1:12:31outsize returns, meaning if you make a
1:12:34video that's 20% better than your
1:12:35average video, you might get five times
1:12:37the views. And it might take only twice
1:12:39as much work to make your video 20%
1:12:41better. And so then all of a sudden
1:12:42you're like, oh, well, well, instead of
1:12:44making two videos, I'll make one that's
1:12:4620% better and then I'll get five times
1:12:47the views. And then that becomes the new
1:12:49standard. Then all of a sudden it's
1:12:50like, okay, well, now we're
1:12:51videos of this standard, but if I spend,
1:12:54you know, twice the time as I did on
1:12:56that video, I get this video that was
1:12:58already 20% better another 20% better,
1:13:00and then that gets five times the views
1:13:02of the five times the views. And so what
1:13:04happens is
1:13:05over time you learn how much work it
1:13:07takes to make something great.
1:13:09And that is why quality starts to Over
1:13:11time,
1:13:13all these platforms will always optimize
1:13:14towards quality.
1:13:16Because there is no lack of information.
1:13:19Like people have Google. They can find
1:13:21out whatever they want. What they want
1:13:22is value per second, not seconds of
1:13:25value.
1:13:26And so our job, if we want to make
1:13:28anything, whether it's a product,
1:13:29whether it's marketing, whether it's an
1:13:30ad, whether it's it's a a service that
1:13:33we give, that we sell,
1:13:34is that it's I I get so tired of hearing
1:13:36the entrepreneur story, and I used to be
1:13:38one of these guys, which is I get so
1:13:39frustrated. This is me yelling at my
1:13:40younger self.
1:13:41Is Is I'm going to like, I provide so
1:13:42much value. Like there's so much stuff
1:13:44that I give them. But the internet gives
1:13:47them literally everything for nothing.
1:13:50And so it's not that people want more,
1:13:52they want better. They want us to do the
1:13:54work ahead of time. People want a
1:13:56bargain. They want, how can I compress
1:13:5813 years of business lessons into two
1:14:00hours? How do I How do I do that? How do
1:14:03I How do I get the lessons from 35,000
1:14:04posts in 60 minutes?
1:14:07They want that. They don't want you to
1:14:08say, "Hey, you know what? Dude, I put
1:14:10all 35,000 of my posts inside of this
1:14:12membership login. It's so much value."
1:14:15They're not going to get value from it.
1:14:18Because what would be so much more
1:14:19valuable is distilling all of that down
1:14:21to the most concrete form, where every
1:14:23time they consume it, the value they get
1:14:25per second is so high they can't stop.
1:14:27That's where And
1:14:29when you're thinking about this stuff,
1:14:31like
1:14:32quality is in the details that you only
1:14:34realize with lots of exposure. And I
1:14:36think about this like coats of paint.
1:14:37When I write a book,
1:14:39it's it's not like I sit down and I
1:14:40write it. I write the first draft, and
1:14:42then I put another coat of paint on it.
1:14:44And then I put a third coat of paint on
1:14:45it, and a fourth coat of paint on it.
1:14:47And and and I'll say this is a gift I
1:14:48got from the consulting and and and and
1:14:50and banking world, which is let me tell
1:14:52you how they edit. Let me tell you how
1:14:53it works.
1:14:55First, you make a deck or a brief or
1:14:58whatever deliverable you're going to
1:14:59have to a customer or client.
1:15:01That's round one.
1:15:04The second round, you look for just
1:15:06punctuation errors.
1:15:08The third round, you look for data
1:15:10errors.
1:15:11The fourth round, you look for
1:15:12misspellings and typos.
1:15:14The fifth round. Now, all of a sudden,
1:15:16every time you're reading it, you're
1:15:17also going to catch other stuff, too,
1:15:18but you're specifically looking for one
1:15:20type of thing. And I'm not a video
1:15:22editor, but I would bet that
1:15:24this is exactly how you edit video. You
1:15:26think, "Okay, let's look for lighting
1:15:28this time. Okay, let's look at
1:15:29transitions this time. Let's look at
1:15:31sound and music this time. Let's look at
1:15:33the actual content itself this time and
1:15:35make sure that there like there there's
1:15:37no there's no gaps or space." And so,
1:15:39it's coats of paint, and that exposure
1:15:42over time and looking at it when you
1:15:45when you start early in the morning, and
1:15:46the second time you look at it, it's
1:15:47after lunch. The third time you look at
1:15:49it, you're in a bad mood. And the fourth
1:15:50time you look at it, you just talked to
1:15:51your wife about this other thing, and
1:15:52that's top of mind. And so, you you look
1:15:54at it through these different frames,
1:15:56and you get a way It's like sanding down
1:15:58the rough edges, and you just keep
1:15:59getting at it, and you put different
1:16:01level grade sandpaper, so it gets finer
1:16:04and smoother and smoother. But that only
1:16:06happens with exposure over time and lots
1:16:08of licks.
1:16:10And so, you make the money You make the
1:16:12money in the edit. You make the money in
1:16:14the distillation, not in the creation.
1:16:16And so, stop focusing on the hacks
1:16:19and put all your effort into the
1:16:22repeated bouts
1:16:24and bursts and
1:16:27going over with the sandpaper and the
1:16:28second coat and the third coat and the
1:16:29fourth coat of paint. That is how you
1:16:31can escape mediocrity.
1:16:33And that's what everyone who's mediocre
1:16:34is unwilling to do.
1:16:37They think that the moment they put the
1:16:38last period on their document that they
1:16:40finished writing a book. When really,
1:16:42they just put 80,000 words into a
1:16:44document that no one's ever going to
1:16:45read. And you can teach
1:16:47quality to people by teaching the
1:16:50process
1:16:51that
1:16:52begets quality.
1:16:54So, if you say
1:16:56the first thing we do is we have a
1:16:58wireframe and every wireframe has to
1:17:00have
1:17:01a hook, a story, a list or steps for an
1:17:04outcome,
1:17:05and then a conclusion that meets these
1:17:07standards, that's the wireframe. Have we
1:17:09done that? Checkbox one. Checkbox two,
1:17:11we record the whole thing, we fill in
1:17:13the gaps. Great. Checkbox three, we look
1:17:15for transitions. Checkbox four, we look
1:17:17for And so, then they can follow your
1:17:19step for creating quality, and most
1:17:21people just never document what they do,
1:17:23which is why every time they have to
1:17:24reinvent the wheel, and they have to
1:17:26reinvent the wheel for every new person
1:17:27who comes into their company, which is
1:17:28why it's so taxing when you're small to
1:17:31bring people on because you feel you
1:17:32have no training, you have no system.
1:17:34But, if you can document these things
1:17:36for yourself, which A, by the way, will
1:17:37make you better, B, it also make it
1:17:39easier for you to bring new people in so
1:17:40you can ultimately replace yourself and
1:17:41keep the quality where you want it to
1:17:42be.
1:17:44Business Truth 10, the best people cost
1:17:45more, but make you way more than they
1:17:47cost. It's still one of the biggest
1:17:49arbitrage opportunities that exist in
1:17:51business, and I think will continue to
1:17:52exist in business as long as humans
1:17:53work, right? And the thing is is that
1:17:55small business owners never get this.
1:17:57So, it's really just the big businesses
1:17:59that are competing for talent. That's
1:18:00where the talent war happens is at the
1:18:02top. And do you think there's a
1:18:03coincidence that the biggest businesses
1:18:05are the ones that are competing for
1:18:06talent? Why do you think that is? It's
1:18:08because they understand that talent is
1:18:10what makes them a big business. And so,
1:18:12the thing is is And this is where small
1:18:13businesses get in trouble again, and I
1:18:14did this too, is that you have to be
1:18:16worthy of the level of talent that you
1:18:18need and have a mission that's aligned
1:18:20with what they find meaningful. So, um I
1:18:23have a I I have a an acquaintance that's
1:18:25in the porn business. I have no moral
1:18:26qualms. He does legal
1:18:28Everything he does is legal. Do what you
1:18:29want.
1:18:31One of the issues that he has is he's
1:18:32it's very hard for him to find
1:18:33high-level talent cuz a lot of people
1:18:35don't want to work in the porn industry.
1:18:37And so, I see that as an an as a
1:18:39hypothetical extreme, but some of you
1:18:40guys are working one degree less than
1:18:42that. You're like, "I sell a day trading
1:18:43thing." It's like, "Oh, so you are
1:18:45somehow you beat the market." Well,
1:18:47obviously, if you sell day trading, then
1:18:49you should just be day trading and not
1:18:51selling courses on how to day trade if
1:18:52you were so good at it. And you
1:18:53definitely wouldn't tell people what the
1:18:54trades were. Duh, right? And so, the
1:18:57thing here is the level of talent that
1:18:58you can attract for that level of
1:19:00opportunity is going to be very
1:19:00different from like, "I want to create
1:19:03something that takes all trash and turns
1:19:05it into energy."
1:19:06You're going to get people who are very
1:19:08mission driven. There's a reason that
1:19:10every single one of Elon Musk's
1:19:12businesses is here to save the world.
1:19:14That's not a mistake. Now, there's two
1:19:16elements to that. One is that they could
1:19:18save the world. The second is that
1:19:19that's what he makes it about.
1:19:22So, Twitter before this wasn't about
1:19:24having free speech and civilization. It
1:19:26was just a social media platform.
1:19:28But now,
1:19:29it's
1:19:30the last beacon or bastion of free
1:19:32speech. That's what Elon has positioned
1:19:34it as. Now,
1:19:36uh ULA, which is United United Launch
1:19:37Alliance, which is a a government
1:19:39contracted that does a lot of space
1:19:40things. You might not have heard of
1:19:42them.
1:19:42But SpaceX is how mankind is going to
1:19:46survive if anything happens to Earth.
1:19:48And so, we're going to become an
1:19:49interplanetary species. So, the
1:19:51likelihood that we can survive any kind
1:19:52of event if we're a multi-planetary
1:19:54species goes up for our survival as a
1:19:56race.
1:19:57And so, he made SpaceX not about
1:20:01doing rockets and government
1:20:02contracting, which although that is how
1:20:04they make their money, he made it about
1:20:06saving humanity.
1:20:08Tesla is about it's electronic cars.
1:20:10There's a zillion other car companies
1:20:11that have electronic cars. But why is it
1:20:13only Tesla is about having this because
1:20:15it's the future of having Earth be
1:20:17environmentally friendly.
1:20:19Every one of his companies he makes
1:20:20about saving the world. And by doing
1:20:22that, you get people who will work night
1:20:24and day to save the world.
1:20:27And so, I'll give you four little
1:20:28personal examples that I've had or
1:20:30sorry, three personal examples that I've
1:20:31had um around this. I remember when I
1:20:33had my first $50,000 a year employee cuz
1:20:35before this I'd only worked with hourly
1:20:37hourly wage employees at my gyms.
1:20:39And that one person gave me the time cuz
1:20:41they could manage my first location to
1:20:43open up my second location, which made
1:20:45$250,000 a year in profit. And so, wait,
1:20:48so I paid $50,000 a year for somebody
1:20:50out of one location to allow me to open
1:20:53up my second location made 250,000. I
1:20:55got five to one on that. Great
1:20:57investment. Now, somebody might say, oh,
1:20:59well, why would you give up $50,000 when
1:21:00you could do that? Well, cuz I want to
1:21:01make 250 on the next thing.
1:21:03The second story I had, this is a little
1:21:05a little bigger, my first $300,000 a
1:21:07year employee. Guess what they did? This
1:21:09was my first really really exceptional
1:21:11salesperson. He brought in $5 million in
1:21:13sales that year.
1:21:14I paid him 300 grand.
1:21:16Was that worth it? Absolutely. Was it
1:21:18more than I'd ever paid a salesperson
1:21:19for? Absolutely.
1:21:22So, it was worth it and it was even more
1:21:24worth it. My first million dollar
1:21:26employee immediately in their first 90
1:21:28days saved me 3 million bucks a year.
1:21:31Immediately.
1:21:32And she was like, all right, I just want
1:21:33to make sure I paid for myself. Now
1:21:35let's do this other stuff. And then with
1:21:37her contacts in her Rolodex allowed us
1:21:39to package our companies and then sell
1:21:41them through her network
1:21:43of bankers and private equity firms. And
1:21:46so, I didn't come from that world. And
1:21:47so, I hired an executive that had 35
1:21:49years of experience who had sold who had
1:21:51been sell side over 40 times because I
1:21:54was like, I've never done this before.
1:21:55And so, I found somebody who already
1:21:56had. Now, I had to pay him a million
1:21:58dollars a year.
1:21:59But, was it worth it? More than
1:22:01anything. And so, the thing is is that
1:22:03what's crazy is that the stories I just
1:22:05told you, the arbitrage on value
1:22:07actually increased as I spent more.
1:22:10Think about how crazy that is.
1:22:11A $50,000 got me a 5x. A 300 got me a
1:22:1514x. A million got me a 50x.
1:22:19This is why I believe that talent is
1:22:21still the most underrated biggest
1:22:24money-making arbitrage opportunity that
1:22:26exists and the biggest constraint to
1:22:27getting there is that your company's
1:22:29and you're
1:22:31Brutal business truth number 11,
1:22:33the big obvious thing is the problem,
1:22:36not the 100 other things.
1:22:38I want to be clear about this. The
1:22:39details absolutely matter.
1:22:41But when I talk to business owners
1:22:43today, the vast majority of the time, I
1:22:46can just keep hitting them on this one
1:22:48question cuz they want to avoid
1:22:49answering it and I'm like, "Have you
1:22:52tried your food?
1:22:54Have you gone through the workouts you
1:22:56sell?
1:22:57Have you been a customer of your own
1:22:58product?"
1:23:01And more times than not, the answer is
1:23:03no, not recently.
1:23:05And they're like, "No, but I don't think
1:23:07that's the problem." Because a lot of
1:23:09times, the hard thing is the thing that
1:23:13hurts your ego the most.
1:23:14And so there's a quote from Williamson,
1:23:16uh Chris Williamson, he said, "The magic
1:23:17you're looking for is the work in the
1:23:18work you're avoiding."
1:23:20And I think that's absolutely true also
1:23:22from a business perspective. Is that
1:23:24what thing, if it were true, would hurt
1:23:26your feelings the most?
1:23:28Often times, that thing is the truth and
1:23:31it's the one that we're not willing to
1:23:32face. Like,
1:23:34let's be real. Your service might not be
1:23:36that good.
1:23:37Let's be real. The reason your
1:23:38restaurant isn't growing isn't because
1:23:40your SEO isn't updated. It's not because
1:23:43your website isn't, you know,
1:23:46optimized. It's because your food sucks.
1:23:48And the real real is that it might not
1:23:50even suck. It might just be mediocre.
1:23:53But the difference between mediocre and
1:23:55exceptional is those 100 details, but
1:23:57most people are working on all these
1:23:59other things beyond the main thing that
1:24:00matters most.
1:24:02And so,
1:24:03I remember Peloton, the story of the
1:24:05founders, they were talking about how
1:24:06they were trying to build Peloton. They
1:24:08said, "What we did is we fundamentally
1:24:10believe that if we could be the best
1:24:12part of everyone's day, that if
1:24:14everybody who came to one of our
1:24:15workouts left saying, 'That was
1:24:17unbelievable' and they had to tell
1:24:18people about it." They're like, "How
1:24:20good would we have to make it that the
1:24:21next person they talked to, it was the
1:24:23first thing they brought up?
1:24:25And I love that as a litmus test for how
1:24:28good is the thing that I sell. And so
1:24:31many people just do anything they can to
1:24:33have quote something to sell, like some
1:24:35to sell. But
1:24:39that's the reason you get stuck. Because
1:24:41the thing is is that on some level,
1:24:43whether you admit it or not, you know it
1:24:45could be better. And that then
1:24:47influences how hard you push. Because if
1:24:49you really believed you had the best
1:24:50pizza in the world, and I hear this all
1:24:52the time, people are like, "Oh, we're
1:24:53the absolute best." I'm like, "No,
1:24:54you're not." Dude, no you're not. Stop
1:24:56saying it. Because when if you say that,
1:24:58you're lying.
1:24:59On some level. And you're lying to other
1:25:01people and you're lying to yourself. And
1:25:03so I think most business owners lie to
1:25:04themselves about how good they are at
1:25:07the things that they do because
1:25:09confronting the fact that they're just
1:25:11insufficient, they're not good enough,
1:25:13they're inexperienced, they haven't put
1:25:14enough work in to be good frightens
1:25:17them. And so then they want to just
1:25:18scatter their focus to 100 things that
1:25:21they read online. But
1:25:24unless the workouts are amazing, unless
1:25:26the food is exceptional, long-term all
1:25:28you do is you just let lots of people
1:25:30know that your food's mediocre.
1:25:32And that's where thinking about business
1:25:34in terms of years and decades starts
1:25:36really paying off because if you believe
1:25:38that you're going to go big and you want
1:25:40to go big, then you honestly want as few
1:25:43people as possible to find out about the
1:25:44product when it's mediocre rather than
1:25:47as many people as possible. And so it's
1:25:48counterintuitive because you have to pay
1:25:50bills today and tomorrow. And so you
1:25:52just need to advertise enough that you
1:25:54can continue to iterate the product. And
1:25:57then when you nail it, when people are
1:25:59stoked, when you're starting to grow on
1:26:01your own
1:26:02based on the word of mouth because as
1:26:04soon as people leave your establishment,
1:26:05they leave your business, they get off a
1:26:06call with you, whatever it is, they then
1:26:09can't help but tell everybody they talk
1:26:11to that day about your thing, that is
1:26:13when you add the gasoline. That's when
1:26:15you pour it on.
1:26:17So, for example, uh my my most recent
1:26:20investment, school.com,
1:26:22which is a community platform for
1:26:24helping people build and monetize
1:26:25communities,
1:26:27I had been watching that company since
1:26:292018.
1:26:31And watching what Sam, the founder, was
1:26:34doing and watching how he was iterating
1:26:36the product. And when I decided to
1:26:40become a co-owner of the business, it
1:26:41was because the business was growing on
1:26:44its own. It had zero marketing, and it
1:26:46was growing month after month and had
1:26:49net growth every single day
1:26:52based on people telling other people
1:26:55about the product. And so, that's when I
1:26:57knew. I was like, "Okay, if this thing
1:26:58can grow without me,
1:27:01then how much more will it grow with
1:27:02me?"
1:27:03And that's what I want to get into. I
1:27:04want to get into a business where I
1:27:06already know the product's exceptional.
1:27:08I already know it has a
1:27:09base rate of growth based on word of
1:27:11mouth, so that now when I introduce
1:27:13thousands and tens of thousands and
1:27:14hundreds thousands of people to the
1:27:16platform, they will associate me with
1:27:19that value.
1:27:21And I know that the product will deliver
1:27:22and then take over from there. They're
1:27:24not going to buy They might buy because
1:27:26of the association, but they stay
1:27:27because of the product.
1:27:29I've created all of my wealth in four
1:27:31distinct periods.
1:27:33In the very beginning with my gym,
1:27:35I had a 30:1 return on advertising. The
1:27:38reason that that arbitrage existed,
1:27:40meaning I put a dollar in and I get $40
1:27:41out. I put $1,000 in and I get $30,000
1:27:43out. The reason that arbitrage existed
1:27:45was because Facebook at the time was
1:27:47wildly underpriced.
1:27:48I'm just being very honest. That's why
1:27:50that first arbitrage happened.
1:27:52The next arbitrage that occurred was in
1:27:54Gym Launch, where we got a 100:1 for the
1:27:57first year. I spent 100 grand and made
1:27:59$10 million.
1:28:01Yes.
1:28:03And as a side note, most of the very
1:28:05wealthy people that I know had distinct
1:28:08periods of time where opportunity
1:28:10presented itself, and then they just
1:28:11backed the truck up. They just went all
1:28:13in on that thing. What happens in
1:28:15between is you make normal money, but
1:28:17it's those those windows of time where
1:28:19these opportunities present themselves
1:28:20where you can just make crazy money.
1:28:22So, gym launch was 100 to 1.
1:28:25And the reason it was 100 to 1 was
1:28:26because the product that I was selling
1:28:28was the 30 to 1 thing that I had from
1:28:30the gyms. And so, everybody who became a
1:28:33licensee then was immediately printing
1:28:35money in their gym. And the product was
1:28:36so good, what ended up happening I I say
1:28:38and so, now I'm going to give you like a
1:28:39look behind the curtain here.
1:28:41I say it at 100 to 1, which I did. But,
1:28:43the reality is I just spent $100,000 and
1:28:45made 10 million. And a lot of that was
1:28:47from word of mouth. Because if I had
1:28:49spent $0, I don't know how much money I
1:28:51would have made versus spending the 100
1:28:53grand that I did on ads, but I still
1:28:55probably would have made a decent amount
1:28:57of money on zero ad spend because the
1:28:59people who came in got the result we
1:29:01promised and then told five other gyms.
1:29:03And especially in a niche, the people
1:29:07everyone knows everyone. The smaller the
1:29:08niche, the smaller the local market, the
1:29:10more connected it is, and the more word
1:29:12of mouth matters.
1:29:15And that's where
1:29:16you can get these absurd returns. That's
1:29:18when you get into this like it feels
1:29:19like printing money because if you have
1:29:20good margins on the thing and you have
1:29:22zero cost to acquire or very low cost to
1:29:23acquire because of the word of mouth,
1:29:25then it just goes nuts.
1:29:28And you just like you're like just
1:29:29accepting money hand over fist. You're
1:29:31like, "Oh my god, this is unbelievable."
1:29:32And if anything, that's when you kind of
1:29:33like throttle back to make sure that you
1:29:35can consistently keep that word of mouth
1:29:37and you can deliver on your promises. By
1:29:39the way, if this is valuable for you or
1:29:41your team or your executive team, uh
1:29:43don't be lame. Share the game. Uh this
1:29:44is how we know that you want us to make
1:29:46more of this, honestly. Just like we
1:29:48look at data. The more people share it,
1:29:50the more we make more of that stuff. And
1:29:51so, if you're a business owner
1:29:52specifically, like I'm calling you out.
1:29:54I'm making my stuff for you.
1:29:55And so, like please share it so I know
1:29:57that this is the type of stuff you want.

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