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"Why Is Hiring Great People So Hard?" (1-Hour Compilation) — Transcript

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0:00Alexandra. I sell Pilates education, so
0:03I co-authored a comprehensive 550 hour
0:05comprehensive school of Pilates along
0:07with a physical therapist and professor
0:09at Oakland University in Michigan. We
0:11also I also used to have four Pilates
0:13studios, so individual sessions and
0:17Pilates classes as well.
0:19I now have two and I'm trying to offload
0:21the second right now to come back to the
0:23roots of what was working.
0:26And so I think my biggest constraint
0:27like last week I fired my sales I fired
0:29my marketing entire marketing team
0:32because I learned that despite the
0:35$14,000 a month that we were spending on
0:37ads,
0:38everything was still coming in from word
0:40of mouth.
0:41>> it off and nothing changed.
0:43>> Yeah.
0:44And ads used to work though.
0:46>> Sorry.
0:47>> [laughter]
0:49>> But ads used to work. I used to break
0:51even on like that $14,000 a month used
0:53to get me about $14,000 worth of intro
0:56offers and then our conversions at like
0:5886%.
1:00>> Okay.
1:01>> So I do 1.5 in revenue now. I'd like to
1:05be a billion dollar company. I think 500
1:07studios globally with a school and a
1:09studio will easily accomplish that. More
1:11important than that, I'm mission driven.
1:13I want to change the way humans feel and
1:15move in their bodies.
1:17I've been broken so many different times
1:19and
1:20people have a right to feel at home in
1:21their bodies. And also I'm education
1:23driven. I left home at 17. I didn't get
1:25to go to college and it was robbed from
1:27me despite all the scholarship anyway.
1:29So I want to provide opportunities for
1:32people so that cuz I would love to have
1:34been a physical therapist, but I'm not.
1:36>> So you have a school
1:38>> Mhm.
1:38>> and you have a facility where customers
1:41come in.
1:42So you have two of these dual setups.
1:44>> Mhm.
1:45>> Okay.
1:46The B2B side where you teach how to do
1:49Pilates.
1:49>> Mhm. Teach teachers how to teach. Yeah.
1:51>> it. So you teach teachers and then you
1:54graduate the best teachers.
1:55>> 12 entrepreneurs in the area instead of
1:57supporting my flywheel.
2:00>> You take the best ones, they come to
2:01your thing, and then when they get good
2:03they leave with your customers.
2:04Something like that. Okay.
2:05Um
2:07Okay.
2:08So, [sighs]
2:11you want to scale
2:14this business.
2:15Hm?
2:16>> Epically, yes.
2:17>> Yeah.
2:18So,
2:20having been in I still consider this the
2:22gym space. Um
2:24same same.
2:24>> Yeah.
2:25>> From a customer perspective. Um I feel
2:27like I have some credibility talking
2:28about this. Um
2:29>> That's why I'm here.
2:31>> What's really difficult about that space
2:34particularly is that you sell
2:39low
2:40skilled labor
2:42that you then train into high skilled
2:44labor
2:45that they can immediately earn more
2:47somewhere else.
2:48>> Mhm.
2:49>> It's very hard.
2:50>> Mhm.
2:51>> And so, you have to build some sort of
2:55widgetized system, if that,
2:58to make it somehow more difficult for
3:01them to try and do it on their own. So,
3:03for example, an Orange Theory trainer
3:06has a harder time leaving because they
3:09can do some hopscotch in the parking
3:11lot, but they don't have the vibe, they
3:13don't have the lights, they don't have
3:14the equipment, and so it makes a little
3:15bit of a moat for people but basically
3:17in terms of making your own competition.
3:19>> Mhm.
3:21>> But, if we look at like how many really
3:25successful micro gym boutique models
3:28have you seen scale?
3:31>> Um I mean the the one that comes to my
3:33mind is Solidcore.
3:35>> Okay.
3:36>> Yeah.
3:36>> And so, what's interesting about that?
3:38Do you know what the unit economics are
3:39for Solidcore?
3:40>> No.
3:41>> I'm going to bet they're bad.
3:43>> Mhm.
3:44>> Could be wrong, but I'm probably not.
3:46And
3:48the unfortunate truth about how most
3:51brick-and-mortar fitness works is that
3:53the person who makes the most money is
3:54the franchisor.
3:55>> Mhm.
3:56>> And I have yet to see someone really
3:59hack it with the exception of Alloy,
4:02which is um a semi-private model.
4:05Um I have yet to see someone have
4:07impressive unit economics
4:10because of the issue that I just stated.
4:11The reason that you can have a Quiznos
4:13and a Subway is because the food is all
4:15there. The person's not The sandwich
4:16artist isn't like, "I'm going to start a
4:18different Like you're like, "Oh, I'm
4:19going to follow Roosey." You know, like
4:20you have no affinity for the sandwich
4:22artist, unfortunately, right?
4:24Um and so those models are incredibly
4:27replicable. And the chicken is the
4:28chicken, the bread is the bread, so it's
4:30it's so it's so easy Not easy, but it's
4:32easier to get consistent. Whereas even
4:34with the same coach, they can be have a
4:36good day and a bad day, let alone
4:38differences between coaches. And so the
4:40consistency of the model is incredibly
4:41difficult. And typically, you have an
4:44owner-operator who has lots of
4:45razzle-dazzle, and everyone loves them.
4:47I'm guessing that's what's happening
4:48with you. But as soon as you get people
4:50around you, if you create enough
4:51razzle-dazzle, you can't pay them
4:52enough.
4:53And if you don't create enough
4:54razzle-dazzle,
4:56your product suffers.
4:57It's an incredibly hard business.
4:59And so I'm not saying this to dissuade
5:01you. I'm saying that the reality is that
5:03the unit economics has to be
5:06there has to be a more defensible moat
5:07within the business,
5:09like the actual four walls of the
5:10business, that that prevent a trainer
5:14from
5:16starting their own thing. And it's not
5:17like I want to be defensive. I'm just
5:18like the reality of it, right? Um in
5:21order for it to scale, because you have
5:22to have basically career growth and
5:24retention for It's a service business.
5:26>> Mhm.
5:26>> Um and so that is the difficulty of this
5:28particular model in terms of how do I
5:29get to 500 locations? You can, if you
5:32look at the Solidcore's and the the
5:34Power Yoga's and whatever else that that
5:35has scaled over the years, typically,
5:37you've got a really good marketing and
5:38sales entrepreneur that gets one
5:40location that they just crush ads
5:41through, and then they sell off the unit
5:43economics of that one, and sell 200 uh
5:46locations. They scale to open 50 as fast
5:49as they can. They're usually in year
5:51one, year two max. They're a little bit
5:53new, trendy, hip, fatty. And then they
5:55immediately set up private equity, who
5:57then holds the bag. And then the
5:58franchisees who own all these locations
6:00never even open them up. The unit
6:02economics drop. And then their item 19
6:04sucks, which is basically where you
6:05disclose how much money each location
6:07makes. And then all of a sudden their
6:08franchise sales die, and the and the
6:10cycle repeats.
6:11That is
6:1290% of franchises, unfortunately.
6:15So, this is me obtaining the biggest
6:17doom and gloom
6:19uh version for you. But
6:21um
6:22>> So, with the school being a $13,000
6:25ticket
6:26>> Yeah.
6:26>> at uh I think
6:27>> I'd rather you do that.
6:29>> Well, yeah, that's what I want to do.
6:30And that's what I do.
6:30>> Okay. Well, then can we get rid of the
6:32the individual locations for the
6:34customers? And is Okay, let me let me
6:36ask this differently. Do you just use
6:38the locations as a way for them to
6:39practice?
6:40>> They I need a location for them to be
6:42able to practice.
6:43>> Yes.
6:44>> Okay. That So, it's more of a you have a
6:46you have a Pilates teaching school.
6:48>> Yes, and it's not scalable. Yes.
6:51>> I'm fine with that business. The other
6:52business is very hard.
6:53>> But that that's Oh, yeah. I agree.
6:55>> Yeah, yeah. Very hard. Yeah, yeah. Yeah.
6:57>> Um So, So, my next question then would
7:00be So, my competitors in the industry,
7:02the people who are $200 million
7:03companies, Balanced Body, Polestar,
7:05Bosu, um they are doing it scaling their
7:09education systems through host
7:11locations, right? And And so, what my
7:14brain did instead, because like for
7:16instance, I was like I don't know what
7:17to do. So, I was like I need to figure
7:18out how to do this. And then I was like
7:19I need to do this.
7:20So, like when I tried to
7:22scale or hire in my own community, I
7:24went back to where I got educated. And
7:26like, "No, your region's already sold.
7:27We can't help you." And so, that was the
7:29driving force to create my own school. I
7:31was like, "Fine, [ __ ] you. I'll do it
7:32myself. And I'll create my own people
7:33that are qualified." So, um
7:36So, I did that. And but now I have these
7:3912 local entrepreneurs in in my area.
7:41So, I'm like, "Fuck, I should have
7:42thought of a licensing model. I should
7:44have sold them my playbook. I should
7:45have sold them like, yes, here's how you
7:47teach Pilates, but now here's how you
7:49have a marketing model. Here's how you
7:51do this. Here's how you do this." And
7:52then keep going.
7:53>> like you want to start a franchise.
7:54>> I don't think a franchise cuz I've read
7:56all the books and that seems really hard
7:58and sucky and
7:59>> Well, I mean, bro, you want to get to a
8:01billion and you're like it's hard.
8:03>> No.
8:03Well, I want I uh yeah, hard is the
8:06wrong word. Um
8:09Yeah, what about licensing? Like I guess
8:11I'm trying I mean, I joined the thing.
8:12>> Yeah, yeah. No, you're It's not like I'm
8:14not going to help you for free.
8:15>> [laughter]
8:15>> like yeah, help.
8:17I don't want to do this alone. I am
8:19alone. So.
8:20>> much cash do you have? None. I'm so out
8:23of [laughter] cash.
8:24Okay.
8:24>> Like
8:25yeah.
8:25>> Not it.
8:26>> Yeah, that whole exercise yesterday was
8:27like nearly impossible because my EBITDA
8:29is like way in the [ __ ]
8:31>> I got you. Okay.
8:32Um
8:33all right.
8:34Okay.
8:34>> [laughter]
8:35>> So, no, you're good. You're good. So,
8:40the difficulty is that you don't have a
8:42true model yet because right now you
8:45have a your business is teaching and you
8:48use a store just so that you have a test
8:50kitchen. But, it's not because the
8:52business is the store.
8:55So, said differently, if you if you have
8:57the true store model nailed,
8:59>> Mhm.
9:00>> then the education of the Pilates owner
9:03is just part of the franchise package,
9:04which is you train the staff, you train
9:06the owner on your systems and whatever.
9:08And so like you're looking to build like
9:10everything you're saying is looking to
9:11build a franchise.
9:13I'm saying what's difficult about it.
9:15And I want to be very clear.
9:16You can absolutely make a ton of money
9:18doing it. I just ethically have some
9:20issues with it because I have seen 99%
9:22of franchises, the franchisor leaves
9:24with the money and the franchise users
9:25left with the bag, right?
9:26>> I like all the money, but it's not
9:27actually my
9:28>> Got it.
9:29>> purpose.
9:31>> Got it.
9:31>> But, I do want it all still.
9:33>> Yeah, yeah. So, we
9:37>> Sorry.
9:38>> You're good. You're good. I'm trying I'm
9:39trying to unpack this thing. So,
9:44Layla has this great frame which I'll
9:45I'll share with you which is like, are
9:46we are we talking about solving a missed
9:48opportunity or we solving a problem? And
9:50most growth comes from solving problems,
9:52not lamenting missed opportunities cuz
9:54there will always be infinite missed
9:55opportunities. But there's a more finite
9:57set of problems that you can solve and
9:58there's one problem that's going to be
10:00the most valuable to solve which by the
10:01way is how you grow. It's not fun, but
10:03that's how you actually grow. And so
10:05right now,
10:06I want to go all the way back to basics.
10:08You have an education business where you
10:10teach the Pilates. What stops you from
10:12doing more of that?
10:17>> Uh I am doing more of it. Like this my
10:19goal this year is to sell out three So,
10:21I'm the first company or first school to
10:23do uh a daytime cohort.
10:25>> What's stopping you from doing it?
10:26>> What's stopping me from doing more? I am
10:27doing more. I'm already doing more. I'm
10:29I'm probably going to be at the capacity
10:31of those two locations this can't do
10:33this fall.
10:33>> so then the capacity of the location
10:35becomes the thing why you can't do more.
10:37Correct? Okay.
10:39So,
10:40are those locations profitable?
10:43>> Uh my Berkeley location's very popular
10:45pop- profitable. My Rochester one is not
10:48at all and that's the one I'm trying to
10:50exit and sell to one of my students.
10:53>> [laughter]
10:54>> She don't know yet.
10:55>> You're meant to be a franchisor.
10:57Um
10:57>> [laughter]
10:59>> uh
11:00I'm just kidding.
11:01Um
11:01>> I did that with my third location. I
11:03sold that to one of my students.
11:05>> All right. Um Jesus. Uh
11:09All right.
11:10>> home now?
11:10>> So, No, no, no, you you have this
11:12education business and I I I want to I'm
11:15trying to I'm trying to solve this. So,
11:17uh you have this education business and
11:18you're
11:23It's just It's because you have two
11:25models that are getting mixed up.
11:26You have this brick-and-mortar model and
11:27the teaching model. There's nothing that
11:29stops you from just opening more
11:32teaching stores, whatever you want to
11:34call it, classroom, whatever facilities.
11:36Um
11:37>> And I have six educators that I've
11:38trained and out teaching school.
11:40>> I mean, if I were you, do you have a way
11:42of reliably producing Pilates people who
11:44will pay you money to get certified in
11:46your style of Pilates?
11:47>> Yes.
11:47>> Great. So, I think it would make a
11:49shitload of sense for you to just
11:52partner with people, use the off hours,
11:54sell a shitload of customers, students,
11:56students who want to become teachers
11:57into those businesses. You don't have to
11:59take the build-out risk, you don't have
12:00to take the rent risk, and that is super
12:03profitable.
12:07>> But then I'm just like my competitors.
12:08So, then I got to beat I got to beat I
12:10got to beat I got to
12:11>> got to beat Goliath.
12:12>> Hm?
12:12>> I got to beat Goliath. Like if I'm going
12:15to do that then
12:15>> you want to be a billion-dollar company.
12:17>> Yeah.
12:17>> You got to beat Goliath. That's the
12:19game.
12:19>> Okay.
12:20>> I'm being real as [ __ ] with you.
12:22Like you want to be a billion-dollar
12:24company.
12:24>> I would do it differently than Goliath's
12:26and therefore better.
12:30Goliath is Balanced Body.
12:31>> So,
12:33most of the time Goliath is actually not
12:35that hard to beat. The biggest part
12:36about Goliath is hard to beat is the
12:37idea of Goliath.
12:39>> Yeah, I look up to them.
12:41>> Yeah, you I think you show them too much
12:42respect.
12:44And what I mean by that is that also
12:46means that they have a ton of bloat,
12:48they have a ton of overhead, they're not
12:50adapted to AI, they're going to be super
12:52slow on all this new stuff that's coming
12:53out, and there's always room for a new
12:55player because the new player always is
12:57more up to date and is always leaner and
12:58always faster. And that is the cycle of
13:00business.
13:02And so, like there's no like Rome didn't
13:05lose to another Rome, they lost to the
13:06barbarians.
13:08Right? And so, like you are the
13:09barbarians right now, and I think that
13:10that's probably the strategy that you
13:12should take. Cuz if right now you
13:13believe that you're Are you beating them
13:14in your current market?
13:15>> Yes.
13:16>> Then why can't you beat them in another
13:17market?
13:19>> Uh capital.
13:21>> Well, you're not beating them then
13:23because you need to make money in your
13:24business.
13:24>> Mhm.
13:25>> So, real talk, I think we need to zoom
13:28all of you know, I'm glad we're happy to
13:30help, but like we have to fix the like
13:33you're you're here.
13:35We're trying to solve like it's like a
13:37weight loss customer is like I'm going
13:38to have to change all my clothes once I
13:40lose 100 pounds. It's like let's lose
13:41100 pounds first, then we'll worry about
13:43the clothes, right? So, you're like I
13:45got to get to a billion. I'm like I hear
13:47you, but like let's make money here
13:49first so that we can do that.
13:51>> Yes. You asked where I wanted to go.
13:54>> No, you're fine. You're fine. But we got
13:56to get these four walls to print cash.
13:59>> Yes.
14:00>> Once these four walls print cash, you
14:01will have oxygen to breathe and you'll
14:03have optionality. At that point, we'll
14:05be able to make the call of maybe maybe
14:07the store itself is a franchisable
14:09model. The the the teaching part, which
14:12is different. It's B2B. It's cool.
14:14That could be a franchisable model. You
14:16could just do the kind of flying out in
14:18the host version of that. That's also
14:20super profitable. But until we nail
14:21these four walls, nothing else matters.
14:25>> Mhm.
14:25>> So, this is what we have to focus on.
14:27>> Mhm.
14:27>> And we'll help you focus on it, but
14:28that's that's that's what we have to
14:30solve and thank God we got to there. But
14:31that's that's where it is, okay? That's
14:33what we have to do.
14:34>> Yeah.
14:34>> Forget everything else.
14:35>> Yes.
14:36>> Nothing else matters until this thing
14:38prints.
14:39And then you have lots of options.
14:41But you have no options cuz you have no
14:42money.
14:43>> Right.
14:43>> So, we need to go make money.
14:44>> Yes.
14:47Okay.
14:47>> Yeah, sure.
14:48>> [applause]
14:56[clears throat]
14:58>> Hi Alex.
14:58>> We made it.
14:59We [laughter] did it.
15:00>> I run a cyber security company.
15:02Uh we sell cyber security analytics.
15:05Specifically, we catch hackers
15:07in large organizations.
15:09>> All right.
15:09>> Primarily sell to the Fortune 1000,
15:11Global 2000.
15:12Specific focus on financial services,
15:15nation states, and uh and retail.
15:18We do uh last year we did uh $304
15:20million of top line.
15:21>> Awesome.
15:22>> And
15:23uh our gross margins are about g about
15:2588%.
15:26>> Right.
15:26>> Uh net operating margins are lower uh
15:29primarily because we have significant uh
15:31costs in terms of sales and marketing
15:32and and what have you. There's a lot of
15:33infrastructure on the back end there.
15:35Even though the delivery costs are low,
15:36the sales and marketing efficiency is
15:38not there.
15:39We'd like to get to about $500 million
15:40of revenue in about a year and a half
15:43from where we are and that's recurring.
15:45What's stopping us is that we're sort of
15:46addicted to those large deals. Take a
15:49look at our average deal size, we're
15:50talking about about 536k
15:52for average deal size today.
15:54Um
15:55and what that really causes is it causes
15:57a significant amount of lumpiness in the
15:59business.
16:00Moreover, there's a lot of
16:01platformizations in in terms of what we
16:02have in terms of the technology. And
16:04what I mean by that is we've we tried to
16:06do a land and expand sales model where
16:09we sold we sold smaller amounts if you
16:10will. We We tried to transact those and
16:12try to upsell. But ultimately, we have
16:14an elephant hunters on our enterprise
16:16sales team who just go and sell the
16:17entire
16:18fleet of products in one shot. 9 months
16:21uh it's 9 months or bust.
16:22Um really what's happened over here
16:24though is that this is a fundamental
16:25risk to the business. It's very very
16:27lumpy and sometimes uh a quarter will be
16:30um
16:31we'll we'll either make the quarter or
16:32lose the quarter based on a particular
16:34on one deal. And this is particularly um
16:37frustrating right now because we are PE
16:39owned. We've sold the company We've sold
16:40the company twice. We sold it from VC to
16:42PE and then from another PE to another
16:44PE. And now we're looking at the third
16:46exit here in the next year and a half,
16:47which is why we have the $500 ARR
16:49target.
16:51Any suggestions on as to how to take an
16:53established model where we have various
16:56covenants
16:57and add a a minnow or basically a land
17:00expand motion without disrupting the
17:02existing enterprise sales motion.
17:06>> Did you found the business?
17:07>> Yes.
17:08>> Congratulations.
17:09>> Thank you.
17:10>> How long has it been?
17:11>> 18 years.
17:13Feels like 18.
17:14>> Yeah.
17:15>> [laughter]
17:18>> That might be my of the day.
17:20Um, okay.
17:23>> [snorts]
17:23>> So, I think that
17:25um
17:26So, I mean, margins have to be
17:27razor-thin if a $500,000 deal is going
17:29to make or break the quarter. So, what
17:31part am I misunderstanding there?
17:32>> Uh, it's not So, it's not so much um So,
17:34basically we reinvest a significant
17:35amount in growth. So, for example, we
17:37have 204 sales people in in in the
17:39company today. And what we generally
17:40have been trying to do is rather than
17:42optimize on the operating margin, we've
17:44been reinvesting in the business. So, we
17:45have sales capacity for the next year.
17:47>> Do you trade on EBITDA?
17:48>> Uh, we have now we've recently moved
17:50from covenant basically our leverage
17:52covenant moved from uh moved from ARR to
17:55EBITDA as it it's actually about it's
17:57moving next end of this year. So, we're
17:59preparing for that right now.
18:00>> Yeah, because you'd have to dramatically
18:02increase EBITDA if you're
18:04>> That's right. So, we've moved We've
18:05actually moved from negative EBITDA to
18:07$37.6 million of EBITDA this year.
18:09>> Got it. Okay.
18:11Um
18:13All right. So, I'll I'll tell you what I
18:15I might start by what I wouldn't do.
18:17Um, which is I probably wouldn't
18:18allocate existing resources or people
18:21um and try and
18:22to take people from one to the other
18:24because it's it's such a different sales
18:26motion
18:27uh kind of going after minnows. And so,
18:29I think you'll probably need somebody
18:30who's kind of entrepreneurial. It might
18:32be a really cuz given the size that you
18:34have, it might make sense to acquire
18:36somebody who
18:37already have like that's pro like if I'm
18:39in your shoes because you need to have
18:41such a significant amount of scale in
18:43order to make a you know, make a dent in
18:45this.
18:45>> Yeah.
18:46>> It's like I'd be looking at somebody who
18:47has inferior product to yours but has a
18:49really good marketing and sales function
18:51for minnows and just say like, "Listen,
18:53your back end's trash. Uh, like we'll
18:55we'll plug it into ours uh but we just
18:58want like this there was a deal that I
18:59was looking at um for gym launch,
19:01obviously smaller, but um where there
19:03was a marketing agency that was selling
19:05like 50 gyms a month and they would keep
19:06them for 3 months and they churn out.
19:08And I was like, "Man, I could just buy
19:10buy company and just say like, keep
19:11everything the same, just sell our
19:12thing. Um we ended up not doing the deal
19:14for a different reason, but like I think
19:15that would probably be like the fastest
19:17way of getting into the minnow market.
19:20Start building that from scratch given
19:22the fact that no one in the business
19:23sells to minnows now.
19:27Given the timeline.
19:28>> Right.
19:29>> Uh I don't think I would I don't think I
19:31would try an organic growth strategy for
19:32minnows to get from you know, 340 or
19:36right around where you said to to 500 in
19:3918 months.
19:40>> Right.
19:41>> I don't think it I don't think I just I
19:42think it'd be really really tough.
19:43>> I think that that's that's our sense as
19:45well. Uh we were looking at doing an
19:46inorganic rather an
19:48an inorganic acquisition there. Uh the
19:51catch is also one of them maintaining
19:52the culture of that acquisition. That's
19:53going to be such a distraction.
19:57>> I mean I think either way it's going to
19:58be a distraction. I wonder if like I
20:00know you said that
20:02the lumpiness is an existential threat
20:04to the business.
20:06What is sales velocity?
20:08>> So sales So like as I mentioned the
20:09sales uh
20:10I'm not happy with that sales cycle
20:11either. It's about 9 months.
20:13>> But how many deals a year do you do?
20:15>> So in general So right now we have about
20:1740 customers with the with ARR's of over
20:19a million.
20:20>> Uh-huh.
20:20>> Uh total customer count is approximately
20:22a thousand today.
20:23>> Got it.
20:24>> And uh so we'll we'll add a net new this
20:26this year of about 150 customers.
20:30So there's
20:31>> a thousand customers, 340 million
20:33roughly. So annual revenue is like
20:35340-ish
20:37per customer. And then top 40 are
20:39disproportionately higher.
20:40>> That's right. So So we have a long tail.
20:42So we raised prices in recently. Now
20:44we're looking for larger deals. The The
20:46average deal size has increased as as
20:48we've grown the company.
20:48>> Yeah. Yeah.
20:51So if we were looking at the more better
20:52new, I know as as as rudimentary it is,
20:54I still think that way. Um
20:57if I had to make a bet,
20:59I would probably bet on the better
21:01button for the existing sales function
21:03with like
21:05you have 204 or 40? 204? to just
21:08>> people.
21:09>> Yeah, 204 sales people.
21:11I would probably be thinking like, okay,
21:14I I'm dissatisfied with this. I'm
21:16probably not going to introduce a new
21:17variable into the business when I know
21:19that if I if we just I guess thinking
21:21like 12 months in the future, if we just
21:23nailed one thing, what would have the
21:24highest likelihood impact on us getting
21:27to 500? We're probably taking the
21:28existing infrastructure, existing deal
21:30model, and just say like, how can we
21:31tune this thing up?
21:32>> Right.
21:33>> Would probably be and that's just going
21:34to be a lot of
21:35>> Like
21:35>> rolling sleeves up. But, I think
21:37realistically that is probably and
21:39there's probably a lot of blow right
21:40now.
21:41Um and I'll bet you that from a cultural
21:43perspective, I know you want to maintain
21:44the culture, but I'll bet you the
21:45culture that team is probably not as
21:46good as you want it to be. It's probably
21:48a lot I mean, especially in like tech
21:50sales, it's like literally
21:52the butt end of jokes for lack of work
21:54ethic, right?
21:54>> That's right.
21:55>> So, um
21:57probably putting in like almost like a
21:58Welchian, like Jack Welch, um
22:00perspective of like every quarter bottom
22:0210% gets cut.
22:03>> Right.
22:03>> I think it would probably dramatically
22:05signal to them that like we need to
22:07produce. Um and usually laying off the
22:09top bottom 10% in a business of that
22:12size
22:14it would like it'll you will make more
22:15money.
22:17Um and so that actually I know I know we
22:18we had to like derive that be a bigger
22:20business. That's probably what my next
22:22move would be. And then I would be
22:24looking at So, if we're it's kind of
22:25funny cuz this really what we're doing.
22:28Um
22:31One more?
22:34So, this is a like a perfect case study
22:36here, which is like we need to get more
22:37customers, right? Are we doing more, are
22:39we doing better, or are we doing new?
22:41So, new would have been we're going to
22:42go after minnows or we're going to do an
22:44acquisition. That's new. So, we talked
22:45through that. It was like, ah I don't
22:46know, especially on the timeline. Is it
22:48going to create 150 million in sales?
22:50Probably not.
22:51It'd be really tough unless you just did
22:53you acquired one that did was already
22:54doing that.
22:55>> Um so, then it's like, okay, do we hire
22:57more sales guys or better? Well, we have
22:59a lot of blow on on right now. I'll bet
23:01you we could do it better. Cool. Okay.
23:03So, who's in charge of that team right
23:05now and why are they not winning?
23:09>> Um
23:10it's Does that Yeah. So, yeah, we have
23:12we have a CRO on that team. Like again,
23:14he's the the incentive on again is is
23:16completely revenue based. Yeah. So, um
23:19really
23:22My concern more than anything else is
23:24I I and I keep on hearing this and this
23:25is a topic that we have fairly
23:27frequently. If it ain't broke, so don't
23:29so don't try to fix it. At the same
23:31time, I'm
23:32>> Well, is it broke though?
23:34>> I look at it, I'm not happy with the way
23:35I mean, look, when we start this
23:36company, the goal was it was less it was
23:38less about revenue and more about
23:40ubiquity. We said, "Okay, we have the
23:41solution that can get everywhere." And
23:44as we sort of learned got wet at the
23:45teeth of the big deal, it's been hard to
23:48to break that habit.
23:49>> Yeah.
23:51Heard.
23:52Um
23:54So, I'll say this. Um
23:56And you may not need to hear this from
23:57me, but
23:59>> [snorts]
23:59>> I think that founder founders have a
24:01special privilege, which is that you
24:03know how the company was founded, you
24:05know how it was made, you know how to
24:07break it, you know how to bend the
24:08rules. And so, if you started this, the
24:11first few sentences you said was this is
24:13an existential threat to the business.
24:15And so, if the private equity firm is
24:16not recognizing it as an existential
24:18threat, it's because they don't have the
24:19same information that you do because
24:21they couldn't. They haven't been around
24:22the business for 18 years, but you do.
24:24And so, whatever pulse you have, I would
24:26probably trust your gut and say, "No,
24:28this is a threat." So, like when you say
24:30it ain't broke, don't fix it, I see it
24:31is broken and we do need to fix it
24:33because we will not hit the $500 million
24:35goal if we continue with status quo. And
24:37if we if we don't hit that goal, then
24:39all of a sudden, you know, um
24:41one of the private equity guys I know
24:42who says, uh
24:43"All businesses increase in value over
24:45time unless they don't, in which case
24:47they are worth nothing."
24:48Uh and so, you were you from that
24:50perspective, that's kind of where you're
24:51at right now. Um and so, I think it
24:53would make sense for either you to
24:55parachute in and you might need somebody
24:57who's a little bit more entrepreneurial,
24:59a little bit more renegadey,
25:01uh to go in and kind of rattle some
25:02cages and say like we need to
25:05we need to do better. And I think that's
25:07probably going to be
25:09um what will be required. And it'll And
25:12I focus obviously we think I talk a lot
25:13about behavior, but what are the
25:15behaviors that we're going to change?
25:17And how can we
25:21I mean, we solve sales problems in every
25:23organization by more role playing that
25:25like role playing is your ice blade.
25:27Like that's how we do it. And that's
25:29fundamentally how we fix sales functions
25:31because we can just give rapid feedback.
25:33Um and so it's like I think you need
25:34people who it's not like getting all the
25:36sales team to attend a rah-rah event and
25:39having some sales speaker speak for 8
25:41hours. It's not going to do anything,
25:42right? I think it's you need to have um
25:44probably almost like a SWAT team of
25:46people going in and then retraining and
25:48quickly red red yellow greening um the
25:51team as is and be like this guy sucks,
25:52he's out. This guy has potential, but
25:54like still needs to learn. This guy's
25:55great, let him do his thing. And um
25:59I mean, that might take 12 months. But
26:01at least at the end of that 12 months
26:02like your sales velocity will increase.
26:04The the deal cycle will probably
26:06shorten. The deal average deal value
26:08will go up. And those are the things
26:09that I think would have the highest
26:10likelihood of of getting to the 500.
26:13It's from my vantage.
26:14>> I appreciate it. Thank you very much.
26:16>> Hey Alex, my name is Jordan and I'm the
26:19owner of a multi lawn care franchise
26:22locations. We make tall grass short.
26:26>> [laughter]
26:28>> We've been in business for 1 year and
26:30reached 600k in revenue.
26:32>> Nice. Nice, man.
26:33>> I'd like I'd like to copy and paste that
26:36>> Uh-huh.
26:37>> and reach 25 million.
26:39>> Okay.
26:40Um and that's Yeah, go ahead.
26:43>> I'm sorry.
26:43>> You're good.
26:45>> My biggest constraint is people.
26:48>> Tracks.
26:49>> hire experienced technicians,
26:51they aren't always a culture fit.
26:53>> Mhm.
26:54>> And when I hire culture fits that aren't
26:56experienced,
26:58we've been unsuccessful in training
26:59them.
27:01>> So, this is lawn care, correct?
27:03>> we were seasonal, we lose half of our
27:05workforce.
27:05>> Yeah. And so, this is lawn care,
27:07correct?
27:09>> Correct.
27:10>> Okay, so what I mean this is not me, you
27:12know, being insulting here. I want to be
27:13really clear.
27:15How are you unable to train people who
27:17are good culture fits on how to mow
27:20lawns?
27:23>> Um
27:25it's probably the pressure of the short
27:28timeline.
27:30>> Okay.
27:31>> And
27:33with the lower margins, you have to be
27:36really efficient to be successful in our
27:39process.
27:40>> Uh-huh.
27:42Okay.
27:44Um
27:45how are you paying them?
27:49>> Uh we're using pay for performance.
27:51>> Okay.
27:52>> So, we have a a low base pay.
27:55>> Mhm.
27:55>> And then a option to earn a percentage
27:58of revenue.
28:00>> Okay. Um and that option is based on
28:03what?
28:06>> Uh
28:06>> [clears throat]
28:07>> basically the budget hour
28:11has a a fixed cost for the customer.
28:14>> Mhm.
28:15>> And if they complete that work inside
28:17the budget hour,
28:19>> Mhm.
28:20>> they get a percentage of that.
28:21>> Of the of the like excess, right? So,
28:24they're they're incentivized to do more
28:25jobs faster.
28:27>> Absolutely.
28:28>> Does that Is that actually working?
28:32>> It is for the A players.
28:35>> Okay.
28:36So, right now, like you have a cleaning
28:38business. I'm just going to tell you
28:39right now. You have a cleaning business.
28:41Um the business will always be
28:43constrained by talent. It's not hard to
28:45have people who would rather have
28:47somebody else mow their lawn.
28:49And so you will always be in the
28:50recruiting and training business. And so
28:51this is a feature not a bug.
28:54And so to your point of like wanting to
28:55be able to copy and paste this,
28:57the thing that you need to nail before
28:58you scale is your recruiting, hiring,
29:00and onboarding process. Like the fact
29:02that you're getting customers and you
29:03can sell them, all that stuff, like
29:04that's very easy. Also, if you're in a
29:06supply constrained industry, which you
29:08are, you likely have more pricing power
29:10even though you feel like
29:11um you know, margins are thinner, right?
29:16If you can barely take on more business,
29:17then you are supply constrained. Right?
29:20And when you have supply and demand, and
29:22supply is constrained, you can typically
29:24raise prices. What are your close rates
29:26right now?
29:29>> Um we are like right at 70%.
29:31>> Okay. So, if you're familiar with my
29:33pricing guide, if you're at like
29:35basically everything above basically
29:36every 10% above 35, you usually have
29:40like a 25 to 50% lift in pricing.
29:43All right?
29:44So, what what are you charging right
29:46now?
29:49>> Charging $75.
29:52>> An hour? Okay. Um you could probably go
29:55up to like, I don't know, 85, 95 and get
29:58away with it because you're closing 70%.
30:01I doubt your close rate's going to cut
30:03in half if you go to 95. What are your
30:04margins right now?
30:07>> Um my margins on the direct cost of
30:10labor is about
30:1355%.
30:14>> Okay.
30:16And so that means
30:19Hold on. One moment, please.
30:22All right, so we've got
30:2375 an hour, you're making uh 55, so you
30:27you pay them 34 bucks an hour, roughly?
30:32>> Yeah, there's some there's some
30:33inefficiencies that come that cost us
30:35>> Driving between place to place and all
30:37that kind of stuff, right?
30:38>> Correct.
30:39>> Yeah, yeah, got it. So, but for you
30:41though, if you could add an extra $10
30:44per hour or $20 per hour, it'd be pretty
30:46material, right?
30:49>> Yes, I I think the reason why we're
30:53at the price we are is we still have um
30:55extra capacity and we wanted to fill
30:57that before we raise prices.
30:59>> Okay, so do you have a lead gen issue?
31:01Or do you have a talent issue?
31:04>> No, we we will reach that in
31:06>> Okay.
31:07>> Um once the the like in the next month.
31:10>> Okay.
31:11>> But that wouldn't it would include me
31:14adding like
31:16eight new technicians.
31:19>> Wait, you just said that you're you
31:21already have you need to fill up
31:23what you already have, correct?
31:26>> Uh for for like a physical capacity or
31:29equipment.
31:30>> For equipment capacity, not headcount
31:32capacity.
31:34>> Correct.
31:35>> Okay.
31:36So,
31:37>> [sighs]
31:37>> okay. So, right now
31:41you cannot take on more business,
31:42correct?
31:46>> Incorrect.
31:47I guess without
31:51with
31:52>> All right, listen listen to me real
31:53quick. This is feeling complicated.
31:56You're closing 70%, you're going to hit
31:58capacity, you need to raise the price,
32:00you need to raise the price so you can
32:01pay people better so you can get better
32:02talent. That's the process. That being
32:05said, on the recruiting side, um
32:08what are you doing right now to bring
32:09people in?
32:12>> Um Indeed ads.
32:14>> Okay. I mean, there's nothing really
32:15wrong with that.
32:17I mean, the thing that I tend to reject
32:19is just like at the onset you said like
32:21people who are good culture fits I can't
32:23train. Like, how how hard is this to
32:24train?
32:28>> Um it's
32:29it's not hard and that's why I I put
32:32culture into the
32:33>> Uh-huh.
32:34>> question.
32:36Cuz it seems like uh the
32:38where we really fall apart is you we're
32:39trying to raise the level of
32:41professionalism in the industry.
32:42>> Mhm.
32:43>> So, quality is really big.
32:45>> Yeah.
32:47>> And we train them they they they show us
32:50they can do the work.
32:51>> Mhm.
32:52>> And then when they're on their own the
32:53quality falls apart.
32:55>> Okay, so part of the incentive, right?
32:57How do you know the quality falls apart?
33:01>> Uh complaints from customers and audits.
33:03>> Really, really easy. So, the problem is
33:05your incentive plan is only one-sided,
33:07not two-sided. So, whenever you have a
33:09KPI, it always have a pa- has to be a
33:10paired metric. So, the classic is
33:13quality and speed.
33:16Right? So, you have a speed performance,
33:18but you don't have something that weighs
33:20out the other side. So, in the cleaning
33:22world, it's you get X per clean and you
33:25want to clean as many times as you can.
33:26But, if you have a one-star review or a
33:29complaint, you got to go back and clean
33:30it again.
33:32Right? And so, in your situation, it's
33:34going to be if you get a complaint, they
33:35don't get paid for the whole day.
33:39>> And we do that, but we only
33:42hit them for the work they have to
33:44complete.
33:45>> Okay, just make the make it make it for
33:47the week. I mean, you know what I mean?
33:48Like you just like you have to enforce
33:50this.
33:52>> Yeah.
33:53>> And to be clear,
33:55you probably Do you teach them like how
33:56to talk to customers?
34:00>> Um yes, but I would say that 75% of the
34:03time they don't have to.
34:05>> Okay, so then like what are the
34:06complaints about that they just like
34:08literally cut corners, quite literally?
34:11Or don't cut corners.
34:13>> [laughter]
34:14>> Yeah, the the short grass that we're
34:16supposed to make is still long.
34:18>> Yeah, got it. Okay, so I would say you
34:20got to do two Number one, if I'm going
34:22to pay you this performance thing, if
34:24you cut a corner, you got to go back on
34:26your own time and do it.
34:28Zero, I'm not paying you for it.
34:30Number one.
34:31That would probably be my first level of
34:33defense. If that doesn't fix it, I would
34:34say that and you don't get you don't get
34:37your performance bonus for the whole
34:38day.
34:42>> Correct. So, I just got to be a
34:45a little bit more
34:46>> You need to enforce
34:47rules without enforcement or not rules.
34:49They are suggestions.
34:51>> Mhm.
34:54>> Like you sound like you want to be a
34:55nice guy cuz I'm just listening to you
34:56on the phone. Um but like
34:59you it's like you have to protect the
35:00business. And the thing that you have to
35:02protect protect most is the reputation
35:04cuz that goes fast.
35:07>> For sure.
35:08>> Right? Okay, zooming out.
35:10We're going to raise the price by at
35:12least $10 an hour. Please commit to that
35:14one.
35:15Cuz you have 7% close rate. It's not
35:17going to be an issue. I bet you can go
35:1825 an hour more and still won't matter.
35:20Number one. Number two.
35:22We have to add a second pairing to this
35:24which is that if they [ __ ] up, they got
35:25to go back and do it on their own time.
35:27If that doesn't, you know, reinforce you
35:29know, basically punish the adverse
35:30behavior, you also pair in that if they
35:32have to do it, you know, two times in a
35:33month or I mean you would know the
35:35cadence better than me. Two or three
35:36times in a month, uh they'll miss their
35:38bonuses for that and on the third time
35:40they lose their job. Right?
35:42>> Yeah.
35:44>> The third thing that um we need to do is
35:46that you need to be very you need to be
35:48more
35:50specific about the training uh in terms
35:54of the actions they need to take. But I
35:55think a lot of this just comes down to
35:57like if you just put the incentive right
35:59from what it sounds like if they're
36:01never even talking to the customers, you
36:02got to just got to get them to do the
36:03job. You just got to incentivize them
36:05well and that's basically it. And if you
36:06want to, you could put a third piece of
36:08this which is that they have to take a
36:09video on their phone of the whole lawn.
36:11It probably takes about 5 minutes and
36:14and then that includes it.
36:17>> And then and if they aren't
36:20team motivated or incentivized by money,
36:23does that mean they're not the right
36:24person?
36:25>> Um they should be incentivized by what
36:27you reward publicly.
36:30Money is going to be a portion of that
36:31needs to align with it, but if you allow
36:33people who cut corners, I love that
36:35that's literally like what this is. If
36:37someone actually cuts corners in your
36:38business and you don't publicly, you
36:41know, give kudos to people who are
36:42consistent and you don't punish or
36:44remove the people who are not, you
36:47basically reinforce that it is okay to
36:49cut corners.
36:51Mhm. It's unfortunate, but like you have
36:53to make an example and vast majority of
36:55people do not know how to build culture.
36:59>> For sure.
37:00>> Like you need to be
37:01>> If I understand you
37:02>> Yeah, go ahead.
37:03>> Is Is it So, by setting that example,
37:06that's how you're building culture?
37:08>> Yes.
37:10You have to define exactly what you want
37:11in two observable terms. You have to
37:13demonstrate it in front of them. You
37:15have to
37:16uh get them to actually do it, and then
37:19you have to see what they did, and then
37:21you have to immediately correct the
37:23people who [ __ ] up. You have to give
37:24kudos to the people who do it well, and
37:26you have to keep repeating it until it
37:28sticks. And then you'll move on to
37:30reinforcing people for giving kudos to
37:33each other. And as soon as they start
37:35giving kudos to each other in public,
37:37that is when you'll know that you'll
37:38start to have built the culture. And
37:39then after that, what ends up happening
37:40is they start punishing each other in
37:42private, meaning they say, "Hey man, you
37:43[ __ ] that up. Don't let him see that.
37:46It's going to get all of us in trouble."
37:50>> Awesome.
37:52>> Like those are the behaviors. That is
37:53how you do it.
37:56Cool?
37:58>> Cool and easy.
37:59>> How important in this game of building
38:01and starting is people?
38:03>> Uh
38:05>> Very?
38:05>> Uh
38:06hiring question.
38:07>> Yeah.
38:07>> And I'll tell you why I asked this
38:08question, because when I look at my
38:09portfolio, early stage first founders
38:12never seem to understand the importance
38:14of hiring in people.
38:16>> Yeah.
38:17>> And I bang my head against the wall
38:18trying to convince them that actually
38:19the game they're playing is in the right
38:22group of people.
38:23>> Yeah. So, I I would I'll start with one
38:25thing and then I'll answer the question.
38:27So, I was talking to um a mentor of
38:29mine. He said, "When I was in my 20s, it
38:31was all about the destination."
38:33He said, "When I got to my 30s, I
38:34realized it was all about the journey."
38:35He said, "When I was in my 40s, I
38:37realized it was about the company."
38:38And I was like, "I can't wait till
38:40you're in your 50s."
38:41>> [laughter]
38:41>> I was like, "What's the next one,
38:42right?" But, I thought that was such a
38:43great like such a profound shift in
38:45terms of how he thought about his
38:46business success cuz he was like, "I
38:47don't need to be a you know, a
38:49decabillionaire. It's like I'm I'm cool
38:50where I'm at. Um
38:53and now I just want to do it with people
38:54that I like. And so, to the question
38:57about um people overall,
39:02I believe that the potential
39:04of an organization is directly
39:06correlated with the aggregate
39:08intellectual horsepower of everyone
39:11contained within it.
39:13And so, if you are the smartest person
39:17in the business,
39:18then and you can do everyone's job
39:20better than everyone in your company,
39:22then it means that the limit of the
39:23business is purely based on one person's
39:25horsepower and one person's life
39:26experiences.
39:29And that will be the cap. And basically,
39:31it doesn't matter how smart you are, you
39:33can't live 100 lifetimes. Like, you can
39:35learn quickly, sure. There's some people
39:36who can learn faster than others, but
39:38you're not going to be able to live
39:381,000 lifetimes.
39:40And so,
39:42as a business grows, more expertise is
39:45required. And I think the easiest litmus
39:47test for this is if you look at the
39:49richest people in the world, almost none
39:51of them own 100% of their business. So,
39:53number one. Most of them own don't even
39:54own 50. Like, most of them are small
39:56percentages. Jensen Huang is at 4% for
39:58Nvidia. Bezos is at 7 or 9% for for
40:01Amazon. Uh I think Elon's at 20 for
40:04Tesla. Like, small percentages. And it's
40:06because it takes a lot of horses to take
40:09a chariot to the moon, right?
40:11And so,
40:13basically, as you put in more
40:15intellectual horsepower, the potential
40:18peak of the business goes so much so
40:21much higher, so much faster. Keith
40:23Rabois from um he's one of the original
40:24PayPal Mafia guys has a really good
40:26analogy for this. And he talks about it
40:28in terms of barrels and ammunition. And
40:30he says, "So,
40:32as soon as you get some product market
40:33fit, the business starts to grow and you
40:35say, 'Okay, we need to start shipping
40:36things faster.' And this works the same
40:38with a services business, a physical
40:39products business, software business.
40:40The concept's the same.
40:42And so what happens is you then hire a
40:44lot of people and you assume that your
40:46throughput is going to increase
40:47proportionally. So, we have 10 people,
40:49we hire 50, we should 5x our output. And
40:51then you quickly realize that that is
40:52not the case.
40:53And so what happens is uh there are
40:55people who are rate limiters for or an
40:58organization and those are the barrels.
41:00So, think about like a Civil War barrel,
41:01you know, old cannon and you've got
41:02these cannonballs next to it. He said,
41:04"Most people are ammunition. And so you
41:06bring more ammunition, but you're still
41:08going to be limited by the one barrel
41:09capacity of how how many shots can get
41:11taken by the barrel. And so you need to
41:14find more barrels. So, you have to go
41:16from one barrel to two barrels, two
41:17barrels to three barrels. And that
41:18becomes an increase in capacity or
41:20throughput for the organization. And
41:22there are very few of those. In a
41:24different um I can't remember the law,
41:26but it's some organizational uh law, but
41:28uh the square root of the number of
41:30people in a company
41:31generate 50% of the work. So, if you
41:33have 100 people in an organization, 10
41:35people are responsible for 50% of the
41:36value that's created.
41:37>> Facts.
41:38>> Right. Anybody who's been in a like
41:40you're like like preach, right?
41:42>> [laughter]
41:42>> And so the thing is is
41:44I think the real game of
41:46entrepreneurship is that your standards
41:48rise over time. And it's unfortunate
41:50because we we hear things that other
41:53entrepreneurs tell us, "It's all about
41:54the people, stupid." And then you're
41:55like, "Sure, but look at my" and it's
41:56like not you're not hearing it. And I
41:59don't know, there are some I think
42:00Williamson talks about this how there's
42:01like some lessons that for some reason
42:03it's like we have to learn for
42:05ourselves.
42:07I still believe that that is like we can
42:08operationalize this at a lower level so
42:09that we don't have to learn it for
42:10ourselves, but like I'm convinced I
42:12haven't figured it out yet. But um
42:15so every entrepreneur can can can can
42:17resonate with this, which is
42:19every business that I've started, I've
42:21gotten to the success of the business
42:23prior way faster.
42:25And I kind of liken it to a video game
42:28where it's like you beat level one and
42:30then, you know, you you get to level two
42:32and it's like you spend months trying to
42:34beat this boss and you finally figure
42:35out how to beat the boss and it's like
42:36great and you spend another three months
42:37getting beating boss three and then say
42:39you start the game over with a new
42:41character, it's like you just zoom
42:42through level one, two and three and
42:43then you get to level four and you're
42:44like shoot, now I got to spend time.
42:45It's like virgin land. Like I don't know
42:46how to beat this yet. And so I think
42:48that that happens for archetype finding
42:51for skill and talent within an
42:53organization. And so
42:55>> Say that again.
42:56>> So if you have functions across an
42:58organization, there are people who are
43:00going to drive results within that
43:01function.
43:02And the first time you hire a
43:04salesperson, for example, you don't know
43:06what you're looking for. And so you just
43:08hire a human who says they can sell and
43:10maybe they can, maybe they can't. And
43:12then you cycle through you try to train
43:14them, it doesn't work, does work,
43:15whatever. And then finally you let's say
43:16you cycle through three sales guys and
43:17finally you find a killer. And then you
43:19have this pattern recognition where
43:20you're like, okay, that's what I'm
43:21looking for. And then all of a sudden
43:23you try and approximate that person or
43:24that archetype as as much as you can.
43:27And so when you start your second
43:28company, you're like, oh, I can quickly
43:30staff up sales cuz I know what I'm
43:31looking for. But then you're like,
43:33shoot, I've never really nailed sales
43:34manager yet. And so then you cycle
43:36through you start you start whacking
43:38away at the boss and then you have to
43:39end up firing the boss at that level
43:41because you're like, oh god, this didn't
43:42work. And then six months are gone
43:44because you had to find them, recruit
43:45them, hire them, train them and then
43:46find out they sucked and then start over
43:47again. And maybe it takes 18 months to
43:49really find the right sales manager. And
43:51then you're like, okay, I know what that
43:52looks like. But I still don't have a
43:54director of marketing. What does that
43:55look like? And so it's basically
43:57developing this pattern recognition
43:59across all functions of the business so
44:01you then you know what exceptional looks
44:03like.
44:03And then over time what happens is as a
44:06business grows, your ability to attract
44:08talent increases. And so then your
44:10standards also grow and then you find
44:12out that there's even more nuance to
44:14this, which is that there's a director
44:16of sales at a one to ten million dollar
44:17level, which is a different looking
44:19person from ten to a hundred million
44:21dollar level. And it continues to go all
44:22the way up. And so it's basically
44:25building this repertoire of identifying
44:28patterns. And what if you talk to I
44:31would say more experienced entrepreneurs
44:32now, they don't talk about building
44:34businesses. It's like assembling them.
44:36You just assemble the pieces and you
44:38just know that this is how it's all
44:39going to flow together. And
44:42that fundamentally is basically what I
44:44try and decode within the content that I
44:46have so that it's like here's a pattern
44:47for how you can recognize this. Here's a
44:48pattern for how you recognize this. So
44:50that you can just move faster through
44:52the levels
44:53to get to where you want to go. And so
44:55to loop back to the original question,
44:57which is how important are people in an
44:58organization? People are the
45:00organization. And so if you ever want to
45:03build enterprise value, it's building
45:05the collective consciousness of the
45:06organization, the skills and how they
45:08collaborate together towards a specific
45:10outcome. And so knowing how to staff
45:12that up is the job.
45:15>> I think the reason why first-time
45:17founders
45:18feel like they have to learn this lesson
45:19themselves is because everything you've
45:20just said is an unknown unknown. Like
45:22they don't even know that they don't
45:23know it. So they stumble they hire the
45:25sales guy because they were their
45:26friends from high school and then
45:27[ __ ] and then they go through the
45:29pain and the I say this because I'm so
45:31unbelievably passionate about it. I went
45:32through the same BS. I hired my friend
45:34who worked at Prada to be our account. I
45:36hired a guy I met at a rap battle to be
45:38my marketing director who had who was
45:40literally playing video games for a
45:41living at 30 years old.
45:44And I went through this whole thing and
45:45then at maybe three four years into my
45:47first business, I accidentally hired
45:49someone great.
45:50>> [laughter]
45:51>> Like through no intention of myself.
45:53Accidentally, I saw the net impact they
45:55had and I thought, "Oh my god." Over the
45:56coming years I learned that the game,
45:58the fundamental game here was as you
46:00said assembling the best group of
46:01people,
46:03how, if I'm a first-time founder,
46:06can I put a system in place
46:09to
46:10to make sure that even though I don't
46:11know what a good sales person looks
46:12like,
46:13>> Yeah.
46:13>> even though I don't know what an ex-
46:15good person looks like, I still attract
46:17them to my company?
46:20>> The simplest way of doing it,
46:22so the simplest way of attracting
46:25somebody to your business when you don't
46:27know how to do the job or know who to
46:29look for
46:30is to unfortunately do the job yourself.
46:33And then once you can break down the
46:35job, we follow three D's, which is
46:38um document, demonstrate, duplicate.
46:39That's how we train anybody. So first,
46:41you have to document everything that you
46:43do to successfully do the job.
46:45And that's step-by-step into a
46:46checklist. Then you demonstrate, so you
46:49do this checklist in front of the person
46:51that you're trying to bring on.
46:52Then they duplicate, they do the
46:54checklist in front of you.
46:56What's interesting about that three-step
46:57process is that you'll often find when
46:59you try to demonstrate following the
47:00checklist, you don't follow your
47:01checklist. And so then you have to
47:03adjust the checklist until you actually
47:04follow the checklist. And then when you
47:06can consistently follow that checklist
47:07and get the output, then you can have
47:09them do that checklist. And so I think
47:11this is why bootstrap founders uh
47:14I think often times will find they they
47:17tend to know more about more things
47:19because they had to learn them in order
47:20to teach them.
47:22Now, what's really interesting about
47:23what you said about accidentally finding
47:25that that star at three or four years in
47:27is that I think that happens to almost
47:28everyone. Well, hopefully the people who
47:30end up making it happens to almost
47:32everyone. Um because then you realize,
47:34oh my god, like if I had four of these
47:36people, [laughter] like we could change
47:37the world, right?
47:38>> something as well? The other
47:40epiphany revelation I had was the star
47:43hired stars.
47:45>> Yeah, all right.
47:45>> And so I think of her name is Katie
47:47Lesson. Of the 10 people she then hired,
47:49nine of them became the best people in
47:50my company. And also, I'm not going to
47:52say his name, but someone else in my
47:53business,
47:54a C player,
47:55>> Yeah.
47:56>> of the 10 people he hired
47:57>> Yeah.
47:58>> He and everyone he hired was fired.
48:00>> So, one of the it's so as you go up in
48:02the organization with hires, the risk
48:04and reward goes up. And so, that's
48:06something that a lot of people don't
48:07like talking about, uh but I will. Um
48:11which is if you hire somebody and let's
48:13say that they're not a cultural fit.
48:14Maybe they have the skills uh or they
48:16are a cultural fit, they don't have the
48:17skill fit. And they're a leader,
48:20what you find often and it sucks is that
48:22everyone it's almost like it's like a
48:24tree that has an entirely rotten branch.
48:26It's like you end up having to scoop out
48:293/4 of what was underneath cuz you
48:31realize that they were ineffective or
48:33they just were against the actual
48:34mission of the business.
48:36And it's it's harrowing and it's
48:38horrible.
48:39But
48:40I try to give this analogy um to my team
48:42cuz we've had to do it in every business
48:44we like it happens. It's just part of
48:45business. is
48:48if
48:49somebody goes to the bar
48:51and you're at the club and somebody
48:54racks up, you know, just ordering shots
48:56for everybody. Shots for everybody.
48:56Shots shots shots. And then that guy
48:58dips. That guy leaves.
49:01We all have to pay the bill.
49:03In the moment when we pay the bill, when
49:04we scoop out the deadwood, when we scoop
49:06out the rot from the organization, it
49:08feels horrible.
49:10But
49:11that pain isn't because the scooping out
49:13the rot is bad. It's because we planted
49:16it on bad ground or because that guy
49:18ordered all these shots but couldn't
49:19afford it. And I have a different
49:21analogy cuz I really want to drive this
49:22home cuz I think it's important is that
49:24in the in the relationship world,
49:26if one spouse tells the other spouse,
49:29"Hey,
49:31I cheated on you. I had an affair."
49:33That moment is incredibly painful for
49:35both parties.
49:36And so, what it makes you think is, "Oh,
49:38this was wrong to tell the truth."
49:41But it's not wrong to tell the truth.
49:43What's wrong was cheating.
49:45When you tell the truth is when you make
49:46it right. And so, the pain that you
49:48often have to encounter in an
49:49organization
49:51feels wrong but is right because that
49:54was your your righting a wrong and
49:56that's where the pain occurs and that's
49:58why so many businesses stay stuck is
50:00because they have this affair, they have
50:02this person and they're unwilling to
50:04have that hard conversation or multiple.
50:06>> I'll give you the little management
50:07diamond
50:08um that I do for employees, which is a
50:10really good framework for having hard
50:13conversations.
50:15But if you want someone to do something
50:17and they're not doing it,
50:19you have like four or five reasons that
50:20they're not doing it, right?
50:22The first is they just didn't know that
50:23you wanted them to do it.
50:25Most common.
50:26Hey, did you do that thing? And they're
50:27like, what thing? You're like, damn it.
50:29I didn't write it down, did I? Okay, so
50:30we have to write it down. We have to We
50:31have to put a deadline on it. Fantastic.
50:33So now I say, why didn't you do that
50:35thing? They say, well, I didn't know how
50:37to do it.
50:39Okay.
50:40Well, fine. So they didn't know how to
50:42do it. Now let's say we train them. So I
50:44told you that you needed to do it, you
50:45know how to do it, but um
50:48you didn't know
50:50when
50:51I was going to do it by. Oh, I need you
50:53to do that tomorrow. Okay, so you knew
50:54that you needed to do it, you knew how
50:55to do it, you knew when to do it. The
50:57next
50:59is you have something
51:01that's blocking you.
51:03So I knew that, I knew how, I knew you
51:05wanted to do it tomorrow, but you also
51:06told me to do three other things.
51:09Which one did you want me to do?
51:12And then finally, you get into this,
51:14which is that
51:17I didn't want to do it.
51:18Which in my experience is the first
51:20place that we go to as entrepreneurs and
51:23typically the last one that's reality.
51:25Most people I have found when they have
51:27a job prefer to keep it.
51:29And I've also found that most people
51:30prefer to feel like they're doing a good
51:31job at their job.
51:33And so it's usually one of these other
51:34issues. And so this provides a really
51:37good framework for having these
51:38conversations. Now the reason I bring
51:40this up is because we can also have
51:42these conversations with ourselves. I
51:44know I need to do more. Why am I not
51:46doing more? Did I not know that I needed
51:48to do more? Well, now I do. Okay, do I
51:50not know how to do more? Oh, I don't
51:53know how to do more. Great, well, now I
51:54have something to attack. That becomes
51:56my to-do. If I don't know how to do it,
51:57I know what to do, which is to figure
51:58out how to do it.
52:00Right? Um is it not urgent enough?
52:03Right? Or is there something blocking
52:04me? I would go recruit more people for
52:06my HVAC company, but right now 80% of my
52:09time is dealt with
52:11these customer service issues that are
52:12coming up one-sy, two-sy all day. Okay,
52:14great. How much is the cost to replace
52:16the one-sy, two-sy thing? Cost me
52:17$60,000 a year. I 400,000 in profit. Am
52:20I willing to go from 400,000 to 300
52:2340,000 in profit in order to get 80% of
52:24my time back? Yes, but that means I'm
52:26going to make less money. Yes, today.
52:29But then I'm going to get 80% of my time
52:30back so that I can then focus on how to
52:31figure out how to do more.
52:33And so it's just it's taking second and
52:35third-order consequences down to their
52:36natural end, and then ultimately being
52:38like, okay, this is what I need to do. I
52:39literally went through this process, so
52:41post-launch for me, I was like, okay, I
52:44have this bandwidth
52:46What's the next thing to train in the
52:47business? And for me it was six
52:50questions down for me to be like, that's
52:52what the issue is, and that's what I'm
52:54focused on. And so right now 80% of my
52:55time is dealing with that constraint.
52:58Which is I'm heavily recruiting
52:59executives right now.
53:01That's what I'm doing with my time.
53:02Yesterday I had four executive meetings
53:04and I had follow-up notes and and
53:05connections afterwards that I have to
53:06do. That's what my time is right now
53:08because that's the constraint of the
53:08business. And then once that finishes,
53:10cuz those people get on board and they
53:12do a good job, I'll go through this
53:13again.
53:15All right, Caleb Stewart started my
53:17roofing company in January, been doing
53:19law of 100. Great, love that. Uh and
53:22went full-time. Congratulations. How do
53:24I bring someone else on and get them to
53:26do this versus just doing it for
53:28themselves?
53:34I'm get You mean like go recruit a sales
53:36guy?
53:37I'm guessing you're not saying like why
53:39don't people go do roofing? I mean, cuz
53:41it's work.
53:42Um but the way to like so the the
53:45progression is
53:47you need to
53:48sell people, stage one. Stage two is you
53:52need to recruit somebody else that
53:54sells. Stage three is that you recruit a
53:56team of people that can sell. Those are
53:58the three levels of salesmanship, which
54:01by the way, for all the entrepreneurs
54:02here who love to say that they're really
54:03good at selling, you are level one
54:06salesman. You need to transition your
54:08identity from sales god to sales
54:10training god and sales leader. And so
54:13it's no longer about how well you can
54:15close, it's about how well you can get
54:16people to learn how to close on your
54:18behalf.
54:20So, uh how do I get people to not do
54:22this on their own? Well, they can do it
54:22for you and get paid for it.
54:25So, I'm not really I'm not actually
54:26really sure. I feel like it's it's like
54:27a mental thing cuz you're like new to
54:29this, but I
54:30like this is to me this is not a thing.
54:32Um if you have like just go recruit
54:34other sales people, say, "Hey, this is
54:36what I'm willing to pay you as a
54:36commission. Let me show you how to door
54:38knock."
54:41That's kind of it.
54:42>> In terms of hiring people, how do you
54:44spot an A player?
54:46>> Um I will say that I have yet to have an
54:48A player that I don't know is an A
54:49player within the first week or two.
54:50>> What are the signs?
54:52>> Mhm?
54:52>> What are the signs?
54:53>> They meet So, like support, right? They
54:55decrease the likelihood of failure. So,
54:57they are taking things off my plate
54:58really quickly,
54:59um and they're proactive in terms of
55:03their uh decision-making and the actions
55:06that they take. A lot of A lot of it is
55:07really just a tre- a tremendous amount
55:09of activity. High activity, high
55:11alignment. If you have both those
55:12things, you have somebody who's moving a
55:13lot of things in the right direction.
55:14And ideally, you get a lot of attention
55:16back. And so like if my life gets worse
55:18when someone starts, that's a bad sign.
55:21And if my life doesn't change when they
55:22start, that's also not that good of a
55:23sign, either. Now, of course, there's a
55:24little bit of onboarding, you're going
55:25to have that, that's sure, but like
55:27by and large, I want to see some
55:29dramatic changes in how my time is
55:31getting allocated from bringing somebody
55:32in, especially if they're taking things
55:34off my plate. But But that works at all
55:35levels.
55:36>> And what's one of the things that you
55:37still insist on doing personally, even
55:39though you could outsource it?
55:42>> Well, all the books. Um I write all the
55:44books. I write all my emails.
55:46I write I mean I I do all the recording.
55:50Um
55:51>> Tweets?
55:52>> All the tweets are mine. Uh all the
55:54tweets are mine. Honestly, every every
55:56piece of written word
55:57that comes out of acquisition.com
55:59um
56:00is me. And that is a huge model.
56:02>> We've essentially made 20 million in
56:04revenue across all our different
56:05companies. So, we have quite a small um
56:09core team that kind of essentially
56:11started
56:11>> called Deep Pockets.
56:13>> Yeah.
56:13>> Okay.
56:14>> But we've we've started a like a bunch
56:16of different um businesses.
56:18>> So, it's a holding company.
56:20>> We have an umbrella company called
56:21Swaggy Inc, but then we just start
56:23different businesses that we essentially
56:24have been doing really well in.
56:26>> Yes.
56:27>> And um I guess we have a really small
56:28>> guys have the logistics company that's
56:30pre-revenue right now that has 3 million
56:32in contracts that you just have to
56:33figure out, and then you have the other
56:35businesses doing 2.4, which is like the
56:38the you know, older old folks help
56:40stuff. Correct?
56:41That's you.
56:42>> That's it.
56:43>> Oh, I thought I thought she was part of
56:44your holding company cuz you said you
56:45bought a bunch of people. That's why
56:46That's why I figured I'd clarify.
56:47Okay, different holding company. Okay,
56:49so you guys start companies
56:51>> Yeah.
56:51>> and incubate them. Yes.
56:52>> Yeah, right now Deep Pockets this is our
56:54financial literacy program where we just
56:55sell educational um content to traders
56:59and anyone who wants to like branch out
57:01for that for Forex.
57:03>> Okay.
57:03>> Um but we have a small core team, and
57:05what I was essentially asking
57:07for any business other than the CEO and
57:10um
57:11like the founder, what would be the
57:13three core members or what roles that
57:15any business would need in order to
57:17succeed? Cuz right now we do have some
57:19employees that kind of are flexible in
57:21what their um roles are, and where
57:25they're looking at like um
57:27just being a key asset to the team, but
57:29don't have an actual job description or
57:33>> So
57:34uh
57:35>> the first thing I'll do is I'll just
57:36kind of challenge the question, which is
57:37that it's not like what are the three
57:39key people? So, I could just be like
57:41I'll reject the premise. Um it's more so
57:43what are the functions? What things must
57:45occur in a business and whether one
57:47person does them or 20 people do them,
57:48these things have to happen.
57:50Right? At the most foundational level,
57:51you have to have somebody who can
57:52promote. Right? Someone who can
57:54advertise, let people know about the
57:55stuff. Right? Now, that also technically
57:57includes conversion. So, that one person
57:59who goes and gets customers.
58:01The other person is the person who
58:02builds the thing. Right? Who's the one
58:04who's at head of product or the service,
58:06making sure that it continues to be
58:08exceptional.
58:09Um and then the third kind of function
58:11is who's running the day-to-day? Who's
58:12operating? Who's leading the team? Who's
58:14continuing to basically build the
58:16culture? Who's the one who's um you
58:18know, recruiting the the people in,
58:19setting the standards for how the
58:20company runs. Now, there's the things
58:22that have to occur. One person can't do
58:24all three of those things.
58:24>> Yeah.
58:25>> It's difficult, hard to find, easier to
58:27find three people. Sometimes you find
58:28six people. Um who can do those things
58:30and they have, you know, varying
58:32degrees. Like I can build product stuff,
58:34I can also advertise and I can operate
58:36to a degree. Right? Operations not my
58:37strongest suit. That's where Leila's,
58:39you know, uh a G, right? And she can
58:41also obviously advertise. She has
58:43multiple million followers um that she
58:45has and she also like can do product
58:46stuff. But she probably, if I were to
58:48pick two of those three buckets, she's
58:49probably more
58:50uh advertising and ops with ops being
58:52the primary. And so, um
58:54if you're asking the question of like
58:55who do we need to hire for each of our
58:57portfolio companies,
58:58I would just say where is the deficiency
59:00with each of those companies and does
59:02that deficiency
59:04tie to the constraint of the business?
59:08>> Okay.
59:08>> So, if you're demand constrained and no
59:10one in the company knows how to
59:10advertise, that makes sense. If you're
59:13demand constrained and someone I'm
59:15sorry, and you're not demand constrained
59:16um
59:17and no one knows how to advertise,
59:19who cares?
59:21It's not the constraint today.
59:22So, we still always start with are we
59:24supply or demand constrained? And if
59:25once we know which one we are, cuz you
59:27really can for the most part just be one
59:29of the two,
59:30um we basically ignore everything else
59:31on the other side.
59:33And until we have a, you know, once
59:35we've
59:36cracked demand enough that we now are
59:37have supply constraints,
59:39then we fix supply.
59:40And then we ignore demand.
59:42And basically there's a very there's a
59:44there's a cadence, kind of a rhythm to
59:45it of alternating between the two. And
59:46so Leila and I joke, which is like, one
59:48of us is always killing ourselves.
59:51Never both of us at the same time same
59:52time. So it's like I'm like, "Oh god."
59:54She's like, "Hey, we need to, you know,
59:56fill up these counters." I'm like, "All
59:57right, I'll you know, I'm going to go
59:58drum my drum my whatever and and get,
1:00:00you know, get these counters filled."
1:00:01And then after that I'm like,
1:00:03"We good?" You know, "Great. All right."
1:00:04And then I just hang out and then she's
1:00:05like, "Oh my god, we need more people to
1:00:07deliver so we can expand the calendar
1:00:08availability."
1:00:10And so it's really going to it's going
1:00:11to be normally Charles and I between
1:00:12these things.
1:00:12>> Okay. One thing that I haven't got a
1:00:15clear answer on is to get our team as
1:00:19fired up as we are and just making sure
1:00:21that like
1:00:22yeah, like we're finding people that can
1:00:23actually do their jobs focus on things
1:00:27like this.
1:00:27>> So do the VAs that you recruit
1:00:30do you have like standardized training
1:00:32for them to
1:00:34get on boarded?
1:00:35>> Yeah.
1:00:35>> And that training is not working.
1:00:37>> Yeah, like we have SOPs even before we
1:00:39left.
1:00:40>> But does that but does that create the
1:00:42the the action or behavior that you
1:00:44want? So it's one thing to have SOPs,
1:00:46it's another thing to have a system
1:00:48where people do the [ __ ] you want them
1:00:48to do.
1:00:49>> Yeah, so like even before we came here,
1:00:51like we said we reiterated
1:00:54>> Sure.
1:00:54>> our expectations like with our DM
1:00:56setters.
1:00:57>> Yeah. Well, they're all idiots, I guess.
1:00:59>> Yeah. Well, we've had the same
1:01:00conversation. I'm like, "Well, I don't
1:01:01fire them and rehire them."
1:01:03>> a little trap here. So
1:01:04>> [laughter]
1:01:06>> they're [clears throat] either all
1:01:07idiots, right? Or the process that you
1:01:10have doesn't work.
1:01:11>> Mhm.
1:01:11>> One of those you're in control over,
1:01:13right? And so right now
1:01:15as uh this may be an interesting pill to
1:01:17swallow, it might be that the training
1:01:20that you have for these VAs is
1:01:21insufficient. And I actually think that
1:01:24fixing that might be the single greatest
1:01:25point of leverage that you could have in
1:01:27your business because they are both the
1:01:28thing that's helping you grow your
1:01:29business and the product of your
1:01:30business.
1:01:31>> Mhm.
1:01:31>> And so if you were to only do that, and
1:01:33so this is like goes for everybody. If
1:01:34you feel like you have many constraints,
1:01:36it means that you don't know how to
1:01:37prioritize.
1:01:39Because there are always many problems.
1:01:41The question is which problem is the
1:01:42most important?
1:01:43>> Mhm.
1:01:43>> And if you can't decide that, you're not
1:01:46doing your job.
1:01:47Like that is the job of the
1:01:49entrepreneur. And so if you then expect
1:01:51the team to then prioritize these
1:01:53things, then you're basically delegating
1:01:55decision-making to people who have less
1:01:57context in the business than you, and
1:01:59then unsurprisingly, they do a worse
1:02:01job.
1:02:02And so you have complete context on the
1:02:04business. And so you have to make the
1:02:05hard call of saying, "This is what we
1:02:07will solve first, and we will allow
1:02:09these fires to burn." What's interesting
1:02:11about them is when you do solve the
1:02:12first and most important thing, the
1:02:14remaining constraints often will
1:02:16reorganize in terms of their importance.
1:02:18And so sometimes people will leave here
1:02:20and be like, "This is number one, this
1:02:21is number two, this is number three,
1:02:22number four, number five." And then
1:02:23they're like arguing, "I think this is
1:02:24seven, this is eight, this is seven,
1:02:25this is eight." Who gives a [ __ ] You're
1:02:27never going to get there. By the time By
1:02:28the time you finish number one, the
1:02:29whole thing's going to reorganize.
1:02:30You're probably going to have something
1:02:31from over here that's going to slot on
1:02:32top because that's actually the next
1:02:33constraint.
1:02:34>> Mhm.
1:02:34>> And so I think a lot of people spend a
1:02:36huge amount of time trying to organize
1:02:38the priorities rather than just figure
1:02:39out what is the one thing that matters,
1:02:42only directing all resources towards
1:02:43that, and that also means having a
1:02:45conversation with the team that you have
1:02:47to give basically give them permission
1:02:48to [ __ ] up on everything else.
1:02:50>> Okay.
1:02:50>> We had a pixel issue, right? And the
1:02:52problem was we had basically seven
1:02:54different funnels that were running at
1:02:55the same time. Every meeting was just a
1:02:57[ __ ] And I I got on these
1:02:59meetings because I was trying to I was
1:03:00like, "What is going on?" And this was a
1:03:02marketing huddle. And I was like, "I
1:03:04don't know what you guys are saying, and
1:03:05people call me a good marketer." And so
1:03:07I was like, "That's probably an issue."
1:03:08I was like, "If I don't get it, you
1:03:09probably don't get it either." And so
1:03:11this was like a few weeks. And so I was
1:03:13like, "Okay, here's the deal.
1:03:15We have three problems. We have a lack
1:03:16of CRO, we don't have attribution, and
1:03:19we don't have pixel. Like the pixel is
1:03:20installed incorrectly. It's getting fed
1:03:21wrong data. It's like, "Okay, of these
1:03:24three things, they're all problems.
1:03:25Which one's the most important?" The
1:03:27pixel, because we have to keep spending
1:03:28more to get customers because the pixel
1:03:30data is getting worse and worse. We have
1:03:31to keep spending more, we send more
1:03:32data, it gets even worse, we have to
1:03:33spend more data, it's a vicious cycle.
1:03:35So, let's stop the vicious cycle. But
1:03:36what about attribution? It's [ __ ]
1:03:39Also, not the priority.
1:03:41But our CRO is this page doesn't even
1:03:43load right. It's totally [ __ ] as well.
1:03:46Also not the priority. And so we're
1:03:47going to get on every single day, twice
1:03:49a day, until each of these pixels is
1:03:51fixed, and we're going to start with
1:03:52number one, and we're going to fix this
1:03:53flow. How long will that take you in
1:03:55hours? That will take us four hours.
1:03:56Great. We'll meet at What What is it
1:03:58now? It's 8:00. We'll meet at 12:00. And
1:04:00then at 12:00, we're going to look at
1:04:01the next funnel. We're going to fix that
1:04:02one. And then we're going to meet again.
1:04:04And you keep doing that. It took me
1:04:05three days to fix everything. And this
1:04:07was This was a a team that took
1:04:09basically like three months this was
1:04:10[ __ ]
1:04:11>> Mhm.
1:04:12>> And so basically the change in in
1:04:13product like output was a lot. Three
1:04:16months to three days, right? It got
1:04:17fixed. And then after that it was like,
1:04:18"Great, this one's gone. Now attribution
1:04:21is the priority. So, what do we need to
1:04:22do to fix attribution?" Well, we take we
1:04:24collect traffic from 28 different
1:04:25sources. Okay. Well, then one at a time,
1:04:28when you get custom links for every one
1:04:29of these, we need to make sure the API
1:04:30feeds into the data box, whatever it is.
1:04:32And so anyways, I'm I'm I'm ranting a
1:04:34little bit, but
1:04:36right now you have all these
1:04:37constraints. I would bet that you
1:04:39getting the VAs that you have working
1:04:40for you to actually do their jobs will
1:04:42solve more than one for you. Because
1:04:44it's both the product and how you expand
1:04:45the business. That's what I would That's
1:04:47what I would fix.
1:04:48>> Okay.
1:04:49Thank you.
1:04:50>> Yeah.
1:04:51>> So, my question, I have a salon, and
1:04:54after COVID, it's been very tough to get
1:04:56Yeah, pretty.
1:04:57>> [laughter]
1:04:58>> It's been very tough to get
1:05:00staff members in to fill up the spaces
1:05:03for the ones that we lost over COVID. Uh
1:05:05that left the salon for whatever reason.
1:05:07>> that you lost or what?
1:05:08>> that we lost. Yes, cuz the industry got
1:05:10kind of crushed for the for stylist got
1:05:12It's been a very difficult thing to get
1:05:14stylists.
1:05:14>> Sure.
1:05:15>> And so I know that part of my problem is
1:05:17overcompensation of the stylists I do
1:05:19have. The people that are with me have
1:05:20been with me 10, 15 years, long time.
1:05:23Um I'm pivoting into um
1:05:26my product line and selling retail
1:05:28because I need to make more margin than
1:05:31what we're currently making.
1:05:32>> Okay.
1:05:32>> And I don't want to get rid of my
1:05:34people, but
1:05:35with inflation of all the other costs
1:05:39that I have, the amount that I'm paying
1:05:42in commissions, then after I pay all the
1:05:44other things, it's like it almost it
1:05:46almost negates
1:05:47>> Yeah.
1:05:48>> why we're even in business for for for
1:05:50some of the stylists, not all the
1:05:51stylists.
1:05:51>> a nonprofit and you're like, this sucks.
1:05:52>> Part of my my business is a nonprofit,
1:05:55so
1:05:55>> you're doing the Lord's work, so it's
1:05:56good.
1:05:57>> Thank you.
1:05:57>> Yeah.
1:05:58>> Yes.
1:05:58>> [clears throat]
1:05:58>> All for the curly hair.
1:05:59>> Yeah.
1:06:00>> Um so, do you have any advice on on what
1:06:03I can do?
1:06:04You know, it's it's such a tough
1:06:05situation.
1:06:06>> um well, I'll say this. So, one is I
1:06:08would I would not call it a tough
1:06:09situation cuz it just make it tougher
1:06:11for no reason. Um you are in a condition
1:06:14which can be changed through activity.
1:06:16So, that's the good news.
1:06:17So, um the other good news is that many
1:06:20salons are doing fine.
1:06:23And so, the question is what are they
1:06:24doing that you're not doing? And then
1:06:25that makes this a lot simpler in terms
1:06:27of like, what do I need to do? And so,
1:06:29kind of like we were talking about with
1:06:31the land thing, is that, you know, we've
1:06:33got 500 real estate agents a month
1:06:36getting signed up over here, right?
1:06:37Like, we need to find one stylist a week
1:06:41for you.
1:06:42>> Mhm.
1:06:42>> And so, it sounds like Let me ask a
1:06:45different question.
1:06:47If your salon, this is actually a
1:06:48question I asked Kale who became the GM
1:06:49of Jim Munch. I said,
1:06:52"If we could just fix your salon, would
1:06:54you do any of this other stuff?"
1:06:56>> Um
1:07:01No.
1:07:01>> Okay. Well, cool. Then, in in just being
1:07:04honest then,
1:07:05cuz the business that you're about to
1:07:06get into with the retail super hard. I
1:07:08know. Yeah, like
1:07:11I think the salon's easier.
1:07:12>> I agree.
1:07:14>> So, like really articulating what the
1:07:16problem is is that you just lack a
1:07:17recruiting mechanism for getting
1:07:19stylists.
1:07:20>> Okay.
1:07:21>> Like that's it.
1:07:22>> Yeah.
1:07:22>> If you had 20 stylists that were all
1:07:24really good saying, "Can I start next
1:07:26month?" you would be stoked.
1:07:28Right? What size market are you in?
1:07:31>> Um
1:07:32I'm in Long Island, New York. We have
1:07:33plenty of
1:07:34>> So, there's humans there.
1:07:35>> We have plenty of people too that are
1:07:36>> They have hair.
1:07:37>> They have hair.
1:07:38They do have hair.
1:07:39>> You know, like I'm in a small town
1:07:40keratin treatment. You're like, all
1:07:41right, well, not a lot of people, not a
1:07:42lot of hair.
1:07:43Um
1:07:44So,
1:07:46um
1:07:48Yeah, I think you just need to figure
1:07:49out So, the acquisition system that
1:07:50you're missing is a recruiting function.
1:07:52>> Okay.
1:07:53>> And so, you just need to do either
1:07:54outbound, post content, run ads for
1:07:57stylists.
1:07:58>> Okay.
1:07:59>> And realistically, if you're having
1:08:00trouble retaining them, in small
1:08:03service-based businesses,
1:08:05So, obviously, buy these businesses.
1:08:07They're my one of my favorite types of
1:08:09businesses to buy. Um and I've seen a
1:08:11lot of them. The ones that I've seen
1:08:13consistently outperform have two
1:08:15features.
1:08:16One is if they're completely privately
1:08:18owned, they have some sort of profit
1:08:19share with the manager. You don't need
1:08:20to do that yet cuz you have one
1:08:21location. But when you get to more
1:08:23locations, when you do the leave behind
1:08:24of who's going to run this thing, having
1:08:26somebody who really acts as an owner,
1:08:28and they truly run it so that you're not
1:08:30there at all. Not like, "Oh, I'm just
1:08:31there less." It's Here's the deal. You
1:08:33get 20% my phone doesn't ring. That's
1:08:35how this works.
1:08:37Does that make sense? Okay. So, that's
1:08:38that side.
1:08:40On the
1:08:43uh the other piece of it is
1:08:45when you have low-skilled labor, which
1:08:47is what you have,
1:08:49um they tend to really like career
1:08:51pathing.
1:08:52And so, showing how they can upskill
1:08:54themselves and showing that they're
1:08:55going to get a concurrent increase in
1:08:57pay as they get more skills, that you
1:08:59will invest in them.
1:09:01And so, there was a nail salon that I
1:09:04like looked up you know, six ways to
1:09:06Sunday
1:09:07that I was this close to buying and it
1:09:09was a six location chain
1:09:11which is small but I love the model. JJ
1:09:13remembers. Legendary. Yeah, they were
1:09:15great. Anyways. Um
1:09:18And what was really cool about that
1:09:20particular business was
1:09:22Um well, forget I said that name by the
1:09:24way. Anyways.
1:09:26My bad.
1:09:27>> [laughter]
1:09:28>> Um is that well, I won't tell you more
1:09:29details but can you tell her what the
1:09:31like how their career path worked? Not
1:09:33now but later. Okay, cool. I'll tell you
1:09:35how it was. If you like this video and
1:09:36you're a business owner who wants to
1:09:37break through your current revenue
1:09:38ceiling, I distilled every lesson from
1:09:39scaling 10 businesses past 10 million
1:09:41and three businesses past 100 million
1:09:43into a completely free scaling road map
1:09:45that I've used to go from zero to one,
1:09:47zero to 10, and zero to 100 plus. And
1:09:49so, you can click here and you can check
1:09:50it out. Again, absolutely free and since
1:09:52you're a business owner, I appreciate
1:09:53you and enjoy.

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