Why Another Business Model Won't Solve This Constraint — Transcript

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1. 0:00Hey, Alex. [snorts]
2. 0:01>> What's up?
3. 0:02>> Um
4. 0:02>> You look warm.
5. 0:03>> I This is fleece-lined. Mistakes were
6. 0:05made. I saw
7. 0:06>> You were saying [laughter] that
8. 0:07I regret this for you.
9. 0:10>> Um my name's Andrew Wade. I run a
10. 0:12dietitian consulting and wellness
11. 0:14services company.
12. 0:15Um mostly regionally located in
13. 0:17Pennsylvania. We did 3.5 million in
14. 0:20>> How many locations?
15. 0:21>> Uh 10.
16. 0:22>> Okay.
17. 0:22>> Awesome.
18. 0:23>> And we have 30 dietitians across those
19. 0:24and we'll be adding more.
20. 0:26>> Super cool.
21. 0:27>> We did 3.5 million in revenue in 2025.
22. 0:30We've had consistent 35 to 50%
23. 0:32year-over-year growth for the last 3
24. 0:33years.
25. 0:34>> Word of mouth or ads or what?
26. 0:36>> Um dominantly provider network.
27. 0:38>> Okay, got it. Insurance side of things.
28. 0:40>> Yeah, I mean, we get about 400 referrals
29. 0:42a month from just the 18 ancillary
30. 0:44practitioners we work alongside. We have
31. 0:46strong SEO locally and then we
32. 0:48um have built a local brand presence,
33. 0:50podcast, content. We give a lot of free
34. 0:52[ __ ] away in the local region. So,
35. 0:54>> Great.
36. 0:55>> um I'd like to be at 10 million in
37. 0:57revenue. I definitely have those visions
38. 0:58of 100 million-dollar models. And I
39. 1:01think the thing that I struggle with is
40. 1:03I get so excited about the different
41. 1:05models that I struggle to say no to the
42. 1:07right things and say yes to the right
43. 1:09things.
44. 1:10>> Uh-huh.
45. 1:10>> And so, you know, franchising models,
46. 1:12licensing models. And I feel like a way
47. 1:14to The way I like to think about it is
48. 1:16we spent about 2 years ago when I really
49. 1:18started digging into your content, you
50. 1:20guys asked a really good question, which
51. 1:21is if you doubled your referrals
52. 1:22tomorrow, what would break? And the
53. 1:24answer was [ __ ] everything across
54. 1:26front, middle, back. We went to work
55. 1:27operationally. I spent the last 2 years
56. 1:29in the trenches and we've now fixed that
57. 1:30problem. So, now we get to go out and
58. 1:32say, "Hey, let's go double our
59. 1:33referrals." which
60. 1:34>> Okay.
61. 1:35>> Um but I def- definitely have had a
62. 1:37tendency to dabble and say yes to all
63. 1:39the adjacent things. Like, "Oh, it makes
64. 1:41sense to have a gym alongside it because
65. 1:43they can work with the trainers next
66. 1:44door." And "Oh, if I want to do more
67. 1:46outside of regions, should I license to
68. 1:48other dietitians that are passionate or
69. 1:49franchise?" And so, I start to see all
70. 1:51of these models and then I spread myself
71. 1:53thin, my team thin. And so, I My
72. 1:55ultimate question for you is is there a
73. 1:57framework you utilize to be more
74. 2:00decisive in your yeses and no's?
75. 2:02>> Yeah, what do you think
76. 2:05outside of the framework? What do you
77. 2:06think I'm going to tell you to do?
78. 2:08>> Slow down and do what I'm doing well
79. 2:10even better.
80. 2:11>> Yeah, yeah, sounds like a [laughter]
81. 2:13good
82. 2:13great plan.
83. 2:14>> Yeah, that's I I think one of the things
84. 2:16I'll notice that in my industry it's
85. 2:18being heavily funded right now for the
86. 2:19first time. So, I've run this practice
87. 2:21for 12 years and dietitians in private
88. 2:24practice was not a thing a decade ago.
89. 2:26And so, I had kind of this early thing,
90. 2:28built something cool. And in our current
91. 2:30setup, if you look across the nation
92. 2:31there's a bunch of small 100K to
93. 2:33million-dollar private practices, then
94. 2:35there's our group, and then there's a
95. 2:37bunch of 100 million-dollar venture
96. 2:39capital funded groups that are doing
97. 2:40virtual crazy scale. And so, I start
98. 2:43looking at how can we scale faster? And
99. 2:45I I gave an analogy, Ed really helped
100. 2:47with this, too, is I feel like I just
101. 2:48spent a bunch of time making our
102. 2:50escalator like really really awesome.
103. 2:52>> And there's an elevator. And there's a
104. 2:53bunch of elevators. And so, I'm trying
105. 2:54to decide do I just need to keep being a
106. 2:56better escalator or should I pivot hard
107. 2:58and be an elevator?
108. 2:59>> Yeah.
109. 2:59Um So, a couple things. So, as much as I
110. 3:02would just be like, just do more, which,
111. 3:04you know, not a bad play. [snorts]
112. 3:06Um
113. 3:07This is a grass is greener, so you can
114. 3:08use yours, but it also works the same
115. 3:10way.
116. 3:11Um
117. 3:12It actually So, to me this is this, by
118. 3:14the way.
119. 3:14>> Yes.
120. 3:15>> Um
121. 3:17What
122. 3:18What do you want to have happen?
123. 3:21>> I want to So, big vision, human
124. 3:24flourishing. I was Yeah, I was going to
125. 3:26say zoom in, money. Money. Yeah, 100
126. 3:29million would be the the ultimate
127. 3:30>> Exit or revenue?
128. 3:31>> Um revenue.
129. 3:32>> Okay.
130. 3:34Um
131. 3:34>> [sighs and gasps]
132. 3:35>> 10 million in 3 years, but long-term,
133. 3:37like when I think 7-year plan, yeah.
134. 3:39>> Well, 10 is the one that you can see, so
135. 3:41we can think about that.
136. 3:42>> I kind of feel like I'm getting clear on
137. 3:44how to get there, yeah.
138. 3:45>> Yeah.
139. 3:49So, uh Keith Cunningham has a really
140. 3:51good thought process for this, which is
141. 3:53what's the upside number one, what's the
142. 3:55downside,
143. 3:57and can I live with the downside?
144. 3:58>> Ooh.
145. 4:00>> And if the downside is not livable, then
146. 4:02you just don't do it.
147. 4:04>> Okay.
148. 4:05>> And so if the downside is
149. 4:08I mean, you could ask a fourth question,
150. 4:09which is how likely is it, and then can
151. 4:11I live with the downside? But um I think
152. 4:13that that that kind of gets to the heart
153. 4:14of the issue.
154. 4:15>> I would agree.
155. 4:16>> Um which is like, have you done anything
156. 4:18virtual before? Not that you can't
157. 4:19figure it out, but do you?
158. 4:21>> 60% of our clients are virtual.
159. 4:23>> Okay. Then let's just say
160. 4:24hypothetically, what stops you from
161. 4:25doing lots of virtual right now?
162. 4:27>> So we've scaled that. There's massive
163. 4:30licensure variance in our insurance
164. 4:31reimbursed product. 700 insurance
165. 4:34companies, they're all different, being
166. 4:35licensed in certain states. So there's
167. 4:37the difficulty of that patchwork quilt,
168. 4:39we'll call it. But to be fair, we've
169. 4:41worked really hard to get to a place
170. 4:42where we can definitely do more virtual
171. 4:44in more states and scale that. The only
172. 4:47other component, that's what a lot of
173. 4:48those VC-backed groups are is they're
174. 4:50virtual only. Their quality sucks,
175. 4:52client engagement, client retention, um
176. 4:55that
177. 4:56you know, what we'll call like in the
178. 4:57community part, that's where none of
179. 5:00them have doctors and therapists and
180. 5:01physical therapists.
181. 5:02>> How do you know that their metrics suck?
182. 5:05>> Um I've been offered acquisition offers
183. 5:07by two of them because they want our
184. 5:09quality and can't figure out how to do
185. 5:10it at scale.
186. 5:11So I've been kind of that like one
187. 5:13little shiny version of quality in a
188. 5:15industry that's going quantity.
189. 5:16>> But are there ones that are doing it
190. 5:19with the good metrics?
191. 5:20>> Not yet. This is all it's all of these
192. 5:23groups are within 2 years. It's super
193. 5:25new in my industry, which is pretty
194. 5:26wild. And dietetics is a fairly low, you
195. 5:29know, insurance rates are 150 an hour,
196. 5:31whatever you want to call it. And
197. 5:32they're pretty set and they're pretty
198. 5:33straightforward. So by the time you pay
199. 5:35the dietitian, the admin team, the
200. 5:37marketing team, the VC group's not uh
201. 5:39not getting a huge hunk, you know.
202. 5:41>> Mhm.
203. 5:42>> [sighs and gasps]
204. 5:48>> I mean
205. 5:51it's a hard decision to make
206. 5:53because it really I mean this is a risk
207. 5:55tolerance thing. So
208. 5:58said differently, can your existing
209. 6:00vehicle get you a hundred million? Yes.
210. 6:03Will it probably take 15 years?
211. 6:0610 to 15.
212. 6:07>> Yeah.
213. 6:07>> Yes.
214. 6:08Are you okay with that?
215. 6:11>> That's the more important
216. 6:12>> Are you okay with that?
217. 6:14>> Mhm.
218. 6:15That feels long. I think my my in my
219. 6:17brain I'm doing other things in 10
220. 6:19years.
221. 6:20>> Okay.
222. 6:22Play the other side out.
223. 6:24If you hard pivot and then this business
224. 6:26goes to not profitable
225. 6:29and the virtual thing doesn't work as
226. 6:32easy as it was because all of these
227. 6:34smart people with lots of money haven't
228. 6:36figured it out. And so I like to assume
229. 6:38that my competitors are not morons.
230. 6:40>> Yeah.
231. 6:40>> And especially if they're well-funded
232. 6:42with smart teams.
233. 6:43>> Yeah.
234. 6:43>> This might also be one of those maybe
235. 6:46your competitors actually have a shitty
236. 6:47business.
237. 6:48>> Yeah.
238. 6:49It's felt like it's flashy funding
239. 6:51that's going to bust in the next year or
240. 6:52two.
241. 6:52>> Maybe.
242. 6:53>> That's within my team I've had a mantra
243. 6:54which is when they go quantity we go
244. 6:56quality. So we double down on community
245. 6:58endeavor and you know, quality of
246. 6:59service, labs, all that good stuff. Uh
247. 7:02but again it's it has it just it there's
248. 7:03that pull to you're not helping enough
249. 7:06people, you're not doing enough, do
250. 7:07more, go bigger.
251. 7:08>> Mhm.
252. 7:09>> Are you are you swinging hard enough?
253. 7:11And then that's where I start to go well
254. 7:12maybe I'll launch Case Specific
255. 7:14University to help train dietitians
256. 7:16nationally and then you know, like my
257. 7:17brain just starts to come up with these
258. 7:19like extra projects and then I find
259. 7:20myself splitting my time across things
260. 7:23that I shouldn't be splitting my my time
261. 7:24across.
262. 7:25>> Yeah. So
263. 7:30you think 10 years is too long?
264. 7:32Right? So then I guess the next question
265. 7:35is is there a way that we can make this
266. 7:36existing vehicle faster? So how can we
267. 7:38do more?
268. 7:40And so there are ways that you can do
269. 7:41more with within this existing vehicle,
270. 7:43which is probably more of an M&A route.
271. 7:45>> Mhm. Yeah.
272. 7:46>> Realistically. And so,
273. 7:49the question is, if you were to able to
274. 7:50go into an existing practice, how
275. 7:52quickly would it How long would it take
276. 7:53you to turn the practice into your
277. 7:55metrics?
278. 7:57>> It would take somewhere in the around a
279. 7:59year based on what we've done. I do some
280. 8:01mentoring, we've done some sampling of
281. 8:02that.
282. 8:03>> But, your team can't do that. It's still
283. 8:04you.
284. 8:04>> Uh my team No, my sorry, it's myself and
285. 8:07my team. We We kind of have all
286. 8:08integrated within. Yeah.
287. 8:09>> So, there's no way for you to buy like
288. 8:10five of these or anything like that.
289. 8:12>> Oh, we haven't thought about actually,
290. 8:14like you said, actually acquiring
291. 8:15smaller practices.
292. 8:16>> Yeah.
293. 8:16>> That's what I I thought I thought you
294. 8:18were saying.
295. 8:18>> go to an existing one that's
296. 8:19everything's stood up.
297. 8:20>> Yeah.
298. 8:21>> They already have a team. They have some
299. 8:22clientele. How long does it take you to
300. 8:23just make it do Make them do it your
301. 8:25way?
302. 8:25>> Oh, that would be within 6 months.
303. 8:28>> Okay. That's a little faster.
304. 8:29>> yeah.
305. 8:30>> And so,
306. 8:31>> that's kind of the vision of the
307. 8:32licensing. So, just as a reference is I
308. 8:35built this internal portal case specific
309. 8:37RPN, and now it's a CRM.
310. 8:39>> I'm going to go so deep on this with him
311. 8:40real quick, cuz I think it'll apply to
312. 8:42like literally half of you. So,
313. 8:44let me let me walk you through why the
314. 8:45franchise isn't a good idea.
315. 8:47All right?
316. 8:47>> Perfect.
317. 8:48>> So,
318. 8:49number one, this is not a
319. 8:50capital-intensive business, right? And
320. 8:52so, typically, if you don't have The
321. 8:54point of franchising is the capital
322. 8:56component. That's use It's the most
323. 8:57expensive form of capital that you can
324. 8:58get You're giving literally almost all
325. 9:00the business away, and you're getting a
326. 9:01royalty. So, uh what's each location do
327. 9:04in revenue?
328. 9:04>> About 500K. 350 to 500, depending on
329. 9:07where the office
330. 9:08>> just use five Let's use both cases, all
331. 9:09right? So, 500K is what each location
332. 9:11does. And you guys can
333. 9:16>> [laughter]
334. 9:17>> You guys can follow along with your own
335. 9:19metrics. So, 500K, right? Top line.
336. 9:22What's uh What's bottom line?
337. 9:24>> Like 350.
338. 9:26Oh, you mean sorry, like what's the
339. 9:27>> like, [ __ ] it. What are we talking
340. 9:28about?
341. 9:29>> [laughter]
342. 9:30>> Do that, man. Shut up.
343. 9:31>> Sorry.
344. 9:33No, we've got about a 15% margin, so
345. 9:35it's going to be like 425.
346. 9:38>> Profit.
347. 9:39>> Oh, so profit on 500 would be like 75.
348. 9:42>> Okay, got it. Okay, thank you.
349. 9:43>> Yeah.
350. 9:45>> All right, now I can see why you why you
351. 9:46have a little bit of frustration. You're
352. 9:47good. Okay, so we're making $75,000 per
353. 9:50If you were to do the licensing model,
354. 9:51what percentage top line would you be
355. 9:52taking?
356. 9:53>> Somewhere between 6 and 8% probably.
357. 9:55>> Okay.
358. 9:57Um
359. 9:59You know,
360. 10:00that as it I mean this Okay, so when I
361. 10:02look at that, it's cuz your margins are
362. 10:04dog [ __ ] Um
363. 10:09if you could take half the margin in a
364. 10:11licensing fee,
365. 10:14they're not going to do as well as you,
366. 10:15but you're going to take it off top
367. 10:16line.
368. 10:16>> Yeah.
369. 10:19>> It's not terrible.
370. 10:20>> It would have And it would allow me to
371. 10:21cross state lines, which is to say meet
372. 10:23that other passionate person that's in
373. 10:25their community.
374. 10:25>> Yeah, so I like this. So I like this.
375. 10:27So I would probably look at Now mind
376. 10:30you, this is the
377. 10:33This is under this premise.
378. 10:35>> Yeah.
379. 10:35>> I am not willing to wait as long as it
380. 10:37is for me to privately own all of these.
381. 10:39My neighbor,
382. 10:41>> [snorts]
383. 10:42>> Mr. Panda,
384. 10:443.7 billion top line,
385. 10:4627% net margin selling chicken, Kung
386. 10:49Pao, General Tso's, the whole thing.
387. 10:52Sweet and sour pineapple for those of
388. 10:54you who know what I'm talking about. Uh
389. 10:56and he's been he's been selling chicken
390. 10:58for 45 years.
391. 11:00>> Yeah.
392. 11:01>> And he did it one location at a time.
393. 11:03And so
394. 11:05you might not see yourself in 10 years
395. 11:07doing it because you think about this
396. 11:09times 10.
397. 11:11But if in 10 years you were doing 40
398. 11:13million a year,
399. 11:15your life's different, dude.
400. 11:16>> That's what I said.
401. 11:17>> Because here's Here's the reality as
402. 11:19business scales.
403. 11:21Your life
404. 11:22at the most at the pinnacle of success
405. 11:24in every business is the same.
406. 11:27You'll have a head of sales, you'll have
407. 11:28a head of marketing, you'll have a head
408. 11:29of product and you know, CS, you'll have
409. 11:31a head of IT, you'll have head of legal.
410. 11:34Um
411. 11:34you'll have some sort of AR AP because
412. 11:36you're in the insurance world, right?
413. 11:37Some finance.
414. 11:39Whether you sell widgets, back massages,
415. 11:41or motorcycles.
416. 11:42>> Yeah.
417. 11:43>> It's going to be the same thing. And so,
418. 11:44everyone feels like their business is
419. 11:45really unique, but the higher up you go,
420. 11:47it's the same [ __ ]
421. 11:48And you're going to be dealing with
422. 11:49seven to 10 personalities every day that
423. 11:51you got to manage. So, really changing
424. 11:53your life is managing those seven to 10
425. 11:55people and making sure that they're ones
426. 11:57that you like.
427. 11:58>> Yeah.
428. 11:59>> And so, like the key to longevity is
429. 12:00fixing those and then making sure that
430. 12:02the business model sustains and that you
431. 12:04feel good about it in terms of helping
432. 12:05people, which I think you do have that
433. 12:07part.
434. 12:07>> Yeah.
435. 12:07>> And so, maybe the biggest gift that I
436. 12:09can give you is that there is nothing on
437. 12:11the other side of this this rainbow.
438. 12:13It's Suzanne Shiflett, who was my CFO
439. 12:15back in the day, said um
440. 12:18"The grass is always green on the other
441. 12:19side because it's fertilized with shit."
442. 12:22And so, there's just there's bodies
443. 12:24there that are buried that you don't
444. 12:25know about. Like the fact that none of
445. 12:27these other guys who have unlimited
446. 12:28money and probably a lot of talented
447. 12:30people haven't profitable, not to say
448. 12:32that you can't,
449. 12:33but I'm like, is that the bet I want to
450. 12:34make when I already have something
451. 12:35that's that's good and decent right now?
452. 12:37If I were you, I'd be looking at these
453. 12:40core economics and see what I could take
454. 12:42off from the bottom line in terms of
455. 12:43COGS. Like what things can I can I build
456. 12:46so I can drive efficiency in this
457. 12:47business because in the insurance
458. 12:48business you can control price.
459. 12:50And so, you have to control efficiency.
460. 12:51That's how you win from the bottom up
461. 12:52rather than top down.
462. 12:53>> Yep.
463. 12:54>> And so,
464. 12:55that's where I would look at this cuz
465. 12:56even if we can take this from like 75,
466. 12:58if we can improve the margin by like
467. 13:0010%, it's a whatever the math is there.
468. 13:03A 67% improvement in bottom line.
469. 13:05>> Yeah.
470. 13:05>> That's like you opening six more
471. 13:06locations and you can probably do that
472. 13:08in six months.
473. 13:08>> And that's actually what we've been
474. 13:09building out internally. This is a
475. 13:11>> So, it's like we do that and then then
476. 13:14there's the decision of like, okay, what
477. 13:16few things do I hate that I can get
478. 13:17smart people in that I just made the
479. 13:19cash flow to cover? And then all of a
480. 13:20sudden I have an asset that then
481. 13:22continues to grow. And at that point,
482. 13:24you might have some bandwidth to start,
483. 13:27if it continues to grow without you,
484. 13:29then you can start a licensing thing
485. 13:30that you can get your entrepreneurial
486. 13:31chops on. But that's once this thing
487. 13:32continues to grow and open locations
488. 13:34with an opening team that continues to
489. 13:36grow. So, that is my litmus test for
490. 13:37you. I will give you my absolute stamp
491. 13:39of approval to go to the licensing model
492. 13:41and take, you know, 6 to 8% of top line
493. 13:43once
494. 13:44new locations, so like let's you can
495. 13:46open up a location per quarter with a
496. 13:48team that's not you, that you're not
497. 13:50involved in at all.
498. 13:50>> Beautiful.
499. 13:51>> But what will happen is that when that
500. 13:52happens, you won't give a [ __ ] anymore.
501. 13:54>> That order of operations is perfect.
502. 13:55Thank you.
503. 13:56>> If you like this video and you're a
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