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If I Had to Scale Without More Chaos, I'd Study This for 1 Hour — Transcript

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0:00Elsenor recruiting.
0:03>> It's one of the things I do.
0:04>> Oh, what is the other business?
0:06>> So, I [laughter]
0:08>> my other mistress. Yeah.
0:09>> Um, kind of like the gym launch model
0:12for doortodoor sales. So, I coach on
0:15sales, leadership, and recruiting,
0:17>> which then has led to through
0:21>> a recruiting department. So, we have
0:22like a recruiting firm, we have a
0:24mastermind, online education and events.
0:27So those are kind of the verticals.
0:29>> Okay. So those are products.
0:31>> Those are the products.
0:32>> Okay.
0:32>> Um
0:33>> but the same avatar.
0:34>> Same. Well, the problem is there's three
0:36avatars. Rep, sales leader, and then
0:38owner. So we service reps, management,
0:42and owners.
0:43>> But you sell to the owners.
0:45>> All three.
0:46>> So think the sales people have a sales
0:48track. Okay.
0:49>> Leadership have a leadership track.
0:51Owners have an owner.
0:51>> What's revenue?
0:53>> Uh last few years we've kind of capped
0:55at around 7.5 million. Okay.
0:58>> Um, we'd like [snorts] to be at 15
1:00million.
1:01>> Okay.
1:02>> But just seem to just hit this invisible
1:04ceiling.
1:04>> Okay.
1:06>> Um, I think talking to Ed, it has been
1:10that's why he's like, "You just need to
1:11say this to Alex and let him just pick
1:13you apart."
1:13>> Yeah.
1:14>> So,
1:15>> uh, I think I am what I'm stopping me
1:18just because I have that. Yeah. Yeah.
1:20So, I will take ownership of that.
1:21>> Yeah. Um, we I think are trying to bite
1:25off so many different things to where
1:27it's just like team bandwidth and
1:29>> Yeah.
1:30>> Three avatars, three companies. Okay.
1:32So, you have
1:34>> sales dude, right?
1:35>> Yep.
1:36>> All right. And what's this guy buy?
1:38>> So, one time 12-month online course.
1:42>> Okay. Think
1:42>> for how much?
1:43>> For little little one 197 big one, 1500
1:47bucks.
1:48>> Okay. So 197 and then 1,500
1:51>> and then they can buy the mastermind
1:53which is up to 10 grand.
1:55>> Okay.
1:56>> So
1:56>> okay
1:57>> like that's the ascension, right?
1:58>> Okay. What's the what's the second
2:00business? Yeah.
2:02>> Uh
2:03sales manager would be the next avatar.
2:06Okay. Which you would go kind of the
2:08same track.
2:09>> Uh
2:10>> same price.
2:11>> Same price
2:13>> but different stuff.
2:15>> Same price, different stuff. Yeah. Okay,
2:19>> just different track.
2:20>> Okay, what's the And then owner.
2:22>> Owner.
2:24Uh,
2:25typically the model would be business
2:27boot camp two 2500 bucks
2:30>> in person.
2:31>> Yep. This thing
2:33>> and then
2:35uh mastermind would be 35 grand or the
2:39model would be
2:41>> they come in and buy an online for their
2:44team. So that's $6,900
2:47plus 500 bucks to whatever 50 bucks a
2:50user and say pay recurring.
2:52>> Okay. 6,900 like set up.
2:54>> Yep. Set up then 50 bucks a user and
2:57then we give them a free ticket to that
3:00boot camp and then upsell them into the
3:02mastermind.
3:03>> So you sell this on the front end
3:04sometimes too.
3:05>> Yeah. So we and or we'll sell that plus
3:07the recruiting. So we call that a pro
3:09package. Exactly. I know this you can
3:12see my constraint here. Exactly. So the
3:14pro would be like for a business owner
3:15it's like you get the training and the
3:17recruiting done for you. We build out
3:19your training system, we build out your
3:20recruiting system and that's like 15
3:23grand.
3:24>> Do you have an organic following?
3:26>> Yes.
3:26>> Yeah. That's why. Um so super common
3:31when someone's like organic only or
3:33organic as their primary is that you
3:36sell a product and you make money and
3:37then you say, "Oh well shoot, what else
3:40can I sell?" And then you come up with
3:41another product because you have this
3:42fixed pool. Yep.
3:43>> And you're like, I want to just put as
3:45many lines in this one pond as I
3:46possibly can so I can make as much as I
3:48can. And it makes sense until it
3:49doesn't.
3:50>> Yep.
3:50>> Um rather than what is the one thing
3:53that has the highest operating leverage,
3:55that has the highest revenue retention,
3:57and then how do I expand the pond? Um
4:00and so typically it's like you figured
4:01out one thing, which is like you figure
4:03out how to make content, which is how
4:04where your lead flow comes from. But
4:07if you want this like the answer to you
4:09getting to 15 or 25 or 100 isn't going
4:13to be like I'm going to also do sales
4:15massages and a sales newsletter, right?
4:20Like what else can I sell these people?
4:22Um,
4:26I I prefer businesses that are straight
4:28lines like front door, door two, door
4:32three, and then call it a day. And then
4:35the question becomes, how do we put more
4:36people in the front door? It just makes
4:38life a lot simpler. Um, that is a big
4:41strategic question for you. So, this is
4:43more of a like, if we're flipping off
4:45the page, like what's our issue here?
4:46It's a model issue.
4:52And so the thing is is that everything
4:54that you did is not inherently wrong. It
4:55was logical. It's just that when you're
4:58a small business, you have such limited
5:01resources that your ability to do
5:03anything well is so constrained that
5:06it's like you might as well just pick
5:07one thing because you're competing
5:09against people who only do each of those
5:11elements on their own as their main
5:12business. And so um
5:16let's zoom back out.
5:19Which of those avatars that you just
5:20named is the most valuable avatar to the
5:22business?
5:23>> Owner. Owner for sure.
5:25>> Okay. So, if owners came in,
5:29what if what's the revenue percentage if
5:31you had a split here?
5:32>> Uh, probably 80% owners.
5:35>> 80. Bro, what do we
5:37>> Yeah. Yeah.
5:41>> Okay.
5:42>> So, I've got this great thing I have
5:43this idea. So, we're going to do is
5:44we're going to cut out 80% of your work
5:46and we're going to make 20% less money.
5:48[laughter]
5:49Uh, and your margins are going to go up.
5:51Um, yeah, it sounds like you just need
5:53to sell to owners and then go get more
5:55owners.
5:59>> Just focus on that.
6:00>> Yeah. The next question I have on that
6:03then is so training has its own
6:06fulfillment, its own model. Recruiting
6:08has its own, you know, they kind of go
6:09and then there's the mastermind. Do you
6:11do you find getting a leader or like a
6:14kind of a product owner for each of
6:16those verticals because it still kind of
6:17hits all three of those all three of
6:19those are really profitable?
6:20>> Yeah.
6:21>> Would you just find like a dude that
6:23kind of runs each one of those?
6:24>> Yeah, you can have somebody who owns a
6:25division or owns a revenue line.
6:26>> Yeah.
6:27>> Or do they share like a marketing team
6:30and they share a sales team? Like that's
6:32been my struggle.
6:33>> This is front door. This is the whole
6:34front door idea which is like
6:36>> if you have one team and obviously this
6:39depends on size of business and so
6:41>> I'd love to give you like this is
6:42exactly when it happens but it's you'll
6:45have a front-end team that sells the
6:46front-end thing and then typically
6:48because there's so so many fewer
6:49customers than there are leads in
6:50general and then that c that customer
6:52base from the first sale becomes the
6:54leads base for the second sale. Okay.
6:56>> Right. You can have significantly fewer
6:57people who actually do ascensions and
6:59you just take your one or two guys who
7:01are the best people from your front end
7:03team, make them the backend team and let
7:05them do the ascensions for you and you
7:06can do
7:08>> you can get to 100 million a year with
7:09like two or three guys on ascension. It
7:11does especially with the ticket sizes
7:12that you're talking about.
7:13>> Not hard.
7:14>> Um and so right now it's just like we
7:17have to fulfill for owners. That's the
7:19main game. and
7:22you do recruiting and you do training
7:24for their teams as a result. Correct. I
7:28mean, I'll bet you that the $50 a month
7:31per user thing is relatively sticky.
7:34Yeah.
7:34>> Very sticky.
7:36>> Yeah. So, like that's the best business.
7:38So, I'll bet you the sales dudes is not
7:41that sticky.
7:41>> No.
7:42>> Right. And the manager is probably not
7:43that sticky either. So, like you have a
7:46good business here. You just have to cut
7:47off the the appendages. So, think about
7:49like pruning a tree, like if you want
7:50the tree to grow, you got to prune off
7:51the bad branches. So, you're just
7:53pruning. Um, that's okay. It's normal
7:55because unconstrained growth is also
7:56called cancer, which kills you. And so,
7:58we just have to cut the cancer out and
8:00focus all of your nutrition and
8:02resources, the water, the sunlight, etc.
8:04on the one tree branch or the one
8:06central stalk that's going to keep
8:07growing that's super high margin and
8:09very sticky. And I would say like that's
8:13step one. And then step two is okay,
8:15great. Now, how do we like once we've
8:17fixed the model, which is what we just
8:19did, basically now we go back to the top
8:21and say, great, why can't we sell a
8:23hundred owners a week, what's holding us
8:26back? And then that's what we that's
8:27what we would attack.
8:28>> So, the next question just randomly,
8:30there's different verticals in door to
8:31door. So, like solar, pest, alarms, all
8:34the different verticals. Would you just
8:35take all things door to door or would
8:37you niche down into
8:39>> roofing door that Okay, cool. Stay
8:41there. And then would there be an
8:43argument to go beyond
8:45into
8:46maybe they're not indoor but they're
8:48home services
8:50because it is a a lot of the stuff we do
8:52is applicable very much so in
8:54>> how much is not applicable
8:58>> maybe 20%.
9:00>> Yeah I mean I'm okay with doortodoor or
9:03home services both those feel fine to
9:05me.
9:05>> Yeah
9:06>> I think that's still consider that's
9:07that's fairly niched down enough because
9:09they have similar problems. Yeah, it's
9:11kind of the same
9:12>> because it's more and this is how I'd
9:14frame it if I were selling it to an
9:15owner who's like, "Wait, I'm solar and
9:17these guys are pest control." I'd be
9:19like, "Do you guys knock on doors and
9:20get people in their houses to to give
9:22you money?" Yeah. Okay, great. Same
9:25sale. Right.
9:27>> Okay.
9:27>> Right. Now, sure there's financing,
9:28blah, blah, blah, but like it's a
9:30separate subm module. It's not that hard
9:32to to explain to somebody.
9:34>> Cool.
9:34>> Yeah, that's what we do first. Clean up
9:36the model. And then
9:38>> this is for tall people. Um, my name is
9:40Julie. I sell custom screen printed and
9:42embroidery embroidered custom merch to
9:45clubs, groups, and organizations through
9:47ecom. Okay.
9:48>> Uh, we do 17 and a half million revenue.
9:51>> I'd like to be I mean I'd like to be at
9:53100. I think a good first stop is 50,
9:55you know.
9:56>> Um, so what's stopping me is customer
9:58acquisition.
9:58>> Okay.
9:59>> A little background is we do all of the
10:01production inhouse. So we control
10:04production
10:05>> about 20%.
10:06>> Do you have like a warehouse and all
10:08that?
10:08>> Yeah. Okay.
10:09>> In Kentucky, um, let's see, about
10:1480% of our capacity is taken up by a one
10:17big contract customer
10:19>> that we just get paid on the screen
10:21printing. 20% of the capacity is our own
10:23business. Our own business is about
10:25three times more profitable than the
10:28other.
10:28>> So, if we flipped, we already have the
10:30capacity done. If we flipped from that
10:34contract customer to our customers, we
10:36would be a $50 million company today and
10:39our employees wouldn't know that
10:40anything had changed.
10:41>> Okay?
10:42>> And so we really suck at getting people
10:45to come to our website. And we are
10:47exactly like our competitor. Like the
10:48contract customer we print for their
10:50customers are our customers.
10:52>> They're huge. We are not. So my question
10:54is um
10:57>> what do you do?
10:57>> Help me. Yeah. Where do we start? I mean
11:00we have
11:01>> that was a great question. Um
11:02>> we have we have a website you know and
11:04then we have outside sales people and
11:06they both bring in about the same amount
11:07of money.
11:08>> Okay.
11:08>> We want to scale the web because I can
11:11sell 247 across the country whereas
11:13>> okay
11:14>> you know the issue with outside sales.
11:16>> Okay there's so two things there. So
11:18first one on the 80% what percentage of
11:20revenue is that?
11:22>> Uh like 45%.
11:23>> Okay. So it's it's material.
11:25>> Yeah [laughter] it's we and it keeps our
11:27workflow steady for now. Yeah.
11:28>> Yeah. There's there's advantages having
11:30whales, but we'd like to have it all.
11:32>> Good. Yeah. So, uh what I'll tell you
11:35what I'm not going to say is don't kill
11:36your whale. I don't think that's a good
11:38idea. Like we never stop a flow until we
11:39create another flow. Um and ideally we
11:41just don't stop flows preferably.
11:43>> What we like to do. Yeah.
11:44>> Great. Um so what? So right now you're
11:48at full capacity because of this setup.
11:50>> No.
11:50>> Okay. How much capacity do you have
11:52left?
11:52>> About I'd say 25% right now.
11:54>> Okay, great. So that 25% we have to
11:56demonstrate that we can double the other
11:5920% of the business that's three times
12:00as profitable.
12:01>> So we have that double that's sitting
12:02there. Correct. Like you could double
12:04that side. Okay. Got it. So on the
12:06website now magic question. What stops
12:09us from doing more?
12:10>> It was there but
12:12>> right. No I I feel like I may have
12:13answered a lot of my questions through
12:15that initial thing. I mean more
12:16[laughter] is one knowing we need to do
12:19more.
12:20>> Two the manpower to do more.
12:22>> Okay.
12:22>> Um
12:23>> let's solve one at a time.
12:24>> Yeah. So,
12:26we need to do more. So, we're in
12:27agreement there.
12:28>> Um, on the website, what does more
12:31require?
12:32>> Uh, more ads is what I'm
12:34>> Okay. What stops you from making more
12:35ads?
12:36>> Uh, manpower.
12:37>> Okay, got it. So, you need more creative
12:39is the issue.
12:40>> Yes, we we film all that our own. I
12:43mean, there's a question if our they
12:45convert, but could they be better? I'm
12:47sure. Like, are we doing the right
12:48thing?
12:49>> Okay. So, it's not a spend issue.
12:51>> No,
12:51>> it's not an LTV to CAC issue.
12:53>> No.
12:53>> Okay, great. So, we just need more
12:55creative,
12:55>> right? Maybe.
12:56>> Okay. This feels really solvable. Um,
12:59okay. So, I mean, h how what's spend per
13:04day and how many pieces of creative are
13:06you making per day?
13:07>> Yeah, this is where I should go sit
13:09down. Um, no,
13:10>> you're good. [laughter]
13:11>> Spend. So, let's say for a month it's
13:1325,000. So, a little less than a
13:15thousand a day. I mean, we're running
13:17like 15 ads
13:19>> like a month.
13:20>> Yes. Yeah.
13:21>> Got it. Yeah. So, I mean, we just got to
13:23get to like 50 a week. And 50 a week is
13:26not hard. Like, it's it's like it's not
13:28hard to do 50 ads a week. Like, you can
13:29do in like an hour and a half. Um, and
13:31then you just have a couple editors. And
13:33given the size of your business, what
13:35are your uh margins right now?
13:37>> About 20%.
13:38>> Okay. So, you're at three or four
13:39million whatever profit somewhere in
13:40there. Yeah. So, if you hire three
13:42editors and they cost $200,000 in total,
13:45>> it's going to not Your life's not going
13:47to change.
13:48>> Sure.
13:48>> But your business could double.
13:50>> Yes.
13:50>> That feels worth it. It does.
13:52>> You want to do that?
13:52>> I do.
13:53>> Let's do that. And
13:55>> if there's anyone here who is looking to
13:57quit their business and [laughter] kind
13:58of
14:02>> So, just as a side note, when you're
14:04looking for editors, I would look for
14:05organic people, not people necessarily
14:07who are kind of ad specialist because
14:09organic and paid have more or less
14:11merged. Um, and so your best pieces of
14:13organic that get proven are going to be
14:15the ones that you're going to put more
14:16money behind anyways. Um, the only real
14:18change that you'll probably add is maybe
14:19like a lower third banner that has a CTA
14:21on it onto an existing winning creative.
14:23Um, or you can slice in a CTA at the end
14:25with like a freebie or some whatever
14:27your lead magnet is to make the make it
14:28all make sense,
14:30which means that you can take your
14:31editors, ramp up your organic, which
14:33will get you more leads, and then
14:34literally take all that organic.
14:36>> Yeah. So, I I run a digital marketing
14:39business that helps uh clinics in the
14:42golf markets attract Arabic speaking
14:45patients for elective procedures.
14:48>> Okay, hold on. Hold on. Digital
14:49marketing agency helping golf like the
14:53Gulf of Gulf of
14:55>> like like the Arab Gulf or the Persian
14:57Gulf like like talking about like Saudi
14:59Arabia,
15:00>> UAE, Persian. Okay. Marketing agents
15:02helps Persian people find
15:04>> No, Arabic speaking. Okay, cool.
15:07>> People.
15:07>> Okay.
15:08>> Elective procedures.
15:09>> So, this is plastic surgery.
15:13>> So, yeah, plastic surgery, dental, this
15:16elective, you know, like veneers, things
15:18like that.
15:18>> Got it. Got it. Got it.
15:19>> Um, and then
15:21>> we're not making a ton. We do about 300
15:23in revenue. I probably get about 150 in
15:26total takehome. Um,
15:29>> and as far as like my my my profit and
15:32comp and
15:34>> Okay.
15:35Um, right now we're kind of struggling
15:38because
15:40I'm not sure the market is big enough.
15:43Um, because we're we're doing like a ton
15:45of cold outreach. We've been doing it
15:46for two years. We use Instantly and we
15:49use Apollo and kind of all the main
15:51services there. And the thing we
15:52struggle with is like we I'm struggling
15:54with doing the whole 100 action thing
15:56because when we like research cosmetic
15:59surgeons in Saudi Arabia,
16:01>> Yeah. We might be lucky to put together
16:03a list of 150 of them and then it's like
16:07we do the outreach you know for a week
16:08and then it's like we run out of
16:10prospects and then you know we try to
16:12look for for dentists and then you know
16:14we find another two 200 to 300 that can
16:17do you know elective procedures and then
16:19we run out and so kind of struggling
16:21with
16:21>> what made you start with that as what
16:23made you get into Arabic speak like what
16:25made you do that?
16:27So, originally back in 2012, I started
16:29an agency doing like Arabic SEO and we
16:32were like the only one in the market
16:34doing it. Um, I I lived in the Middle
16:36East for four years and and uh and just
16:38thought I'd try this skill out
16:40>> and it worked really good for a while
16:41until probably a couple years ago there
16:43just like was a ton of competition in
16:44the market. So, we started niching down
16:47and since we've had a lot of medical
16:48clients, I thought, you know, let's
16:50focus on elective stuff
16:51>> and try to get uh clinics. But I'm I'm
16:54kind of like struggling with the market
16:56size. Like it's kind of a developing
16:58market.
16:58>> So you can get leads for them. What's
17:01your I mean do you do do they retain?
17:06>> Yeah. So a lot of them a lot of them
17:08retain you know they stick around or
17:10with some of the clinics you know
17:12they'll pause for like a period where
17:13you know like
17:14>> what's annual revenue retention. What's
17:17annual revenue retention? What's that?
17:19>> What's annual revenue retention?
17:23annual revenue retention. So I we're
17:26we're churning about 50% of our clients
17:28every year, I would say.
17:29>> Yeah. Yeah. You have an acquisition
17:31issue. Um the problem is so you you have
17:35kind of like you have two you have two
17:36issues, right?
17:38>> So issue number one is that you're
17:40dealing with very small businesses and
17:41so there's going to be structural trend
17:43that exists there because they are not
17:44very big business owners and so as a
17:46result their volatility translates to
17:47your volatility. That's thing one. Okay.
17:51The second issue is that you don't have
17:54a reliable way of getting them. Uh
17:56outreach is obviously a way of doing it.
17:58Um you might benefit from just straight
18:01running ads for anything that's
18:03elective. The good news is that with
18:05Andromeda, you can be very specific and
18:07still keep the targeting relatively
18:08open. Meaning your, you know, creative
18:11can be like, "All right, well, we're
18:13going to run a campaign for, you know,
18:14uh dental cosmetics. We run a campaign
18:17for uh ocular facial. We'll run uh one
18:19for uh just pure facial. We'll run one
18:22for noses. We'll run one for necks.
18:23We'll run one for boob jobs. Like we'll
18:26run one for each of, you know, I mean,
18:27each of the different, you know, surgeon
18:28types. Um and I would bet that if you
18:31ran ads with those objectives, you would
18:33probably do better. There are certainly
18:36more than 150 of each of these things.
18:39There are tens of millions of people,
18:41you know what I mean? um in in that
18:44whole area. There's for sure some issues
18:46with like
18:47>> um wealth and money and whatnot, but I I
18:50I feel confident in saying that you
18:52could um just run ads rather than do
18:54outbound because I just think you're
18:55just not getting as many leads as exist.
18:58Um but
18:59>> okay, so so maybe cold outreach isn't a
19:01good channel.
19:03It's just that you don't have you just
19:04don't have the ability to get the leads.
19:06So it's like I could say, hey, try
19:08harder at getting the leads. It's just
19:09you have been doing this for a while, so
19:10I didn't feel like barking up that tree.
19:12And so I think just running ads to get
19:14them might be a better next step. I
19:16would still say like I like you niche
19:18down to a super super niche.
19:20>> Um you might be cons like it you might
19:23do well just like opening it up to like
19:25the US um and not make it Arabic and
19:30just open up to the US. That would be
19:32like my second thing. I would still try
19:34try the ads ads angle first though.
19:38>> Yeah. One of the things that we struggle
19:39with like with the the ones that we do
19:41work with is their budgets are
19:43relatively small and we we constantly
19:45are getting compared against having like
19:46a freelancer in the market that's super
19:48cheap. They're like, you know, I could
19:49hire five people for the price I'm
19:51paying you.
19:52>> Well, here's the services.
19:54>> Here's the downside of what you're doing
19:55is that you're kind of reverse market
19:57arbitrageing.
20:00>> Yeah.
20:00>> So, the ideal way to do this is live in
20:02Indonesia and sell to Americans. You're
20:06like living in America and selling to
20:08people who don't live here.
20:11>> Yeah.
20:12>> Right. So, I think that um Yeah. I mean,
20:15I would prefer like I'll bet you you'll
20:16just be able to not have any of these
20:18issues if you probably were US- based.
20:19If you have the skill, you could just
20:21market here and compete. Um you've been
20:23doing this for like 12 years. So, um I
20:26would say it might be worth considering
20:27to expanding to the market where like
20:29the most buying power is.
20:32So you think it you think it's a lot
20:33easier being in the US where there's
20:35more competition because at least the
20:36thing we have in the Middle East is like
20:38there's less competition that's you know
20:40hyperfocused on this.
20:42>> Yeah. No, there's less competition. I
20:44mean how good are you? Do you feel like
20:46are you good?
20:47>> Yeah. I feel like we're we're really
20:49good. Yeah.
20:50>> Well, dude, if you're really good, then
20:51you So here's here's the big secret. If
20:53you're really good, you want to go where
20:56the competition is because that's where
20:57all the pie is.
20:58>> Okay.
20:59If you're not good, you start by niching
21:02down so you can be really good in a tiny
21:04pond.
21:07>> Yeah, that makes sense.
21:08>> That's why you niche down to begin with.
21:10I'm not in a niche. I mean, business is
21:13my niche, but that's a pretty big, you
21:14know, pretty big ocean there, right? And
21:16so, like, as you get better, as you can
21:18compete in the wider and wider ocean and
21:21you're a bigger and better shark, the
21:23more you want to go where all the fish
21:24are at.
21:27>> Yeah, that makes sense. So, you might
21:28have just leveled up. If you're if
21:30you're good, if you're good, then
21:31compete, man.
21:33>> Like, go and win. That's
21:35>> what I'm gonna do.
21:37>> Yeah, you got this, man.
21:39>> Just win.
21:40>> Awesome. Thanks, Alex.
21:41>> Yeah, you bet. Rock and roll. Thanks for
21:43calling in, man. Appreciate it. So, you
21:44got neuropathy. Um, you're doing 5
21:46million. What's the model?
21:47>> Uh, done for you scheduling.
21:50>> Okay.
21:50>> Legion.
21:51>> Okay. Is it local neuropathy stuff?
21:54Yeah.
21:54>> So, it's diabetic dinners and all that
21:55jazz. dinners and
21:58>> yeah, familiar with the model. Okay. Um,
22:01so then what's the what's the what's the
22:03big play?
22:04>> Uh, our
22:06we're we're niched pretty well. Like I
22:08think we're probably the biggest in our
22:10niche.
22:11>> Um, it's a smaller group, meaning like
22:14there's maybe 2,000 doctors that do
22:16neuropathy specifically.
22:18>> Um, so and we have 160 of them. So, it's
22:22not we're still there's still a huge
22:23potential for us to I think we get 300
22:26or 500 or,000 maybe. I don't know.
22:28>> What's the end goal for you?
22:30>> Um
22:33I'm I'm just cash.
22:35>> Okay. Yeah. Yeah. No, I I asked because
22:37it's like is it to build it to sell it?
22:40Is it to have
22:41>> Yeah. I mean, I think selling would be
22:42cool. It has to It'd have to go to
22:44different verticals. I mean, I'm like
22:46I'm way too risky on the checklist.
22:49>> Oh, not necessarily. I mean because the
22:52thing is is like the the ultimate
22:54version of the model that you have is
22:55like you've got 160 out of like 2,000
22:58neuropathy clinics right so you've got
23:00like pretty decent you know you got
23:01whatever that is 8% um of that like
23:04pseudo like niche of a niche of a niche
23:06market but those guys make how much
23:08these these guys make a year like
23:11>> um uh between a million and 5 million
23:15>> right and so this is where this gets
23:16like way more interesting in my opinion
23:18so it's like you've got 320 million I'm
23:20just using an average, right, per year
23:22that you're driving in revenue. And it's
23:25like, man, I'm making five. I'm like,
23:29this sucks, right? Of that. [laughter]
23:32You're like, how can I get more of that?
23:35>> Um, and so
23:37>> the thing is is like I think the the
23:39ultimate version for like the the quote
23:42info and agency space that I know those
23:44are different things, but fundamentally
23:45they serve niche niche avatars that are
23:47B2B. Um, the ultimate version of those
23:50businesses is rollups of the the
23:54customers you serve. Because if you
23:55think about what like a rollup does, I
23:57don't know how familiar you are with it,
23:57but like you get everyone on the same
24:01marketing, you get everyone on the same
24:03price points, get everyone on the same
24:05packages, you get basically you
24:07consolidate what everyone's operations
24:08are. And that's what the majority of
24:10super niche agencies and kind of in info
24:13consulting, whatever you want to call
24:14it, do with businesses. So they do all
24:17the heavy work of integration for what a
24:19rollup would do and then they just say
24:20like okay I'll stop there I just won't
24:22like actually push it over the edge and
24:24monetize the whole thing.
24:25>> Um and so like most of the physicians
24:28that I know hate being physicians. They
24:32do it purely to make money and want to
24:33be out of it as soon as possible. And so
24:36like selling them on the idea that like
24:38okay your practice does you whatever 2
24:40and a.5 million a year of topline and
24:44whatever 1 million in profit. Uh that's
24:47awesome. And then you have your you know
24:49taxes that you're taking home 600k a
24:51year after that. Like that's great but
24:54what if and on your own this thing could
24:57maybe sell for I don't know 3 million
25:00bucks maybe. like maybe if you're really
25:03really you know we're being really
25:04generous but if you were part of a group
25:07of physicians that were a neuropathy you
25:09know thing nationwide uh we could
25:12probably sell for like your thing could
25:14probably sell for 10 million and so all
25:15I'm asking for is a you know 20 to 30%
25:18slice of that but times 160
25:24and so obviously of the 160 you wouldn't
25:26do it with all of them I mean if you did
25:27that would be a monster deal but like if
25:29you could get like 10 or 20 of them to
25:31roll together because they all probably
25:32do have enough like enough profit
25:34together to be meaningful. So it's like
25:35if you can get the roll up to be like 10
25:38to $20 million in terms of profit. That
25:40would be a meaningful exit. That would
25:42be probably like a$100 to $200 million
25:45exit and you have 20 to 30% of that. But
25:47then after that point you're now the guy
25:48who did that. And so then your whole
25:50reputation changes. Your dynamic changes
25:51around pricing your long-term stick. All
25:53of that kind of stuff changes because
25:54it's like oh I'm the guy that can get
25:56you to here. And that's also the like
25:59get rich if you don't have to do this
26:00again
26:01>> which is a much more compelling offer.
26:02>> Can I ask you a side question? Sure.
26:04>> You guys uh when you switch to licensing
26:08>> cuz I remember I know OG flying around
26:12>> and then more less OG they were flying
26:14around for you.
26:15>> Yeah.
26:16>> And then more recent them doing it for
26:18for themselves.
26:19>> Right. And I gave them the ads that we
26:21test. Yeah.
26:21>> Right. So the the transition for you
26:26from doing it for them to doing it to
26:29them doing it themselves and you being a
26:30coach
26:32>> I would never use that word but yeah.
26:34>> Yeah. Does that work? Do you think that
26:36that looking back would you would you
26:39have done it that exact same way? Would
26:40you have switched to the licensing model
26:42and like and is that what you're calling
26:43licensing? Yeah.
26:44>> I mean, because like we had ads that we
26:46would test every month and then we would
26:48just let everybody else use them and
26:50tons of people tried to use them that
26:51weren't our because they would copy the
26:53gyms that we had ads and they'd like I'd
26:55have ads gyms using my face to run ads
26:58for their gym. It happened all the time.
27:00So, um, would I do the model we had
27:03again? Yes. Okay.
27:04>> The reason that we didn't do done for
27:07you was two things. one is or like the
27:10reason do it yourself for your avatar
27:12doesn't work is that they make too much
27:13money.
27:14>> Yeah.
27:15>> A gym owner the value of learning the
27:17skill exceeds their current skill.
27:20>> It makes more sense for somebody who
27:21makes $35,000 a year to learn how to
27:24market and sell than somebody who makes
27:25a million dollar a year to learn how to
27:26market and sell. They've already leveled
27:27out of that in terms of like cuz they
27:29can pay somebody less than they make to
27:32do this for them. Whereas a gym owner
27:33can't. It makes sense for them to learn
27:35that skill. And then from the reason I
27:37didn't do a rollup is because group
27:40based service uh there's zero there's
27:42zero market for it. No one wants to buy
27:43them. If I had been in a market where
27:45people were buying for like for sure I
27:48would be I would that would have been
27:50the model I would do.
27:51>> Beautiful.
27:52>> Yeah. Out of respect for
27:53>> I sell advertising training to business
27:55owners. So all paid ads.
27:57>> Um we'll do five or six million. I'm
27:59optimistic. So we're gonna go with six
28:01because it sounds better.
28:02>> I like five or six. Okay.
28:03>> Okay. Yep. Um, I would like to be at 50
28:07million.
28:07>> Okay.
28:08>> Um, obviously not this year. What's
28:09stopping me is my capacity for sure.
28:12>> Sure.
28:12>> And so my question is after hearing
28:14today that you spend 80% of your time on
28:16content, I'm trying to figure out what
28:18are the only things that I should do for
28:20me and then what should I delegate?
28:22>> Yeah.
28:22>> I don't have anybody that I pay more
28:24than 100,000.
28:25>> So that's one thing I feel like I'm
28:27missing out.
28:27>> What are your margins?
28:29>> My IBIDA I know.
28:30>> Yeah, sure.
28:31>> 2.5
28:32>> on five.
28:33>> Mhm. That's great. That's amazing. Yeah,
28:35it's super good.
28:36>> I was excited yesterday. [laughter]
28:40>> That was the best reaction. Um, so
28:42here's So the So you're I want to I want
28:46to answer your question with a
28:47perspective shift.
28:49>> So you're now getting to the point where
28:51you have enough money where you have to
28:53start thinking about return on capital,
28:54right? Return on invested capital within
28:56a business. And so if you have $2.5
28:58million, right? You can think of that as
29:00like, okay, well, if I take that out of
29:01the business, which you would because
29:02I'm sure it's an LLC or whatever, right?
29:04So, it's like, okay, so I've got call it
29:061.5 million after taxes that I can put
29:08in my pocket.
29:08>> Yeah.
29:09>> Which there's nothing wrong with that.
29:10I'm a big fan of putting money into
29:11pockets. The the other way of thinking
29:13about it, though, is like, okay, well,
29:14what if I were to take 200,000 of that
29:18um and I take my taxable from 2.5 to 2.3
29:21and then that $200,000 person, it makes
29:23me an extra million.
29:26And so that's where I think the the I
29:28still believe that the biggest arbitrage
29:30opportunities that exist right now in
29:31business are still on talent.
29:33>> And I can tell you right now, I'll tell
29:35you a story because I think it'll it'll
29:36drive it home and I'm talking through
29:38you to everybody else.
29:39>> So the moment like my the best talent,
29:43one of my one of my favorite people on
29:44earth is here strong here. One of my
29:46favorite people on earth uh said this to
29:48me and I' I've always remembered it
29:49since he said he said um your best
29:51talent is always in the future. So right
29:54now, think about the people who used to
29:55work for you like five years ago. Can
29:59you think about that team right now?
30:00Could that team run your business right
30:02now? They would die,
30:06right? And you would die too. Um, and so
30:08the thing is is that there's five years
30:10ahead of you looking back today on your
30:12team who feels the exact same way. And
30:15so my goal is how do we shrink that gap
30:17as fast as we possibly can um so that we
30:21can pay down your talent debt because
30:22right now that's what your debt is. So
30:24basically you're choosing to make more
30:26money but you're paying by making more
30:30money. You're increasing your debt for
30:32humans. And so businesses can incur lots
30:34of different types of debt. And whenever
30:35you start a business you always incur
30:37debt. The question is which type of debt
30:38you want to incur. You can do financial
30:40debt. You borrow money and then you
30:41start the business. But maybe if you
30:43borrow money, you can hire people that
30:44you otherwise couldn't hire and so you
30:46don't incur as much talent debt or as
30:47much management debt. You might incur
30:49technical debt. Okay, I don't have a
30:50CRM. I don't have data. Some of the
30:52constraints we talked about earlier,
30:53right? Like that might be some of the
30:54debt. And so there's different types of
30:55debt that you can incur. You have talent
30:57debt.
30:58>> And so the goal would be especially
30:59because you're in a service based
31:00business. Your business will be capped
31:02for sure by the culture that you keep,
31:05which is going to be on you
31:07>> and the people that proliferate that
31:08culture is the people you attract. And
31:10so if you want to grow this business,
31:11which is all based on service, it's all
31:13based on people. And so you have to
31:15bring people that you got to be like, if
31:17you're not paying more than $100,000 a
31:19year, it's 100% you who's making this
31:21happen, which is kudos to you for being
31:23skilled.
31:24>> On the flip side, though, it doesn't
31:26have to be that way. And you would be
31:28amazed at the talent that you can get
31:29when you crack like you might want to
31:30just jump to 250,000 a year and you'll
31:32be like, "Oh my god, these people are so
31:35much better." And what's scary is when
31:36you pay someone $500,000 a year, you're
31:38like, "Oh my god, this is a totally
31:39different level." Then you pay someone a
31:40million dollars a year. You're like,
31:41"Holy [ __ ] I didn't know people could
31:43you made they they made people like
31:45this,
31:45>> right? And then eventually you you get
31:47people, you know, like Shiron, and
31:48you're like, he's he's just he's just
31:50better than I am, you know? And maybe
31:51someday I I'll convince Shiron, right?"
31:53And so the point is it's like you just
31:55want to find people who are absolutely
31:58unreal. And the litmus test that I have
32:00is that you feel this like desperation
32:01in your core when you talk to them.
32:03You're like, I have to have this person.
32:05It's not like, oh, I have this role.
32:07This person seems like a pulse and not a
32:08[ __ ] I guess this is the least bad of
32:11the 10 people I've talked to. I would
32:13encourage you if you're ever in that
32:14situation, this is the least bad. Just
32:15don't just keep keep looking.
32:17>> Okay?
32:17>> Like we will keep we will keep a role
32:19open for weeks or months if we do not
32:21find the person.
32:22>> And so we are always actively recruiting
32:24and we have a lot of flow. And so you
32:25guys got to meet the team this morning.
32:27So you have a little bit more context.
32:28Smart people, very good at what they do.
32:31But in order to do that, like those
32:32people do not cost $250,000 a year.
32:35>> They're significantly more than that.
32:37>> Yeah. I've told myself up until now that
32:39I'm saving money by paying less. And
32:41you're right, it's like costing so much
32:43more.
32:43>> Yeah. It's you are always paying. It's
32:46just what you paying. You you pay with
32:47the thing you care the least.
32:48>> I sell golf clubs to angry men and uh
32:53>> yeah, a lot of that unbreakable and uh
32:55yeah golf club just kind of Yeah, it's a
32:58lot of lot of anger. But anyway, um,
33:01dude, 2.4 this last year. Um, 5 years
33:05ago, I lost my focus and decided to
33:08overexpand. And I [laughter] have, uh, I
33:13mean, yeah, you should probably put my
33:14picture up on that right there. But
33:16anyway,
33:16>> mine is there, too. So,
33:17>> yeah. So, I have one retail store that's
33:19been open for 36 years, one that's been
33:21open for 5 years. at the five-year split
33:23when I did the second location, I had a
33:25keyman that was amazing that allowed me
33:28to then go off and start the second one
33:30myself. I also have an internet business
33:32warehouse, you know, all that kind of
33:33stuff. Um, so the problem now is that
33:37over the last three years, my sales in
33:40my original location have slowly
33:43trickled down while the one where I'm at
33:45is growing rapidly.
33:48My guys are telling me, "Oh, you know,
33:50it's the market. It's politics. It's
33:52tariffs. It's uh, you know, recession.
33:54It's all this stuff, and that's why we
33:55can't sell it. We've sold to everybody
33:57in our market. We're saturated, which is
33:59BS, right? There's no way they're
34:00saturated." So, obviously,
34:01>> so we're an hour and 45 minutes apart.
34:03And here's where the crux of the
34:05question comes.
34:06>> The location that I'm at is in a tourist
34:08town, beach, lot more money, disposable
34:11income, people don't have a problem
34:13paying for our goods and services. the
34:15other location is in a much more
34:17bluecollar area, old, you know,
34:19whatever. And so they're using that as
34:21an excuse and telling me that, you know,
34:23we just we've we've tapped the market,
34:24we've saturated, these people won't
34:26spend money.
34:26>> Is the key man no longer there?
34:28>> Right. He left.
34:28>> Oh, done. That's it. Yeah. You're
34:30undertalented.
34:31>> Yeah.
34:32>> So, it was not it was a logical decision
34:34at the time because you were
34:36appropriately talented as in the guy was
34:38good and then you left and you did
34:39another thing. Things are good. He left.
34:41Now, it looks like overexpansion because
34:43it's like the guy's not there anymore.
34:44So, I think the the question is like
34:46what well, what would you like to do?
34:49>> Well, I mean, Ed wants me to bury two of
34:53the three arms in the ground, and that's
34:55fine. I get it. But I just want to put I
34:57just want to put better leadership in
34:59that first store
35:01>> and because I can only be there one day
35:02a week. I can't be there often. So, I
35:05want to put better leadership in that
35:06store andor coach up the leader that I
35:08have there now and hopefully get them
35:12back on point because there I mean it's
35:1436 years of history. Not saying that
35:16sometimes you don't have to just let
35:17something die, but we're the market
35:19leader in that market and there's no
35:21reason why we shouldn't. We're only a
35:22little bit off of our sales from a
35:24couple years ago, but we're not growing.
35:26Yeah. And not growing is dying in my
35:28opinion.
35:28>> Yeah, I agree. Um, so options, right? So
35:32you have um get one of the guys who
35:36currently work for you at your hot
35:37location to move over. Get somebody
35:41who's at the new location, sorry, the
35:43old location who's a quote leader there
35:45to step up. Um a little tougher. And
35:48then you have kill everything. So
35:51what stops you from taking somebody from
35:53your current high performing location?
35:54Because you can always take up the slack
35:56if it's you there because you're there,
35:58right? and they've seen how this one's
36:00humming and working and what you're
36:01doing behind the scenes. Because I'll
36:03bet you if you had fresh eyes when boss
36:05isn't there, you'll find out quickly if
36:07you have a stud from location two going
36:09back to location one that they'll tell
36:11you like, "Oh, they're not even insert
36:13thing that's obvious that they're not
36:14doing to make money,
36:15>> right?" So, the reason why I can't do
36:17that now is because my keyman at the new
36:19location is leaving tomorrow when I get
36:21back to move to Atlanta. So, that's
36:24>> So, so now I have to go hire for that.
36:26the other the other guy I lost three
36:28years ago.
36:29>> Yeah.
36:29>> And we've just
36:30>> haven't replaced him. Yeah.
36:31>> Yeah. So,
36:32>> so what's really interesting about this
36:33because and I I didn't say this earlier,
36:35but it's I'm very little talking um to
36:37whoever is asking the question and I
36:39think more of like talking through the
36:40person to everybody else here. Um one of
36:43the the like
36:46business will be limited by your ability
36:49to track attract talent. Um, and the
36:52longer I've been in business, the higher
36:55my or the lower my bar uh for tolerance
36:58has been and the higher my bar for
36:59excellence has become. And so the best
37:01talent is always in the future. And
37:03that's what I always have to remind
37:04myself that every single time. And I you
37:06you think it's not true, but like when I
37:08look back at my team from three years
37:10ago to now, I'm like, my god, my team is
37:12so much better now. And at that time,
37:13three years ago, I was like, my god,
37:14this team is so much better than it was
37:15three years before that. And so this the
37:18crazy thing is that three years from now
37:19I will look back on the team that you
37:20guys met today and be like my god I
37:22can't believe that was the team. And so
37:24what's interesting about that is that
37:26the bar the bar only should go one way.
37:29And so it sounds like you had it right
37:32like and maybe it was like you got lucky
37:34with the keyman guy but it's how do we
37:36repeat the successful action which may
37:38mean that like not being okay with the
37:40mediocrity is the thing that's limiting
37:42the business. And especially in a
37:43brickandmortar it's half service half
37:45products. Uh, it's probably 75% product,
37:4825% service.
37:49>> Got it. Um, but the culture of the store
37:52is still going to be dictated by the
37:53leader, right? What he or she determines
37:56to be good enough or acceptable in terms
37:58of effort. And so, you obviously have a
38:00standard and that's why that store is,
38:02you know, cranking. Um, but you're
38:04definitely in, you know, a hard spot.
38:05So, I'm not going to pretend like, okay,
38:07everything's going to be great. But you
38:08actually are more similarly in this
38:11position
38:13in the swamp. Uh because your profit
38:15margin that you have right now, you're
38:17going to have to bet on the other
38:19location to keep it alive. Hopefully
38:21that was inspiring.
38:23[laughter]
38:24Well, it's like you have this much cash.
38:26It's like you got this much cash. You
38:28have to be at the one cuz the other
38:29guy's leaving. You have a hole there. We
38:32either kill it or we have to we have to
38:34invest money into it, you know.
38:37>> Yeah. I would just encourage you to keep
38:39the bar as high as possible. And I would
38:41say that the the inkling that I've
38:43gotten when I hire now is
38:46I need to be pulled rather than thinking
38:49like I'm in pain. I want to stop this
38:51pain. I have to it has to be [ __ ] I
38:54really want this person and until and
38:57like it's an easy reminder that I put
38:59like on my on my computer if I'm doing
39:01it like a Zoom call or whatever is that
39:02I have to I have to want the person not
39:05I have to want the pain to go away from
39:06not having a person. It's a tiny nuance,
39:09but it the constraint that you guys are
39:10dealing with is the same one. Gosh,
39:13sometimes I feel like I've told the same
39:14stories and I forget who I've told them
39:15to. So, um, it's a cleaning business, so
39:18it's just residential cleaning versus
39:20window cleaning, but the same idea. So,
39:21getting customers is not hard in this
39:23business. Keeping customers isn't hard
39:24either. Delivering for customers, which
39:26is the talent side, is the hard part,
39:28right? And so, the best cleaning model
39:30that I've seen that has worked well is
39:34basically one is you want to show career
39:35path for them. This is me telling you to
39:38be creative on this, but like I saw a
39:39nail salon girl. We really liked her her
39:42chain. Um, and the thing that she was
39:44able to do is that she had like eight
39:46like levels of being a nail salon girl
39:49and she's like, I can take girls who
39:50dropped out of high school and can't
39:51read and I can get them to like 70,000 a
39:54year, which I thought was really cool.
39:56And so, um, the big thing was is that
40:00you just alternate title and pay in
40:02terms of the movement of how they move
40:04up. So it's like four and four basically
40:05in terms of the movements. Um and so to
40:08move up each time they have to develop
40:10new skills. So they kind of unlock it.
40:12So it gives them this huge trajectory.
40:14By the end they never want to leave cuz
40:15they've gotten all these micro wins.
40:17They're getting paid more. And so one
40:19the 40% if you stuck with percentages
40:22I'd be like let's work up to that. we
40:24start you here and you can earn that you
40:27like you unlock unlock 5% of time or
40:29something like that and you do it if you
40:31keep all your customers you know what I
40:33mean like you could put some quotas
40:34around that so that's one the other the
40:37other model that I liked a lot was this
40:39was an entirely centralized model they
40:40did all the sales and what they did was
40:43they um they told they they'd pay people
40:45per clean a flat amount and they would
40:48try and get whatever they could get over
40:49the phone um and then that meant that
40:53the people worked way faster
40:54because they were like trying to get
40:56paid for a clean. But the deal was if
40:58you [ __ ] up the clean, you got to do it
40:59again. So if the customer calls back,
41:02then you got to clean again for free.
41:04And so so all of a sudden it's like they
41:07made more money because they were
41:08getting paid whatever 200 bucks to
41:10clean. They told the guys they pay them
41:1150 bucks to clean. And but the guys were
41:14like, well [ __ ] I they all of a sudden
41:16they tripled output for the team cuz
41:18they were like like [ __ ] cuz it's just
41:20like UPS and FedEx. It's like if you
41:21have a simple task that doesn't take a
41:24tremendous amount of skill and this
41:25isn't an insult. It's just not like
41:26computer programming, you know what I
41:27mean? Um, Alpha can hugely uh improve if
41:31you incentivize the right way. So, I
41:32like the fact that you're thinking the
41:34rev share thing, but they're not
41:35involved in the sales, but the way that
41:38they make you more money is that they do
41:39more windows at the quality standard.
41:41And just to be clear, this will be a 1.0
41:43model and then you're going to have to
41:44do this a little bit, but that's just
41:46business. You make the change, then you
41:47can retroactively what's this side is
41:49bigger than that side if it works
41:51better. At the very onset though, if you
41:53were going to do nothing, just make the
41:54rev share tiered that way. Like you're
41:57cuz people, it's the survivorship bias.
41:59As soon as you say the most someone can
42:00make, they immediately assume that's
42:02what they're going to make and they'll
42:04just work. I mean, think about network
42:05marketing, think about investment
42:06banking, like all these great insurance
42:08sales. Like people will work years if
42:11they know that one point they could make
42:13that. And so just give them that and
42:15then you can pay significantly less and
42:17then your blended rate might be 28.
42:19>> So I uh run a company where I
42:22essentially help remote high ticket
42:25sales coaches uh with their fulfillment
42:27by providing job opportunities and then
42:30coaching for their students/clients on
42:34best application processes, interview uh
42:37support and prep and and things like
42:39that. Um, which part of the delivery do
42:41you
42:44>> can you hear me? What part of the
42:45delivery do you do?
42:48>> So, I like post the job opportunities
42:50inside of their [clears throat]
42:51community. Um, and then I do group
42:54coaching calls once a week with some of
42:56the clients and then DM support,
42:58answering people's questions, reviewing
43:00their application videos and things like
43:02that.
43:03>> Okay. What do they do? They're
43:04responsible for sales.
43:06>> Yeah. So, they're sales coaches. So
43:09they're teaching people the sales side
43:10of things and most of them before I come
43:13into the business are doing part of the
43:15you know helping them land jobs um but
43:18often are struggling with having enough
43:20job opportunities and the coaching part
43:22of actually uh teaching people what to
43:24do properly to get hired.
43:26>> Got it. So they're really good at
43:27getting the clients. They're not good at
43:28getting the clients the opportunity. So
43:30you bring them the opportunities. You're
43:31responsible for the second funnel.
43:34>> Exactly.
43:34>> Okay. Great.
43:38Um, so I guess like the bottleneck that
43:40I have is we currently have 45 um,
43:43communities that we work with.
43:45>> Wow.
43:46>> Um, we work on a retainer model. Uh, we
43:48don't charge the businesses anything for
43:50the recruitment uh, services. Not really
43:52recruitment services. It's just like
43:54posting their opportunities in the
43:56communities. Um, and so the sales
43:58coaches pay us a retainer. Uh, it's
44:00anywhere from two to $4,000 a month. Um,
44:04and I run the entire business and
44:08fulfillment. And so I guess my
44:10bottleneck is that the business is not a
44:12business, it's me. Um, and
44:13>> are you searching for placements when
44:15you get them opportunities?
44:17>> No. So it's just like a flat retainer
44:19modeling the job opportunity.
44:21>> You're providing Let me say it
44:23differently. These guys get jobs at
44:25businesses that need salespeople.
44:26Correct.
44:29>> Yes. So who those businesses you just
44:32give them people for free?
44:35>> Exactly. So I don't charge the
44:37businesses anything um so that that
44:39doesn't become a bottleneck so that I
44:41can have as many job opportunities as
44:43exist in the world. [clears throat]
44:46>> So it'd be like I would come to you and
44:48say I need remote sales people and you
44:50would be like I'll give you some for
44:51free.
44:53>> Yes. So let me know anytime you need
44:55sales reps.
44:56>> I I mean I wouldn't do it because I
44:57wouldn't believe that you were any good.
44:58Yeah, there's that.
45:05>> Well, we have uh anywhere from 500 to
45:08600 job opportunities that we post per
45:10month. So, we've got a lot of people who
45:12do trust us.
45:14>> I You get what I'm saying? Okay. So,
45:16what's the problem with your business?
45:19Well, just that uh I guess I'm
45:21bottlenecked by I have no team and we
45:24have 45 clients and so uh I'm not sure
45:27where to find the right talent, how to
45:29incentivize the right talent for um the
45:32fulfillment side like coaching, finding
45:34the right opportunities. I I guess I I
45:36just don't know what direction to go in
45:38to scale beyond where we're at
45:40currently.
45:41>> So, let me ask you in the business right
45:42now, where do you spend most of your
45:44time? Is it on sales? Is it on
45:46fulfillment? Like which piece?
45:49Um it it yeah I don't really spend very
45:53much time at all on sales. It's it's
45:55pretty much all on fulfillment. So uh I
45:57guess like liazing with businesses who
45:59are looking to hire sales reps. Yeah.
46:00>> Um and answering questions and getting
46:02on group coaching calls with the
46:04students of my clients.
46:06>> How many group coaching calls a week are
46:07you getting on?
46:09>> Uh currently around 20 per week. So, a
46:12little less than half of the total
46:14clients we work with have that as part
46:16of the services I provide.
46:17>> Gosh. Okay. And then of that time, the
46:20rest of the time you're spending DMing
46:21people and essentially like answering
46:22questions in the group.
46:25>> Exactly. Yeah.
46:26>> Okay. And then what would you do if you
46:28weren't if your time wasn't being taken
46:30by doing either one of those things?
46:33>> Um, I think it would just mostly be be
46:35acquisition. um finding more clients and
46:38making bigger, better connections with
46:40with businesses and people that are
46:42hiring sales reps consistently.
46:44>> Yeah. I think the first thing that you
46:46should try and get off your plate is the
46:49questions. Um because if you can bring
46:52somebody on and you can train them on
46:53answering the questions in the group,
46:55that's like a it's almost like they're
46:56onboarding to then take over calls from
46:58you. My question is when you're on the
47:00calls, what [clears throat] is the like
47:02if you were to tell me the top three
47:03things that you're teaching them on the
47:04calls, what would those three things be?
47:08>> Uh, I mean, I I think the like the
47:11application videos would be the the
47:13number one thing, but the the majority
47:16of those calls and answering people's
47:18questions is all like personalized. So,
47:20it's based on their situation and their
47:23past experience because I work with some
47:25people that have a ton of sales
47:26experience and some people that, you
47:28know, this is going to be their first
47:29ever, you know, go at sales. Um, and so
47:32it's mostly personalized to like how can
47:34we frame the experience they do have or
47:36the lack of experience in the right way
47:39to be able to help them land a better
47:42job than they have currently or their
47:43first job.
47:44>> Yeah. So, it's essentially a lot of
47:45career coaching to a degree, just in
47:47like a less traditional sense.
47:48>> Yeah.
47:50Okay. So, you're looking for somebody
47:51that can essentially be a career coach
47:52for the sales remote sales opportunity
47:54peeps.
47:57>> Yeah, pretty much. And I think like the
47:59struggle is I don't know who has the
48:03understanding of the industry and and I
48:06guess enough expertise and obviously I
48:08can coach that but um to to have
48:10authority in those conversations that
48:12isn't a great sales rep who could make a
48:15lot more money selling than uh helping
48:18people get jobs.
48:19>> So there's two different models that you
48:20can think of when you think of a
48:21coaching business like this. And I think
48:23this goes for like any coaching business
48:24in existence, which we've talked to so
48:26many and I've helped structure multiple
48:28teams like this. Like there's really two
48:30models that work and there's trade-offs
48:31in each one. Meaning like you kind of
48:33just want to pick your problems. And so
48:34I'm going to describe each one and you
48:36can tell me which one you think you
48:37would rather have the [ __ ] that comes
48:39with it. The [snorts] first one is that
48:40you hire people that are going to be
48:42full-time. The downside of this is it's
48:44going to be harder to find those people
48:45because they're competing with these
48:47other opportunities. So, just like what
48:49you said, it's like they could go make
48:50more money somewhere else, which means
48:51the type of people you're going to find
48:53are people who directly want to learn
48:55from you and they see this as a learning
48:57opportunity, not an earning opportunity.
48:58And they one day want to open up a
49:01business similar to yours. So, there's
49:02two downsides here.
49:03>> Yeah.
49:04>> Which is one, uh, they're going to be
49:06competing in terms of cost and so
49:08they're looking at these other
49:09opportunities. They're not going to come
49:10in for super cheap even though they're
49:12trying to learn because the anchor is
49:13just very high as what they could earn
49:14elsewhere. The second side to it is that
49:16there's going to be a finite timeline on
49:18this because they're coming in to learn.
49:19And so once they feel like they've
49:20learned enough that they can go off on
49:22their own or go do something somewhere
49:24else and learn more, they're going to do
49:25that. However, the benefit is that it's
49:28less management for you because if you
49:30bring these people in, you probably only
49:32need a couple of them literally to take
49:34care of all the clients that you have
49:35and you get a ton of discretionary
49:36effort from them because they're
49:37full-time employees with you and they're
49:39trying to learn. So they want to go
49:40above and beyond because they're trying
49:41to acquire the skills.
49:44>> That make sense? That's the first model.
49:46The second model,
49:46>> yes, absolutely
49:47>> is easy to find and also hard to manage,
49:52which is find people that essentially
49:54are doing what you just described.
49:56They're already those coaches making a
49:57lot of money, but they want to make more
49:59money and they want to have influence.
50:01They like the status. They like the
50:03teaching. And so as a side opportunity,
50:06they can do this for 10 or 15 hours a
50:08week, maybe even less. And so then what
50:10you would do is you would get more of
50:11those people. Say you need based on, you
50:14know, 20 calls a week plus whatever, say
50:15it's 40 hours, maybe you need four or
50:17five of them to cover you. You pay them
50:19a lot less. You get them fractionally
50:20and part-time. The downside to it is
50:23that it's going to be more management
50:25from you because you have to build out a
50:26schedule. You're going to have to make
50:27sure that they're all, you know, clock
50:29in, clock out, whatever, all the
50:30compliance. Um, and so I [clears throat]
50:32would say that if you have a hard time
50:35[snorts] finding the people, then maybe
50:37go with the model where you have the
50:38part-time coaches coming in. Um, I would
50:40say the other upside to doing the
50:42part-time is that if you lose one, it's
50:44not a big deal. You can replace them
50:45fairly easily. There's a lot of keyman
50:47risk in the first model. And so if you
50:50don't feel like you're like going to
50:51really be great at retaining them, I
50:52typically tell people to steer away from
50:54that model.
50:55>> Let me Yeah, I'm going to piggy back on
50:57that. So the nice thing with the partial
50:59model that Leela just outlined is that
51:01one you you're placing all these sales
51:03people right now and you already have a
51:04history of placing a lot of sales people
51:05already right and they already went
51:06through your training and whatnot and so
51:08I would say take your most successful
51:10alumni and say hey want to make an extra
51:11five grand a month and give back to the
51:13community that you came from many of
51:14those guys will probably say sure I'd
51:16happily do it because you know five
51:18grand because a lot of you know sales
51:19people they get tired of selling all the
51:21time and so this gives them a little bit
51:22of a break and feel like they're giving
51:24back. Yeah, exactly. So, I actually
51:26really like that model. Um, and given
51:28the fact that you recruit all these
51:30sales people, I don't think it'd be that
51:31hard. Um, second, because it would it
51:33would kill me and eat me up inside to
51:34not at least say it. Um, you can double
51:37your revenue really easily. Can I tell
51:38you how?
51:40>> I would love to know.
51:42>> So, I hear where you're coming from with
51:44the, hey, I want to have as many
51:45opportunities as possible so I can find
51:47as many places as possible. So, making
51:48it free is a way to do that. I hear you
51:50there. Mhm.
51:52>> But you probably know of all the
51:54candidates you have that there's
51:55probably 10% of them that are killers
51:57and are going to do well, right?
52:00>> Yeah. Yeah.
52:00>> Right. Have a tier that's 2500 bucks or
52:03$5,000 per head that you say, "Hey, uh,
52:06all these people are free. I personally
52:08screen these ones and give them a blue
52:10check mark uh from me and these ones are
52:122500 bucks or 5,000 a pop."
52:15>> So if you get 600 placements a month is
52:17what you're doing. If 60 of them are
52:19paid at 2500 or 5K, that adds $150 to
52:23$300,000 a month to the business.
52:28>> That makes a lot a lot of sense.
52:33>> Boom. Okay.
52:34>> You're like, I got to get that one out.
52:36>> Yeah, I definitely I definitely need to
52:37implement
52:38>> call that a money model.
52:40>> Call that a money model right there.
52:42Right there.
52:43>> You should write a book.
52:44>> I should write a book about that.
52:45[laughter]
52:46Does that that help? So that Leila
52:48solved your uh your your delivery model
52:50and that solved your money model.
52:51>> Rock and roll.
52:53>> Yeah. Yeah. That that's awesome. Thank
52:54you guys.
52:55>> Appreciate it, man.
52:56>> That was a fun one. That was good.
52:58>> Uh essentially we help nineto-5ers quit
53:00their jobs with affiliate marketing.
53:02That's what we teach.
53:04>> Uh right now we do about 1 to3 million a
53:07year, which is kind of my question that
53:10uh I'm going to ask you. Um so basically
53:13I'm stuck at the 1 to3 million a year
53:15mark. Um, obviously we do info and uh
53:19coaching, then we have the software on
53:21the back end. Um, so I want to get to
53:26that $10 million a year mark.
53:29How do I do that? I I that it's going to
53:32kind of go into my next question, but I
53:34want to hear what you say first because
53:36I have a I have a way that I've been
53:39really thinking about. Uh, but I want to
53:41hear what you say first.
53:43>> So, what stops you from doing more?
53:47What stops me from doing more?
53:48>> What you're currently doing that's
53:49making you money?
53:51>> Creating content. I don't do any ads. I
53:53just do more content. Uh, and
53:55affiliates, we we have a ton of
53:57affiliates.
53:58>> What percentage is affiliates versus
53:59content?
54:00>> Uh, as far as revenue, uh, I would say
54:0460% comes from affiliates.
54:06>> Okay. How do you acquire affiliates?
54:08>> Uh, naturally from them coming into my
54:11courses because I teach affiliate
54:12marketing. So they don't have to promote
54:14my stuff, but a lot of them end up doing
54:16>> What's the tip of the spear? What's the
54:17first thing that people find out about
54:18for you?
54:19>> The first thing they find out is they
54:21they find me from YouTube.
54:23>> So content is the primary way that
54:25people
54:25>> primary. Yeah.
54:26>> And then once they come in your
54:27ecosystem, some of those people then
54:28turn around and then you know affiliate
54:30you know they start promoting your
54:31stuff. Okay. So
54:35in order to scale the business,
54:48so imagine this represents all the
54:51people who know you exist. Okay?
54:55Right now you're monetizing this
54:57percentage of people based on how you
55:00convert them, whatever that way is. Do
55:01you have a phone sales team or what do
55:03you do?
55:03>> I have a low ticket challenge leads into
55:06a $2,000 and then also a webinar that
55:08also leads into the
55:09>> It's an automated conversion.
55:11>> It's all automated. Yeah.
55:12>> Okay. Got it. So,
55:15there's two ways that you can make more.
55:24Option one is you pull the conversion
55:25mechanism which is that you would add as
55:27phone sales team. it'll convert more of
55:28the audience that you have and you'd
55:30probably also increase the price point
55:32if you're selling over the phone.
55:34So, this doesn't get more people to find
55:36out about you. This just converts more
55:37of them at a higher price. It's still
55:39going to be limited by how many people
55:40who know about know about you right now,
55:42which is all limited by your YouTube
55:43content. The alternative is that you
55:47make more better YouTube content, which
55:48expands the whole slice and then this
55:50line then moves to here and now you
55:52have, you know, all of this that you're
55:53monetizing.
55:55>> Does that make sense? But those are if
55:56we only took more as the angle, which I
55:59think is the right perspective. Um, I
56:01guess a third path if you really wanted
56:03to, is we could run ads to that
56:07audience, which then allows you to I'll
56:09give you a different visual for it.
56:15So, if we think about this circle, I'm
56:18doing this backwards. Sorry. Um, I know
56:20what it looks like when it's done. Okay.
56:22So,
56:26Okay.
56:28So, let's say that when you make So,
56:29this is um
56:32all so how many how many subscribers do
56:34you have?
56:35>> Almost 100,000.
56:36>> Okay. So, this represents 100,000
56:37followers. Okay. Now, of the 100,000
56:41followers, when you make a post, only
56:44this percentage of people are going to
56:45see it. This tiny little circle, right?
56:47>> When you make a call to action, only a
56:49tiny percentage of those people, a
56:50little pin prick in the middle, are
56:51actually going to see the call to
56:52action. either in terms of retention on
56:54the video or just in general if you have
56:55a harder ask, those videos tend to not
56:57do as well. Right.
56:58>> Right.
56:58>> So, when we run ads and you have an
57:01organic channel, you're able to capture
57:04all of these people, which are not only
57:07the people who know who you are,
57:10but sorry, who have who who are
57:12following you or subscribed to you, but
57:13the people who have tangentially
57:14consumed your stuff and are interested
57:16in the topics um that you have made. So,
57:19like right now, if I were to say, who
57:20here follows me on Instagram? Some of
57:22you do, not necessarily all of you. And
57:24so that being said, that differs from
57:27whether you've consumed a piece of
57:28content of mine on Instagram. And so
57:30some of you guys, I'm in your interest
57:32graph. So like Instagram will feed you
57:34my stuff, but you might not follow me,
57:36but you still know who I am. And if I
57:38ran an ad, you might respond to it. And
57:41so that's all of this that's all of the
57:43stuff that's gets captured here when we
57:45run the paid ad side. And so going back
57:49to this original thing,
57:54you can convert more of the audience by
57:56adding a phone sales team. You can
57:58convert more of the audience by putting
57:59more of the people in that big circle
58:01into here. It's still the same number of
58:03people who know you. Or we just get more
58:05people to find out about our stuff.
58:07>> All three of those methods would work.
58:10The paid ads and sales team andor price
58:12stuff is are one-time levers. So you can
58:14only pull that once. And so you might be
58:17able to go from three to 10 by just
58:18doing that, but then at 10 you're going
58:20to run into the same issue. You will be
58:21making more money, but then at that
58:23point, we'll have already pulled those
58:24two levers. And then at that point,
58:25we'll say, okay, can we now scale into
58:28colder traffic rather than functionally
58:29retargeting our existing warm audience
58:31or do we need to grow our warm audience
58:33or both?
58:34>> I am part of a group that buys and holds
58:37uh software businesses.
58:39>> Cool.
58:39>> I have four businesses in my group
58:41currently. Uh, three of them we sell
58:44software to property management
58:46businesses and the other one is to event
58:49management.
58:49>> Where's my vendor smart guys? Where you
58:51at?
58:52>> I've already had a convers.
58:54[laughter]
58:55>> Um, as a group at the minute I do just
58:58under 12 million in revenue. Um, I'd
59:00like to be 90 million in the next five
59:02years and that'll be a combination of
59:04acquiring new businesses as well as
59:06helping the current businesses to grow.
59:09um what is stopping me is I feel I'm
59:11constantly balancing how to help my
59:13existing businesses to continue to grow
59:16as well as um going on the acquisition
59:18journey as well. So I'm really
59:20interested to understand from you do you
59:22have a specific playbook of how you
59:23balance those two things effectively to
59:26scale?
59:26>> Yeah, I have um
59:29>> people who run them as their entire
59:30thing.
59:32The honest truth. So our venture
59:34portfolio is run entirely by a different
59:36team. I don't I don't even okay the
59:38checks anymore.
59:39>> They just let me know.
59:41>> I'm like, "Sounds good." Um, so I I I
59:45this is me being honest with you, like
59:46um I
59:49>> my highest leverage so like my the the
59:52vast majority of my time is spent
59:55>> generating demand because that's the
59:57highest leverage thing I can do.
59:59>> So if I build the brand, I will be able
1:00:00to get all the talent I need. I'll be
1:00:02all the deal flow that I need. I'll be
1:00:03like I'll be able every if I just do
1:00:05this one thing. And so that's that tends
1:00:07to be how I think about my job, which is
1:00:08like if I could only accomplish one
1:00:10thing. Um, and that one thing on its own
1:00:13would accomplish all of our other
1:00:14objectives, then I will just do that and
1:00:16then I will hire people to do everything
1:00:17else. Um, so with regards to your thing,
1:00:20do you have uh do you have a capital
1:00:21constraint or you just need deals? Like
1:00:22do you have the capital in order to to
1:00:24to
1:00:24>> make the Okay. So you just need deal
1:00:26flow.
1:00:27>> Mhm.
1:00:28>> Oh, okay. Um, so then each of the
1:00:31individual uh portfolio companies, how
1:00:33did you buy those? Just is it a fund
1:00:35that you're you're managing right now?
1:00:36>> Uh it's part of much bigger group of
1:00:38businesses that have their own cash.
1:00:39>> Okay, got it. Um All right. And so the
1:00:43Did you kick out the founders when you
1:00:44bought them or do you
1:00:46>> No, we uh because we're a buy and hold
1:00:48acquirer. The preference is that the
1:00:49founders stay and help to continue to
1:00:51grow um and develop with us.
1:00:53>> Do they roll 20% or 30% something like
1:00:55that?
1:00:56>> Uh as in like do they do they exit? Is
1:00:58that what you mean?
1:00:59>> Well, yeah. Do you do you buy 100% or do
1:01:00you
1:01:00>> Oh, yeah. Sorry. No, we buy 100%.
1:01:02>> Okay. pay by 100% and then they just get
1:01:03like cash bonuses upon growth and
1:01:05whatnot. Okay.
1:01:07>> Um so there is is the issue that the
1:01:11founders aren't following your
1:01:12instructions
1:01:13>> or you need better like what's the
1:01:15what's the problem with the organic
1:01:16growth side because the acquisition
1:01:18stuff is really straightforward. You
1:01:18just need like we need to generate more
1:01:20demand which is either outbound or trade
1:01:22shows, conferences, things like that
1:01:23which is a different process. um we can
1:01:25happily walk you through it but like
1:01:28>> I'd say probably from the existing
1:01:30businesses some of the ones that we
1:01:31acquire are less um developed and
1:01:33therefore need more time than others. So
1:01:35that's where it can take more of the
1:01:36time when actually to get to the 90
1:01:38million it's really needed to
1:01:40[clears throat] focus more on the
1:01:40acquisition as well.
1:01:42>> They're so small. That's the problem.
1:01:45That's why most most [clears throat] PE
1:01:47doesn't doesn't go there because it's so
1:01:49difficult. Uh because they have like a
1:01:51hundred problems that are wrong all at
1:01:53the same time. Um and then the founder
1:01:56who got to that level like is at that
1:01:58level for a reason. And so usually it is
1:02:00the founder that's the problem. At least
1:02:02that's been my observation. And then the
1:02:04business that's limited by that person.
1:02:07So how do so how do you do both? The
1:02:10acquisition side for deals is
1:02:12straightforward. I'm I am curious about
1:02:13like that deal box that you have uh for
1:02:16the you know they're averaging three-ish
1:02:18million or is it one of them that's like
1:02:2010 and the other three are
1:02:21>> uh No, they're all pretty much similar
1:02:23size but clearly want to uh buy
1:02:24businesses that are much bigger than
1:02:26that. Yeah, I think that some of these
1:02:28problems will actually disappear if you
1:02:30get the better businesses
1:02:32>> because right now I would imagine
1:02:34hopefully not overstepping, but I'm I'm
1:02:35guessing that you're probably playing
1:02:36babysitter a little bit to the founders
1:02:39that are there um and dealing with like
1:02:41the regular fires that are coming up all
1:02:43the time in the business and the
1:02:44decisions that need to get made rather
1:02:45than like what is the one thing that if
1:02:46we just get this right, this business
1:02:4810xes.
1:02:49>> And so good founders already do that
1:02:50innately and mediocre and bad founders
1:02:53don't. they just get sucked into the
1:02:54day-to-day and then they just stay
1:02:55mediocre for a very long time. So, it is
1:02:58probably a who problem. It's difficult
1:03:00because of the nature of the
1:03:01acquisitions that you did. Removing
1:03:03founders is tough.
1:03:04>> Um, but it probably is the like what's
1:03:07the root
1:03:08>> is probably that.
1:03:10>> Um, to give you guys context like I've
1:03:13did in between in 2020
1:03:16in 2022 and 2023 I did 24 acquisitions.
1:03:19Um, and I basically sold or gave back my
1:03:26shares in
1:03:2919 of those companies because it just
1:03:31wasn't worth it. Because as much as I
1:03:34could say, "Hey, this is sound business
1:03:36advice," they just weren't winners.
1:03:41And because winners aren't going to come
1:03:42and say like, "Yep, we stayed the same
1:03:43for the third year in a row." Like, they
1:03:45will die or they will win. and I'm just
1:03:48trying to find those people. And I would
1:03:49say that I spend a greater percentage of
1:03:51my time looking for that. Now,
1:03:53>> so I need to find more winners within
1:03:54each of the businesses.
1:03:56>> You might find winners that are there
1:03:57and andor be able to put someone in. Um
1:04:01because I mean this is the classic like
1:04:02private equity story, not your story,
1:04:04but like business is going great,
1:04:06founder gets removed, business tanks
1:04:08because private equity doesn't know how
1:04:10to run the business. Um and it's like
1:04:11you just need somebody who is good and
1:04:13those people are rare. Um, but one of
1:04:16the best telltale signs of that if
1:04:17you're going to do the buy and hold is
1:04:18just bigger because the entrepreneur who
1:04:20can get to 20 million in ARR probably a
1:04:22better entrepreneur than somebody who
1:04:23caps at three and then sells at that
1:04:25point. Also, just from an ambition
1:04:26perspective, I don't know what kind of
1:04:28multiples you were paying for those, you
1:04:29know, particular businesses, but if if
1:04:32they're like it's very difficult to
1:04:34motivate someone who only needed to make
1:04:3620 $30 million in their life and then
1:04:38they made it
1:04:40because then it's just like this is the
1:04:41business I built and these are the
1:04:43people that I built it with and they
1:04:44have families and I just want to, you
1:04:45know, I just want to keep this going so
1:04:47that everybody's, you know, taken care
1:04:48of and that is not the mindset of
1:04:50somebody who's trying to get, you know,
1:04:52go from three to 30 in my opinion.
1:04:55That's a it's a more it's a more nuanced
1:04:57but probably true answer than here's the
1:05:00three-step process. It's probably the
1:05:01founders of the companies you bought
1:05:04>> aren't dogs and you pro you need dogs.
1:05:08>> So just buy bigger businesses with the
1:05:10right talent.
1:05:10>> Yeah.
1:05:11>> Okay.
1:05:11>> And I think every investor uh reinvents
1:05:14the wheel. Uh myself included.
1:05:16[laughter] I was like, "Oh my god, I
1:05:18could take these things like so easily."
1:05:20Because you can see how you can take
1:05:21something from 5 million or 10 million.
1:05:23Like, "Oh my god, I get this to 50 and
1:05:24like I can basically buy this for
1:05:25nothing and flip it for a hundred
1:05:27million. Like, that'll be a great deal.
1:05:29I should do that a bunch." And then you
1:05:30realize why you get paid so much to do
1:05:33this because it absolutely sucks and you
1:05:35actually have to build the entire
1:05:36business. And then you're like, "If I
1:05:37had to build this thing from scratch, I
1:05:38wouldn't have picked this business."
1:05:41>> And then you you kind you reinvent the
1:05:42wheel. You're like, "Oh, this is why
1:05:43they
1:05:44>> I have a subscriptionbased boat rental.
1:05:48Yes.
1:05:48>> Yeah. Boat membership.
1:05:49>> Yes. Yes, I do. Uh currently doing 2
1:05:52million top line. Um I'd like to pass
1:05:56the 10 million mark.
1:05:58>> Uh what's stopping [clears throat] me is
1:06:00uh decision. I came here to this
1:06:03workshop because
1:06:05>> um I've been doing this 13 years. I put
1:06:07in my 10,000 hours. Not making enough
1:06:10money.
1:06:11>> So I came to learn how to scale. Mhm.
1:06:13>> Um I have two options
1:06:16uh in front of me in the next 6 months.
1:06:18One to purchase an existing club that
1:06:20would more than double
1:06:22>> and another to start a third. Um I have
1:06:26five locations. This would make 10.
1:06:29>> Um
1:06:29>> and you're doing like [clears throat]
1:06:30twoish with 500,000 in profit, right?
1:06:33>> Yes. 600.
1:06:36>> I mean, [laughter]
1:06:38>> hey, every dollar counts. I'm I'm with
1:06:39you. Okay.
1:06:40>> Yes. Um, and in a session that I had
1:06:43this morning or this afternoon, um, in
1:06:46asking questions about how to scale, Ed
1:06:48told me, "I should not scale. I should
1:06:50sell."
1:06:52>> So,
1:06:52>> is it because you don't [laughter] like
1:06:53it?
1:06:55>> Yeah, that's what he said.
1:06:59>> I'm just reading here.
1:07:01>> Yeah. Clairvoyant.
1:07:02>> He said, "Do you love boats?" And I
1:07:04said, "No."
1:07:08Well,
1:07:10before we before we break your life, um,
1:07:13[laughter]
1:07:15>> just a couple frames because I I didn't
1:07:16say this earlier, but I'll say this now.
1:07:18Um, I'm really not talking to anyone per
1:07:20se. I'm talking through them to
1:07:21everybody else because believe it or
1:07:22not, the problems that you have is the
1:07:23same problem that like five other people
1:07:25here have or 10 other people here have.
1:07:26So, just want to set that up front. Um,
1:07:28I'll just share something that might be
1:07:30just a maybe a different frame on this,
1:07:32which like, have you heard the story of
1:07:34the three stone cutters?
1:07:36So, guy walks up, sees a stone cutter,
1:07:39and he says, "Hey, how's your day
1:07:40going?" And the guy's like, "It's
1:07:41terrible. It's backbreaking work. It
1:07:42sucks." And he's like, "Okay, wow. Got
1:07:44it." And he goes to the second stone
1:07:45cutter, um, and the guy says, "Um, well,
1:07:48you know, pays the bills. You know,
1:07:50keeps the family fed. You know, that's
1:07:52fine." And then he goes to the third
1:07:53stone cutter and he says, you know,
1:07:55"How's your day going?" He says, "Oh,
1:07:56it's amazing. I'm building a cathedral
1:07:58that, you know, is going to last for
1:07:59generations for my kids, right? And so
1:08:02the same work just different
1:08:03perspectives on the work itself. And so
1:08:06the perspective that I'll share is just
1:08:07that um having now owned a lot of
1:08:10different businesses. Um almost all
1:08:12businesses are the same as if you chunk
1:08:15up high enough. Because if you get two
1:08:18or three levels up, you're going to have
1:08:19a director of sales, director of
1:08:20marketing, you're going to have a
1:08:21director of IT, you're going to have
1:08:22personnel issues, you're going to have
1:08:23HR, you're going to have legal, and it's
1:08:25going to suck every other day.
1:08:28You know what I mean? And so, it's kind
1:08:30of like, you know, I've had I've had 10
1:08:32executive assistants and I currently
1:08:35have none. Um, and the common thread
1:08:38between all of me and them is them,
1:08:41obviously. And so,
1:08:44and so I say this because like if we're
1:08:47hope, if we're trying to hope for the
1:08:48business to be the thing that brings you
1:08:50joy, I would just really strongly push
1:08:53against that. Um, and I'd rather you
1:08:55just see the business through a
1:08:56different perspective, which is like
1:08:57this is an opportunity that get to learn
1:08:58some skills. Like a good friend of mine
1:09:00had um he was in the fitness industry
1:09:02and then started a cookie company, which
1:09:04makes it seems completely antithetical,
1:09:05right? He's like, I'm creating demand
1:09:06and supply.
1:09:08>> [laughter]
1:09:08>> Um, but what was interesting about it is
1:09:11that I asked him, I was like, "Are you
1:09:12passionate about cookies?" And he was
1:09:13like, "No, not at all." And I was like,
1:09:14"Why are you doing this?" And he was
1:09:15like, "Well, I think there's a good gap
1:09:16in the market." This is before Crumble.
1:09:17So, he had the right idea. Like, he
1:09:19thought that gourmet cookies were going
1:09:20to be a thing. He ended up having a bad
1:09:21partnership, whatever. But the point is
1:09:22is that he was right about his idea. He
1:09:24did a hundred different recipes to
1:09:25figure out the one chocolate chip cookie
1:09:27that was amazing. And he did, and he did
1:09:28really well. But the thing is is that he
1:09:30wasn't he wasn't in love with cookies.
1:09:32He was in love with being excellent.
1:09:34>> And I think that that's that's at least
1:09:35how I try to see business. It's like how
1:09:37can I let this business be an expression
1:09:38of the values that I have rather than
1:09:41this business has to fill a hole in my
1:09:43heart.
1:09:45So back to you. Okay. So do we exit this
1:09:48thing? Do we get another location?
1:09:50Because I'll bet if you just didn't hate
1:09:52the people you work with, you'd probably
1:09:53be okay with it
1:09:56>> with getting another location.
1:09:58>> Oh, no. Just in general. Like I mean
1:10:00because right now you have this this
1:10:01desire because you have what? 2 million
1:10:02in debt, right?
1:10:04>> Yes.
1:10:05>> Yeah. So, you have two million bucks in
1:10:06debt. You're doing 600, not $500,000 in
1:10:09profit. Not good. [laughter]
1:10:11Um, and so basically after taxes, it's
1:10:14going to take you like six years, seven
1:10:16years to pay the whole thing off,
1:10:16assuming you don't spend any money,
1:10:18which would suck, right?
1:10:19>> Yes.
1:10:20>> That would blow. Okay. Um,
1:10:23so I can feel that that is crushing
1:10:25weight. So, either you want to scale
1:10:26past it so these debt payments aren't
1:10:28killing you because it's eating probably
1:10:30the majority of your cash flow. um or
1:10:33selling and kind of either starting over
1:10:35or you know doing something else etc.
1:10:37Right.
1:10:38>> That's right.
1:10:38>> Okay. Do you have an offer on the
1:10:40business?
1:10:41>> No, I wasn't even looking to sell until
1:10:43an hour.
1:10:44>> I was like sell [laughter]
1:10:49um so you have 25% margin. So it's not
1:10:53bad or no less than that because you're
1:10:54a little higher than 2 million in
1:10:55revenue, right? 27. Is that what it is?
1:10:58>> Um
1:10:58>> what was revenue
1:10:59>> between the five? Two million
1:11:01>> is two million. Okay. So, it's two
1:11:02million top line, five 600, excuse me,
1:11:04600,000 bottom line. So, I mean, you're
1:11:05running 30% margins. The only issue is
1:11:07you made a bad decision like four years
1:11:08ago or however many years ago you took
1:11:09the debt out.
1:11:11>> Yes. Because it's pretty capital
1:11:12intensive to have 50 boats.
1:11:15>> Yeah.
1:11:17So, how's cash flow for the business?
1:11:20>> Um, good. I mean, COVID was great. We
1:11:24sold like crazy and unfortunately put a
1:11:27lot away. So, I don't have cash
1:11:28constraint. That's great. Okay. So,
1:11:32okay. Outside of like let's sell this
1:11:34thing, you still want to grow it, right?
1:11:36>> I want to grow business. This just
1:11:38happens to be the vehicle.
1:11:39>> I don't think this is a bad business. I
1:11:40mean, a boat membership where you have a
1:11:42you know like I mean fundamentally you
1:11:45have very high margins on each
1:11:46incremental membership. Correct.
1:11:48>> Yes. Yes.
1:11:49>> So, you're kind of at this point where
1:11:50like you've covered all your cost and so
1:11:52each additional membership makes you a
1:11:55lot more money, right?
1:11:57disproportionately drops the bottom line
1:11:58is my point.
1:11:59>> Yes.
1:11:59>> Okay. So, what stops you from selling 10
1:12:02times the memberships?
1:12:09>> That was the question that I tried to
1:12:11answer, right?
1:12:12>> Coming here and going through the
1:12:13framework and and when we were going
1:12:15through the circles yesterday,
1:12:17>> I came down to I think it's my offer.
1:12:19>> Okay. Okay. And is this is this a
1:12:22franchise or is this yours that you just
1:12:23start on your own? That's the other part
1:12:25of the equation is that it's it's a
1:12:28licensing model. Okay. And I think the
1:12:30conversation in the room today was
1:12:33is it really mine if I'm under a
1:12:34licensing structure?
1:12:36>> You could sell the business. You have an
1:12:38existing agreement, but what do you give
1:12:39away topline?
1:12:40>> Nothing.
1:12:41>> Oh, okay. So then what what's the what
1:12:44do you license
1:12:46>> the the [clears throat] marks in the
1:12:48system? It's a reservation flat fee. So
1:12:52technically my members do because we're
1:12:54a licensed and not a franchise. I can't
1:12:56pay directly. So the members do.
1:12:58>> Okay. What percent do they give away?
1:13:00>> It's a $500 a month membership. 30 bucks
1:13:03a month goes to corporate.
1:13:04>> Okay. So whatever that is 6%.
1:13:07Okay. I mean that's fine.
1:13:09>> Okay. So I mean I wouldn't say it's
1:13:10strangling you. Um Okay. So it's 20% of
1:13:13your margin functionally. All right. So
1:13:16uh why so do you currently do ads? Do
1:13:18you do outbound? Do you do organic? You
1:13:19doing affiliates? What are you doing to
1:13:20grow? We spend about 6,000 a month in
1:13:23paid ads. We do a lot organic.
1:13:26>> What's rorowaz on this? Oh,
1:13:31>> good. Bad.
1:13:32>> Um, [laughter] well, according to the
1:13:34marketing agency that I use, they're
1:13:36very, very great.
1:13:38>> They're like, it's exceptional.
1:13:39>> Yes.
1:13:40>> You just spend all your money there.
1:13:41>> Yes. I only spend $11 per lead, and
1:13:44that's a fabulous number in the
1:13:46industry, evidently.
1:13:46>> Well, what percentage are you closing of
1:13:48leads? Uh, the industry standard is 6%.
1:13:51When I was doing it myself,
1:13:52>> I'm going to pause here just for
1:13:53everybody. Zero [ __ ] about industry
1:13:55standard.
1:13:55>> Okay, we're at 4%.
1:13:57>> Average American overweight, in debt,
1:13:59divorce seven times over. Why would I
1:14:01care about the average person? They all
1:14:02suck. They don't make money. [ __ ] them.
1:14:03So, anyway, sorry. Go back to you.
1:14:07>> We're at 4% lead to close.
1:14:09>> Okay. 4% lead. So, so 25 times lead
1:14:11cost. So, at two whatever 266
1:14:15uh is cost of acquisition right now, not
1:14:17including sales commissions.
1:14:21That's what the number is. So like um
1:14:23>> Thank you.
1:14:23>> Yeah. Yeah, you're good. So um if that's
1:14:26if that's what it cost you to get a
1:14:27customer, uh what's the membership is
1:14:29$500 a month.
1:14:30>> It's a $5,000 initiation fee and then
1:14:33$500 a month. We sell fiveyear
1:14:34contracts.
1:14:35>> I love this.
1:14:37>> Why are we getting out of this business?
1:14:39cost you cost you call it $300, $400
1:14:43with commissions, whatever to get the
1:14:45sale to get a $5,000 upfront and then
1:14:47and then $500 a month or
1:14:50>> Yeah, that sounds chill.
1:14:52>> So that's why I was thinking I'd do more
1:14:54of it.
1:14:54>> Yeah, do more sounds great. [laughter]
1:14:57I love this for us. I love this for us.
1:15:00>> I love this.
1:15:01>> Yeah. Yeah. Um Okay, so why don't we
1:15:05spend more on ads?
1:15:07>> Sounds like I should. I feel like that's
1:15:09not a terrible idea.
1:15:10>> Not a terrible idea.
1:15:11>> Yeah. The thing is is you have a
1:15:12business where this happens a ton by the
1:15:15way. Like you get and this this is
1:15:16actually really interesting because
1:15:17that's in my opinion it's purely
1:15:18psychology. But you you have a certain
1:15:20amount of cost that you have that's
1:15:22fixed cost in the business and then you
1:15:24spend enough marketing to get above the
1:15:25fixed cost and then make some profit and
1:15:27then you like exhale. You're like a
1:15:28thank god I'm not losing money. But it's
1:15:30like you're willing to work so hard to
1:15:32make everyone else money. your landlord,
1:15:34the licenser, the your the employees,
1:15:36like you're paying all their mortgages,
1:15:38but then like you're just forgetting to
1:15:40like pay you.
1:15:41>> And so it's like let's go ham on that
1:15:43side. Like when it gets easy is when you
1:15:45go hard.
1:15:47So I'm So you do this. What else do you
1:15:50do? You said you're good at organic
1:15:52stuff.
1:15:53>> Yeah, we are. And a third of our new
1:15:55members come from our existing referrals
1:15:58or existing members.
1:15:59>> Okay, cool. Do you have a really
1:16:01structured referral system or just
1:16:02people talk to people?
1:16:04>> Yes and yes.
1:16:05>> Okay.
1:16:05>> Yes, we have
1:16:06>> because we have a whole bunch of badass
1:16:07stuff for referral stuff. But um that's
1:16:10one thing that can probably get juiced
1:16:12beyond the scope of right now. Um but
1:16:14that's a big one. And then ad stuff.
1:16:17Honestly, if we could just take a look
1:16:18at it, it's like we could probably
1:16:19figure this out in five seconds of what
1:16:20needs to The thing is is what's your
1:16:21close rate on people who come in?
1:16:25Um, [sighs]
1:16:27so 4% lead to close and then we 33%.
1:16:32>> Okay, you're fine.
1:16:37>> Yeah, like your stuff's not [ __ ] up.
1:16:39[laughter]
1:16:40>> We just need to get the referral system
1:16:41in place. We need to spend more on ads.
1:16:42We can make sure attribution's right. If
1:16:44we needed to tweak, like if you were
1:16:45like, I'm closing 10%, then it's either
1:16:46a sales motion issue or it's an offer
1:16:48issue. Now, if the lead costs are too
1:16:49high, but you said they weren't, if the
1:16:51lead costs were too high, I would look
1:16:52at offer as well, but that might not be
1:16:54the issue right now. And so, I think
1:16:56probably more and better creative that
1:16:58we do on the ad side. And I'm sure Are
1:16:59you doing Google Adwords? Is that your
1:17:01primary? Yeah. Um, more and better
1:17:03creative, probably better targeting in
1:17:04terms of what what keywords we're be
1:17:05look uh bidding on.
1:17:07>> Um, and there's probably a handful of
1:17:10like really easy CRO stuff. So,
1:17:12conversion rate optimization that we can
1:17:13do on the actual funnel itself. like you
1:17:15just don't know a lot. Like there's so
1:17:16many little things there that can just
1:17:18like immediately increase how much the
1:17:20business is making from each lead and
1:17:22that'll probably just give you a little
1:17:23bit more exhale like uh in order to
1:17:25spend more because I think that's what
1:17:26we have to do.
1:17:27>> Thank you.
1:17:28>> If you like this video and you're a
1:17:29business owner who wants to break
1:17:30through your current revenue ceiling, I
1:17:31distilled every lesson from scaling 10
1:17:33businesses past 10 million and three
1:17:35businesses past 100 million into a
1:17:36completely free scaling road map that
1:17:38I've used to go from 0 to 1, 0 to 10,
1:17:40and 0 to 100 plus. And so you can click
1:17:42here and you can check it out. again,
1:17:44absolutely free.

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