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"Why Do My Best Employees Keep Leaving?" (1-Hour Compilation) — Transcript

by MoreMozi · 14,827 words · 2,154 segments · language en · Watch on YouTube

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0:00Am I doomed? I don't have skills but
0:03can't get a job to learn because no
0:05companies are hiring fresh graduates
0:07right now.
0:08>> No companies
0:10on Earth.
0:12Whoa, that's crazy. I guess the fresh
0:15graduates that we hired, I guess we
0:17don't exist. I guess we are not a
0:18company. Um, I think that the statements
0:20that you're making are absolute because
0:22you have not uh succeeded as quickly as
0:25you wanted and then are extrapolating
0:27the fact that it is impossible. But
0:29here's the good news is that if it's
0:30hard for you, it's hard for other
0:31people. And if you have more or higher
0:33frustration tolerance, meaning that you
0:34can tolerate difficult [ __ ] longer and
0:36you can get punched in the face more,
0:38then you the pool of people that you
0:40were competing against as time goes on
0:42narrows uh because other people have
0:43fallen out because they've given up
0:44hope. And so uh yes, I think that you
0:47can absolutely negate uh inferior odds
0:49with superior volume of work. And so if
0:53your acceptance rate, let's say into a
0:55company is uh 1% likelihood, then you
0:58need to apply to a 100 places. Now, and
1:00to be clear, you just submitting a
1:01resume, not putting a cover letter, not
1:03taking any outreach, not trying to talk
1:04to somebody um at that place from a cold
1:06call, cold outreach, cold email to show
1:08that you're putting the extra work in,
1:10uh that will dramatically uh increase
1:13the odds of success. But if you're doing
1:14none of those things, if you're doing
1:16none of those things uh to to make it
1:18work, then you should expect that you're
1:20going to have inferior outcomes. And so
1:22the big the big highlight here though is
1:24stop saying that no companies are hiring
1:29freshmen. They are probably just not
1:32hiring people who are not putting all of
1:34the work in for enough time period to
1:37meet the needs of the business. And you
1:39need to go above and beyond to break out
1:41of the mold. So if everyone else is not
1:43putting a cover letter, you put a cover
1:44letter. If everyone else is not reaching
1:45out or trying to find somebody else who
1:46works at the company to just say like,
1:47"Hey, can you at least give me an
1:49interview?" um then that's the extra
1:52work that you do to make it more likely
1:53that you're going to win. And by the
1:54way, that never stops. Like following
1:58the process is important and also doing
2:01above going above and beyond. And that's
2:03going to happen for customers. It's
2:04going to happen for business owners like
2:05that never ends. Delegation is the price
2:07of scaling. Loss of control, right? And
2:10so I believe that the the the spiritual
2:12path of entrepreneurship is a consistent
2:14relinquishing of control. And so we were
2:17employees at some time likely for many
2:19people and then you stop doing that and
2:21then you decide to start a business and
2:23you typically do that because you want
2:24to quote have freedom and so then you
2:27say I will have complete control but in
2:29order to have true freedom you actually
2:31can have no control. You have to accept
2:32that's true freedom right and so at
2:34every level in the very beginning you do
2:36everything and then you say I'm going to
2:37have somebody who helps me with this. So
2:38you give a little control and then the
2:40next level is like okay well the doing
2:41I've I've delegated but the management
2:44no one can manage like I can manage and
2:45then you give the management away and
2:46you're like okay well no one can direct
2:47or lead like I can lead then eventually
2:48you give the leadership away and then
2:49it's like well no one can think of the
2:51vision of the future like I can and then
2:52eventually maybe there is somebody Steve
2:54Jobs wasn't able to be replaced but many
2:56of us aren't Steve Jobs and are
2:57replaceable and so delegation is the
3:00price of scaling losing that control and
3:03so hardworking people and this is what's
3:05really interesting about this
3:06hardworking people have a hard time
3:07coming up with non-h hardworking
3:09solutions. And so this has been
3:10particularly difficult for me because
3:12like I I will look at problems and say,
3:14"Oh, I wonder if I can outwork this
3:16problem." When Bill Gates talked about
3:18this saying it's really good to have
3:19lazy executives because they will try
3:21and think of non high energy ways to
3:24solve problems. And so the hard worker
3:27won't feel like delegating because they
3:29want to feel useful. And it's incredibly
3:32difficult. But if you draw the line, you
3:35have to say that you will not do
3:36anything in order for it to scale
3:38because otherwise you will absolutely be
3:40the limiter of your own growth. And I
3:43don't think we are as special as we
3:44think we are. And so you might kind of
3:47just have to give up some profit in the
3:49short term, but you'll make more in the
3:51long term. And so this has been kind of
3:54like a thinking process for me, which is
3:55at this point the razor I have is if it
3:57requires me, it doesn't work. That's how
3:59I think about it now. And so I use the
4:02term internally for my head and Leila
4:03and I talk about this of scale zero.
4:05Like we have to scale me down to zero so
4:08we can scale it up to infinity.
4:10Otherwise I will always be the limiter.
4:11And so this is kind of just like a a a
4:14great reminder or artifact that I've
4:16gotten from the year is scale zero. And
4:18I've been reminded this at at at this
4:20level now is that nothing can rely on me
4:23because the business is just too big.
4:25The other little little tidbit I'll I'll
4:26add in there as well is if you're at
4:28equilibrium within your business, that
4:30means that like your supply and your
4:31demand are fixed. Like I can't I can't
4:33take in more customers because my
4:35supplies like I my team can't handle it,
4:37but I also don't have more demand,
4:39right? So it's like what do you do when
4:40you're at equilibrium? When I was in my
4:42earlier part of my career, I would have
4:43said increase demand and then force the
4:45team to, you know, pull from the cracks
4:48and then with the ex extra cash flow,
4:49you'll be able to afford, you know, the
4:51the next person you need to hire. That
4:53was what I would have said probably the
4:54first 10 years of my career, 12 years of
4:56my career. And I would say that I have
4:58flipped that thinking probably this
5:00year, which is that I would say increase
5:01supply. And I'll explain why. When
5:03you're at equilibrium, whatever your
5:04next step is, you're going to have to
5:06bear a cost. And the cost will either be
5:08your reputation or your profit. And so
5:10if I increase demand, the cost of that
5:12increase will be my reputation because
5:14my team will probably not be able to
5:15deliver at the same quality they
5:16otherwise would have because they are
5:17overextended. If I increase supply
5:20first, then the bandwidth of my team
5:22will improve and in the short term they
5:25will have to train this new person up
5:26which will be a cost in the business. So
5:28I'm going to almost have a double cost.
5:30They have to train this person up and I
5:31have to bear the cost of the person to
5:32begin as well. But once that's done, I
5:36will have dramatically increased the
5:37capacity of the business which will then
5:39give bandwidth back which will then
5:41allow us to push to fill up the demand
5:43side. And so the reason that we were
5:45even able to do the book launch this
5:47year. We actually originally were going
5:48to do it in February. Couldn't do it
5:49because we didn't have the bandwidth.
5:50And then we're able to do it in August
5:52because 90 days prior we hired four
5:55directors and leaders in the business
5:57which expanded the capacity of the
5:58business so that we could do the launch.
6:00So that was the that was just some of
6:02the lessons of this year.
6:03>> So my name is Joseph. I do auto hail
6:05repair very niche hail storms damage on
6:08cars similar to roofing. Uh do 5.5
6:11million. I want to be at 15 million next
6:13year.
6:13>> Cool.
6:14>> Uh my biggest constraint is being under
6:1610 million is people leadership.
6:18>> Um so my question is if I'm hiring
6:22basically a leadership you know seuite
6:24bench COO
6:26CMO
6:27that type of thing what have you seen as
6:29the most effective way to design
6:31compensation and decision- making
6:33structure for a team like this so that
6:35performance scales without eroding owner
6:37control or margins. So I think first off
6:40you might be mistitling.
6:42>> Okay?
6:42>> Because at fiveish million you're
6:44probably not truly looking for seuite
6:46like actual sea suite. Um you're
6:48probably looking more for like a a VP or
6:51director um in terms of like titling.
6:53>> Sure.
6:54>> Um that might help with the comp stuff.
6:56>> Um so thing one titles thing two um
7:00which role you want what what roles are
7:02missing right now? I would say uh I need
7:05a a better operations person like a
7:08right hand like you are the visionary
7:10and you need somebody else.
7:12>> Yeah.
7:12>> Okay.
7:13>> Uh so you need an operator.
7:15>> Is that the main one that you need to
7:16hire right now?
7:18>> I would say right now that's probably
7:19the biggest constraint because
7:20everything seems to come back to me in
7:22terms of operations.
7:23>> Yeah. So I think it's somebody anybody
7:24who's done any kind of auto um even
7:28Yeah. Anyone who's done any kind of auto
7:29repair stuff might be helpful. Um, in
7:33terms of looking for my search, you'll
7:35probably do well,
7:37you there's a there's obviously a bunch
7:39of different sources you can do for
7:41getting getting talent. My bet would be
7:43the two most fruitful would be LinkedIn
7:45outreach.
7:46>> Okay.
7:46>> Um, and as silly as this may sound, even
7:49like simple like indebted ads, um,
7:51you'll probably get lower quality
7:52candidates from the Indeed ads. You
7:54could still get lucky. um right at the
7:56level that you're hiring for is kind of
7:57the transition between when you run ads
7:58and when you start doing targeted
8:00outreach uh for the level of person that
8:02you're looking for. Um,
8:05and so I think if you targeted outreach,
8:07I would look for people who are in auto
8:08around the same size as what you're
8:09currently doing, who are in basically in
8:12that role and you say, "Hey, you want to
8:13do that thing that you did there over
8:14here?" And that's probably like honestly
8:17that's what it's going to be. And so
8:18from an outreach effort perspective,
8:20it's like you'll probably want to reach
8:22out to 500 or so. Um, and if you're and
8:26you're struggling with your local area,
8:28you can offer a relocation package um as
8:30kind of like a signing bonus to
8:31encourage them to come there. Um, and
8:34that would probably help you solve
8:36[snorts] um the personnel issue. Uh, in
8:39terms of what I'd be looking for, you
8:41want someone who is a leader, not
8:43someone who because oftentimes you'll
8:46have people who are they they will trick
8:48they'll trick us entrepreneurs and
8:49they'll be like it's all about processes
8:51and systems and it's like those people
8:52hate talking to people and that's not
8:54what you need relief from right now. You
8:55need probably more people to handle
8:57[ __ ] Um, which means that when
8:59something bad happens, they go to them,
9:00not you. And so you need someone who you
9:03think your team would admire and look up
9:06to their character. Um because if you
9:09find leaders then they can lead almost
9:11anything and the auto is just like a
9:13bonus but a really good operator can
9:14just come into just about any business
9:16and money because they're usually two
9:18levels above like they're not fixing
9:19cars they're fixing people and that's
9:21the same.
9:22>> Sure.
9:23>> Appreciate that. In terms of
9:25compensation for something like that
9:28level where I'm trying [snorts] to go
9:29>> it's going to be it's kind of like a
9:32reverse sale. So the offer that you're
9:33giving is going to be a proportion of
9:35the leverage you or they have over the
9:37role. Right? If you have someone who has
9:38less experience, they're younger,
9:41they're going to have less less
9:42leverage, and so you wouldn't have to
9:43give up as much. If someone's done this
9:45scaling process two other times before
9:47that and taking someone from 5 to 50
9:49times, then they'll probably want more
9:51and it might be justified, right? And so
9:54I have hard I have a hard time saying
9:55like this is the hard and fast way that
9:57you should, you know, should do this.
9:58It's going to depend on the talent, but
10:00I would say like run-of-the-mill
10:01generic, you know, VP ops or director of
10:04ops uh role. Maybe a GM, general
10:06manager. Depends. Like I'd have to know
10:08a little bit more about what the
10:09day-to-day is going to look like. Um,
10:11but for someone like that,
10:14having a small tie to the overall
10:16profitability of the business is not a
10:17bad idea. Um, so a good way of doing
10:20that is like you run a a profit pool of
10:2210 to 20% that you distribute amongst
10:24the leaders and then as the business
10:26grows that 10 or 20% that percentage
10:29stays the same but the pie increases and
10:31so they think like owners like you do
10:33which is like well we're going to bring
10:34this other guy in who's also going to be
10:35a leader and they have to be willing to
10:37bring cut some of their pie up the same
10:39way you do because they think it'll
10:40expand the overall pie. So it gets them
10:42thinking more like an owner in that
10:44perspective. But I like 10ish 15
10:46sometimes in terms of uh profit share
10:48pools. And if you want to tie them in to
10:51the overall value of the business, the
10:53way that I have this conversation, this
10:55will go for just about everyone here, um
10:57is that you have uh cash flow, you've
11:00got sale,
11:02you've got risk, and then you've
11:04[snorts] got control, right? And so
11:07these are the four things that come with
11:08equity. And most people say they want
11:10equity, but you're like, "You want
11:12risk?" And they're like, "No, no, I
11:13don't want risk." And you're like,
11:14"Okay, do you want control?" Because I'm
11:15not giving it to you. And they're like,
11:16"No, I don't want that." Okay, cool. Um,
11:18so that's off the table. That's off the
11:20table, but you do want cash flow and you
11:22do want the potential for an exit. And
11:23they say, "Yeah." You're like, "Okay,
11:24cool." So we'll have a profit share pull
11:26here to help you with this. And then
11:30what we'll do is we'll, you know, you'll
11:31have a call a 4%
11:35um profits interest in the business.
11:37you'll get 1% uh per year. I'm making
11:40numbers up. 1% per year. Um it's
11:43phantomed up, which means if they leave,
11:44it comes back and then in the time that
11:47a sale occurs, they would get to
11:49recognize whatever percentage they have.
11:50Or you could accelerate the whole 4% if
11:52you wanted to um in the event of a sale.
11:54But it's only if they're there during
11:56the sale and they'd been there for at
11:58least 12 months or 24 months or
11:59something like that. And that gives them
12:01the best of both worlds. The only
12:02downside of that setup for an employee
12:05is that they have to pay regular income
12:06taxes on the sale bonus because it'll be
12:08structured like an option. If they
12:10didn't want to do that, they would
12:11actually have to pay taxes on the equity
12:14that they got and not get anything else,
12:15which most people don't want to do.
12:17>> Gotcha. And that that you're you're
12:19specifically talking about like a COO.
12:20That would be like managing multiple
12:22shops or upper ops under them type of
12:24thing.
12:25>> No, you want I mean so if you're going
12:26to do this, this is somebody who's going
12:27to drive,
12:28>> right? For sure. And then for the ops
12:31managers themselves, would you still do
12:33that?
12:34>> You could do that on a you could do it
12:35on a on a shop basis. Yeah.
12:37>> Okay. So that would be separate from
12:39>> Do you have any separate LLC's?
12:41>> I don't.
12:42>> Okay. Well, something to consider. Um
12:43you could still as if you run the P&L
12:45separately, which you probably do as
12:47long as the P&Ls are separate. You could
12:48still calculate it that way. But and
12:50they're I'm assuming they're brick and
12:51mortar, right? Um I have found So who
12:54hears brick and mortar? Can I get hands
12:56raised real quick? Okay, perfect. Yeah.
12:58So this will apply to more than just
12:59two. Um, if you were if you were doing
13:02private expansion, which you are, right?
13:04You own all the shops. I have yet to see
13:06someone do like an exceptional job
13:08expanding without having the equivalent
13:11of a an operator boots on the ground in
13:13each store that has no tie to the bottom
13:18line. So, I would strongly encourage
13:20because that and that doesn't mean that
13:22you go to all the people you have now
13:23and say here's profit share. Um, it's
13:25more like what type of people do I need
13:27to what caliber of person
13:30do I need to actually have this run so
13:31that I don't need to have all this
13:33handholding happening and that type of
13:36person might require profit share which
13:38then allows you to truly decentralize
13:39these and actually have them run kind of
13:41more independently which will allow you
13:42expand.
13:42>> Gotcha. And then when you talk about
13:44like a 10% to an ops manager so they
13:46have that is that of like revenue
13:48increase or the total amount.
13:50>> So there's two ways that I like
13:51structuring these. We're going to go as
13:52deep as you guys want. So there's two
13:53ways I like structuring these. Number
13:54one is if you have a which I don't think
13:56will be the right one for you because in
13:59a so for the people who have fast growth
14:00businesses that are not geographically
14:02constrained I like doing this which is
14:04that you can have a much higher
14:05percentage say I'm going to give you 30%
14:07of the growth that we had from last year
14:10and that becomes the watermark for next
14:12year and then you got to grow it again
14:13but I'll give you a fat percentage of
14:15whatever you grow it in a in a
14:17geographically constrained business like
14:18a local business I don't I don't do that
14:20because they can't it's tough for them
14:22to actually grow then they get really uh
14:23discouraged And so I'd rather have them
14:26have a profit share percentage profit
14:29share of the profit not revenue um that
14:31they're going to get. And
14:34I reverse engineer what I think OTE on
14:37target earnings should be. So if I think
14:39that the caliber of person who I would
14:42need to hire for this role should make
14:44$150,000 a year because I get questions
14:46like should I do 5% or 10% like I don't
14:48know what the profit is and you know how
14:49how much effort like there's a lot of
14:51variables.
14:51>> 10% would be a lot.
14:52>> Okay. So what's the what is the profit
14:54for 10% for one store?
14:55>> Um I mean margins are 40%. So
14:58>> okay
14:59>> well no like what's the
15:00>> Yeah. So well I have I have four
15:02locations but one of them is where 80%
15:04of the revenue is coming from right now
15:06because it's storm related.
15:07>> Yeah
15:08>> sense. So um monthly we're talking
15:12monthly dividing
15:15>> I won't tell.
15:17>> I'm just thinking in terms of that one
15:19store
15:20>> we'll do the other three whatever.
15:21>> Okay. So,
15:30>> so close to 200 a month
15:33>> in profit.
15:34>> Yeah.
15:34>> For one store.
15:35>> Yeah.
15:35>> Okay.
15:37You said you were doing 5.5 million,
15:39right?
15:41>> Huh? It's 5.5 million. Four stores. Each
15:45one's doing $200,000 a month profit.
15:46>> No, I was just I was picking one. I said
15:48accumulative
15:49>> Oh, cumulative 200. Yeah, that's okay.
15:51Got it. So, let's say divided by four,
15:53you've got $50,000 a month in profit
15:55that's coming in per store. Okay? So,
15:57$50,000 a month in profit um per store.
16:01If they had 10%, they would get $5,000
16:03extra a month. They get 60 grand extra.
16:06>> If they're making a hundred and they can
16:07make 160
16:09great
16:11>> two to 400 would be average next year.
16:13The only reason why I have the four is
16:15because they run without me and it's
16:17just there.
16:18>> Fundamentally, we just reverse engineer
16:20OT. It could be 5%. I like the
16:22percentage doesn't matter. I just want
16:23to reverse engineer how much money do I
16:24think this person should make. If
16:26they're bad, they'll get fired. If
16:28they're mediocre, they make on target.
16:30And if they crush it, I want them to
16:31make this much money.
16:32>> Sure.
16:32>> So, I just put those lines in the sand.
16:34Take that money and reverse in
16:35percentages. And then that's what I
16:37present.
16:37>> Okay. Makes sense.
16:39>> No, I appreciate you, man.
16:40Congratulations. [applause]
16:43>> We were at the gym, Jack and I, uh, the
16:45other day. Actually, two people came us
16:47up to us and they said that they love
16:50the podcast that we did together, the
16:52first one. I think that's how they found
16:54the podcast, but that was their both
16:56people separate referenced that podcast
16:58like when and one person said, "When are
17:00you going to have Hormosi back on?" I
17:02said, "Well, coincidence." You know,
17:03he's coming like the next week. They had
17:05a question for you that I told them I
17:07would ask you. So, if you ever see me in
17:09person, you want to have me ask Alex
17:11Hormosi something, you just ask. Uh
17:13[laughter]
17:14he was a W2 employee.
17:15>> Okay.
17:16>> And he says he really likes your content
17:17and wants to know your advice to people
17:19who aren't selling anything.
17:21>> Sure.
17:21>> But they're an employee and they want to
17:23make more money. They want to get better
17:24at what they're doing. How could they
17:25apply your advice to them?
17:28>> You have to figure out how your job
17:30directly ties to revenue in the
17:31business. And if you don't know, ask.
17:34Like fundamentally, if you don't know
17:35how your job makes the business money,
17:37then ask. And then once you understand
17:39how you directly tie to money then drive
17:42towards that because like fundamentally
17:44every position in the business makes the
17:47business more money. If I mean if the
17:48job is welldesigned otherwise why are
17:50you there right? I mean even if you're
17:51like I'm a frontline customer service
17:52rep it's like okay well how do you like
17:54if I had to ask that person like how do
17:55you make the business money? The answer
17:57is if I do a good job people will come
18:00back and buy again. If I do a good job
18:02we'll have a lower percentage of people
18:04who will refund. if I do a good job, the
18:06business will be able to command higher
18:07prices off of word of mouth in the
18:08future. Like these are the things that
18:09you can explain and say like, okay, well
18:11then if those are the things that drive
18:12revenue, then I'm going to try and focus
18:14on those things. And then you can ask
18:16your boss, and this is a great question,
18:17is what would it take for me to make
18:19this? It's not saying I need to make
18:21that. It's just asking them to solve the
18:23problem. Like what would it take for me
18:24to earn that? And then they can give you
18:26an objective metric. Now your boss might
18:28might not be high enough. And then you
18:30say, cool, can you ask the person above
18:31you? And um by doing it that way, you're
18:34also being clear like I want to make the
18:36business more money. What would it take
18:38for and and in doing so, I would like a
18:40small percentage of the increase that
18:41I'm able to bring. Like what would it
18:43take? And I think that's a great way to
18:45have that conversation. Leila, my wife,
18:47also makes tons of content for like how
18:49to ask for raises, how to negotiate that
18:51stuff on her channel as a side note when
18:52she's more knowledgeable than I am. But
18:54>> I do think though a lot of careers out
18:56there will never give you that
18:58opportunity. you say, "I want to, you
18:59know, make more money or I want to do
19:01more." They're going to You get back get
19:03back to your desk. Just focus. You just
19:05focus on that.
19:06>> And there aren't really those
19:07opportunities out there. In those
19:08situations, would you recommend looking
19:10for work elsewhere?
19:11>> I think I think um small businesses are
19:14a good opportunity for that stuff. So,
19:15if you're like in a massive corporation,
19:17um
19:19>> you can quickly cap out and get like
19:22lost in the shuffle if it's this massive
19:23org. And so I think it makes sense to go
19:26get uh basically a stamp of approval
19:28from maybe a name brand company that you
19:30can then leverage into a smaller
19:31business that you'll have a lot more
19:32impact, a lot more opportunity for
19:33growth. Most entrepreneurs are far more
19:36receptive to anyone who says I will help
19:38you make more money. Uh and so um
19:40>> so I live with the permanent assumption
19:42that I'm bad at hiring because I've got
19:44biases. There's things I don't know
19:45about certain things, etc. And when you
19:47start with that assumption that you are
19:49really really bad at hiring, you try and
19:51decentralize the decision-m. So, one
19:53thing I say a lot to startup founders is
19:56if you're hiring a salesperson, create
19:58an interview process where there's five
19:59people and one of them might be you and
20:02the other four are the best sales people
20:04you've ever encountered in your life.
20:06Like, who sold you your house?
20:07>> Yeah.
20:08>> And ask them ask them to be part of the
20:10interview process. How does that sit
20:12with you?
20:13>> I think it sits great and I think that
20:15the amount of references that you go for
20:17is proportional to the importance of the
20:19role.
20:19>> Okay. So Sam the co-founder of school um
20:21when he so he was a nontechnical
20:23founder.
20:23>> Who's school? What is school? Sorry.
20:25>> Oh so school's uh school.com's uh a
20:27platform for building communities. Right
20:28now it's online but we have an inerson
20:30component so that people can meet online
20:32and meet in person. It's awesome. And so
20:33that's the only investment that I've
20:36publicly uh associated myself with
20:38outside of acquisition.com. So it was a
20:40very big deal. It's something that I
20:41believe in a lot because it's education.
20:43It's where education and media meet. Um
20:46it's funny Sam is the is the is the
20:48founder of school and he is not
20:51technical and so he knew that to build
20:53an exceptional software product you need
20:54worldclass talent and so he interviewed
20:59600
21:00developers to find Daniel who' become
21:03the CTO of school and he asked everybody
21:08to know who the best coders were and
21:10then he talked to all those people and
21:11they asked them who the best coder they
21:13knew was and he talked to those people
21:14and then he asked them who they thought
21:16the best coder they knew was. And
21:18eventually like Daniel's name came up as
21:20like god tier. He's like if you can ever
21:22get this guy he'd be amazing. And so he
21:25ended up finding a way into find Daniel
21:28and then he ended up becoming uh
21:30co-founder of school as well. And what's
21:33interesting about that process is that
21:36it actually ladders into uh rapid
21:39learning. And so when I was a
21:41consultant, you I was 22 years old and I
21:44would go and have to give presentations
21:46to fourstar generals, right, about about
21:49weapon systems that I knew nothing about
21:50because I was, you know, chugging beers
21:52like 12 months earlier, right? Um and so
21:55how do you sound intelligent in front of
21:57somebody who has 30 years more
21:59experience than you do? And so this is
22:01the consulting process for rapid
22:03learning.
22:04First is you find five experts. So you
22:08ask the one person, you're like, "Hey,
22:10tell me the five people you know who are
22:11the best at this thing." And then you
22:13ask them, "Who are the five people you
22:14know who are who are who also know a ton
22:16about this thing?" And for each of the
22:18interviews, you take all of their their
22:19information down of like, "What do you
22:21think about this? What do you think
22:21about this? What do you think of this?"
22:22And what happens, you start mapping kind
22:24of like the e the information ecosystem.
22:26And the reason you talk to experts first
22:27is that there's no lack of information.
22:29Like you can Google whatever you want.
22:30The problem is there's too much. And so
22:32the filter becomes where the highest
22:33point of leverage is. And so experts
22:35have spent years filtering out for
22:37what's important. And so then you
22:38basically rapidly consume the most
22:40filtered information and then you
22:42reorganize the information. And so this
22:44is what a typical analyst will do as a
22:45consultant is like I would so for the
22:47space and cyber project that I did I
22:49with 600 pages of notes from all the
22:51interviews that we did. First step is
22:53you recategorize all all the news by
22:55category. So it goes from raw notes to
22:57categorized notes. Then from there you
22:59distill and consolidate notes into what
23:02are the what are the truths or the the
23:05most distilled beliefs that we have
23:07about these particular in this case
23:09weapon systems, but it could be
23:10whatever.
23:11>> And then from there, you're able to
23:13generate your inferences for what the
23:15what it looks like when it's right, what
23:17the problems are, what potential
23:19solutions might be, and then that's
23:20fundamentally how you say this is what
23:22we need to do next. That's if you're
23:24trying to learn something. But in
23:25talking to all those people, it actually
23:27works the same way because the interview
23:29process, the higher up the talent is,
23:31the more I would encourage entrepreneurs
23:33to use it as a learning process as a
23:34consultant. And so I present somebody
23:37who wants to come in for this role, the
23:39actual problems of the business for
23:41which they would have control over and
23:43say, "How would you solve these?" And so
23:44then they tell me all the things that
23:45they would be considering and what
23:46they're thinking about. And then I'll
23:48ask the next guy what he thinks and what
23:49he thinks and what he thinks or she
23:51thinks. And then all of a sudden, one, I
23:52get free consulting, which is amazing.
23:54But secondly, you can tell by how the
23:57quality and quantity of metrics that
23:59someone tracks how good they are at a
24:02particular skill. And so this is
24:03fundamentally what separates beginners
24:04from experts. And so beginners typically
24:07have binary thinking in terms of
24:08outcomes. Either it worked or it didn't
24:10work. An expert, for example, for a
24:11marketing campaign isn't going to say,
24:14"Oh, marketing doesn't work or ads don't
24:16work." They're going to say, "This
24:18particular campaign didn't work because
24:20our click-through rate was too low or
24:21because it was sending traffic that
24:22wasn't qualified and we weren't
24:23converting enough on the page or we
24:25didn't have enough people who were
24:26taking the second step in our four
24:28steps." And like they can break down any
24:30part of those any part of that
24:32continuum. If I'm interviewing a
24:33salesperson and the person says and I
24:35say, "Okay, how are you going to affect
24:38these metrics? What behaviors are are
24:40you going to do?" So to the same degree
24:41about vague versus specific, if they
24:43give me vague things back, I'm going to
24:45dial in and say, "No, what are you going
24:47to do that's going to change that?" And
24:48by the way, this is a wonderful way to
24:50teach in the organization how what they
24:52do makes a business money. And so if you
24:54have like a customer support rep, for
24:56example, and you say, "Hey, how do you
24:58make our company money?" If they can't
25:01explain it to you, they probably aren't
25:02doing it. [laughter] And it sounds as
25:04simple as it is, but if someone says,
25:06"Well, you know, I answer customers
25:08questions." And it's like, how does that
25:10make us money? Now, if they're able to
25:12say, when I answer customers questions,
25:14I increase the likelihood that they
25:16refer us other customers, and I increase
25:18the likelihood that they stay and
25:18continue to pay for us. So, I help us
25:20get new customers by delivering an
25:22amazing experience, and I get the
25:23customers that we have to continue to
25:25pay us. And if it makes sense, I
25:27recommend other products and services
25:28that we have that I can introduce them
25:30to sales guys who can explain that so we
25:32generate even more revenue from them.
25:33I'd be like, one, if you can articulate
25:35that, you're probably not just a
25:36frontline customer service [laughter]
25:37rep, you're probably a director, right?
25:39And so that level of nuance, the
25:41specificity is what shows expertise. And
25:44so when I look for and I'm interviewing
25:47uh for candidates, I first I I want to
25:50gather as much information as I can. I
25:51want to drain as much knowledge as
25:52possible, but I'm also really looking
25:55for the quality and quantity of metrics
25:56they track and behaviors that they do to
25:59influence those metrics. So in the
26:02hypothetical problem that let's say
26:03we're trying to solve uh we have low
26:04clickthrough rates. I'd be like okay
26:06this is the problem we have how would
26:07you approach changing it right and then
26:10that actually gets me to understand what
26:12they would do in the organization
26:14because it's very easy to say uh you
26:15know I'm going to come in and let's say
26:16a sales director I'm going to come in
26:18and I'm going to I'm going to improve
26:19the the sales team. I'm like okay cool.
26:20What are you going to do? You know I'm
26:21going to coach the guys up. I'm like
26:23okay what does that mean? And so just
26:25continuing to ask what does that mean?
26:26How do you do that? until they're like,
26:28"Okay, well, I'm gonna meet with the
26:30guys every single morning and we're
26:31gonna do role play." All right. Well,
26:33how do you role play? Well, we're going
26:34to start with the script and we're like,
26:36the more detailed they get, the more I
26:38believe they can do it because they've
26:39actually explained what actions they
26:41will take. If someone [clears throat]
26:42can't dial it into actions, then it's
26:45very unlikely that they're going to take
26:46them. And so, what I just outlined is
26:48basically three core things. So, one is
26:50the quality and quantity of metrics that
26:51they track. The second is the behaviors
26:54that they're going to do to influence
26:55those metrics. And then lading up to
26:57third, how do those metrics and these
26:59behaviors influence the revenue in the
27:00business? So you're like, okay, how do I
27:02find these types of a a a players,
27:04right? Is we want to look for people who
27:07describe their role in metrics in as
27:10much detail as humanly possible, right?
27:12So I can measure someone's skill in any
27:14endeavor based on the quality and the
27:15quantity of metrics they track. So if I
27:17said and I'll tell you I'll tell you the
27:19first time I like a great example of
27:21this. So, the first time I hired a
27:22really good HR professional, and I've
27:24had plenty of them in my history, but um
27:26the first time I hired a good one, um
27:29she asked me questions on the interview.
27:30She was like, "So, what's your cost of
27:33acquiring talent?" And I was like, "I
27:35don't know. That's a good question. I
27:37should know that." She was like, "What's
27:39your time to fill?" And I was like,
27:41"Wow, I didn't I didn't really think
27:42about it." She's like, "Okay, what's
27:43your two-way fit in terms of what
27:44percentage of 90 days later do both the
27:47employee and the manager say that it's a
27:4810 out of 10 fit?" I was like,
27:51don't know. And so she starts giving me
27:54all these different metrics for for the
27:55talent side of the business. Um that I
27:58had no idea about. I was kind of in the
27:59uh the internet marketer world of oh uh
28:03if I have a low refund rate, therefore
28:05my product is good. It's kind of like I
28:07had that on the talent side where I was
28:09like oh which by the way that is not how
28:10you know you have a good product. Just
28:12FYI. Um I was on the talent equivalent
28:15of that of like well you know I mean we
28:16haven't had any lawsuits lately. It's
28:18like duh, you think uh that's probably
28:21not a good way to know if you have a
28:22good culture or a good team or a good
28:24talent talent management um process. And
28:26so again, the quality and quantity of
28:28metrics. Now, this particular HR
28:30professional was uh uh a leader in
28:32turnarounds and so she knew all these
28:34different metrics and then obviously I
28:35learned all those things from her and
28:37then discarded her. I'm kidding. Uh but
28:39I learned those skills so I could apply
28:40them and fundamentally that's I I try to
28:41find people who can teach me things
28:42because that's like the best thing in
28:43the world is like you pay someone to
28:44say, "Hey, you know way more than me. Go
28:46do that in here." When you're starting
28:47out though, it's hard to afford those
28:48people because those people don't want
28:49to work for you or you can't afford them
28:50or both. Right now, I'll give you a
28:54couple a couple rules of thumb that that
28:56also took me too long to figure out is
28:58that um number one, uh I would interview
29:01as interview more people than you think
29:03you should. And I know how costly this
29:05is as a business owner. So, you want to
29:06stack as many as you can. Also, I highly
29:08encourage [snorts]
29:08group interviews um pretty high up once
29:12you get into director and executive.
29:14It's tough, but like anything that's
29:15like frontline to maybe even manager, um
29:17you can have group interviews because
29:18it'll save you time and you'll very
29:20quickly be able to to read people's
29:21vibes. And so the idea here is that um
29:24I'll tell you I'll tell you a story. Um
29:26for school, Sam interviewed 600
29:31developers. 600
29:35developers to find our co-founder
29:38Daniel, the CTO.
29:40600.
29:42So think about one, two, three, four,
29:47five. Okay, so that's just me naming
29:48numbers. That felt like it took a long
29:49time. Now imagine each of those
29:51represented a 30 to 60 minute
29:53conversation. And then imagine that
29:55that's over a year of those
29:57conversations. It is brutal. But when
29:59you do that, what happens is you start
30:00to get a lot of nuance of who's good and
30:03who's not. When you talk to 10 people
30:05who say that they are u a manager, a
30:07sales manager, you're going to get a way
30:10better idea than when you talk to one of
30:11who's actually legit. When you talk to
30:13your 50th person, you already know who's
30:15got game. And so what happens is it
30:17starts to tune your picker. Because
30:19fundamentally, the reason I think we've
30:22been able to grow businesses faster and
30:24faster and faster with each each next
30:26company that we start is because pattern
30:28recognition um becomes one of your
30:30biggest assets. Like some people call
30:32this wisdom or whatever you want to call
30:33it, but fundamentally it's just that
30:36I've had a good sales manager. They
30:37looked like this. You look like that
30:39person. Therefore, you have a higher
30:41likelihood of working out in this role.
30:43But to figure out which sales manager
30:45was good, I had to hire five different
30:47sales managers and waste six months or a
30:49year on each one of these before I
30:50finally found somebody who was good. So
30:52that's the thing is that if you look at
30:54every role in the business, and again,
30:55this goes from the ground up. So, a
30:57frontline support rep, a frontline sales
30:59rep, a frontline media editor, whatever.
31:01And then all of a sudden, it's like,
31:02okay, this starts to work. And then your
31:03business starts to grow. And then you're
31:04like, I've never hired my first level of
31:06management. So, you got to figure out
31:07what a good sales manager, a good media
31:08manager, a good all these roles. And
31:10then after that, you're like, okay,
31:11well, that starts to grow. Now, I've got
31:12my director level. And so, each of these
31:14levels, you keep putting these people in
31:15until eventually, you know what it looks
31:17like when it's right across an entire
31:18org. And so, what happens is when you
31:20start really building businesses, you're
31:22not actually building the business. It
31:23feels much more like assembling the
31:24people who then build the business.
31:26I sell um services to real estate
31:28agents. We help them uh scale, be more
31:30profitable. We're similar to an
31:31acquisition.com, but specifically in the
31:33world of real estate. Um we'll do about
31:3717 18 million this year in revenue. Uh
31:39we'd like to be at 100 million in
31:41revenue. And what's stopping me is I am
31:45I along with my COO are the best closers
31:47for external growth right now, bringing
31:49more clients into the organization.
31:52>> Um the leads are not the issue. It's
31:54it's really a it seems like regardless
31:56of what I do and how far I try to get
31:59out of the process,
32:01the people teeing up the appointments
32:04still want me to come in and close.
32:06>> Yeah.
32:06>> So, I looked at my week last week. I had
32:10about 20 hours of the week in closing
32:12meetings.
32:13>> Yeah.
32:14>> And it's, you know, me and my COO can
32:17probably between the two of us bring in
32:19about five million a year in external
32:21revenue. Um, so
32:24That's the issue. What I've gotten from
32:26this yesterday and today is that I need
32:28to find more of me and the whole thing
32:30works really well. Um but just trying to
32:32find more of me.
32:33>> I think um well, how can I help?
32:37Um I mean I can I can answer what I
32:39think the question you didn't ask is.
32:41>> Yeah.
32:42>> Um so the question I think you didn't
32:43ask is like how do I go about
32:44systematizing the sales process so that
32:46somebody can come in and have increased
32:47likelihood of success?
32:48>> Yeah.
32:49>> Cool. Um,
32:51so right now I'd say like a big shift in
32:55identity that you will have to have with
32:56your COO is going from sales god to
32:58sales training god. Um, and having
33:01basically seeing every time you close a
33:02sales a failure rather than success. Um,
33:05as thing one. Thing two, I would
33:07consider not paying commissions on sales
33:09that you help close. Um, so that'll
33:11probably get them to real quick stop
33:13asking you to close. Um, the next issue
33:16is that right now, um, you say things,
33:20so I I'll say it differently. I will bet
33:23because I've only done this a lot of
33:24times when it comes to sales. I will bet
33:26that you have what I call a
33:28founderdriven sales process. Meaning,
33:32the way that you script
33:35uh, and the way the sale works is
33:36probably more consultative in nature,
33:39which relies on heavy industry knowledge
33:42and expertise. which is typically not a
33:45scalable sales process. You can do it.
33:48It just requires a shitload more work
33:50and is not my preference. So, if I come
33:52in and I talk to a business owner, it's
33:54very likely that I can sell them on
33:56doing stuff with us. If I have a
33:5922year-old who's going to talk to a $18
34:02million per year business owner, he
34:04cannot rely on using the same process
34:06that I do because it's based on
34:08authority.
34:10A sales process that scales is based on
34:13the prospect not the salesman.
34:16And so fundamentally um all the
34:20knowledge has to be about
34:23the questions that have to get asked in
34:25the correct order to have them like the
34:28salesman should not provide any answers.
34:32That's not what they're there for.
34:34They're there to ask questions to lead
34:36the prospect to make their own decision
34:37that this makes sense. And so if they
34:40have to demonstrate expertise,
34:42you will not find those people or it
34:44will be way too expensive to find those
34:46people. So we just have to have a good
34:49intro frame. The discovery process is
34:51where they just have to say their their
34:53pain points and we have to match those
34:54to the solutions that we have. And then
34:56when we get to our pitch moment, we're
34:58going to say here's how we solve those
34:59problems. Thing one, thing two, thing
35:01three. And then we match that problem
35:03you said earlier to the solution set
35:05which we set the stage before we
35:06transition to the pitch. And so if we
35:08follow that process, if the scripting is
35:12correct, the salesman should close the
35:15closable accounts. And so fundamentally,
35:17like for us, the way that we do things,
35:20um, and I think that like 90, honestly,
35:22like 97% of businesses do not know how
35:26to train sales. What they do is they
35:28just have they hire a bunch of sales
35:29guys and just see who sticks and that's
35:32the process. If you really know how to
35:35train sales, you can take anyone. And if
35:37you know the script is successful, then
35:39it's really a reinforcement loop of
35:41getting someone to say the right thing
35:42at the right time, which is 100%
35:44trainable. It's just that most people
35:45don't train nearly enough. And so right
35:47now, I would imagine that your training
35:49cadence is Do you guys train daily?
35:52>> It's so that's the issue. We're very
35:53good at training realtors. I'm very bad
35:55at training people on growth.
35:57>> So like the the simple answer is that it
35:59requires a shitload more work. Number
36:01one. Number two is the scripting is
36:02probably wrong the way it currently
36:04stands. It's probably too long. I would
36:06bet you. Um, so if we were to look
36:08through the script, I would bet you that
36:09we'd cut half or more of the script out
36:11because we need to give someone just the
36:13absolute minimum amount of information
36:15in order to make a purchasing decision.
36:16That is the only objective. And then
36:18fundamentally after that, it's answering
36:20the questions related to the sale, not
36:23related to the product. And so what I
36:25mean by that is like if you say if you
36:27were on the phone for today, some of you
36:29guys probably asked this on the phone
36:30like, "So what is Alex or what is
36:32acquisition.com specifically going to
36:34help me with in my business?" The guys
36:36are not going to say, "Oh, what they're
36:38going to do is we're going to, you know,
36:40we're going to figure out your paid ad
36:41strategy for uh for health for your meta
36:43ads webinar uh and this is the hooks and
36:45angles that we're going to run." Because
36:47that wouldn't be reasonable for them to
36:48know. What they would say is, "Hey,
36:51right now you're talking to the
36:52secretary and you have a hearting
36:54question." And so I just want to make
36:55sure that you have a heart that needs a
36:57surgery. That's my only job right now.
36:59And so you're saying that you have these
37:00pains, we solve that stuff. And the
37:02people who can help you solve it,
37:04they're really good.
37:06Do you want to do it or not? That's f
37:09like that's what we all the rest of this
37:11is the consultative closing. You're
37:12coming in with authority and you're
37:14undermining the sales guys because the
37:15process doesn't make it makes you the
37:17hero rather than the prospect the hero.
37:19>> Got it.
37:20>> That's the issue.
37:21>> Cool. All right.
37:22>> Easy peasy. We sell microdevelopment
37:24housing to investors.
37:26>> Microdevelopment. Okay.
37:27>> Yeah. So, infill housing.
37:29>> Um, we do 46 million in revenue. We'd
37:31like to get to 500 million.
37:32>> Cool. Awesome.
37:34>> Um, and our bottleneck is scaling
37:36capital and our team structure. So, they
37:38rely heavily on myself and my business
37:40partner.
37:41>> So, you do the fundraising.
37:43>> Uh, no. To do everything. [laughter]
37:45>> Yes. Fundraising is what we'd like to
37:48focus on.
37:49>> Heard. Okay. Okay. And so,
37:51>> so question is, how do we get Chiron to
37:53join us as a GP in our fund?
37:55>> Yeah,
37:57>> sneaking. Yeah.
37:58>> But our question would be is how do we
38:01uh attract high net worth individuals
38:03without using our personal network?
38:05>> Just talk to me. [laughter]
38:08Um,
38:10I mean, you you have a you have a number
38:11of paths, right? One is somebody go to
38:13somebody already has the has all those
38:14people, right? Option one. That's the
38:16affiliate model. You could run paid ads
38:17and say, "Hey, this is my experience.
38:19This is my background." If you're an
38:20accredited investor, check us out. Um,
38:22or you could be making content, which I
38:23don't know if you are doing that on a
38:24regular basis. You could be making
38:25content. Um, or you could do the
38:27outbound method, but like those are fun.
38:28Like those are the options, right?
38:32>> There's only there's only so many ways
38:33to get like have people find out about
38:34your stuff. Um,
38:37I mean, that's it. Like going to trade
38:39shows I still kind of put into like you
38:40pay somebody else to gain access to
38:42their audience. Same same idea. Um, but
38:44those are the those are the different
38:46paths. Um, we have a really good kind of
38:49like playbook for for uh because what
38:53you what you're looking for is kind of
38:55like high it works the same as an
38:56enterprise sale. Even though it's a it
38:59feels different or like it it quacks
39:00different, it it's actually still the
39:02same process. Um, and I think that if I
39:06had to like if I had no money, no
39:07everything, and I had to start now and I
39:09was switching places with you, I would
39:11probably hit um the conference event
39:14stuff.
39:14>> Yeah.
39:15>> Because that's where it's just super
39:16high leverage. you typically want to be
39:17face to face with investors. They I mean
39:19not you don't want to, but you can. Um
39:20and it's just like the speed to trust is
39:22so much faster. Um yeah, we have a whole
39:25playbook around that, but you should um
39:28more than I could share right now in
39:30terms of time for everybody else, but I
39:31think if I had to pick one of those
39:32paths, that's probably the one I would
39:34start with.
39:34>> Um unless you had some like background
39:36in like media buying or some other
39:39>> Yeah. founders often struggle with, do I
39:42hire naivity because [clears throat]
39:43that's going to probably create new
39:45solutions to old problems, like the
39:47young scrappy kid that gets Tik Tok.
39:49Yeah.
39:49>> Or do I hire experience, which is going
39:52to be more expensive, more conventional,
39:53and safe.
39:55>> And I see some companies lean too far
39:57either way.
39:57>> Yeah.
39:59>> I have actually fairly strong opinions
40:01on this.
40:02>> Oh, great.
40:02>> So, I actually think it's um and I was
40:04talking to the CEO of ButcherBox about
40:06this particular thing um last week.
40:09I think it's a barbell strategy where
40:11you have people on either ends and very
40:13little in the middle.
40:14>> Interesting.
40:15>> So, I love lots of young hungry people
40:19who are here for growth and want to
40:21learn and are ready to work long hours
40:23and just go all in.
40:26And the people at the call it the the
40:28back half of their career that are here
40:31that they they've made enough money.
40:33They know they can get a job wherever
40:34they feel like it. You're not doing them
40:36a favor by giving them a job. And
40:39they're not what I a term I hate, which
40:41is careerists. They're not obsessed with
40:43their title. They're not obsessed with
40:45their career path, what their promotion
40:47plan is going to be. They basically have
40:49a litmus test, which is like, I have to
40:50have make about this to get to come in
40:52and do this with you, but they actually
40:54just really love the work. And so these
40:56people are learning. So the young people
40:58are learning and and overcompensating
41:01with tons of hours and reps. And these
41:03people are bringing their experience to
41:05the game. and creating significantly
41:06more leverage with strategy. The people
41:08in the middle are the ones that tend to
41:10be the pain in the ass for everybody.
41:12[laughter] And I don't think, and be
41:13clear here, I don't think this is
41:14actually an age thing. I think it's a
41:16perspective thing. So, it's just are you
41:19here for growth or are you here to share
41:22what you know? And I think that it's the
41:25people in the middle that are like,
41:26well, I'm bringing something, but I need
41:28some. It's like this kind of tit fortat
41:30relationship that um I would say the
41:33vast majority of people that don't work
41:34out are in that bucket.
41:36>> And what role does naivity play in
41:38innovation here? Because the kids that
41:40don't know the rules Yeah.
41:41>> are more likely to stumble across
41:43nuances, right?
41:44>> I think yes. Uh
41:48you can fundamentally you can disrupt
41:50any industry if you don't know how it's
41:51supposed to go. [laughter]
41:52And so, but that's I think that really
41:55teases out something we said at the very
41:57beginning, which is um starting from
42:00first principles, which is what are the
42:01few things I know to be true and then
42:04basically forgetting everything else.
42:06And when you build from those
42:07assumptions up, you end up building lots
42:09of different paths up the mountain that
42:10may or may not have been trotten before.
42:12I think one of the one of the one of the
42:13most um corroborating things that can
42:15happen sometimes is that like you
42:16rederive a solution that already works
42:18and you're like, "Okay, well, now I know
42:20why this works, [laughter] right?" And I
42:21think but I think that's actually then
42:23you have more confidence in the path and
42:24you're like okay that's fine but now I
42:26know why we're doing this not just
42:27because other people did it but because
42:28I understand why it works. And so I
42:30think it just comes down to what are the
42:32few truths that I know to be true and
42:34going all in on those things like I know
42:36that if customers love my product they
42:39are more likely to tell other people
42:40about it than if they hate it. That I
42:42feel very confident. So then we say,
42:43okay, what are the things that must
42:45occur in order to get someone to quote
42:47love my product, aka increase the
42:49likelihood that they tell their friends
42:50about it or post about us. And so now
42:52there's and you can break this and
42:54again, this is where quality and
42:54quantity of metrics matter. So it's like
42:56how how much more nuance can I break and
42:58break this up into small pieces. So it's
43:00like, okay, at what time do we deliver
43:02these messages or around what
43:04experiences that have high likelihood of
43:06them posting? Can we decrease the
43:08friction around uh them sending friends?
43:10How can we make it both easy and how can
43:11we incentivize it? And so all of these
43:13components, whether it's a service
43:14business, a physical products business,
43:15a software business, it still works the
43:17same way is, you know, and for each each
43:20customer, for example, as we're taking
43:21someone through this, I have four
43:22milestones that I look for, which are
43:23the four Rs. So how do I get them to
43:26review my product? How do I how do I
43:30well in order how do I retain them
43:32immediately? How do I get them to review
43:34my product? How do I get them to refer
43:37somebody? And then how do I resell them?
43:40And so they're basically those four Rs
43:42is what I try and take every customer
43:43through. It's a very simple framework,
43:45right? [laughter]
43:46When you think I was like, "Oh man,
43:47customer success, what does it mean?"
43:48It's just like, "Well, these are the
43:49four things that I want to occur." And
43:50so all I'm trying to do is reverse
43:52engineer what activities I sell
43:54[clears throat] guaranteed deadlines uh
43:56and showstopping trade show booths. Uh
44:00>> guaranteed deadline was it
44:01>> like we have guaranteed deadlines on our
44:03because it's all event event based,
44:05right? So
44:06>> people are hosting events like this. I I
44:08have a guaranteed
44:10deadline on when our properties have to
44:12be there.
44:13>> So
44:14>> you'll have a booth that you'll build
44:15for them.
44:15>> Yes. Yes.
44:16>> That'll be done by the time.
44:17>> Exactly. Yes.
44:19>> Including the shipping and all that
44:21setup, whatnot. Um so we do a toz on
44:23that. Um our revenue is about 10 million
44:26right now. I'd like to be at 20 to 25
44:28million in 18 to 24 months.
44:31>> The biggest problem we're having is
44:32keyman and manpower. And I mean it's
44:36kind of kind of same problem, right? Um
44:39I just need to hire more people to take
44:41over the responsibilities that we have
44:43now.
44:44>> So what stops you?
44:47>> The biggest thing is
44:50it's it's manpower in general, right?
44:51>> Okay. Do you have the money to afford
44:53the manpower?
44:54>> Yes.
44:54>> Okay. What are the margins again?
44:55>> Uh about 30%.
44:57>> Okay. So you're doing three-ish.
44:58>> Three-ish. Yeah.
44:59>> Okay. That's not bad. Okay. So you have
45:01three million. And what roles are you
45:03missing that you are struggling to fill?
45:05>> A lot a lot of um trade industries like
45:07we need welders, carpenters, stuff like
45:09that. And obviously it's a big commodity
45:12right now. So everyone's paying top
45:13dollar from
45:15>> and just to get incentive to come work
45:18for us, especially in the trade show
45:19industry. It's uh
45:23>> how much do you uh how much do you Oops.
45:25How much do you make per
45:27per tradesman roughly for the role that
45:30you're struggling to fill per year gross
45:32profit?
45:33>> Um
45:35it's hard to say. One part one part
45:37department we just opened and that it's
45:40the welding part, fabrication of it,
45:41metal part. Um we've brought in about
45:45>> probably $750,000.
45:47>> That's what one guy can do in terms of
45:48like what you can sell for his work.
45:50Yeah. And that that guy was me. I'm the
45:51one laser welding and doing all that,
45:53>> right? Okay. So 750. Fine. Let's just
45:56say that they're not as fast as you or
45:58as good as you and they can bring in
45:59500. Does that sound fair?
46:00>> Yeah.
46:01>> Okay, great. So five. But what about
46:03gross profit though? What would So
46:05that's revenue. And then is it just like
46:07what other costs are there besides
46:08labor?
46:09>> Very minimal. I mean the material I mean
46:11obviously the the materials to build it.
46:13Um
46:14>> is that like a hu like what percentage
46:15is that? 5%. probably about 30% total is
46:19is the the material cost of that.
46:21>> Okay. So, they bring in 500K. So,
46:23there's 350K that would be left over.
46:26Does that sound right? And then you then
46:28you have to pay labor out of this.
46:30>> Yeah.
46:30>> Right. Okay. Cool. But this would be
46:32like whatever after labor the rest would
46:34be bottom line.
46:36>> Yeah. Little bit of building rent and
46:38stuff, but
46:39>> Yeah. Just for just for incremental.
46:40Okay. So, um and that's per year. Okay.
46:44Great. So what how much how much are you
46:48how much does a welder normally get paid
46:49right now?
46:50>> It can go all the way up to $85 an hour
46:52depending on their their certificates
46:54and we're not really
46:55>> So like 180ish. It can go up to that. Is
46:58that what you're offering?
46:59>> Uh we're offering a non-certified
47:01welder. So those are
47:03>> How much do those guys get paid?
47:05>> 45 to 65.
47:07>> Okay. Well that's a big range but um
47:09>> yeah.
47:10>> Okay. Uh so let's just say 50 bucks an
47:12hour for simple math.
47:13>> Perfect.
47:13>> All right. So 100 grand a year is what
47:15you're offering, right? Um what are you
47:18paying right now in order to like in ads
47:21to get those people?
47:23>> We we have I I don't know the exact
47:25number of ads we're paying for, but we
47:27have uh I have my project managers on
47:29LinkedIn paying for the ads to bring
47:30people in.
47:31>> Okay. So let's assume let's just get
47:33really aggressive here and say that you
47:34pay 180,000 for the like if you paid
47:37180, do you think you'd be able to fill
47:38the slot?
47:39>> Yeah.
47:40>> Okay, great. Um, let's do 150 so I don't
47:43have to do this math. There we go.
47:45[snorts]
47:45So, $200,000 in gross profit is what's
47:48on the line, right? And if you paid
47:50this, you know, you'd be able to fill
47:51the role.
47:52>> So, why don't we do that?
47:56>> Real real question.
47:57>> Um,
47:59it's if I could find someone qualified,
48:01I would pay pay for that. But it's the
48:03part the hardest part is bringing
48:05someone in training training them how to
48:06our processes and then maybe they're
48:09>> if you advertise this rate you'd
48:10probably get more qualified guys.
48:12>> Okay.
48:13>> Okay.
48:14>> So if you did that and you got a
48:15qualified guy you'd happily pay him.
48:18>> True. Yeah.
48:24>> Sound like problem solved. [laughter]
48:27>> And don't feel weird about it. I had a a
48:29dentist here like two months ago. So, he
48:30was doing 20 million topline, 4.6
48:33million um in take-home. And he was
48:35like, I have it's I he has a boutique
48:38dentistry, blah blah blah blah blah,
48:39right? Um I only have unicorns, etc.,
48:41etc. Um and so I said, "How much do you
48:44make in gross profit after you pay a
48:46dentist uh per year?" And he said
48:48$700,000 in gross profit is what he
48:50makes per dentist per year in his in his
48:52practice. And I was like, "Okay." Uh and
48:55his issue is that was after him paying
48:57them, right? And so his problem was that
49:00he I was like, "Okay, well, what are you
49:01spending in advertising to go acquire
49:03these these dudes?" And he was like,
49:04"I'm spending $2,500 a month in
49:07advertising to get these dentists, and
49:09it's just not working." And wild. And so
49:13I said, "Why don't we just get a head
49:15hunter and pay him a h 100red grand to
49:17go find the person?" And would you be I
49:20think I said 150 cuz I was being
49:21aggressive. Um 150 grand per person. Uh
49:24and so this year your profit's going to
49:26go from 4.6 six to four and then next
49:29year you'll add 2.8 million in profit to
49:31the business and if I give you a trade
49:33that imagine I have a stock a stock
49:35investment where I said hey give me 600
49:37grand a day and then for the rest of
49:40your life you're going to make 2.8 8
49:41million in profit per year on this
49:43investment. Would you be like, "Fuck
49:45yeah, I would do that." Right? And for
49:47whatever reason, we don't do that with
49:48our businesses. And so, this is why I
49:50still believe that to this day, the best
49:52way to beat the market is to find a
49:53player talent and pay them well. You'll
49:55also retain them longer, all that stuff.
49:57And I'll just say this as like just a
49:58general thing for anybody who deals with
49:59the trades, which is about a quarter of
50:00you guys. Right now there's going to be
50:04I think there's going to be like a
50:05compression and then a huge drop off the
50:07floor. But for the next few years, you
50:10have to accept that the cost of
50:12acquiring and and paying good tradesmen
50:15is going to go up. It's a supply
50:17constrained market. And so in a supply
50:18constrained market, the supply has the
50:22has the has the uh the upper hand. And
50:23so that means that you're going to have
50:25to pay them more. Now the good news is
50:27that the vast and this is you know not a
50:28slight but there's a lot of people who
50:29are in the trades world who are not very
50:30good at business um and so they will not
50:33think this way and so fundamentally we
50:35just have to do the math of is it is it
50:37worth the money and so what I was what I
50:39was outlining here I was about to do the
50:41other side of this is LTGP lifetime
50:43gross profit per employee to CAT which
50:46is cost of acquiring talent so just like
50:48we did LTGP to CAC on the customer side
50:51it's the exact same equation on the
50:52other side which is how much am I
50:54willing to pay to acquire talent and how
50:55much do making talent per year. What's
50:57the lifetime value of this talent? And
50:59so when you look at, okay, if we were to
51:01keep spelling it out, it' be like the
51:02average person stays with you for six
51:04years. Like, great. So all in, I'm going
51:06to pay a onetime recruiter 20 grand to
51:08go get this guy, and I'm going to pay
51:10$150,000 per year over the next six
51:12years. So I'm going to pay 900k plus the
51:14100. I pay a million bucks, but I'm
51:16going to get $200,000 per year for the
51:18six years, and I make it back. Right?
51:20Are you going to make
51:20>> I just want to say, didn't realize what
51:23this was actually going to be. They
51:25figured out that most of my issues are
51:27me 10%. Uh
51:29>> little background, we made that we made
51:32obviously just walking up here.
51:34>> Mine are me. No, [laughter] you're good.
51:35You're good. Yeah.
51:36>> So, we actually did more revenue last
51:38year.
51:38>> Uhhuh.
51:39>> But it was burning us in the ground.
51:42>> So, we went backwards. We got Service
51:45Titan on board as our CRM.
51:48>> And we've done pretty good this year.
51:50We're at 1.5 mil to date. 700 netish
51:54some somewhere around there.
51:55>> Badass.
51:56>> Anyh who, it's just me and four other
51:58techs and my wife. At this point,
52:02>> my big concern is how do I make the
52:07dream team like you have here? How do I
52:09get technicians on board, sales guys?
52:11>> Yeah.
52:12>> Like make it work.
52:13>> So, okay.
52:16What breaks when we do more?
52:19>> What breaks? Like what stops you from
52:21doing this?
52:22>> We're gonna figure out which one like
52:23order of ops. What stop what what what
52:25breaks when you do that?
52:26>> Biggest issue is technicians.
52:28>> Okay. So text is the is the issue. Okay.
52:30So what do you
52:31>> what do you make on a tech?
52:33>> Uh anywhere from 180 200 300,000 a year
52:39>> per?
52:39>> Yeah.
52:40>> After cost.
52:41>> Uhhuh.
52:42>> Damn. All right.
52:43>> Well, this year. Yeah.
52:44>> Your dentist. He's you giving you a run
52:46for your money there. Just saying, man.
52:48All right. All right. So, we got 300K
52:50for the techs. Got it. Um All right. And
52:53you need them local and Boseman.
52:55>> Yes.
52:55>> Okay. Um and what are you doing right
52:57now to recruit techs?
52:59>> Uh honestly, kind of just gave up
53:01lately.
53:02>> Yeah.
53:03>> Yeah.
53:03>> I would imagine that would make it
53:04difficult to recruit more techs.
53:09>> So then then let me then let me ask the
53:11next question which is like what stops
53:12you from recruiting more techs? Not the
53:14decision. And there's I like
53:17>> some of you guys have probably seen that
53:18management diamond that I have which is
53:19like people don't know that you need to
53:20do it. They don't know how to do it. Um
53:22they don't know when to do it by they
53:24have something blocking them or there's
53:25a motivation issue. I'm assuming you're
53:26motivated. I'm assuming you already know
53:28that you need to do it and how to do it
53:30>> 100%.
53:30>> So and you need to know the when is now.
53:32So I'm guessing there's something
53:34blocking you.
53:35>> My thing that's blocking me is I have to
53:38be involved I believe in every single
53:40>> strong words.
53:41>> Yeah. every single aspect of the
53:44company.
53:44>> Have to or choose to?
53:46>> Choose to. Okay. Choose to speak, you
53:48know, sing. Okay.
53:50>> And so I can't I can't let it go.
53:52>> Okay. So can't or won't.
53:54>> We have some Okay. We have some very
53:56high-end clients too. Okay. So we work
53:59at the Yellowstone Club. Okay.
54:00>> In Montana, Spanish Peaks.
54:02>> I know Matt Damon, Jennifer Garner, Mark
54:05Zuckerberg.
54:06>> I mean, you don't need a name drop.
54:07>> Yeah. Sorry. But I I
54:09>> You're a big deal.
54:10>> I'm not a big deal. It's tiny. Ed told
54:13me to say
54:16[laughter] anyhow. And so it's it's hard
54:18to let that go. You know that
54:22>> that ego.
54:23>> So well so fundamentally this is I guess
54:26this is I mean keyman is the number one
54:28risk of every business um for two
54:30reasons. One no one wants to buy it but
54:31second you want to kill it yourself at
54:32some point because you're like I don't
54:33want to do it. You said you burn
54:34yourself off in the ground right? So um
54:37what we have to do is if we look at all
54:39of the things that like look at your
54:41behaviors not your feelings around them
54:42and say okay these are all the things
54:43that I do on a daily basis some of those
54:46things someone else can do now there's
54:48for sure things that are higher leverage
54:49higher value it might be that for you
54:53doing the design for stuff is the
54:55highest leverage thing I don't know it
54:56might be it might it's definitely not
54:58using your hands I can promise you that
55:00u it might be getting the relationship
55:02and managing the relationship that might
55:03be the most valuable thing so if we just
55:05did if we if If you did a rank order,
55:07this is what you'd have to do is like we
55:09do a time study, which is step one. So
55:11take an Excel sheet, you can open up on
55:13your phone, every 15 minutes, you have
55:14an alarm. It'll annoy everyone. Don't
55:16worry about it. And every time it goes
55:18off, you just write what you did in the
55:19last 15 minutes. And at the end of the
55:21week, you can look at all those
55:23activities and rank them in terms of
55:25revenue. Like which of these is the most
55:27valuable and most unique? And then when
55:29you look at the bottom half of that
55:30list, does it neatly fit into some
55:32person that either exists currently that
55:35has bandwidth or somebody that we can
55:36hire? And part of the the good news that
55:40you have is that when you serve premium
55:42customers, which you do, you can charge
55:43a premium, which you do, which means
55:45that you should have excess margins, you
55:47can get premium people. And so right
55:50now, what will probably be required is
55:52that you have to lower your tolerance
55:54for mediocrity on your team.
55:57And so it might cost. So if it's if
56:00you're going to make $300,000 per year
56:02for a tech, it's like, would you be
56:04willing to spend $50,000 to go get
56:05another tech who's good?
56:07>> 100%.
56:08>> Right? And so that's a combination of
56:10like you could try the recruiting firm
56:11thing, which is a thing. One that you
56:13probably haven't thought of that I would
56:15strongly recommend. This will probably
56:16be the unlock for you is run national
56:19ads and then offer a really generous
56:21relocation package.
56:23>> So make the 50 basically a signing
56:25bonus. You get 25 now and 25 at month
56:27six.
56:28>> What do you think about instead of
56:30having W2 employees and how much they
56:32cost running 1099 service tax?
56:35>> You're a business. Do they have to show
56:38up at certain times and do work specific
56:39the way you want them to do?
56:41>> Yes.
56:41>> They're employees.
56:42>> Employees.
56:43>> Yeah. Unless they're like they're not
56:45vendors. They work for you. If you have
56:47meetings and they have to show up,
56:48they're they're employees.
56:49>> Um so no, you like
56:51>> keep it W2. Keep it
56:52>> You want to go more legit, not less
56:54legit.
56:54>> Okay. Yeah. Um, but fundamentally like
56:58if you were to spend this $50,000 to go
57:00get another tech, we just have to like
57:02getting the tech I don't think is going
57:03to be that hard honestly if you're just
57:04willing to spend money for it, which you
57:06have the money to do it.
57:07>> Um, and then the other piece is, okay,
57:09now that this person comes on, I have
57:10this big stack of stuff. How can I give
57:12them a third of it or half of it and
57:14then all of a sudden get those time
57:15back? And so, let me ask you a different
57:17question. If you got half your time
57:20back, could you double the business?
57:22>> 100%.
57:23>> Right? And so that's the game.
57:25>> Yeah.
57:26>> When you're hiring for smart people, how
57:28do you figure out if they're smart?
57:30>> Really good question. Um I think the
57:32quality. So couple things. So the the
57:34the quality of the questions that they
57:37ask.
57:38>> Let's go deep on each one. So the
57:39quality of questions that they ask.
57:41Okay. What's a high quality question?
57:43>> So if someone said, "Hey, I noticed that
57:47you guys have this media brand here and
57:49you have this advisory practice here.
57:51What's revenue retention around that? is
57:53there's another vehicle that you guys
57:54have considered that you know isn't in
57:56the pipeline right now. I'd be like wow
57:58that demonstrated they did a fair amount
58:00of research and they were able to take a
58:02complex thought between these two things
58:03and and ask me about it. So like that's
58:05a great question. Whereas if someone
58:07says like
58:08>> you know what's the 5-year vision of the
58:09company? I don't see that as a bad
58:11question. Um I just see that it's like
58:12kind of a generic interview question
58:14someone might ask. And if that's not
58:16already answerable online, which you
58:18know the the the pros and cons of our
58:20situation, similar to you, is that a lot
58:22of my stuff is public. And so I expect
58:24somebody to come in with better than
58:26generic [laughter]
58:29for quite some time now, but my name is
58:30Derek. I'm from Chicago. I own like San
58:33Restoration. We do um storm restoration
58:36and so far we've been hitting the 7
58:38million mark. This year will be probably
58:40about um over 10 to 15 storms and um I'm
58:45having an issue with bringing in sales
58:47reps on a key structure like I I I'm
58:49just lost.
58:50>> Okay.
58:51>> You know.
58:52>> Mhm. So what what specifically you're
58:55saying you're having trouble with it.
58:57Are you getting are you not getting
58:59applicants? Are you getting applicants
59:00that are qualified or people who are
59:02qualified are starting but they're not
59:03sticking? like what specifically is
59:05>> so I'm getting unqualified people but
59:07then like um so we kind of changed
59:10something up when we started paying for
59:11training and I see people now are just
59:14coming in to get paid for training and
59:16so I keep learning that after one week
59:18I'm like you're out you're not qualified
59:19for this um so the one I'm not getting
59:22qualified people
59:24>> I don't when you saying paid for
59:26training
59:27>> yeah so what we do is four weeks paid
59:29training and then your commission
59:31>> okay
59:32>> um but I figured That's
59:34>> what are you paying for the training?
59:36>> It's 750 a week,
59:38>> right?
59:39>> Um it's not good though. It's not
59:41working out at all,
59:43>> right? Yeah. Um and you're door to door.
59:47>> Uh door to door. Correct. Yes. And then
59:49we have a call center that brings in a
59:51massive amount of leads. So we give
59:52about two to three leads a day to every
59:54rep.
59:57>> What's revenue split between door to
1:00:00door and I'm guessing inbound you say
1:00:02call? Are they outbound calls or they
1:00:04>> uh outbound calls?
1:00:06>> Yeah. So we get um probably like 70% is
1:00:09outbound calls. We get a lot of them
1:00:11like 15 to 20 a day now and then what's
1:00:14it called? Door door is probably about
1:00:1630 40%. So what we do is we get these
1:00:18leads and then they got a door knock on
1:00:20all the houses around cuz um we just had
1:00:23a major storm in Chicago. So all those
1:00:25houses are affected. So we get them the
1:00:27lead and then we knock all those areas
1:00:29there.
1:00:29>> Yeah, understood. Um, okay. So, I don't
1:00:34think there's really any issue with paid
1:00:36training. I mean, if you have ton more
1:00:37people, I'd say four seems like a bit
1:00:39long, but um, you can do it in two or
1:00:42one. Um, but again, it's not that's not
1:00:46the problem. Um, I'm guessing the
1:00:49problem is more around emphasizing it in
1:00:51the advertisement.
1:00:54And what are the requirements for
1:00:58getting in?
1:01:01So, how do you how like you you put
1:01:03these ads out, right?
1:01:04>> Mhm.
1:01:04>> From ad to you can train. What's the
1:01:07process there?
1:01:08>> Um I get them on the phone and I just
1:01:10see if they want
1:01:11>> you personally.
1:01:13>> Jesus.
1:01:14>> Yeah. Yeah. That sucks. Okay. So,
1:01:16>> let's not do that. So, um number one,
1:01:19they come in, they'll apply, they'll
1:01:21send their resume. Doesn't matter for
1:01:22sales anyway. Who cares? Um, what I
1:01:25would say is send them the script that
1:01:28you guys have in response and then give
1:01:30them a group interview. So, you can have
1:01:32all of them on there. On the group
1:01:34interview, you do a one minute role play
1:01:36with every person live. Then give them
1:01:39real-time feedback on how they did. If
1:01:41anyone prepares, it's already a great
1:01:43sign, right? And if they didn't prepare
1:01:45at all, it'll be immediately evident.
1:01:46And if they didn't prepare, they're
1:01:47[ __ ] amazing in sales. It'll also be
1:01:49relevant, too. And you're like, "Hey,
1:01:50what have you actually tried? Let me
1:01:51show you some stuff." Um, and so the
1:01:53thing is is that in that one call, you
1:01:55can interview 10 or 20 people and then
1:01:57from the people who were good, you can
1:01:58then have your one-on-one job offer
1:02:00conversation with those people. Like
1:02:01right now, you're like, I'll guarantee
1:02:03you that there's no issue with there's
1:02:05no lack of sales talent in Chicago,
1:02:07right? It's just that your process
1:02:09you're you're talking on Tuesdays and
1:02:10you want to kill yourself and you're
1:02:11like at this point you should lower your
1:02:12guard like just bring them in. I don't
1:02:14care. I don't want to have these
1:02:15conversations. Just do it one to many.
1:02:17>> Okay.
1:02:19Honestly, that's that's the bottom line.
1:02:21It's almost cool. Thank you. [laughter]
1:02:25>> I did this with a a therapy clinic. They
1:02:27had the same issue. They were hiring a
1:02:29on that was their delivery side. It was
1:02:31insurance based so it was capped.
1:02:33Business 6x for 3 weeks.
1:02:36>> So just cuz it's simple doesn't mean it
1:02:38like we could if you can double your
1:02:39business one move like why do five?
1:02:41>> Exactly.
1:02:43>> Yeah. Know this event gave me the most
1:02:44clarity that I've ever been to an event.
1:02:47Like I've never I've been to a lot of
1:02:48events but nothing gave me that much
1:02:50clarity about business and how to
1:02:52operate and actually structure the
1:02:54business properly for it to grow by
1:02:55itself.
1:02:57>> 6 million
1:02:58>> around on pace six and a halfish this
1:03:00year. Um we did four last yearish. Um
1:03:04we're a a team model. So we are lead
1:03:08generation for our agents, right? So we
1:03:11we generate leads for our agents and
1:03:12then um we're a Zillow Flex team. So
1:03:16that's a big chunk of our business and
1:03:18they they take a a big 40% referral fee
1:03:20off the top.
1:03:20>> Y
1:03:21>> so our main focus has been we're going
1:03:22to your VAM days. Our big focus has just
1:03:24been basically in-house deal flow. It
1:03:27does not have a referral fee attached to
1:03:28it.
1:03:29>> Okay. Um the question I was asking um
1:03:32for for you specifically, Alex, was more
1:03:34of a strategy question on um should we
1:03:39add on like the traditional brokerage of
1:03:41services outside of just our team model
1:03:44>> uh which is more like the real model if
1:03:46you will?
1:03:47>> What do you mean what what do you mean
1:03:48by traditional brokerage services?
1:03:50>> Yeah. So we run the traditional team
1:03:53model and then like if a if if
1:03:55somebody's basically not a fit for the
1:03:56team and just wants to be a part of a
1:03:59brokerage, right? Would we want to do
1:04:00that?
1:04:01>> Yeah. Why would you? Yeah. Yeah. So if
1:04:03you have the infrastructure,
1:04:04>> if you have the infrastructure already,
1:04:06then you allow for that. So I I'll tell
1:04:08you how to think about it. You want to
1:04:09think about it as a minor league major
1:04:10league model. So the minor league major
1:04:13league model essentially is like, hey,
1:04:14if I, Chiron, am doing well in the minor
1:04:16leagues, you promote me up to the
1:04:18majors. And for some reason, if it
1:04:19doesn't work in the majors with your
1:04:21team model where you get all the lead
1:04:22flow, etc., then you get me back to the
1:04:24minors. And when I'm in the minors, I
1:04:26still get all the other services, but
1:04:27then I see the guys in the majors doing
1:04:29well, it gives me an aspirational frame
1:04:31to do better. So the minor league, major
1:04:32league model does really well in this
1:04:34process. As you grow, what you want to
1:04:36add is also a JV model. So you get the
1:04:38new agents coming on board. So if you
1:04:40can get a new agent development program,
1:04:41then you have a JV model, a minor league
1:04:43model, and a major league model. And you
1:04:45have a clean ascension among all three.
1:04:49Got it. That makes sense. And you would
1:04:50use the team as the keep the team is the
1:04:51major obviously.
1:04:52>> Oh yeah. Absolutely.
1:04:54>> We could be with real.
1:04:54>> Absolutely. No. Yeah. Whatever brokerage
1:04:56is fine. But however, I would tell you
1:04:57this. Um you want to get your Zillow
1:05:01portion to a third or under of your
1:05:03business and keep it there because that
1:05:0640% referral fee is not going down
1:05:09anytime soon. That is a that is 40% off
1:05:11your gross margin immediately. And so
1:05:13now you're taking 40% off. So, it's
1:05:14$100, take 40% off with the $60. Even if
1:05:17you do a 50-50 split, that's $30 each.
1:05:20And then they have taxes. So, the
1:05:22average agent is making $15 and $100
1:05:24commission, which gets not fun very
1:05:26quickly.
1:05:27>> Yep. I mean, that's that's our entire
1:05:29focus like from the van days. That's
1:05:31that's all we're doing.
1:05:32>> Yeah. And and a very easy way in your
1:05:33minor league model, you can cap them
1:05:34out, too. You can just say, "Hey, once
1:05:36you pay $15,000 to the brokerage, that
1:05:37way you know that you can expect $15,000
1:05:40or whatever from a cap person always
1:05:42contributing to a brokerage for the same
1:05:43amount of flat fix
1:05:44>> and become super sticky."
1:05:45>> Yeah.
1:05:45>> Mhm. Mhm. For sure.
1:05:48>> Rock and roll.
1:05:48>> And then uh Yeah, for sure. I was going
1:05:50to ask on on geographic expansion. We're
1:05:52we're looking to branch out of our
1:05:54adjacent market from Orange County out
1:05:56to Riverside.
1:05:56>> Yeah.
1:05:57>> Um what should I what should I be
1:05:59looking out for knowing this is the
1:06:00first uh first expansion? For for
1:06:02context, we have 72 agents. Yeah. Yeah.
1:06:05>> Grown two in two years here in Orange
1:06:08County.
1:06:08>> That's awesome, by the way.
1:06:09>> That's awesome. That the key part of
1:06:11expansions, why expansions break is that
1:06:13they don't have the ability to duplicate
1:06:14your current model in the new expansion
1:06:16market. So, you have to preund a little
1:06:19leadership in the expansion market.
1:06:21Otherwise, you're not going to you're
1:06:22going to say, "Wait, how do I not have a
1:06:24homebased expansion? Why why am I not
1:06:26getting the same results?" So, if you if
1:06:28you just think that the mothership's
1:06:29going to serve the expansion, it's going
1:06:30to be difficult because geographically
1:06:31that market's not as tight. So if you
1:06:33can get a local market leader that can
1:06:35then train up and duplicate your model
1:06:38then it will work. Otherwise it gets
1:06:40very hard to duplicate the model that
1:06:41you've built in a new market. You think
1:06:43you can but there are market specific
1:06:44dynamics that are super difficult to do.
1:06:46So if you can get a leader there and
1:06:48that leader can duplicate in that can
1:06:49duplicate your model then it works
1:06:51better. So I would do top down in that
1:06:52market not bottom up.
1:06:54>> That's exactly what we're doing.
1:06:55>> Okay good. Awesome man. Congrats bud.
1:06:57Thank you so much for the donation.
1:06:59>> Awesome. Thank you guys. Appreciate you,
1:07:01man. And thank you for for on behalf of
1:07:02the entrepreneurs who are getting the
1:07:03books. So, thank you, man.
1:07:04>> Yeah, absolutely. Oh, by the way, uh
1:07:06your AI gave exactly the same answer
1:07:09Sean just to just [laughter]
1:07:11amazing. We're
1:07:12>> I'm I'm replaced. I am unnecessary.
1:07:14>> We are on brand, which is good.
1:07:15>> Yeah. Well, dude, I appreciate. If you
1:07:18like this video and you're a business
1:07:19owner who wants to break through your
1:07:20current revenue ceiling, I distilled
1:07:21every lesson from scaling 10 businesses
1:07:23past 10 million and three businesses
1:07:25past 100 million into a completely free
1:07:27scaling road map that I've used to go
1:07:28from 0 to 1, 0 to 10, and 0 to 100 plus.
1:07:31And so you can click here and you can
1:07:32check it out. Again, absolutely free.
1:07:34And since you're a business owner,
1:07:35appreciate you. And uh enjoy.

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