"Should I Expand or Win More of My Current Market?" — Transcript

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1. 0:00I'm a 25-year recovering attorney. I
2. 0:02have a very specialized practice.
3. 0:03>> My condolences.
4. 0:05>> Um we serve as an officer of the court
5. 0:08for judges throughout Texas.
6. 0:09>> Uh-huh.
7. 0:10>> About 1,400 judges, 250 counties.
8. 0:13The uh our revenue currently is standing
9. 0:15at 15 million.
10. 0:16>> Okay.
11. 0:17>> 74% profit margin.
12. 0:19>> Okay.
13. 0:19>> Uh based on a proprietary piece of
14. 0:21software that we developed.
15. 0:23Uh I'd like the revenue to get to 20
16. 0:25million. It's a nice round number.
17. 0:27>> Me, too.
18. 0:27>> It's And it's it is progressing that
19. 0:29way.
20. 0:29>> of us.
21. 0:30>> Yeah. It's progressing that way.
22. 0:32Uh so what's stopping me is we have
23. 0:37not conquered the market in Texas.
24. 0:40Uh we are number one by a large
25. 0:43magnitude. Uh number two, three, and
26. 0:45four combined still don't do what we do.
27. 0:47And so we're about half of the entire
28. 0:49industry in the state of Texas.
29. 0:51>> Love it.
30. 0:52>> So where we are now is this crossroads
31. 0:54of
32. 0:56we have solid relationships with five of
33. 0:59the seven whales that could possibly
34. 1:01exist in Texas. And the whales being the
35. 1:02law firms that ask the judge to appoint
36. 1:05a receiver.
37. 1:05>> Mhm.
38. 1:06>> We have relation like I said locked down
39. 1:08relationships with five out of the
40. 1:09seven. There's two that we will choose
41. 1:11not to serve.
42. 1:12>> Yeah.
43. 1:13Dicks.
44. 1:13>> So we we just don't align.
45. 1:16>> Yeah.
46. 1:16>> [laughter]
47. 1:16>> Our values conflict yet.
48. 1:18>> So we're kind of at this crossroads of
49. 1:22do we go to another state?
50. 1:25>> Mhm.
51. 1:27>> Or as kind of came from yesterday's
52. 1:29discussions, perhaps I go out and do
53. 1:32some whale hunting and bring some new
54. 1:34whales into Texas.
55. 1:35And so
56. 1:36meaning find other national big high
57. 1:39volume law firms that choose not to do
58. 1:41business in Texas because Texas is a
59. 1:43tough state to
60. 1:45practice in.
61. 1:47And so it's really that fork in the road
62. 1:48of what makes more sense. We're a single
63. 1:51business building operation outside of
64. 1:54Dallas.
65. 1:54>> Mhm.
66. 1:55>> We cover the entire state
67. 1:56>> Mhm.
68. 1:57>> with our our building. So, we have a
69. 1:59massive efficiencies.
70. 2:00>> Yeah.
71. 2:01>> We are tight. I have a rockstar team.
72. 2:03Three of them there up front on the
73. 2:04front row.
74. 2:06Versus going into uncharted waters.
75. 2:10>> Yeah.
76. 2:10>> And saying, "All right. Well, we did it
77. 2:11in Texas. We can do it in Oklahoma."
78. 2:14>> What prevents you from doing Oklahoma?
79. 2:16>> It's never been done.
80. 2:18>> Okay.
81. 2:18>> There there would have to be a tweak to
82. 2:20the the law. The legislation might need
83. 2:22to pass. So, there's a 2-year journey to
84. 2:24pass the law to make it more available.
85. 2:26>> Okay.
86. 2:27>> But, the good news is the
87. 2:30you know, one of the particular wells we
88. 2:31have in Texas is saying, "Hey, come to
89. 2:33Oklahoma.
90. 2:33>> Mhm.
91. 2:34>> We're already here.
92. 2:35We need this remedy here."
93. 2:36>> Yeah.
94. 2:37>> But, my natural inclination based on
95. 2:39efficiencies and processes and systems
96. 2:41that are in place is, "We'll figure out
97. 2:43how to do what you're doing here
98. 2:45bigger." And so, I'm kind of in that
99. 2:47fork.
100. 2:47>> Yeah.
101. 2:48>> Which mountain is worth climbing?
102. 2:50>> What's a great I was you even used the
103. 2:51analogy I was going to I was going to
104. 2:53use.
105. 2:54Um
106. 2:55So, the good news is that
107. 2:57both ways will get you up the mountain.
108. 2:58And I think one of the things that I
109. 3:00used to get I'd lose too much sleep over
110. 3:01was obsessing over which path when both
111. 3:04of them lead you up. So, then I I I
112. 3:06would end up deliberating for way longer
113. 3:07than I should have
114. 3:08because I wanted to find the perfect
115. 3:10path rather than just knowing both of
116. 3:11them will take me up. Um and so, that's
117. 3:13allowed me to take make big decisions
118. 3:15faster just as a overarching frame.
119. 3:17Um the second thing with regards to the
120. 3:20actual decision. So, when I think about
121. 3:22something like this, I think, "Okay. W-
122. 3:24How do I How do I maximize the
123. 3:25risk-adjusted return on on on this on
124. 3:27this move, right?" And so, we have
125. 3:30if I call a whale up, so you have five
126. 3:33whales that you like. Are there any
127. 3:34other whales that you like that are not
128. 3:36those five that you have relationships
129. 3:37with?
130. 3:38>> Not in Texas. But, the idea is there are
131. 3:40you know, there there's firms out there
132. 3:42that do eight states. They just don't do
133. 3:44Texas. And so,
134. 3:46not a lot of cost into pursuing, "Hey,
135. 3:48let me encourage you. Let me tell you
136. 3:49what Texas can hold for you." And try to
137. 3:51get them to come to us.
138. 3:55>> Is there and you would know this. Um are
139. 3:58there laws that prevent you from kind of
140. 4:00doing a joint venture or something like
141. 4:02that with
142. 4:03uh
143. 4:04a whale firm so that the two of you is
144. 4:06an exclusive?
145. 4:07>> It is critically important that I am
146. 4:09independent.
147. 4:10>> Okay. Yeah, yeah. Heard. Um
148. 4:13Yeah, cuz otherwise I would have been
149. 4:14like you could put a very big, you know,
150. 4:15check on the table for them to get
151. 4:17there. Which I guess you could still do,
152. 4:19but you would have to have no agreement
153. 4:21like they could just take the money
154. 4:22obviously and then not send it to you.
155. 4:24They probably still would, but as as a
156. 4:26as a risk consideration um
157. 4:29the thing I don't like about that one,
158. 4:30my big hang-up which might be yours, is
159. 4:33I just don't want the growth of my
160. 4:34business
161. 4:35relying on somebody else opening their
162. 4:37business and doing a good job.
163. 4:39Uh whereas I'd rather go where the fish
164. 4:41already are. So, if Oklahoma has a
165. 4:432-year delay, I mean that is a pain in
166. 4:45the ass, but are there other states that
167. 4:47don't have a 2-year delay?
168. 4:50>> That's just the most logical first step.
169. 4:52>> Because the one way that's already
170. 4:53there.
171. 4:53>> Geographic. I mean it's literally
172. 4:55>> Sure.
173. 4:55>> hour north.
174. 4:56>> Yeah.
175. 4:56>> And we already have a relationship with
176. 4:58the Texas whale that is in Oklahoma
177. 5:00saying please come here also.
178. 5:02>> How much business does that represent
179. 5:03though?
180. 5:04>> That's the big question is um it's
181. 5:07unknown.
182. 5:08>> Cuz you're doing Texas and you're at 15,
183. 5:10right? Oklahoma's way smaller by, you
184. 5:13know, head count than Texas and this is
185. 5:15one of five. So, it's like if we had 1/5
186. 5:17current revenue, you know, you're at
187. 5:19three and that's of Texas slice of pie.
188. 5:23Now, whatever the Oklahoma slice of pie
189. 5:25goes from three to
190. 5:27less than three.
191. 5:29>> Exactly.
192. 5:29>> And like to me I'm like I don't know if
193. 5:31I
194. 5:32care.
195. 5:34>> You you nailed it. That's really a big
196. 5:36piece of it is you know, the growth
197. 5:38piece of
198. 5:40great, we can take on another state. And
199. 5:41of course Texas can lead to Colorado and
200. 5:43Colorado can lead
201. 5:45but you're talking about all right, you
202. 5:47just added 10 more percent revenue.
203. 5:49>> Yeah, incremental for sure.
204. 5:50>> But now you have something else dragging
205. 5:52and and on your brain at night at 3:00
206. 5:54in the morning, you know?
207. 5:56>> Yeah, I'm with you. So, then what stops
208. 5:58you from going to New York?
209. 6:00Hypothetically. Like if you if you
210. 6:02operate remotely fundamentally within
211. 6:04the business, like what why does if if
212. 6:06it's another state is another state is
213. 6:07another state, do you need to be local
214. 6:10in order to do it?
215. 6:10>> Some of it has to do with the laws that
216. 6:11are in place. You know,
217. 6:13this remedy that is a Texas law-based
218. 6:15remedy makes sense in Texas because
219. 6:17Texas protects wages. You can't do wage
220. 6:20garnishment. It protects your homestead.
221. 6:22We can't force you to sell your house.
222. 6:24It it has a lot you know, it's it's
223. 6:26considered of the second toughest state
224. 6:27in the nation to recover unpaid debt in
225. 6:30or judgments in. So, we come in as a
226. 6:33tool that works. And and so there would
227. 6:37be just a handful I I would estimate
228. 6:38three to four states where this would
229. 6:40make sense.
230. 6:41>> Okay.
231. 6:42>> It's a matter of is the view worth the
232. 6:44climb? Is adding 10, 15% more top line
233. 6:48revenue worth taking my brain, my
234. 6:50overthinking brain
235. 6:51>> Yeah.
236. 6:52>> to
237. 6:53>> Oklahoma.
238. 6:54>> I would say um this will actually be
239. 6:56fun. I'm going to do this cuz it'll
240. 6:57apply to probably half the room. Um
241. 6:59because this is a really cool
242. 7:01fundamental um decision.
243. 7:03So, uh
244. 7:05bear with me. This will be a little bit
245. 7:06longer, but you'll hopefully like it. If
246. 7:08you don't, [snorts]
247. 7:09don't tell me.
248. 7:11Uh
249. 7:11So, let's say that this line represents
250. 7:13normal revenue of the business.
251. 7:15In my experience, I've I've noticed that
252. 7:18I get a 20% decrement or decrease in
253. 7:19performance whenever I change anything
254. 7:21about the business uh before any kind of
255. 7:24gains can then get accrued from whatever
256. 7:26that change was supposed to bring.
257. 7:28And so, I see this as my guaranteed cost
258. 7:31of change no matter what that I have to
259. 7:32pay. And so, what's ended up happening
260. 7:34after observing this over and over over
261. 7:36again is that number one, if I'm going
262. 7:38to take a guaranteed 20% cost, then I'm
263. 7:41not going to take a potential for a 20%
264. 7:43gain on a guaranteed 20% cost. And so
265. 7:46for me to take a 20% dip, it's like I
266. 7:48need to see 50, maybe a double uh in the
267. 7:52business for me to be like, "Okay, this
268. 7:53is worth it." And so what ends up
269. 7:55happening is that I think this can I'm
270. 7:57speaking to everybody now, but um
271. 7:59you get out of this constant desire to
272. 8:01tweak everything in your business and
273. 8:02drive your employees insane uh because
274. 8:05you're always have a new idea every week
275. 8:06and they're like, "Well, we just did
276. 8:08this other one." Because what ends up
277. 8:09happening is you're like, "Well, this
278. 8:11thing is going to net Well, you're like,
279. 8:12okay, well, what if this does net me 20?
280. 8:14I should still do it, right?" Okay,
281. 8:15sure, let's play that out. But the thing
282. 8:17is is that this week you're going to
283. 8:18think of something else.
284. 8:21You're going to have another 20%. And so
285. 8:22people actually have like persistently
286. 8:25far below ex- um potential businesses
287. 8:27that are operating way below what they
288. 8:29should be because we just constantly are
289. 8:30changing [ __ ] And so
290. 8:33to ladder back to what we were talking
291. 8:34about, um
292. 8:36>> [sighs]
293. 8:36>> my question would be, what state can
294. 8:39generate the same amount of revenue as
295. 8:41Texas?
296. 8:43>> None.
297. 8:43>> None. Okay.
298. 8:46Then I think that it So So then you just
299. 8:49need to
300. 8:51you have to grow the pie of Texas. So
301. 8:53you have two two growth paths, right?
302. 8:55You go from 40 or 50% where you're at
303. 8:56now to 70, 80%. So it's like what
304. 8:59monopolistic
305. 9:01levers can we employ so that like we can
306. 9:04starve everyone else out, which then
307. 9:06just increases the value of the business
308. 9:07a ton, which is awesome. Um
309. 9:09and so there's
310. 9:11share of pie and growing pie of Texas.
311. 9:14And if none of the other states really
312. 9:16make this feasible,
313. 9:19then I think that probably answers that.
314. 9:22At least in the short term. So I don't
315. 9:24love the I have to get other people here
316. 9:27um
317. 9:28as my growth path. And so it's like
318. 9:30number one, the thing that requires the
319. 9:32least amount is increase percentage of
320. 9:35pie.
321. 9:36Number two would be increase pie
322. 9:39percentage or sorry
323. 9:41pie percentage and then number three if
324. 9:43I've done both of these things well
325. 9:45enough then that might already be I mean
326. 9:47for sure getting your 20 but then it's
327. 9:49like okay I'm going to look at New York
328. 9:51I'm going to look at some of these other
329. 9:52other states that might have opportunity
330. 9:54that's still not as good as Texas but I
331. 9:55have truly tapped this.
332. 9:57Um and that's probably the order of
333. 9:59operations I would do it on so then
334. 10:01solving for the constraint of okay why
335. 10:03do these other 50% why are they allowed
336. 10:05to breathe?
337. 10:06Um and then how do I take the oxygen out
338. 10:09of the room would probably be my
339. 10:10approach if I were swapping places.
340. 10:14>> Love it.
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