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"Why Can't I Hire Anyone Good?" | 1 Hour on Building a Team — Transcript

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0:00A lot of people are like, "Can I have
0:01equity?" Right? The thing is is like
0:03they ask that, but they just because
0:04they don't know how to ask, which is
0:05like, "I can't even give you equity
0:07because then we'd have to value the
0:08company and then you'd have to pay taxes
0:09on something you didn't receive money
0:10for." So, you probably don't want that.
0:12And so, what you really want is there's
0:14four things that are involved in equity.
0:17There's risk,
0:19there's decision-making power, control,
0:21right?
0:24there's profit sharing
0:27and then there's equity value or sale
0:30value, right?
0:34And so when you point this out, it's
0:35like, hey, so um how much risk do you
0:37want to take on? Like if we lose money,
0:38do you want to lose some? And they're
0:39like, oh no, I'm I'm good. You're like,
0:40okay, so you don't want any of that?
0:41Okay, fantastic. Um I'm not going to
0:43give you control of the company, so
0:45we're good on that. So what it sounds
0:47like is you really want some profits.
0:49You want to be able to participate in
0:50cash flow, and if we sell, you get some
0:52of that. That sound right? Great. So,
0:53why don't we just solve for that? Right.
0:54And so, in the US, are you an LLC or you
0:57see court? Okay. Well, either way,
0:58there's structures for either, but if
0:59you're an LLC, um it's called a profit's
1:02interest,
1:04which sounds weird, but um which is not
1:07a profit share. It's called a profit's
1:09interest, which is actually um an analog
1:15for uh the equity value, but it
1:18basically is structured as a sale bonus.
1:20So if we sell, you'll get a bonus equal
1:23to this percentage of the company that
1:25you have at the point of sale. So you're
1:28going to get 0.25% per year up to 1%.
1:30And then after that, the whole goal is
1:31to grow the company. So your 1% is worth
1:33more. But the thing is is that for the
1:35sales guys, they're like, I have equity.
1:37And so that's a huge huge point uh for
1:40those guys. But if they if you do let
1:41them go, it comes back to the pool. So
1:44it's only if we sell and you're working
1:45for us that you get the get the spiff.
1:49You can have it also be that they get
1:51profit share equal to their profits
1:53interest which would mean they get 1% of
1:55profits on top.
1:56>> We both have to mutually agree to let
1:59that go for the full term of whatever
2:00the contract is.
2:01>> What do you mean?
2:03>> Like if they're
2:05um
2:07lowering the culture and doing things
2:10unethically.
2:10>> No. If you let them go, the profits
2:12interest comes right back to you. They
2:13don't they don't walk with your company.
2:15>> That's the difference. If you if you
2:17give equity, which you can't do anyways,
2:20uh doesn't like inheritance and gift
2:22bonuses, whatever. You can't give people
2:24equity. They have to buy equity. So,
2:25they would have to write a check to you
2:26to get equity in the company or you can
2:28give it to them and then they pay taxes
2:30on the thing they just received for
2:31free. Either way, they got they got to
2:33write a check, right? And so, since
2:36we're not doing that because they
2:36probably don't want to write a check,
2:38it's like this gives you all the stuff
2:39you want. The only downside of this,
2:41there's two downsides. The upside is
2:43they don't have to pay, which is pretty
2:45significant. Um the downside um is that
2:49it's ordinary income at the time of sale
2:52rather than a capital gain. So they're
2:53going to get taxed at 37 rather than 20.
2:55So that's one. Um and the other downside
2:58is that if you let them go, they don't
3:01have it anymore.
3:03That's the deal.
3:05>> So but why would you let them go as long
3:07as you crush And what they would
3:08negotiate if they were smart would be
3:10what kind of tail is on because like you
3:12don't want to fire fire me right before
3:14the deal closes so you don't pay me my
3:151%. Now people have this fear but it's
3:19not realistic at all because like if
3:20somebody's going to be buying it if you
3:22[ __ ] fire all your sales leaders
3:23that's everyone is trainable and this is
3:25my perspective on life which is one of
3:26the I'll call it the difficulties of my
3:28worldview is that I genuinely believe
3:30anyone can learn to do anything. I do
3:32however also maintain the belief that it
3:34is not worth it for me to do that.
3:38So I believe that somebody who's
3:40incredibly dumb can with enough training
3:45and enough effort become a surgeon. I
3:48really believe that. However, I do not
3:52think it is worth my time to do that.
3:54And this is basic because in school
3:57there are requisites. There are
3:58requirements. You have to pass the first
4:00grade to get to the second grade. Right?
4:02And so it's not that they're good or bad
4:04whether they like is a teacher bad for
4:05failing a student. No, you don't meet
4:08the requirements. It would be unkind,
4:10not nice. It'd be unkind to move them on
4:12because they're not ready. It doesn't
4:14put them in a in in a position to
4:15succeed long term. So I think if you
4:18care like to to use words that you might
4:20enjoy better, if you truly care about
4:22the person, then you have to allow them
4:24the moment of momentary feedback from
4:26reality that they are not good enough
4:28because otherwise you're saying that
4:29they're too weak. you're emasculating if
4:32it's a guy emasculating the person.
4:34You're saying you're too weak to handle
4:35the truth
4:37because you're not that good. That said,
4:39here are the behaviors. Here are the
4:41things that you could do to hold the
4:42camera better and I will show you how to
4:44do it. If the requirement of the job was
4:46they already knew how to hold the
4:48camera, then either you hired someone
4:50who was inept or they lied on the way
4:53in. And if and often times it's in the
4:56middle, which is that you didn't
4:57describe it with enough detail and you
4:58made a guess and maybe the guess was
5:00wrong. And then at that point you have
5:01the decision of whether do I do do I
5:02want to train this person up or do I
5:04want to do I want to buy or build. Do I
5:05want to buy somebody else or do I want
5:06to build this person up? And it's purely
5:08a question of return on resources. And
5:10so when hiring we always want to hire
5:13for the the smallest skill deficiency.
5:15And so often times you probably heard
5:16like do is it attitude or aptitude
5:18right? You hire for attitude fire for
5:19you know you've heard any of these
5:21statements.
5:21>> I'm shaking my head. No.
5:22>> Okay. So if you hire for uh attitude,
5:25it's like hiring for character traits
5:26and like I hire for their heart, right?
5:28Big amorphous words rather than
5:29aptitude, their skills, what they're
5:31good at, right? Hire for attitude.
5:34>> I see all of this as skills just like
5:36basketball.
5:38>> And so if I say, "Hey, I need you to be
5:40more charismatic."
5:41>> If I say that to somebody, let's say a
5:43salesperson that's working for me, I
5:44need you to be more charismatic. He
5:46can't do anything with that.
5:48>> Yeah.
5:48>> Right.
5:49>> Yeah. He either got it or you don't.
5:50>> What does charis what does charisma
5:51mean? I would have to say, I need you to
5:53talk louder and when you walk into a
5:56room, I need you to see everyone and say
5:58their names. And I want you to walk up
6:00to everyone, shake their hands, look at
6:01them in the eyes, and repeat the last
6:02few words they say to you back to them
6:04before stating your next sentence. Okay?
6:06And when they're talking, I need you to
6:08nod your head and uh and when uh nod
6:12their head when when you're talking,
6:13right? So, there's a list of behaviors
6:14that I might say and then be like, "Do
6:16that." And then all of a sudden, people
6:17might describe that guy as warm and
6:19charismatic. And so by by saying that
6:23then I'm making the point that the
6:25character traits that we seek out are
6:26really just behavior sets. Now if
6:29someone just comes in with let's just
6:30say an amalgamation a big bucket of
6:32skills. They have a bucket like skill
6:34number one shake hands. Skill number two
6:35say hello. Being real like breaking it
6:37down to the most basic level. This is
6:38gigantic bucket of skills that they've
6:40learned. We want to hire the person who
6:42has the smallest net skill deficiency.
6:44So, if I'm looking for an AI researcher,
6:47I might be willing to deal with somebody
6:49who doesn't have as much charisma and be
6:51willing to train the small amount of
6:53charisma because the amount it would
6:54take me to train the AI researcher skill
6:58or whatever would be significantly more
7:00than the effort and resource it would
7:01take me to train the charisma and
7:03interpersonal stuff. If I'm hiring a
7:05cashierist at a frozen yogurt shop,
7:07teaching someone to use the cash
7:09register might take five minutes. And
7:11teaching someone to mop the floor maybe
7:12another five. And so I could probably
7:14train that entire person in an hour or
7:16two. And so it makes much more sense for
7:17me to hire for the character traits, the
7:19bucket of skills around social dynamics
7:21and social behavior than it does for me
7:23to hire around oh past experience
7:24working in cash register. And so
7:26fundamentally when we're hiring, we want
7:28to hire for the smallest skilled
7:30efficiency so that they have the highest
7:31likelihood of being able to succeed with
7:32the job and uses up the smallest amount
7:35of resources from the business in order
7:37to get them.
7:38>> Hi Alex, my name is Stephanie Pipkin. I
7:40own Serene Clean. We service residential
7:42and commercial clients in rural western
7:43Wisconsin. We do 1.3 to 1.4 million in
7:47revenue. I would love to be at 2 to 3
7:49million in revenue. What is stopping us
7:51is staffing, turnover, recruiting,
7:54manpower. So,
7:56uh, historically our best staff have
7:59come from the healthcare industry. They
8:00have worked in healthcare in some
8:02flavor. Those are our best techs
8:03interestingly enough. So, whether they
8:05worked in nursing homes or etc. So
8:08knowing that um and we also realized
8:10this week that or this weekend whatever
8:12day it is we
8:14>> do not have a career path for our tech.
8:16So that is something that we want to
8:17unlock for sure. But in general super
8:19rural Wisconsin we're talking 5,000
8:2110,000 town people. So
8:23>> any recommendations for that you use for
8:26>> do you have a churn issue or an
8:27attraction issue?
8:29>> Both.
8:31>> I solve problems back to front.
8:33>> Mhm. So, I'd want to solve the churn
8:34first because if you solve the churn
8:36first in your existing flow, the force
8:38will grow and that might be enough. If
8:40you solve the churn issue and then we
8:42have uh uh and we still have a deficit,
8:45then we can solve the attraction
8:46problem. Um, so
8:51you were in that rural kind of bucket
8:53that I was saying earlier. Um,
8:59being I'm all for having a very clear
9:01avatar like you have with the
9:03hospitality, etc., nursing, whatever.
9:05Um,
9:08I wonder I feel like
9:11that you might be limiting yourself. How
9:15many how many uh texts do you have?
9:16>> Uh, like 25 texts right now.
9:18>> Okay. I feel like you could find other
9:21people out of the 5 to 10,000 people
9:23that are out there who would be able to
9:26clean. Well,
9:26>> we're not marketing to that. It's just
9:28something that I'm aware of of like
9:29should we be marketing to that?
9:31>> I wouldn't. I think you're so like it's
9:33so niched given the size of the market
9:35because I think cuz like in a business
9:37like yours, economics, well, economics
9:39mattered to every business, but in terms
9:40of new talent acquisition,
9:42>> it's not like you can find a cleaning
9:43tech that you can get 10x leverage on,
9:45right? like if an amazing engineer,
9:46amazing marketing, amazing salesperson,
9:48you can pay more for talent when like
9:51you're in very narrow ranges in terms of
9:52what you're able to pay uh based on what
9:54people are willing to pay, right? And so
9:56I think that like what business are you
9:58really in? You're actually in the
10:00training business. And so the core
10:03value, the core problem that you have to
10:05solve, the feature, not the bug of your
10:07business is the people problem. And
10:09that's never going to go away. And so
10:11all of your focus should almost all be
10:14on the supply side of your business. And
10:18you should pride yourself on being able
10:19to take anyone off the street and then
10:21get them up to speed in 14 days and not
10:24churn based on your career path and
10:26opportunity. M
10:27>> and so what you'll have to do is um this
10:31100% applies to AI by the way, but
10:33you'll have to break down all of the
10:34behaviors that make the great text great
10:36into observable actions rather than
10:39descriptive terms. So instead of saying
10:41like be upbeat, it's like not helpful.
10:44So what I need you to do is smile, nod
10:45your head when someone's talking, say
10:47yes sir, no ma'am, and my pleasure,
10:50right? After every time you have an
10:51interaction, um if anyone asks for
10:53something else, you immediately do it
10:54and say my pleasure. And then and then
10:56we roleplay that. And so the the
10:58ultimate version of this that will
10:59likely have to happen is that you need
11:01to recruit probably in groups in cohorts
11:03or classes. Are you doing that already?
11:04>> We do group interviews. Yes.
11:06>> Okay. Interviews. But in terms of
11:07training, what about that?
11:09>> No, we do one-on-one training. So the
11:11limitations of the trainer, it feels
11:13overwhelming to them.
11:14>> Yeah. So I I would I want to break that
11:17belief because it's almost as costly to
11:19train one as it is to train five. Mhm.
11:22>> And when you have more people, you can
11:24split them up and have them role play.
11:25>> Okay.
11:26>> And so the the the process of training
11:28anything from a roleplay perspective,
11:30which is how we basically train
11:31everything. Um especially if it's client
11:32facing, is number one, uh we should
11:35start every training meeting with kudos,
11:37which is like here's what so so and so
11:38did well because we want to reinforce
11:40them reinforcing each other and we want
11:41them to say the kudos. In the beginning,
11:42the managers once the culture is
11:44installed, they give kudos to each
11:46other. It's a great uplift to basically
11:47allow reinforcing to happen without the
11:49the leader. That's how culture spreads.
11:51The second is that the manager or
11:53trainer models the correct behavior. The
11:56the third part is that then we split
11:57into roleplay so they can do it each
11:58other do it to each other. The key part
12:00with role playing is that real- time uh
12:02feedback has to happen. Meaning the way
12:05that we do it is that we nod our heads
12:07and we have our thumbs up while the
12:08person's doing the good job. So they
12:10have real-time feedback. The mistake
12:11that people make is that they will have
12:12a script that they'll have someone do or
12:14some action. the way for them to do 17
12:17things and then at the end be like,
12:18"Okay, so you know what you did wrong
12:21was uh this and this and this and no one
12:24learns that way." You have to stop them
12:26in the moment. They mess it up and say,
12:27"Hey, great. Go back to here. I want you
12:31to raise your voice at the end. Try it
12:32again."
12:33>> And when they nail it, you say, "Awesome
12:34job. Lock it in." Lock it in means you
12:36do three more times in a row. And then
12:38you keep moving. And so that is how we
12:40train anyone on anything.
12:43So go ahead. any recommendations on
12:46people quit a lot because of the
12:47physicality how and they say yes I can
12:49do this job and then we get them in it's
12:51like oh no I can't clean like this like
12:54yeah and then we waste all this time
12:56>> um
12:58great point one are there tools that we
13:02can give them to make the job easier
13:03because this is not going to go away two
13:06is there a certain physical I'll watch
13:09my HR language
13:11>> we know what you're talking about
13:12>> yeah is there uh some way to identify
13:15who might be you know I mean whatever
13:17you have some test I don't know have
13:18them go through boot camp um [laughter]
13:21right um like maybe it's just like we we
13:24we take from industries where people are
13:26on their feet
13:26>> like because rather than just say like
13:28just nursing homes or whatever it's like
13:30maybe it's just on their feet is
13:31something much more likely but I think
13:33if in the training they're on their feet
13:35for 12 hours that will model what the
13:37day is like and if they can't do that
13:38then you can get them out much faster
13:39and not waste time on it but I think the
13:41big if I if I had to guess one thing
13:42yeah for do is that you need to switch
13:45from one-on-one to group training.
13:48>> If you just do that, they'll probably
13:49And so, number one, oneonone to group
13:51and number two, I need you to open up
13:53the aperture for the types of candidates
13:54that you're willing to let into the
13:56training program. And then all of your
13:57extra bandwidth is on making that
13:58training program [ __ ] unstoppable.
14:00>> Okay, perfect. Thank you so much.
14:02>> Thank you. If you get into a fight with
14:04a spouse and then they're like, "Don't
14:06do that. I'm going to have a panic
14:07attack. Don't talk about that thing or
14:09I'll have a panic attack." What they do
14:10is they threaten you and say like if you
14:13continue then I will I will punish you
14:15in some way. And so what happens is you
14:18stop. And so they learn that if they
14:20threaten you with a panic attack, you
14:22stop. And so you train them to bring up
14:24their panic attack issue and then it
14:26becomes part of their identity cuz then
14:27they're like, "Oh no, if I talk about my
14:29mother, I have a panic attack." And then
14:32it's like that's my that's my threat
14:33wall for everybody. And so and then
14:36everyone reinforces that and trains them
14:38that oh if you need to get me to stop
14:41just tell me that you'll have a panic
14:42attack.
14:44There were like, you know, there were
14:45days where like Leila would be not in as
14:47good of a mood because of whatever and I
14:50would try and this is, you know, earlier
14:53in the relationship and I would try and
14:54be like, "Hey, what can I do? Like, let
14:56me do these things." And uh she would
14:59still stay in a kind of a bad mood,
15:01right? And so then what would happen is
15:03I would then get stern and be like, "All
15:05right, like do your own thing. I will
15:08I'm going to just stop talking to you."
15:11And what would happen is that she would
15:12then snap out of it. As soon as I got
15:15mean and so then what she taught me is
15:18that if I am mean, she will stop being
15:20in a bad mood. What happens immediately
15:22after I get mean? She stops. So I
15:25learned that. I mean it's like kids cry,
15:27parent gives them a cookie and you now
15:28teach them to cry to get cookies. Like
15:30it's just like so simple. And the other
15:32piece is if you reward too long
15:35afterwards, you still teach them
15:36something but not what you intended.
15:40So if you train a dog and then you give
15:42the cookie after 30 seconds the original
15:44thing that you try to reinforce is no
15:46longer associated but they do make an
15:48association with whatever thing you gave
15:50them. So the question is what did you
15:51associate with the reward?
15:54>> And so like a parent for example fast
15:56forward
15:58has a teenager who sneaks out of the
15:59house right and then they come back at
16:03in the middle of the night and then as
16:04soon as they walk in the door they
16:06punish them. And so what happens? You
16:09punish a kid for coming home.
16:12And then they're surprised the kid
16:13doesn't want to come home.
16:16You didn't punish them for leaving. You
16:18punished them for coming home. If I'm
16:19being nice to her when she's having a
16:21bad mood, then she's like, "Okay, I
16:22should reinforce this." Rather than
16:25extinguish it, which is what it was
16:26before, which is like, "I would be nice.
16:28I would be nice. I would be nice. I'd
16:29have nothing back." She just continued
16:31to stay in a bad mood. And so I'm like,
16:32"Well, that doesn't work. I'll switch
16:34tactics."
16:35>> Mhm.
16:36But it did make her feel better. She
16:38just never told me. I would get angry
16:39that she's in a bad mood at something
16:40else because now it's just like
16:42affecting me. Yeah. I had this bad
16:44conversation with so and so. And I'm
16:45like, "Okay."
16:46>> Or like now I realize if he's in a bad
16:49mood or mad mad about something in
16:50general, I used to get mad that he was
16:52mad. I'm like, "This is ridiculous.
16:53You're not going to ruin your day." And
16:54whatever. And now I actually go the
16:56opposite and I become really playful and
16:59funny and sweet and loving
17:01>> and then that tends to actually
17:02deescalate the situation.
17:04>> Yeah. And when she's all like girly and
17:05cute, I I usually like people try to
17:08avoid punishment,
17:10right? That's what they try to do. And
17:12so if your spouse punishes you, then if
17:16you can't feel like you can escape, then
17:18the only thing to do to try and get them
17:20to not punish you is punish them for
17:22punishing you. And the hope is that if
17:25you punish them that they won't punish
17:27you again because they got punished. But
17:29then that person starts the next
17:31countermeasure and then it just how do
17:33you teach a kid to talk? Like we are
17:35just organisms and like we reinforce.
17:38Think about a as a baby like humans
17:40teach speech with zillions of
17:43reinforcement cycles. So think about it.
17:45Baby doesn't do anything. Then baby
17:47makes a noise.
17:49Hey, look. They're making noise.
17:50Celebrate. Celebrate. Celebrate. Baby
17:52makes more noise. More noise. More
17:53noise. Eventually one of those noises
17:54approximates a word. Then we freak out.
17:57So then it makes more and more and more
17:59sounds like that because it gets
18:00positive reinforcement. And then all of
18:02a sudden it makes a full word. Everyone
18:03freaks out. And then it starts making
18:05more noise and more words. People freak
18:07out more. And then what do we do? We
18:09tell it to shut up cuz it talks so much.
18:13And so like it's just these
18:15reinforcement cycles that happen over
18:17like that's how we that's how we human.
18:19And so we just have to look at whenever
18:21there's a marriage. It's like the thing
18:23with with Ila. If the guy gets mad and
18:26then the girl shuts up, if he wants her
18:29to be quiet, he realizes mad equals
18:32quiet. And the thing is is punishment uh
18:35like is like reward timing for these
18:37things matters a ton. And so if you
18:39start talking and someone cuts you off
18:41or you you say a statement then someone
18:42disproves it or undermines you or says
18:44it's stupid, you don't learn not to
18:47talk. You learn not to talk in front of
18:48them.
18:50And so the learning is super specific.
18:52People think it's general. It's very
18:53specific like how you learn.
18:57Now if that person punishes you in
18:58enough situations in general, right?
19:00Like then you might, you know,
19:01generalize the learning and and
19:03punishment and reward also sit on
19:06separate. They're not one plus one. They
19:10actually are separate. And so you can
19:12have someone who has punished you a lot
19:13and rewarded you a lot. And that is what
19:16creates conflict. And so it's like I
19:18have this parent that I have good
19:19memories with. I also have terrible
19:21memories with them. And so that's why
19:23you have this huge struggle. So you have
19:24tons of reward and re, you know, and
19:26reinforcement and tons of punishment.
19:28And so you're like, they text you and
19:30you're like, man, I would love to have
19:31access to more of this positive, but I
19:34don't want to risk this negative, but
19:36they don't. Cuz otherwise, if as people
19:38describe it, they describe it as zero,
19:39as like as though they canceled out, but
19:42they don't. You feel both completely on
19:44separate graphs. What's crazy is that if
19:47people learned this stuff, so many
19:49relationships I feel like would actually
19:51be so much better. People don't like the
19:53idea of training because it makes people
19:54feel like they don't have free will.
19:57But if you train someone, which you can,
20:01then like if you want your wife to do
20:03something more, then whenever she does
20:05something that you like, reward her.
20:08>> And you can use it to your own benefit,
20:09you know. I mean, I think that's why you
20:11have to, you know, marry somebody who
20:12you trust. Uh, like I I know when Alex
20:15is training me and I think he knows when
20:16I'm training him and it's always like
20:18for the better. Like I don't think we've
20:19ever done it intentionally for the
20:22worse, right? And then we
20:22[clears throat] figure out that it's
20:23like thinking through it like okay, what
20:25am I accidentally doing that is, you
20:27know, punishing this person or like what
20:28thing that I'm doing by byproduct of
20:30them being in my environment is
20:31punishing to them. It's like, okay,
20:32well, how can I not do that?
20:34>> And training is the maybe the taboo
20:35word. We could, if I wanted to be
20:37politically correct, I would say
20:38motivate or encourage. Like I'm
20:40encouraging her to do these things. So
20:41I'm motiv but like fundamentally they do
20:44something you have an after effect like
20:47that is a cycle of reinforcement.
20:49Punishment you can't it's really
20:51difficult to you don't teach things with
20:54punishment. You get people to avoid a
20:57specific thing. So if you punish someone
21:00for sneaking out of the window you don't
21:02punish sneaking out. You punish sneaking
21:03out of the window. And so they still
21:05want the thing they're seeking the
21:06reward that they're trying to leave the
21:08house for. they're going to just try and
21:09find another way to get it. And so
21:12whereas punish punishment creates lots
21:15of new different innovative ways to get
21:17around, reward focuses on one behavior.
21:21If I have a carrot, everyone comes for
21:23the carrot. But if I hit it, it could do
21:26100 things. So like punishment sprays
21:28the activity of like what someone's
21:30going to do afterwards, but reward
21:32focuses. But it's funny cuz if everybody
21:34knows the game, it doesn't make it less
21:36effective. It actually makes it more
21:38effective because then you you can
21:40understand what they're trying to do
21:41faster. It's just a better way to
21:42communicate. At the end of the day, you
21:44have to organize your environment to
21:45change the way you behave. Like it's the
21:47easiest way to change behavior is change
21:48someone's surroundings. The ultimate is
21:50that two people are working something
21:52that's mutually reinforcing. Which is
21:55why
21:56couples that build businesses together
21:59have a far lower divorce rate because
22:01they have a mutually reinforcing thing.
22:03It reinforces both of them. Why do you
22:05guys work so much? because we both do it
22:07and we both get reinforced at the same
22:09time for doing it together. We're just
22:11like we're just little rats with levers
22:13getting pellets.
22:14>> Yeah.
22:14>> And like our business is a little pellet
22:16machine. And so we're like ooh content
22:18content. This is a really interesting
22:19one. So you think about people wanted to
22:22ascribe reasons why they say you know
22:24when I was a kid and then
22:28you can just cut all of that and just
22:30say when you do X you were rewarded for
22:32it in some way. That's it. because
22:35otherwise if you weren't you would stop
22:36doing it.
22:38[laughter]
22:39>> It's going pretty well. Uh so
22:41>> can't have a bad day with a name like
22:42that for you.
22:44>> All right, [laughter] go for it man.
22:46Talk to me.
22:46>> All right.
22:48All right. Thanks, Alex. Okay, so uh I
22:51just have a two-prong question here for
22:52you. Uh first, uh first and kind of
22:55foremost here. uh how do you kind of
22:59acquire uh semi- senior but not senior
23:03kind of mid-level staff right and then
23:06second off
23:07>> how do I get mid-level staff is the
23:08question
23:09>> how do you
23:11>> yeah yeah that's that's predominantly my
23:13question
23:13>> so like a director level manager
23:17>> manager level right because I have an
23:19easy time finding
23:22>> yeah that's true um but the kind of
23:25issue that I was having was, you know,
23:27finding these mid-level staff that are
23:29qualified enough to do the position in
23:31the first place. I'm having a really
23:33hard time with it. Right. You know
23:34>> what kind of business?
23:35>> It's a it's an accounting business.
23:37>> Okay, got it. Do you need an accountant
23:38who's mid like an accounting manager?
23:41>> Well, kind of. It's, you know, I'm
23:43looking for somebody that has a CPA
23:45license or EA license. And ultimately,
23:48I'm just trying or or is kind of on that
23:50path, right?
23:51>> Yeah.
23:53Well, option one is go to the schools
23:54where they're on that path and see if
23:56you can create an affiliate pro, not
23:57affiliate, but like a referral program
23:58for them. Plenty of those people want to
24:00have uh career opportunities for people
24:01who are in there and that can create the
24:03farm system. That's thing one. Thing two
24:04is that you can also just do direct
24:05outreach to other accountants. Um what
24:09is your gross profit per accountant per
24:11year right now?
24:13>> Uh gross profit right now it's probably
24:17I'd say about 120,000
24:19>> per accountant, right?
24:21Yeah.
24:22>> Okay. Got it. Um and what and what's
24:24gross revenue for an accountant?
24:28>> Uh gross revenue is about, you know,
24:30200,000ish
24:32somewhere around there.
24:33>> Got it. So, you pay them 80, you make um
24:37you make 200.
24:38>> 200.
24:38>> Yeah. Got it.
24:39>> Yeah. So, I'm I'm actually going to bet
24:41that right now you have a two-pronged
24:43issue, which is thing one is you're
24:46probably undercharging, and as a result
24:48of undercharging, you're not able to pay
24:51above market so that you can attract the
24:53talent that you need.
24:56>> Okay, sure.
24:58>> Yeah. I mean, that's that's right now
24:59you're running on 60% gross margins. For
25:02me, my rule of thumb with services is
25:0380% or higher.
25:06>> Yeah.
25:07>> Right. And so if 80 is the base, then we
25:09need to make $400,000 a year
25:11>> per accountant.
25:12>> Yeah.
25:13>> So you probably What are your close
25:15rates for customers right now?
25:18>> Uh my close rates are around 80%.
25:20>> Yeah, dude. 80% means you've got a
25:22you've got a for sure double maybe a
25:24triple in pricing that's sitting right
25:25there.
25:28>> Okay. So you're supply constrained and
25:30in a supply constrained setup and with
25:32high close rates that's a a clear
25:35prescriptive no question in my sleep
25:38double triple in price
25:40>> and then that unlocks an extra $200,000
25:43a year and all of a sudden you can go to
25:44those accountants and offer them 150.
25:47All right. And then you will get them.
25:48>> Yeah.
25:49>> And you're happy to do it because at 150
25:51you're still making way more money than
25:53you're making right now.
25:55>> Yeah, that's true. you know, I'd be less
25:58uh less busy, too.
26:00>> Great.
26:02>> Yeah.
26:03>> Where do we want to go from here?
26:04[laughter]
26:04>> Yeah.
26:06[clears throat]
26:08So, the the kind of Okay. So, the other
26:12kind of question that I had
26:14uh because my accounting business, you
26:16know, it's a pretty traditional
26:17accounting business, right? You know, uh
26:20we we do the kind of standard suite of
26:22accounting services, right?
26:23>> Yeah. Uh but yeah, but kind of yeah, I I
26:29was just kind of curious how you would
26:31test, you know, that pricing model then
26:33at that point, right? What do you mean?
26:35>> You know, because
26:35>> You mean test the pricing model that I
26:37just said?
26:39>> Yeah. Yeah.
26:40>> Did you do the exact same thing?
26:42>> You do the exact same thing you
26:43currently do. Same pitch and then right
26:45when you say the number
26:46>> Yeah.
26:46>> you just double it.
26:48>> Yeah.
26:48>> That's how you do it.
26:49>> Okay. Sure. Yeah. And if you don't close
26:52as many, guess what? Doesn't matter.
26:54Your supply can train anyways.
26:57>> Yeah. Yeah. True. Okay. Yeah. Because
27:01again, to double or triple price, you
27:04know, I I think I I remember watching
27:06one of your YouTube videos, you know, it
27:08to triple price, you know, it's it's
27:10kind of a mindblower, right, for me,
27:12right? Because we do a monthly
27:14reoccurring model, right? Yeah. where
27:16you know it's and and I I think that
27:19it's a crazy value, right? You know that
27:21we offer.
27:22>> Well, you don't think it's that crazy.
27:23You're not willing to charge more for
27:24it.
27:26>> Yeah, true. I guess, right?
27:28>> You're not you're not selling me very
27:29well right now. I don't believe you.
27:32>> Yeah.
27:33>> If you thought it was that good, you
27:34would charge more.
27:37>> Yeah, that's true. But yeah, you know,
27:39>> you got to put your money where your
27:40mouth is right now. You're stalker.
27:43>> Yeah. Yeah. you know that that's that
27:46that is that is the point Alex right you
27:48know but to be quite fair you know you
27:50think about it these small to mediumsiz
27:52businesses is what I'm ultimately you
27:54know
27:54>> kind of fixated at you know 500,000 to a
27:57million and you know ultimately we just
27:59offer this bundle package right
28:02>> you know of doing their taxes at the end
28:03of the year we do the bookkeeping and
28:05then we do their payroll on a monthly
28:07basis right
28:08>> so
28:09>> are you going to try to sell me on the
28:10way that you're let me let me pause you
28:12for a second
28:14>> one of going to win this sale.
28:16>> You or me? [laughter]
28:18Your current way of doing business is
28:20why you called, which is that you can't
28:22get talent, you can't scale because
28:24you're supply constrained. You're
28:25closing four out of five people that you
28:27talk to.
28:29>> Yeah.
28:30>> Okay. Do you want do you want to keep
28:32having that?
28:38>> No. I I I'd rather not be supply
28:40constrained, right?
28:42I'd rather don't sell than don't sell me
28:45and don't sell you on your problem.
28:49>> Yeah.
28:49>> Right.
28:50>> True.
28:50>> You got to change the change,
28:51[clears throat]
28:52>> right?
28:53>> You're intimidated by the fact that you
28:54just have to say a different number at
28:55the end of the phone call.
28:57>> That's it. Literally, the worst case
28:59scenario is person says no. It's not
29:00like you can't change the price back.
29:03>> Yeah. Yeah, that's true. Okay. Yeah,
29:07that that basically solves my issue,
29:08Alex. Thank you.
29:10>> Glad I could help.
29:12All right,
29:14>> go to a bed. You were a sport. I
29:16appreciate you. All right. Later, man.
29:18[laughter]
29:19>> We sell direct response e-commerce
29:21products. We're all paid media. Uh we do
29:24about $3 million a year in revenue. So,
29:26>> direct response
29:27>> e-commerce products.
29:29>> Okay. Like drop shipping stuff
29:31>> pretty much. Yeah. It's it's more
29:33branded than that, but essentially is.
29:34>> Yeah. So, you have customers for doing
29:36that or you're doing that?
29:37>> We're doing that.
29:37>> Okay. Got it. And so, you have a
29:39handful. How many SKs do you have?
29:40>> Uh like four.
29:42>> Okay. Is it all the same brand?
29:44>> No.
29:45>> Okay.
29:46>> Yep. So, we have uh we're doing it's
29:49like four months old. So, we're doing a
29:50run rate of like uh 3 million a year. Um
29:53we have, you know, background in like
29:55paid traffic affiliate. Um so, it's not
29:57the first rodeo with that. We're trying
29:58to get to like 15 million a year run
30:01rate.
30:01>> Okay.
30:02>> Um what's stopping us right now? you
30:04know, not entirely sure, but um
30:06basically like we have each step for
30:08everything that has to be done. We've
30:10built out teams and systems for the main
30:13priorities and those things are working
30:15pretty well. I'm happy with uh our
30:17talent and what they're producing. Uh
30:19but so far what I'm experiencing is
30:21that, you know, I'm left with this, you
30:23know, list of like random chores that
30:25somehow only I can do.
30:26>> A junk drawer. Yeah. But I'm not sure
30:29how to approach hiring for this because
30:31it ends up being like a very niche
30:33specific task. But I may I might only
30:36need them for like, you know, 20 minutes
30:38a week or something. So it ends up being
30:39me but with a million things, you know.
30:42>> And your founder?
30:44>> Uh yeah, co-founder.
30:45>> Okay. Um
30:48so let's start here. You want to get to
30:5215 million. What stops you from spending
30:54more money?
30:57Uh nothing right now. I mean, so we just
30:59hired a pretty robust funnel team and an
31:02operations guy and like a strategist. So
31:04kind of just waiting on those things to
31:06kick in really.
31:07>> Okay.
31:07>> Um but I'm I'm fairly confident that we
31:09we should be able to at least do another
31:122x from here.
31:13>> Okay. So
31:17this is more a complaint
31:20>> than a constraint, right? Okay.
31:22>> No, I'm just No, I'm This is me asking
31:24for clarity. So, we think we can double
31:27if we just spend more money. I'm not
31:29spending more money because I'm waiting
31:31for this thing to happen. Once this
31:33thing happens, then I'm going to spend
31:34as much money as I can.
31:36>> Sure.
31:36>> Right. Um, and in the meantime, I have
31:40stuff I don't feel like doing.
31:42>> Okay.
31:43>> No, I'm like, this is me trying to
31:44translate back. Is that true? Is that
31:46like accurate?
31:46>> Yeah. But eventually, there's going to
31:47be enough of that stuff that like I will
31:49have to find some way to hire out for
31:51these things.
31:51>> Yeah. And then there'll be more stuff
31:53that you'll still do.
31:55you'll just do the more important
31:56valuable stuff and give the other stuff
31:58to somebody else.
31:59>> Yeah. But a lot of it ends up being
32:01fairly tedious. Like it's it doesn't
32:03feel like high leverage or high value at
32:05all.
32:05>> I mean, this is where like VAS and
32:06product project work can come really in
32:08handy.
32:09>> Like I'll give you an example.
32:11>> So when we made all the ads for the
32:13launch, right? I don't I didn't need the
32:16amount of editors that I had to spin up
32:18in order to because like I'm not going
32:20to be making 300 ads a week, you know,
32:24ongoing. I don't need to. But for the
32:26launch I did and I wasn't going to hire
32:28an extra 15 editors full-time because
32:30it's just like I don't need that. And so
32:32we spun up 15 editors that were
32:34contractors who would then just clip and
32:36we had one person just did QA on it to
32:38make sure that it was good and then we'd
32:39ship them, right? And so if we have
32:42something that's like one timeish work
32:43where it's sporadic, then I'm fine just
32:46having a suite or a bench of contractors
32:48that I can turn on and off.
32:50>> Sure.
32:50>> As long as they do decent work.
32:52>> We do similar things like with our with
32:54our video editors as well, but you know,
32:56some of the tasks are fairly
32:58specialized. Like
32:59>> I understand. I was just using as an
33:00example for editors, but I'm saying like
33:02if you have tedious work like
33:03>> this is where the fivers of the world
33:05like can come in handy
33:07>> and worst case you train a contractor or
33:09VA on how to do it and then they do it.
33:11>> Yeah. Just like someone that's high
33:13level enough in like Shopify work but we
33:15only use them for a few hours.
33:16>> There's tons of Shopify contractors like
33:18a boatload of them and they're not that
33:20expensive and some of them are really
33:21good.
33:22>> Yeah. I like I would just look at my
33:24list. What are the things I'm doing on a
33:25regular basis? Can I ship out most of
33:27these to a contractor who does a peace
33:29meal? Probably. And now you're trading
33:3120 hours for two. And that's just you
33:32just keep making that trade until
33:34eventually you've managing a ton of
33:35people. And then it's like great, one
33:36person is managing all of these. And you
33:37just trade all that time for you getting
33:39more. Because hopefully if you're doing
33:40that much work, then you should have the
33:41revenue to support um that role.
33:45Have you have you scaled
33:49e-commerce like this before?
33:51>> Yeah.
33:51>> Okay. Are you
33:54are you just running paid ads?
33:57>> Uh yes.
33:59>> Okay. Do you have influencers who are
34:01doing stuff?
34:02>> No influencers who are looking to hire
34:04for that, but we we have three or four
34:06channels for paid at least.
34:08>> Yeah.
34:13I'll say this. How big do you want this
34:15to be?
34:16Uh I mean ultimately like the goal is
34:18we'd like to have a portfolio of call it
34:21four or five brands that we can then
34:22exit in a couple years.
34:24>> So I have this conversation every week
34:27um with somebody who's doing e-commerce
34:31and it's almost always the same like I
34:32would like to have a portfolio of a
34:34handful of products that I could
34:35eventually sell someday.
34:37I have really yet to see anyone do that.
34:40Um and it's I think for two reasons. One
34:43is that as you continue to scale, your
34:46CAC will continue to go up and your
34:49gross margins will shrink and that will
34:52get frustrating. You will then also have
34:53supply chain issues which would become a
34:55burden. You'll also have dupes if you
34:57start becoming really good that will
34:59undercut you in price and list on Amazon
35:01and all that stuff. Um, do you have
35:03patent protectant like for any of these
35:04products?
35:06>> And so like you right now run a media
35:08arbitrage business and it works really
35:10well up to about 10 million.
35:12>> Okay. and then it will quickly stop
35:14working very well. Um, and so I think to
35:17your point of like you can see a double,
35:18that's probably true. You might even
35:19have a triple that's sitting there with
35:21a little bit optimization, more email
35:22follow-up, blah blah blah blah blah. Um,
35:25but you'll you'll probably get close to
35:26capping in that neighborhood, 10, maybe
35:2812. Um, and then you're going to be
35:30like, well, we're doing a million
35:31dollars a month, but we have like almost
35:33no margin and our cash flow is [ __ ]
35:35Um, and so the what I think you want is
35:40that you want to build a brand that has
35:42a product that you really believe in
35:45that will allow you to recruit
35:47affiliates to your cause. When I say
35:49affiliates, I mean influencers, not
35:50traditional direct response uh,
35:53affiliates that are just mercenaries,
35:54but like people actually believe in it.
35:56Um, and when you do that, you will
35:58actually be able to build a brand
36:00because fundamentally like any one of
36:01the products can be big enough on their
36:03own to sell. And so rather than saying
36:06like why don't we try and build four
36:09totally different products and totally
36:10different brands at the same time, it's
36:12like why don't we just try to build one
36:14that we really like that we think has a
36:16chance at actually like really helping
36:18people for whatever the problem that the
36:19the product solves. Um,
36:22that's what will build what I think you
36:24want. It's just that most people who
36:26come from the direct response world just
36:28are pure performance marketers. And I
36:30say this being someone who comes from
36:32that world. [snorts] And I had to learn
36:34the hard way that you will run into the
36:36wall that there's a there's a great
36:38article you can read called the direct
36:39response doom loop which you might have
36:40read. But basically you just do this
36:43revenue goes up margins compressed
36:45margins compress until you're eventually
36:46here. And then you have to keep selling
36:47in order to maintain your team. And then
36:48you just run a very large very high high
36:50liability nonprofit. And it sucks. And
36:53cash flow is a huge constraint. and
36:54you've got all the supply chain [ __ ]
36:56and then you're like, "This sucks." And
36:58then you'd have another conversation,
36:59come back here and be like, "Hey, we're
37:00doing 12 million with 7% margins." And I
37:03would say, "Okay, of the four products
37:04you have, which one is the the one
37:05that's the the clear winner? That's the
37:07one that's carrying all the other
37:08losers." And you'd be like, "Well, it's
37:09this one." And then I'd say, "Okay,
37:10cool. Why don't we just get rid of these
37:11three and then put all of your effort on
37:12this? Do you think you'd be able to win
37:13that way?" You'd be like, "Oh my god,
37:14for sure." And be like, "Great. So,
37:16like, why don't we do that?" And then
37:17actually invest in building the brand.
37:19>> Yeah.
37:19>> Around it. We we definitely have uh you
37:22know we're we're paid traffic affiliates
37:24so like we're data people like uh but so
37:27one of the things that I've thought
37:28about is like you know our our biggest
37:30skew it it's good but it's not like it's
37:32not that good like I know a good
37:33campaign when I see it so like part of
37:35the purpose of building out like uh you
37:37know our research and funnel teams is
37:39like
37:39>> well eventually we're going to find
37:41something where the market is just like
37:4210 times better
37:43>> you know so it's like do we keep
37:45chugging along with like the one that's
37:46like a six out of 10 or do we find go
37:48find the nine and then go on that
37:56>> the skill set that you guys are
37:58deficient in is going to be brand
38:01>> and that's what you have to learn how to
38:04do
38:05>> and the brand is also completed with the
38:07product
38:08>> right
38:08>> so like that's what completes the brand
38:09loop like we make this amazing promise
38:11we have all these great associations
38:12people then make the purchase and then
38:14the product either reinforces the brand
38:16or destroys the brand and if it
38:18reinforces the brand then the loop
38:19continues and becomes a virtuous cycle.
38:20And that's how you go from an e-commerce
38:22store that does media arbitrage into a
38:24household name that you can sell for not
38:26just 50 million but maybe 500 million.
38:29And so it's just that like
38:32I have this conversation literally every
38:34week. And so
38:37I know that you're coming at this from a
38:39math perspective. It's just that it will
38:41not work at scale.
38:43And so I would rather you spend as
38:45little as you can on all of these
38:47different things to find a product that
38:49you guys really think is legit and has
38:51some level of defensibility if you can
38:53because if you don't have a defensible
38:54product the only thing that you have is
38:56the brand to differentiate you.
38:58>> Yeah.
38:59>> That's the only differentiator. And so
39:01if you're competing because like just
39:03play it out the next step, right? Like
39:05let's say you find your nine out of 10.
39:07No one's buying that. Like private
39:08equity investor not buying it because
39:10they know the game. They buy brands.
39:12they don't buy products and so you get
39:15your nine out of 10 and then the dupes
39:17flood because they see that you're
39:18killing it and then they undercut you on
39:20all this stuff and then your rorowes
39:21goes down and then you leak everything
39:22to your competitors. So either you have
39:24some sort of patent that you can
39:26actually protect and you have a legal
39:27team that can enforce it or you build a
39:30brand. So like that's the long-term
39:32play. The rest of this is just
39:37making money until you figure that out.
39:39>> I'm being super real with you. I'd just
39:41rather save you a couple years.
39:42>> But like that is where this leads.
39:44>> Okay.
39:46I mean, so
39:47>> how do you build a brand?
39:48>> Yeah. Right. [laughter]
39:50Yeah. How do I do that? But um you know,
39:52we are working on like the legal
39:53defensibility of it. You know, I I
39:55didn't mean to say like
39:55>> I would lead with branded in making
39:58>> I would lead with brand rather than
39:59legal.
39:59>> Yeah. Because legal, you have to like
40:03it's still tough to like it's it's
40:06better to be big and then win with legal
40:07than try and be small and win with legal
40:09because you'll just get drowned in fees.
40:11And it's it's it's better to just have
40:13the coolest brand and have the coolest
40:15people promoting the thing and then
40:17people just want to buy from you even
40:18though they see the cheaper knockoffs.
40:20>> Got it? But that's like that's what you
40:23have to do if you really want to go
40:24where you want to go. Otherwise, you're
40:25just going to be cycling through SKS and
40:27you're going to say you have a portfolio
40:28and it'll sound impressive to people who
40:29don't know what you're talking about.
40:31But like margins will do this, cash flow
40:33get [ __ ] and you have co-founders and
40:36it'll be like this is so much work. This
40:38sucks. [laughter] I wish we had one
40:40product that we all really believed in
40:41that we could like build a business
40:42around.
40:43>> Yeah.
40:43>> And that's what you want to do.
40:45>> When did you make the decision to be
40:47more of the dancing bear and less of the
40:51main one? you know, as a doctor, my job
40:54was mainly to see patients. Now, that's
40:56kind of transitioned into I found out
40:57I'm the better dancing bear. So, I'm
41:00leaning more into that. When do you make
41:01that choice?
41:02>> Well, it sounds like you've already made
41:03that choice.
41:04>> Well, I'm still doing half and half. I'm
41:06just double timing kind of the social
41:08media in between patients.
41:11>> Well, do you need to do the seeing
41:12patients?
41:15>> Uh, I do bring in a good chunk of the
41:17revenue still. So, I think if I did stop
41:19I that would hurt the revenue. So, can
41:22the person that you is the other person
41:24you have fully booked?
41:25>> No. And I am training them.
41:27>> Okay. Yeah. I mean, you'd want to
41:30So, typically with highskilled labor
41:33businesses, which is what you have,
41:34right? So, it's not like u
41:37well like shoot a hair salon. I don't
41:39know. Like, it's it's it's harder to
41:40become a chiropractor than it is to
41:41become a hair hair stylist. Um, no
41:44disrespect to Where's my hair guy? Saw
41:46it yesterday. Yeah. Yeah. A little Yeah.
41:49[laughter] little um
41:52what I've seen in terms of private
41:54expansion of service based business but
41:56you know in four walls is that
41:58>> you risk like if you if you do you want
42:00to expand and multip like more locations
42:02is that kind of the the thought process
42:03yeah
42:04>> so if obviously you want to train this
42:06person up you want them to be able to
42:07take on the full workload and I think
42:09that having a path to like 20% ownership
42:12>> um is fairly because otherwise like
42:14they'll be they'll be loyal to that
42:16person and so that person could walk
42:17with your whole practice which would
42:18suck Right. And so adding one probably
42:21more Cyros will help kind of uh over
42:24time like decrease that risk. And then
42:27secondarily having like if you look at
42:30like law firms like high-skll uh
42:32consulting firms high skill accounting
42:33firms high scale almost all of them have
42:35like partnership like path to partner
42:37type things. And so it doesn't mean that
42:39they have to be able to like get a 100%
42:40of the business but typically 10 to 20%
42:43um of like the upside. Now that doesn't
42:45need to be actual equity. It can just be
42:47a profit share and um something called a
42:50profits interest which is basically like
42:52in the event of a sale they would get x
42:54percent and you don't need to give it up
42:55front. You can say hey over the next
42:56five years I'll vest you 2% a year. Um
42:59and a lot of people that's like you want
43:02them to feel like it's their their
43:04facility and you want them to have their
43:06picture on the door. It says, "Hey, I'm
43:07Jerry. I own or operate this, you know,
43:09Chick-fil-A." Same idea. There's a
43:11reason they have them put the picture on
43:12the door even though that they're not
43:13really the owners of the business. And
43:15so I would yes lean into promotion. It's
43:18a higher lever skill. You're naturally
43:20doing that because you're realizing it
43:21makes you more money per unit of time.
43:22Um and the skill that you'll have to get
43:25into is
43:27recruiting, hiring, training, and
43:29culture because when you scale people,
43:31that's the business.
43:32>> Yep.
43:33>> Uh my name is Luke Carlson. I own a law
43:35firm. We do real estate and business uh
43:38litigation primarily. Our niche practice
43:40though is representing homeowners
43:42against bad HOAs. Mhm.
43:43>> Our revenue is rough right around 15
43:46million.
43:47>> Man,
43:47>> uh we like
43:48>> that sounds amazing. I feel like
43:49everybody loves you,
43:50>> right? I had to come up with some
43:52number.
43:52>> No, it's great.
43:53>> I didn't want to say a hundred. Um
43:55>> No, I meant not that. I meant everybody
43:57hates their HOI.
43:58>> Oh, yeah. No, no, we have an we we have
44:01an endless market. So, no, it's been
44:03great. Uh what's stopping us from
44:05scaling currently though is I would say
44:08talent acquisition.
44:10um you know running a law firm having
44:11lawyers it's all A talent there's no B
44:14talent or C talent.
44:16>> Yeah I'm familiar with the model.
44:17>> So
44:18>> if you see my business Yeah.
44:19>> Yeah.
44:21>> So that's our biggest constraint right
44:23now.
44:23>> So right now you have more more um more
44:26demand than you can deal with. Yes.
44:27>> Right.
44:28>> And so manpower would be your
44:30constraint.
44:31>> Okay. So what do you do right now to get
44:36people
44:37>> right? No, I'm asking. What do you do
44:38right now?
44:39>> So, right now we have recruiters,
44:41several recruiters. We uh leverage
44:43Indeed, Zip Recruiter, all the
44:45platforms.
44:46>> Uh we go into LinkedIn. We try to poach
44:49from competitors. I mean, pretty much
44:50everything that you can do, we do.
44:53>> I think one of the biggest uh
44:54>> How many people do you hire a week?
44:57>> Um it's not really on a week, maybe a
44:59quarter. Okay.
45:00>> We probably bring on another attorney
45:02every
45:03>> two attorneys a quarter, I would say.
45:05We're at 31 lawyers total.
45:07>> What's a uh
45:09what's an attorney worth to you in gross
45:11profit per year?
45:12>> Uh we typically have a three times
45:14multiplier.
45:16So they make us three times their
45:17salary.
45:18>> But what is it? What is it? What? Just
45:20give me the absolute.
45:21>> Oh, 600 grand.
45:22>> Okay. So they make you 600k.
45:24>> Yep.
45:24>> And so you pay them 200
45:26>> right around there. Yeah.
45:27>> Okay, cool.
45:28>> So they make 800 total, 600 gross
45:30profit. Okay, got it. Is that correct?
45:32>> Yep.
45:33>> Okay. Um, so what do you pay uh the to
45:36to recruit somebody? What's your cost of
45:38talent acquisition?
45:38>> Uh, typically 30%.
45:40>> Okay, so 60K.
45:42>> That sounds about right.
45:43>> Somewhere in there. Okay. So, what was
45:46uh what was profit last year?
45:48>> Uh, profit came in at about 4 million.
45:50>> Okay. So, what stops you how many how
45:53many people would you need to hire in
45:55order to get to maximum
45:58uh capacity? Basically, how could you
45:59meet your demand?
46:00>> Yeah, saturation. Um, I would say we
46:03could probably bring on another 20
46:05lawyers, 10 in each state.
46:08>> Okay. So, right now at your current
46:09rate, you do eight a year. So, you're
46:11like two and a half years behind at your
46:13current rate in terms of
46:15>> matching demand.
46:16>> Yeah.
46:16>> Right. Okay. And so for you to get these
46:2020 guys, it would cost you 1.2 million,
46:23right?
46:24>> Yep.
46:25>> And that would generate you $12 million,
46:29right?
46:30>> Yeah. And then what were margins in the
46:32business again? You said 15 and four. So
46:34>> it's about four million.
46:35>> 30 30-ish% or like a little less than
46:37that.
46:37>> Okay. And so um I'll say that we we'd
46:40add another, you know, 4 millionish to
46:43the bottom line here. And what are
46:45multiples in the business for for your
46:48space?
46:50>> Uh
46:50>> like eight
46:52>> say around eight.
46:52>> Yeah. Okay.
46:56So when I'm in your situation, I just
46:59see this and this.
47:02>> Okay.
47:02>> And so I think like so when I pointed
47:05originally,
47:08what stops you from doing more?
47:12>> Well,
47:12>> because you're doing all the stuff, but
47:13obviously there's more than two
47:14attorneys a quarter that are getting
47:15hired in the marketplace.
47:17>> Yeah, I I think it's just a lot comes
47:19from sort of our bar. I mean, we can
47:22bring in low lower level lawyers pretty
47:24easily, but at our caliber and what we
47:26do, it's very hard to get that type of
47:29talent.
47:29>> Yeah.
47:30>> So, we interview a lot. I mean, we meet
47:31a lot of people. We go through a lot of
47:32resumes, but just the the funnel is
47:35>> a challenge to make it through the
47:36funnel.
47:36>> Yeah.
47:38>> I mean, it sounds like you just need to
47:403x the amount of volume that you're
47:43doing right now on the recruiting front.
47:46>> Just being super real.
47:47>> So, it's like if you have two
47:48recruiters, it's like, why not get 10?
47:50>> Yeah. like being like just being real
47:52like so it's like okay we're we're doing
47:54how much out outreach do you do
47:56>> um in terms of
47:57>> like you do outbound towards uh legal
48:00people
48:02>> um
48:02>> that's third that's
48:03>> yeah I don't have a metric on outbound
48:04to be honest but um
48:06>> in terms of the recruitment side of
48:08things I mean daily we're constantly
48:10reaching out when we find the right
48:11candidate so it might be through
48:12LinkedIn it might be through yeah
48:14>> competition it might be what
48:15>> in house recruiter
48:16>> uh we do
48:17>> okay so fundamentally and like I'd see
48:20like what's stopping us from doing more?
48:22The first answer would be metrics
48:23because you don't know how many
48:24outreaches you're doing. Um but beyond
48:26that, like uh do you have kids?
48:28>> I do.
48:28>> Okay. So, uh boy, girl,
48:32>> two boys, two girls.
48:33>> Sweet. Okay. So, imagine all four are
48:35going to disappear in 30 days unless you
48:37get 20 attorneys that are at the caliber
48:39that you want. It's
48:40>> fair,
48:40>> right? Aggressive. I know.
48:41>> That's good. Yeah.
48:42>> Yeah.
48:44>> I know. Alex is dark today.
48:46>> Yeah, I know. I can I can tell.
48:47[laughter]
48:50Um, no, for real. What would you
48:51actually do?
48:53>> Probably 10x it like you said. So,
48:56>> I mean the real talk is like if this
48:58would be a more complex issue if you had
49:00big cash flow issues because then I'd be
49:01like, "All right, we have to look at the
49:02model. We have to look at pricing. We
49:02have to change the like we'd have to do
49:03four other steps before getting here. If
49:05you have $4 million in profit and you
49:07could put 1.2 in and get $32 million in
49:08taxfree enterprise value."
49:11>> Yeah. No, it's not economics. It's
49:12simply talent pool. But I hear what
49:14you're saying,
49:14>> right? Yeah. Yeah. So it's like we have
49:16two recruiters or three recruiters like
49:17we had um one of our one of our
49:18portfolio companies we had to spin up a
49:20team of 50 activated and good
49:23salespeople. So we ended up hiring 90 in
49:2512 weeks.
49:26>> Wow.
49:26>> And we're spending lot you know few
49:28hundred thousand a day in traffic to
49:31make sure that you know like that we
49:32don't like every day that they're not
49:34productive we're losing multiple
49:35hundreds of thousands a day. And so you
49:37have to have a bar you have to make sure
49:38that they're you know productive and all
49:39that kind of stuff. But what we did was
49:41we hired 15 different recruiting firms
49:45and we did bulk wholesale deals with
49:48them saying like give us five people
49:51we'll get a discounted rate because we
49:53want five. The terms of that is like if
49:55they don't work out for a little bit
49:56extended from their normal thing you can
49:58replace them. Um, and I understand that
50:00the difficulty of of of hightouch
50:03talent, but you just probably need to go
50:05up market in terms of the level of
50:07recruiter that you're going after, like
50:08recruiting firm that you're going after.
50:09Like you can get recruiters all the way
50:10up to, you know, million- dollar year
50:11recruiters, right?
50:12>> Um, and so when I see this is this is a
50:14pure resource issue. Like spin up three
50:17times the recruiters, whatever your
50:19outbound is. Like right now you're like,
50:20well, when we find somebody, we do a
50:21reach out. It's like, yeah, but it's
50:22like, okay, well then how do we do 10 or
50:2420 times the reachouts? And then once we
50:27have that in place, then we're kind of
50:29good to go.
50:30>> Gotcha.
50:31>> That's how I attack these problems.
50:32>> No, I like that. So, thank you.
50:33>> Just violence.
50:36>> I like violence. So,
50:37>> thank you. Thank you.
50:39>> Uh, in the consulting world, people do
50:41cases for a reason, right? They want to
50:43hear how like, okay, if I need how many,
50:45you know, how many ping- pong balls sit
50:46on a 747, right? This is a common
50:49question they would ask in, you know, a
50:50college interview, not because they care
50:52about the answer. They care about how
50:54you think through getting the answer
50:55because it demonstrates a level of
50:56horsepower. Um, and so for us, I would
51:00say a practice that acquisition.com we
51:02use is frustrated our higher level in
51:03leadership roles is we actually instead
51:05of presenting them hypothetical cases,
51:07we actually present them with the real
51:08cases. And so, you know, worst case we
51:11get free consulting. Best case, we get
51:14somebody who is capable of implementing
51:16that solution that they just came up
51:17with. And so if they can use uh
51:20frameworks that I wasn't aware of,
51:21experiences that I'm not aware of, those
51:22things will come out in that, you know,
51:24complex, you know, uh issue that we're
51:26dealing with. But it's also at least
51:27like way more interesting of an
51:28interview for me because now like
51:31they're solving my problem. So I'm like
51:33way more engaged. So, does that mean
51:35that like the hiring manager or maybe
51:37you would have um someone at the company
51:40has like a generic description of the
51:42company and what some of the numbers are
51:43and maybe they're like fake numbers even
51:45and then each role will have a specific
51:47problem that you need help solving for
51:49at the company and they get like a
51:51Google doc like a two-pager in advance
51:53and it's like prepare your thoughts,
51:55send it to me in advance, I'm going to
51:56read it and then we're going to have a
51:57discussion about it. So, I'll
51:59differentiate this by level of role and
52:01type. And so, I'm talking because right
52:03now I'm like kneede in like seale like
52:06interviews. So, that's like what I'm
52:07thinking with right now. If we're trying
52:08to hire an editor or a salesperson,
52:12those are roles that are super repeated
52:13and as a result have incredibly
52:15structured, you know, interview
52:16processes and whatnot. And so, for
52:19those, like for a salesperson for
52:21example, it's like we're going to send a
52:23script to every candidate that we want
52:25to invite to a group interview first.
52:26And so they're going to get the script
52:28ahead of time and we want to hear them
52:29do, you know, a one minute two-minute
52:31sound bite of the script. So if they if
52:33they didn't even take the ch the time to
52:35like go through it a few times, like
52:37they're going to sound horrible. And so
52:38immediately either they they don't have
52:39the skill or they don't have the work
52:40either way, we can weed those people out
52:42and we can tell within a couple minutes.
52:43So we don't need to waste a 30-minute
52:45call on somebody who's wants to be a
52:46salesperson. We can have 10 people on
52:47the call, one or two minutes, and we can
52:49find out if someone's got a little bit
52:50of game. From there, it's like, okay,
52:52then we'll say, hey, you messed this
52:53thing up, tweak it, try it again. When
52:56we do that, we get to see how coachable
52:58they are, how much ego they have and how
53:00quickly they can learn intelligence.
53:02>> I actually read a book that you
53:03suggested. The guy who u founded HubSpot
53:06sales team wrote that book and uh I we
53:09do the same thing here
53:11>> and in the book he actually says that IQ
53:14uh is the is the number one. He was like
53:16charisma is important but it's not the
53:18most important thing. It's ability to
53:19learn quickly. And I think part of that
53:21also because like they were selling to
53:22business owners and you know so do we
53:24and most most of our portfolio is B2B.
53:26And so like if if if if a salesperson is
53:29being like outgunned consistently by you
53:32know the people that they're getting on
53:33the phone with the people on the phone
53:34feel like they're talking to somebody
53:35who's an idiot and can't actually help
53:37them solve their problem. And so yeah I
53:39think general intelligence is such an
53:40important part but like honestly it's it
53:42started there but like I kind of just
53:44see it across the organization. Like
53:45show me exceptional organizations that
53:46employ dumber people. like it's I mean
53:49there are some but especially in the in
53:51the in the work that we that we do B2B
53:53and higher level uh you need horsepower
53:56so in terms of intelligence like rate of
53:58learning and we can actually demonstrate
54:00them learning uh on a small level and
54:02that works same thing with editors we
54:04follow a very similar process here's
54:05some raw footage send us a clip back
54:07with your edit we can look at just the
54:09final output and that allows us to be
54:11more objective about like some people
54:12don't present well but that doesn't mean
54:13they're bad editors and I think like
54:15interviewing itself is a skill just like
54:17anything else and I don't need somebody
54:18who's great at interviewing. I need
54:19somebody who's great at editing, right?
54:21And so trying to pull that apart and
54:23something that Leila's taught me that's
54:24been really helpful like for me lately
54:26has been um she's like some people are
54:29incredibly smart but are not very good
54:30at communicating and depending on the
54:31role they might not have as much need
54:33for that level of communication.
54:35>> I sell social media services to sports
54:37entertainment clients like Netflix, NBC
54:39Sports, um etc. We do about 12 million
54:42in revenue. Um, like you always say too,
54:45I think we sell time actually to these
54:47huge whale clients because that's what
54:48they need. Um, I would like to be at
54:502530 million in revenue. What's stopping
54:53us is give you an example. So for the
54:56last 12 months, we've seen a big uptick
54:58in sports sponsors wanting to really up
55:02their game on social media. So think
55:03Verizon, Visa, State Farm, etc. So I
55:06told my team, how do we get four State
55:08Farms next year? And they [ __ ]
55:10freaked out. Like that's not possible.
55:12we can't maintain quality staffing. So,
55:14I do think our problem that's stopping
55:16us is a trained bench of talent that can
55:19service this opportunity we have right
55:21now on the on the table because it's
55:23like the only niche that uh we have
55:26expertise for this clientele. So,
55:28>> okay,
55:31>> that sounds right.
55:31>> Well, I think you guys are from what I
55:33hear from your team, you guys are
55:34dealing with the same thing right now.
55:35Like, how do you just operationalize?
55:37What do you found be successful to start
55:39to
55:40>> on the recruiting side? recruiting and
55:42making sure you have talent to fulfill
55:44demand, high demand.
55:47>> So, I mean, it's a manpower constraint,
55:49right? Um, and so we get really
55:51aggressive on recruiting.
55:53>> So, uh, I think I think what happen So,
55:55there's two things that I say like what
55:57what hold people back from recruiting
55:58issues.
55:59>> Um, Miss Medspa Doctor, so this applies
56:01to you. Um, but this also
56:05um
56:08um I I spoke to a dentist uh a month ago
56:11and he was doing around 20-ish million
56:14and he had four million I think in
56:16profit that he was making and he was
56:18saying the same issue of like I need to
56:19get really specialized dentists blah
56:21blah blah blah.
56:22>> And so I was like okay well I'll walk
56:25you through this math. So how much does
56:27one of your specialized talent make you
56:29per year in gross profit?
56:32Um, you talk like maybe like a director
56:34of social, how many clients they can
56:36bring on.
56:36>> Yeah.
56:37>> Um, I would say
56:411.25 million.
56:43>> Okay. So, they make you 1.25 million.
56:44Yeah.
56:45>> And that's gross profit.
56:46>> Yeah.
56:47>> Where's Okay, great. So, 1.25 million in
56:49gross profit. Okay. And
56:53um what are you willing to spend to make
56:55an extra 1.25 million in gross [snorts]
56:57profit per year?
56:58>> Uh, a lot. Um, yeah, that that role
57:01costs about 200 grand.
57:03>> That role will cost 200 grand.
57:04>> Yeah.
57:05>> Okay, cool. That's fine.
57:06>> And it takes a pod of people that person
57:07has to oversee for daily management
57:09obviously. But
57:10>> so there's a pod underneath of them as
57:11well. Yeah.
57:12>> Okay. Well, how much
57:13>> how much does that total pod cost?
57:15>> Uh I would probably say roughly
57:19350.
57:20>> Okay. So like 550 in total. Yeah.
57:22>> But that would be added in. So the 550
57:24is already taken out of this, correct?
57:26For gross profit.
57:26>> Yes.
57:27>> Okay. Um, so then the question is just
57:30of the 1.25, what are you willing to pay
57:34to attract the $200,000 per year person?
57:38>> It's an open question.
57:39>> Uh, well, we want to do 20% profit. It'd
57:41probably be Yeah. 700 grand or
57:44something.
57:44>> Would you be willing to pay? So, if I
57:47said for $700,000, I can find you this
57:49person. You pay me?
57:50>> No. your service.
57:52>> I just think but to your point, it's
57:54like find out what a what a pot of
57:55people can take on in terms of client
57:57revenue.
57:58>> I'll finish this and I think it'll it'll
57:59it'll lead you to it.
58:01>> So right now what this is is a lifetime
58:03gross profit
58:04>> sorry annual gross profit sorry
58:07>> uh gross profit per employee
58:10and then instead of uh CAC like LTGB to
58:14CAC which we guys everybody should know
58:16theirs by now
58:17>> it's cost of acquiring talent.
58:20So just like you have LTV CAC on the
58:22front end, you have lifetime gross
58:24profit per employee to cost of acquiring
58:25talent on the back end. Okay?
58:27>> And so realistically, let's say that
58:29this person, let's say your average
58:30tenure for this role is four years,
58:33>> right? So that would be $5 million is
58:36what this person's going to bring in
58:37over lifetime. And if you really think
58:39about it, this 1.25, let's say you guys
58:41traded 8 million, sorry, 8x or something
58:44like that. So that adds $10 million in
58:47enterprise value to the business taxree
58:49by just adding this person.
58:51>> And so it's what am I willing to spend
58:52to do that? So for me, I'd be like,
58:54cool. I'm willing to spend $125k
58:57one time to add an extra $1.25 million
58:59per year all day.
59:02>> Like all day.
59:03>> We just haven't done the math to make
59:05it. It's not [ __ ] Yeah.
59:08>> Yeah. Um like I had to we had a
59:10portfolio company that we had to scale
59:11up the sales team. Uh it was a long
59:13story, but we had an outsource sales
59:14team because it blew up really fast. And
59:15so we we had to build a 50 person sales
59:19team uh in 90 days.
59:22>> And so um like how did we do it? Well,
59:26we hired 80 guys. We kept 50 and we had
59:3015 headunting firms all spun up at the
59:32same time.
59:34>> Uh bringing us candidates plus our
59:36internal our internal assets. And that's
59:38how you hire 80 sales guys in 12 weeks.
59:41And so to the same degree it's like okay
59:43well how much do I have to pay to a blue
59:45chip recruiting firm to go get these two
59:47people.
59:48>> Yeah.
59:49>> If you're paying them 200 typically it's
59:50like 60.
59:52>> So I'm like am I going to pay 60 to make
59:54one 1.25? I would make that investment.
59:56>> Yep.
59:57>> Right. And so as long as you're
59:58profitable which I'm assuming you are
1:00:01>> that to loop to close the loop on the
1:00:03dentistic story I was telling earlier.
1:00:05Um he was like it might cost, you know,
1:00:08I did this math with him and he made
1:00:09$700,000 in gross profit per per dentist
1:00:13and the recruiting would be and he
1:00:15needed three dentist to get to the the
1:00:16goal that he had for like two years or
1:00:18something. And I was like, "Okay." And
1:00:20that recruiting cost would be like
1:00:21$100,000 per. So it's $300,000 in total.
1:00:23I was like, "Okay, so are you willing to
1:00:24make $3.7 million this year instead of
1:00:26four so you can get your three-year goal
1:00:28to happen like in the next six months?"
1:00:30>> Yeah.
1:00:31>> Like well I was like, "Yeah, right." And
1:00:33so sometimes it's like we just haven't
1:00:34like actually taken in the cost of what
1:00:35it what it costs to do something like
1:00:37this. And specialized roles just kind of
1:00:39for everyone. The more specialized is
1:00:40the more I'm like okay for somebody else
1:00:42that built their entire business around
1:00:43finding it. I don't want to like if you
1:00:46think about every role as a new customer
1:00:48that you have to build an acquisition
1:00:49process for. I will build out like
1:00:51infrastructure and true processes around
1:00:54repeated roles. So if I'm built, you
1:00:56know, if you have a big sales team, if
1:00:57you have a big customer service team,
1:00:58big editing team for media, like
1:01:00whatever your repeated roles are, uh
1:01:02you're a cleaner, you have obviously
1:01:04cleaners are going to be your your thing
1:01:05that you have to go after, then having a
1:01:07strong recruiting like process end to
1:01:09end makes sense. If you're looking for
1:01:11one role one time, I just pay the money.
1:01:13>> Yeah,
1:01:15that help.
1:01:16>> Appreciate it, man. Thanks.
1:01:16>> Yeah, you bet. Thank I'm in the content
1:01:18and um massive audience business
1:01:21>> and I work with a lot of creative young
1:01:24people
1:01:25>> and they are very capable at being funny
1:01:27or creative or creating um great things
1:01:29people want to watch, but I'm having a
1:01:31hard time um untraining their brain to
1:01:36uh they're all kind of hijacked when it
1:01:37comes to being able to focus and
1:01:39attention. So, I know you guys have have
1:01:42talked about uh designing your
1:01:44environment in a better way, but how
1:01:45much do I need to kind of control them?
1:01:47Like, I don't want to feel like a
1:01:48teacher taking away the phone, but how
1:01:50can I instill in them that working for
1:01:52long periods of time is the way to do it
1:01:55when their brains feel like nicotine
1:01:57when they don't have their phone for two
1:01:58seconds?
1:01:59>> Um, I would change the way you talk
1:02:01about it. That would probably be the
1:02:02first thing. So one like
1:02:04>> basically taking the assumption that
1:02:05they've like hijacked and like their
1:02:07brains and addicted and dopamine is like
1:02:09just toss all that out and you're not
1:02:11going to untrain anything. All you can
1:02:13do is train better things or more
1:02:15things, right? And so um if you think
1:02:17about culture in an organization is the
1:02:19rules that govern reinforcement. And so
1:02:21fundamentally people are like I want to
1:02:22build a good culture but they can't even
1:02:23define culture. So culture is just the
1:02:24rules that say what's good and what's
1:02:26bad. And so culture is basically this
1:02:28list of hundreds of hundreds of
1:02:30activities that are very small. like
1:02:31when you show up on time, it's rewarded
1:02:32here. Some in some cultures, showing up
1:02:34not on time doesn't matter. So, it's not
1:02:36punished. And so, more people do it. And
1:02:38so, it's trying to find every time that
1:02:41they do the right thing and then
1:02:42immediately rewarding it. And then
1:02:44that's you become the dopamine hit. And
1:02:46so, the people who have the most
1:02:47influence in the organization are the
1:02:48ones who become totems of reinforcement.
1:02:51And so, you want to be a doer of
1:02:52reinforcement, both positive and
1:02:54negative, within the organization. And
1:02:55I,
1:02:57it's okay to have a little bit of
1:02:59negative reinforcement. like bad dog, no
1:03:01good, right? Squirt water. Like that's
1:03:03okay as long as you have a significantly
1:03:05higher amount of positive reinforcement
1:03:07that kind of gives you the context or
1:03:08the permission to do that. Otherwise,
1:03:10you just become the big dick boss that
1:03:12everyone hates. But if you've done like
1:03:13five nice things for someone and been
1:03:15like, "Hey man, cut it out." That is a
1:03:16punishing event for someone. It's an
1:03:17aversive stimulus. But because you've
1:03:20earned the right to do that, that's how
1:03:22you can just train behavior within an
1:03:23organization. And a lot of times who who
1:03:26you allow to stay in the org and what
1:03:29you punish and praise publicly. So I'll
1:03:32give you a really simple example. So the
1:03:34other day uh I did a like a job post and
1:03:36I got like 500 DMs of people saying they
1:03:38could help me with this thing. And so I
1:03:40put a message in Slack and I was like,
1:03:42"Hey, who wants to go through all my DMs
1:03:44and find and find that?" and it sat in
1:03:47the Slack for like 40 minutes and I've
1:03:50got 18 guys in that Slack and I was
1:03:53livid. And so Caleb was w watching as
1:03:57well waiting to see who was going to
1:03:58step up to be like, "Yes, I sacrifice
1:04:00myself as tribute and we'll do the rest
1:04:01of my afternoon just going through DMs."
1:04:04And so because he's the leader, he
1:04:06jumped in was like, "I got it. Don't
1:04:07worry about it." And it's below his pay
1:04:10grade, right? But the benefit of that
1:04:13was that as soon as he did that, I got
1:04:15to say and that's why he's the boss and
1:04:16you guys aren't.
1:04:20Because it was like those public
1:04:22displays are the times that you can
1:04:23reinforce these are our values. This is
1:04:26why he has moved up. And so whenever
1:04:27someone does something good, you want to
1:04:29like you want to be clear as day like
1:04:30this is rewarded. This is great. This is
1:04:34not more public on the praise, more
1:04:36private on the uh the criticism.
1:04:39>> Makes sense. But that's that process is
1:04:41just a neverending doesn't stop until
1:04:44you die.
1:04:44>> Got it? Okay.
1:04:45>> Because you're gonna bring new people in
1:04:46and they're going to bring the rules
1:04:47that they think are appropriate.
1:04:50>> And so unless you overpower their rules,
1:04:53that becomes the cultural norm, which is
1:04:54why culture tends to dilute in a company
1:04:56as it scales, which is why you need to
1:04:58be even more potent and more militant at
1:05:00the top about what you believe in.
1:05:02>> Yeah. Perfect. Thank you.
1:05:05>> That's all ops.
1:05:06>> Yeah. And small bumps of cocaine to give
1:05:08them Oh, Peter from Norway. I've been
1:05:11been a follower since the subundk days.
1:05:16>> Nice.
1:05:17>> And firstly, I would like to thank you
1:05:18for the opportunity.
1:05:19>> Thank you, man.
1:05:22>> I've run uh a hunting and fishing
1:05:25company
1:05:27uh equipment from two brick and mort two
1:05:31brick and mortar stores
1:05:34and an e-commerce site.
1:05:37So I built that from a 4k student loan.
1:05:41>> Nice.
1:05:42>> And I didn't take any pay for two years,
1:05:46provided uh three 3k a year
1:05:51to find inventory and and since twins
1:05:552015, we've been on top. We three
1:05:58profitability in our niche.
1:06:01I'm sorry. I have a terrible feedback.
1:06:04>> Yeah, I know. Sorry, brother.
1:06:06Okay. Yeah. In 2025, we did $6.5 million
1:06:12revenue,
1:06:14a million one Ebida.
1:06:16>> Okay.
1:06:16>> Based off of a 39 and a half grand gross
1:06:19profit.
1:06:20>> Got it.
1:06:21>> Uh I have 60,000 active
1:06:24customers out of 143K total.
1:06:27>> Mhm.
1:06:29>> And a market size of $100 million.
1:06:32>> Okay. Uh, we're decent decent cash cow,
1:06:36but I'm still the chief ex chief
1:06:39everything officer.
1:06:40>> Mhm.
1:06:41>> Working 80 to 80 hour weeks.
1:06:43>> Mhm.
1:06:44>> I have a massive skilled depth in
1:06:46attracting hiring and and onboarding
1:06:49players, which is stopping me from
1:06:51scaling.
1:06:52>> Mhm. If you were in my shoes,
1:06:56what would be the exact sequence of
1:06:58building a people people playbook
1:07:02so I can stop being the bottleneck and
1:07:04build a sellable asset?
1:07:06>> What takes the majority of your time?
1:07:10>> Everyday tasks.
1:07:13>> More specific.
1:07:17talking to customers,
1:07:19taking out the trash,
1:07:22doing
1:07:23uh more or less every no one else does.
1:07:28>> Yeah. So,
1:07:31I mean, in terms of sequence, the first
1:07:34thing I would do is be able to answer
1:07:35that question clearly with a time study.
1:07:37And so, the reason I do time studies is
1:07:39because if you have a 15-minute
1:07:40increment, what appears to be random
1:07:42things tend to fall into patterns. And
1:07:45so if you do it 15 minutes every single
1:07:46day for one or two weeks, like we do
1:07:48this with new CEOs when we acquire a
1:07:50company, the first thing we have them do
1:07:52is do a time study because that way we
1:07:54can actually tell whether like, hey, my
1:07:56head's on fire, day-to-day operations.
1:07:57It's like, how do we translate that?
1:07:59Because what we'll do is we'll see all
1:08:00the activities that you're doing and
1:08:02say, okay, is there a role right now
1:08:03that exists that encompasses the vast
1:08:05majority of the stuff? And it might mean
1:08:07that you have one or two roles that are
1:08:08missing or three roles that are missing
1:08:10um within the business. I do understand
1:08:12that you got 1.1 million in IBA and it's
1:08:14like you don't want to hurt that but the
1:08:16idea would be
1:08:18can we replace you know twothirds of
1:08:21your time so we can free up some more of
1:08:22it so we can create more profit in the
1:08:24business with the time that you have
1:08:25doing higher leverage activities.
1:08:32>> Yeah I've I've been look looking at at
1:08:35hiring chief operations officer.
1:08:38Okay,
1:08:44so chief, you know, head of ops is not
1:08:46necessarily a bad role overall, but a
1:08:48lot of times it tends to be a junk
1:08:49drawer. And so if you, when I say junk
1:08:52drawer, just like you open it up and
1:08:53there's just a whole bunch of stuff
1:08:54inside of it. And so if you want to hire
1:08:56that person successfully, you're going
1:08:57to have to really clearly define all of
1:08:58the activities that you want them to do.
1:09:00And so either way, you're going to have
1:09:01to start with this time study to get a
1:09:02better hold on the many things from
1:09:04taking the trash to talking to customers
1:09:06that you're currently doing. I would
1:09:08also bet that there's some stuff that
1:09:09you're doing right now that you could
1:09:10also just choose not to do and the
1:09:11business would be okay. So like when
1:09:13you're talking to customers, what are
1:09:15you doing it for and how often?
1:09:21>> Basically
1:09:23more or less every every day.
1:09:25>> Yeah. But for what what reason?
1:09:26>> Because
1:09:28usually when things start to [ __ ]
1:09:31>> Okay. So customer So this is customer
1:09:33service.
1:09:34>> Yes.
1:09:35>> Okay. And so, do you have no customer
1:09:37service reps?
1:09:40>> I do. I have one guy, but he's he's too
1:09:42He's He's too young.
1:09:44>> Okay. I would I will I will How old is
1:09:46he?
1:09:48>> 24.
1:09:49>> Okay. Well, like right now there's a
1:09:50bunch of 24 year olds who have like
1:09:52billion dollar companies and so I don't
1:09:53think he's too young. Um, I would say
1:09:55that you probably haven't trained him on
1:09:57the skills required because a customer
1:09:59service role, it's like there's five
1:10:02things that are happening in that role
1:10:04and we just need to give them a script
1:10:05for how to handle all those things and
1:10:07then train them on saying the script.
1:10:11>> Okay.
1:10:14Because there's no like 24 years old. I
1:10:16mean, my god, that's it's a grown man.
1:10:21>> Yeah, but he's still a kid.
1:10:23Well, I mean, if you treat him like one,
1:10:28>> is it your kid?
1:10:29>> Okay. No, it's uh the son the son of a
1:10:32really good friend of mine.
1:10:33>> Yeah. Then maybe you treat him like a
1:10:35kid still, right? But I mean,
1:10:37fundamentally like he probably wants to
1:10:38do a good job and you probably have to
1:10:41empower him to do so because if
1:10:42everything every time something gets
1:10:43difficult, you jump in rather than
1:10:45basically I'm going to say this and
1:10:47don't take offense to it, okay? you're
1:10:50being lazy by jumping in to solve the
1:10:53problem for him rather than doing the
1:10:56work of training him to do it for you
1:10:58because in the short term it will cost
1:10:59you more time and frustration than it
1:11:02does in the long term. And so right now
1:11:04you jump from short-term fix to
1:11:05short-term fix to short-term fix all day
1:11:07long rather than taking the excess time
1:11:10in the front end and the risk of what
1:11:12happens if this person leaves after I
1:11:14train them.
1:11:17>> Yes.
1:11:18So I think like that's once you talk to
1:11:21customers so that's like okay if we
1:11:22train this guy up that'll take off some
1:11:24portion of what you're already paying
1:11:26him to do. So that'll free up your time
1:11:28and you don't have to pay anymore. What
1:11:29else are you spending your time on?
1:11:33>> Marketing uh purchases.
1:11:37>> Okay. When you say per you mean
1:11:38marketing to get customers to buy,
1:11:40right?
1:11:41>> Yes.
1:11:42>> Okay. Is purchases something different?
1:11:43Are you like are you buying material
1:11:46like what are what is that a separate
1:11:47item or you saying marketing you get
1:11:48purchases?
1:11:49>> Yeah. No, no, no. Merchandise
1:11:51>> like purchasing merchandise.
1:11:53>> Yes.
1:11:54>> Okay. Got it. So you So you do the
1:11:56buying and you do the marketing to sell
1:11:58a product and you have a customer
1:11:59service team. So we can offso some of
1:12:01the customer. Do you have anyone who
1:12:02helps you helps you on the purchasing?
1:12:06>> Some.
1:12:07>> Okay. What stops them from doing all of
1:12:10it?
1:12:14uh on the larger scale on larger scale
1:12:17stuff.
1:12:17>> Yeah.
1:12:19>> Especially the ones that are
1:12:22above probably 100k a year.
1:12:25>> Yeah.
1:12:26>> I want to make sure that I I hold in
1:12:29those myself.
1:12:30>> Okay.
1:12:31>> Because the the the main the the main
1:12:33scaling of the business has always been
1:12:35the main the gross margin.
1:12:37>> Yeah. No, I hear you there. So, um, by
1:12:41percentage of purchasing activity, what
1:12:43percentage are you doing versus the guy
1:12:45you've hired?
1:12:50>> Total purchasing a year.
1:12:52>> Mhm.
1:12:53>> Probably 55 to 60
1:12:5860%.
1:12:58>> Is you or him?
1:13:01>> No, me.
1:13:02>> Got it. Is that by dollar amount or by
1:13:04number of transactions you have to buy?
1:13:06>> No, that's dollar amount.
1:13:08>> Okay. So he's still doing the majority
1:13:10of them and then you save the few bigger
1:13:11ones but they tend to be the lion share
1:13:13I'm guessing.
1:13:15>> Yes sir.
1:13:16>> Okay. So is that a huge time suck for
1:13:17you? How many how many hours a week do
1:13:19you say would you say?
1:13:22>> Uh it depends on time of year because
1:13:23it's such a seasonable it seasonable
1:13:27>> business. So I would say uh this time of
1:13:30year for first quarter probably half my
1:13:32time.
1:13:33>> Got it. That's a lot. Okay. So the the
1:13:38document like I I'll just tell you right
1:13:39now it sounds like the big issue is
1:13:41documentation and training.
1:13:46>> So the process Yeah. So the process that
1:13:48you go through is you have a decision
1:13:51tree. You haven't written it down but
1:13:53it's in your head, right? And so what
1:13:55you have to do is basically walk through
1:13:58how you make the decisions for these
1:13:59purchases around pricing. Like you it's
1:14:03and it you know what it it's a lot of if
1:14:04then statements. And I know this because
1:14:06I have to train our AI on how I make
1:14:08business decisions. And so you can
1:14:09imagine how how difficult it for me to
1:14:11to train a business generalist, right?
1:14:14They have to be able to answer something
1:14:15for a restaurant as much as an
1:14:17e-commerce as much as a an HVAC business
1:14:19as much as an internet marketing
1:14:20business or an agency or a course seller
1:14:22or a school community. Like it has to be
1:14:24able to know all of these things. So how
1:14:25do you train something like that? Well,
1:14:28you start with decision trees. Are you
1:14:29supply, you know, constrained? Are you
1:14:31demand constrained?
1:14:33Like for you, it sounds like the issue
1:14:36overall is that um I mean you said it
1:14:38was a cash cow, so I'm guessing it's
1:14:39flatish, right? Um and the real
1:14:42constraint for you right now is uh you
1:14:45could sell more, but you can't really
1:14:47because the supply constraint is you
1:14:50like the supply of your time is
1:14:51basically zero. And so as much as you'd
1:14:53want to ramp, you can't because you are
1:14:55the bottleneck right now, right?
1:14:57>> Oh yeah, I'm the bottleneck.
1:14:58>> Yeah. And so fundamentally, and this is
1:15:00like this will be my easy lipmus test
1:15:02for you, is that if you look at your
1:15:04calendar and your activities do not
1:15:07change from last week to this week,
1:15:09nothing is going to change.
1:15:14What's your head count right now?
1:15:16>> 14.
1:15:17>> 14. So, I would bet right now probably a
1:15:21third of your time is going to probably
1:15:22have to be dedicated to retraining or
1:15:25really first time training your staff on
1:15:27the things that they should be doing but
1:15:28that you're jumping in to do for them.
1:15:36Yeah, it it's
1:15:39it's both uh um
1:15:42they're a little insecure and that's
1:15:44probably poor B
1:15:47because of poor training.
1:15:49>> Yeah. I mean, it makes sense. If you
1:15:51haven't trained somebody, they're going
1:15:52to do a bad job. I agree with you.
1:15:54[laughter] You know what I mean?
1:15:57>> Of course. Like I said, it's uh it it's
1:16:00uh
1:16:00>> Well, how do we get over this insecurity
1:16:01thing? How do we get over this trust
1:16:02issue? Right? You've been wronged
1:16:04before. Somebody made a mistake. You
1:16:06gave up you, you know, you loosened up
1:16:07the reigns. They [ __ ] it up and they
1:16:09lost you money. Right.
1:16:11>> Yeah.
1:16:12>> Right. And so you basically have two
1:16:15paths. Path one is you keep doing what
1:16:17you're doing and you're going to keep
1:16:18making money, which is relatively
1:16:19reinforcing. And I'm I'm like, but you
1:16:21will not build a sellable business and
1:16:23you keep working hours 80 hours a week,
1:16:25which let's be real, a lot of people do
1:16:27that and they just and they just kind of
1:16:29like moan their way through it, right?
1:16:31The other option is that you're going to
1:16:33lose more money in the short term,
1:16:36but you'll be able to learn the skills
1:16:37of training a team and they're going to
1:16:39make mistakes, but you will eventually
1:16:41be able to get above it so you can
1:16:42actually make the business grow and make
1:16:44more money.
1:16:49>> Okay, think about this.
1:16:50>> You have like a uh
1:16:51>> Yeah, think about this. Think about how
1:16:53many mistakes you've made over your
1:16:54career that you've learned from. A lot,
1:16:56I'm sure. Right.
1:16:59>> Yes, sir.
1:17:00And so I think it's unfair to ask them
1:17:02to know everything, you know, without
1:17:03having made any mistakes of their own.
1:17:09>> And so I think honestly it's just a
1:17:11small shift in perspective. I would look
1:17:13at my schedule. So I really would I
1:17:14would start with the time study. I would
1:17:16look at all those activities. And the
1:17:18first question once you finish that time
1:17:19study, which is, and I'll just say it
1:17:21really clearly because I have some
1:17:22people watching, is open up an Excel
1:17:25sheet, set a timer on your phone, have
1:17:27it say Monday through Sat or Monday
1:17:28through Sunday, and it starts at
1:17:30whatever time you start working, and you
1:17:32do 15-minute increments for each cell.
1:17:34In each cell, you set a timer on your
1:17:36phone. Every time the 15 minutes goes
1:17:37off, you write down what you did. At the
1:17:39end of the week or two weeks, next to
1:17:42each of those columns, you color. You
1:17:45can go red, yellow, green, whatever you
1:17:46want to do, but there's going to be one
1:17:48bucket that is a delegate bucket, which
1:17:50is these are jobs that I'm already
1:17:52paying people to do that they're not
1:17:53doing. So, I need to delegate. And then
1:17:55the next step is going to be training.
1:17:57I've got to train those people on the
1:17:58things that they should already be doing
1:17:59in their job. That's going to open up
1:18:01some of the time. And that realistically
1:18:02is going to be the first real step. And
1:18:04that might take a month or two months.
1:18:05That's the first thing we do. After
1:18:07we've delegated more, now you're going
1:18:08to have a little bit of bandwidth. Now,
1:18:10in that delegation and training process,
1:18:11you're going to have to give them a
1:18:12decision box. Meaning some things should
1:18:15come to the owner for sure. Someone's
1:18:17about to sue you and they're get you on
1:18:18the phone like that should probably come
1:18:19to you, right? Is that going to happen a
1:18:21lot? Probably not, right? And so the
1:18:23idea is you can make decisions up to X
1:18:26amount of money. And if someone's upset,
1:18:29you're going to do one of these three
1:18:30things.
1:18:32And you're going to start with thing
1:18:32one. If they don't like that, you're
1:18:34going to thing two. If they don't like
1:18:34that, you go to thing three. If they
1:18:35don't like that, you can talk to me. But
1:18:36at least that covers 80 or 90%. Right?
1:18:40On the purchasing side, it's going to be
1:18:42the same thing. you're in a decision
1:18:43box. This is the tree. We always ask for
1:18:45a second uh you know a second number. If
1:18:47the number this is what it was last
1:18:48year, it has to be within 6% of last
1:18:50year. And if it's not, send them this
1:18:52email or say this text back to them. And
1:18:54we keep because you have a way that you
1:18:56grind people, right? I mean, it's just
1:18:58negotiating. You have a way that you
1:18:59grind people and you just have to teach
1:19:00them that that way of grinding them. And
1:19:01so you'll teach them on the on the
1:19:03purchasing side and then we have to go
1:19:04task by task until what's left over is
1:19:08the few things that you don't have rolls
1:19:09for. And then with that leftover amount,
1:19:12then we can instead of hiring three more
1:19:13people that you're not going to train,
1:19:15we can hire maybe one person that
1:19:16actually gets the job done. And now the
1:19:18vast majority of your schedule's open.
1:19:19So you can either grow this business or
1:19:20sell it.
1:19:23>> Be good.
1:19:24>> But it's you're going I mean this is
1:19:25going to be all people [ __ ] which I'm
1:19:27going to guess you're not like the most
1:19:28stoked about, but this is just the game.
1:19:30I mean here's the good news. You're
1:19:31you're in physical product sales. That
1:19:33has less headcount than a service
1:19:35business. In a service business doing
1:19:36six and a half million, you'd want to
1:19:37kill yourself. This is I mean 14, you
1:19:39know what I like [laughter] you would
1:19:41you would hate it. So this is the game
1:19:43though.
1:19:45>> Okay. Thank you.
1:19:47>> No, I appreciate you. Thanks so much.
1:19:50>> Thanks. Bye-bye.
1:19:51>> Good luck. If you like this video and
1:19:52you're a business owner who wants to
1:19:53break through your current revenue
1:19:54ceiling, I distilled every lesson from
1:19:56scaling 10 businesses past 10 million
1:19:58and three businesses past 100 million
1:20:00into a completely free scaling road map
1:20:02that I've used to go from 0 to 1, 0 to
1:20:0410, and 0 to 100 plus. And so you can
1:20:06click here and you can check it out.
1:20:07Again, absolutely free. And since you're
1:20:09a business owner, appreciate you and uh
1:20:11enjoy.

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