WEBVTT 1 00:00:00.000 --> 00:00:03.080 But bottom line, if you want to go fast, go broad. 2 00:00:03.080 --> 00:00:05.480 But if you want to be good, you'd be better served 3 00:00:05.480 --> 00:00:07.640 staying narrow for a little and scaling out. 4 00:00:07.640 --> 00:00:09.400 Like, for example, Facebook started in colleges 5 00:00:09.400 --> 00:00:10.200 before expanding out. 6 00:00:10.200 --> 00:00:11.920 So it's not like you have to go broad immediately. 7 00:00:11.920 --> 00:00:13.320 Like you start narrow and then you continue 8 00:00:13.320 --> 00:00:16.120 to generalize over time. 9 00:00:16.120 --> 00:00:18.400 The wealthiest people in the world see business as a game. 10 00:00:18.400 --> 00:00:19.920 This podcast, the game, is my attempt 11 00:00:19.920 --> 00:00:21.640 at documenting the lessons I've learned on my way 12 00:00:21.640 --> 00:00:24.400 to building acquisition.com into a billion dollar portfolio. 13 00:00:24.400 --> 00:00:26.240 My hope is that you use the lessons to grow your business 14 00:00:26.240 --> 00:00:27.640 and maybe someday soon partner with us 15 00:00:27.640 --> 00:00:29.040 to get $200 million in beyond. 16 00:00:29.040 --> 00:00:32.520 I hope you share and enjoy. 17 00:00:32.520 --> 00:00:34.680 There are only five ways to scale how many people 18 00:00:34.680 --> 00:00:36.720 you can sell to for any business. 19 00:00:36.720 --> 00:00:38.360 And I'm going to give you all five and a framework 20 00:00:38.360 --> 00:00:40.720 to think through that you can apply to any business 21 00:00:40.720 --> 00:00:42.920 that you ever start for the rest of your life. 22 00:00:42.920 --> 00:00:44.800 So right now, if you're not selling as many clients 23 00:00:44.800 --> 00:00:46.200 or customers as you want, you might 24 00:00:46.200 --> 00:00:48.920 be able to fix that within just a few minutes. 25 00:00:48.920 --> 00:00:50.400 If you don't know how I am, my name's Alex Mosy. 26 00:00:50.400 --> 00:00:52.040 I'm the founder of Acquisition.com. 27 00:00:52.040 --> 00:00:53.840 I'm a portfolio company that does over $200 million a year. 28 00:00:53.840 --> 00:00:55.160 And I make these so I want you to use as much 29 00:00:55.160 --> 00:00:57.040 of my free stuff as you can, grow your business 30 00:00:57.120 --> 00:00:58.840 at $300 million a year and revenue 31 00:00:58.840 --> 00:01:00.120 and allow us to invest in your business 32 00:01:00.120 --> 00:01:01.080 to scale beyond that. 33 00:01:01.080 --> 00:01:03.080 So let me tell you how I discovered 34 00:01:03.080 --> 00:01:04.560 this scaling framework. 35 00:01:04.560 --> 00:01:06.520 You can scale any business this way 36 00:01:06.520 --> 00:01:08.120 in these five specific manners. 37 00:01:08.120 --> 00:01:10.280 So a few years ago, I went to this meetup 38 00:01:10.280 --> 00:01:12.040 that I got invited to by a buddy who had just sold 39 00:01:12.040 --> 00:01:14.240 for $200 million and he invited me 40 00:01:14.240 --> 00:01:16.920 and six other businesses to this cabin by the lake. 41 00:01:16.920 --> 00:01:19.520 And so the business has rained between 30 on the low end 42 00:01:19.520 --> 00:01:22.440 and $250 million in top land on the high end. 43 00:01:22.440 --> 00:01:24.880 And everyone who got, like, so everyone who got there 44 00:01:24.880 --> 00:01:27.040 got up and shared stuff that was working well for them 45 00:01:27.040 --> 00:01:28.680 and their respective industries. 46 00:01:28.680 --> 00:01:31.280 And this was everything from phone repair, 47 00:01:31.280 --> 00:01:34.000 to solar sales, to solar, to a massive international 48 00:01:34.000 --> 00:01:35.120 MLM selling supplements. 49 00:01:35.120 --> 00:01:37.400 All right, so the experiences were super diverse. 50 00:01:37.400 --> 00:01:39.280 So as I listened to each of the speakers 51 00:01:39.280 --> 00:01:41.880 and I was among the smallest in the room at the time, 52 00:01:41.880 --> 00:01:43.520 one thing became really clear to me, 53 00:01:43.520 --> 00:01:45.600 no one had any magic that I didn't have. 54 00:01:45.600 --> 00:01:47.320 As in, I didn't meet anyone and think, 55 00:01:47.320 --> 00:01:49.720 man, there's some Elon Musk super genius 56 00:01:49.720 --> 00:01:52.280 that is impossible to compete with. 57 00:01:52.280 --> 00:01:53.800 It was not that at all. 58 00:01:53.800 --> 00:01:57.360 Like in fact, the two biggest observations that I had 59 00:01:57.360 --> 00:02:01.040 were that one, people there had been in business longer than me 60 00:02:01.040 --> 00:02:02.960 doing the same thing the entire time. 61 00:02:02.960 --> 00:02:04.520 That was a big lesson for me. 62 00:02:04.520 --> 00:02:07.720 Growth just happened as a consequence of not stopping 63 00:02:07.720 --> 00:02:09.600 and steady consistent improvements over time. 64 00:02:09.600 --> 00:02:12.000 Like that was my biggest first takeaway. 65 00:02:12.000 --> 00:02:13.360 They've been doing it a long time. 66 00:02:13.360 --> 00:02:14.800 They hadn't changed directions 67 00:02:14.800 --> 00:02:16.000 and they just been getting a little bit better 68 00:02:16.000 --> 00:02:17.240 every single year. 69 00:02:17.240 --> 00:02:19.720 The second thing is that they all attacked 70 00:02:19.720 --> 00:02:21.520 a much bigger market segment than me. 71 00:02:21.520 --> 00:02:23.640 In other words, they had a much larger tam 72 00:02:23.680 --> 00:02:25.840 which is an investing term for total addressable market. 73 00:02:25.840 --> 00:02:27.480 Basically, the amount of people who you could reasonably 74 00:02:27.480 --> 00:02:29.040 qualify to buy your thing. 75 00:02:29.040 --> 00:02:30.920 So in the beginning, you want to niche down. 76 00:02:30.920 --> 00:02:31.760 So that's normal. 77 00:02:31.760 --> 00:02:32.600 So if you're new, you're starting out, 78 00:02:32.600 --> 00:02:33.840 it's normal to want to niche down. 79 00:02:33.840 --> 00:02:35.000 And mind you, that's always the advice 80 00:02:35.000 --> 00:02:36.440 for people starting out because it's much easier 81 00:02:36.440 --> 00:02:38.080 to attract a narrow field. 82 00:02:38.080 --> 00:02:40.680 It's also easier to deliver to a very narrow segment. 83 00:02:40.680 --> 00:02:41.680 You can talk in their language. 84 00:02:41.680 --> 00:02:42.960 You can make exactly what they want. 85 00:02:42.960 --> 00:02:45.240 Over time, though, it's natural for business 86 00:02:45.240 --> 00:02:48.240 to expand its scope and by extension, it's market. 87 00:02:48.240 --> 00:02:50.320 Now, if you look at Apple, for example, 88 00:02:50.320 --> 00:02:53.160 they're not niche, Netflix isn't niche. 89 00:02:53.160 --> 00:02:55.720 So it's not like if you're not nicheing, it's bad. 90 00:02:55.720 --> 00:02:56.600 It's just when. 91 00:02:56.600 --> 00:02:58.280 It's a question of sequence, right? 92 00:02:58.280 --> 00:02:59.600 So those guys sell to everyone. 93 00:02:59.600 --> 00:03:02.320 And over time, you start a niche and then you expand. 94 00:03:02.320 --> 00:03:03.240 And so that's what I'm going to talk about. 95 00:03:03.240 --> 00:03:05.840 The five ways that you can possibly expand from a niche. 96 00:03:05.840 --> 00:03:07.560 All right, and over a very long time horizon, 97 00:03:07.560 --> 00:03:08.920 if you build an enormous business, 98 00:03:08.920 --> 00:03:11.680 you'll do all five of these expansion scaling methods. 99 00:03:11.680 --> 00:03:13.560 All right, you would only do one. 100 00:03:13.560 --> 00:03:14.760 So let's dive in. 101 00:03:14.760 --> 00:03:16.040 So the first thing that you can do, 102 00:03:16.040 --> 00:03:17.600 if you envision a triangle, right? 103 00:03:17.600 --> 00:03:19.320 And it's like, this is the whole marketplace, 104 00:03:19.320 --> 00:03:20.520 is that you can go up market. 105 00:03:20.520 --> 00:03:22.120 What that means is that every segment 106 00:03:22.120 --> 00:03:25.880 has a higher or more leveraged version of its core market. 107 00:03:25.880 --> 00:03:28.200 And so if I were to sell to Keraslons, 108 00:03:28.200 --> 00:03:30.880 I'd go up market to multi-location chains 109 00:03:30.880 --> 00:03:33.280 or big national corpse or franchises, right? 110 00:03:33.280 --> 00:03:35.160 That would be going up market. 111 00:03:35.160 --> 00:03:37.360 If I sold a widget to small business owners 112 00:03:37.360 --> 00:03:38.800 like Salesforce did in the beginning, 113 00:03:38.800 --> 00:03:40.560 over time, they went up market. 114 00:03:40.560 --> 00:03:41.720 And so they went enterprise. 115 00:03:41.720 --> 00:03:43.280 So they went to four to 500 companies. 116 00:03:43.280 --> 00:03:45.080 They went up, they went bigger. 117 00:03:45.080 --> 00:03:48.240 The pros are, the deals are worth significantly more, 118 00:03:48.240 --> 00:03:49.880 and they churn far less often. 119 00:03:49.880 --> 00:03:52.200 Because you're dealing with more sophisticated business owners. 120 00:03:52.200 --> 00:03:54.640 You don't have non-payment issues, et cetera. 121 00:03:54.640 --> 00:03:56.920 The cons are, they're harder to sell, 122 00:03:56.920 --> 00:03:58.320 and it takes a much longer time. 123 00:03:58.320 --> 00:04:00.520 Sometimes it takes six to 18 months 124 00:04:00.520 --> 00:04:02.120 to close enterprise deals. 125 00:04:02.120 --> 00:04:04.520 So if you look at Neil Patel, what did he do? 126 00:04:04.520 --> 00:04:07.280 He is SEO services, but he makes his money 127 00:04:07.280 --> 00:04:10.040 doing it for Fortune 500, Gary Vee, what does he do? 128 00:04:10.040 --> 00:04:13.280 A normal agency business, but he sells to Fortune 500. 129 00:04:13.280 --> 00:04:16.920 Going up market is harder, but it pays off in the long run. 130 00:04:16.920 --> 00:04:19.640 Bottom line, if you increase the quality of your customer, 131 00:04:19.640 --> 00:04:22.120 you increase the quality of your company. 132 00:04:22.120 --> 00:04:25.480 The second way to scale is that you can go down market, 133 00:04:25.480 --> 00:04:27.560 which is the exact opposite of what I just said, right? 134 00:04:27.560 --> 00:04:29.360 You can do any of these things, and over time, 135 00:04:29.360 --> 00:04:31.800 you would do all of them, but these are all directions. 136 00:04:31.800 --> 00:04:33.160 So you can go down market. 137 00:04:33.160 --> 00:04:35.400 So if I were selling to hair salons, again, 138 00:04:35.400 --> 00:04:37.800 this would be selling to hair stylists, all right? 139 00:04:37.800 --> 00:04:39.720 If I were in gyms, it would be selling to trainers. 140 00:04:39.720 --> 00:04:41.680 If I were in Cairo, it would be selling to the employees 141 00:04:41.680 --> 00:04:42.560 who work in the clinics. 142 00:04:42.560 --> 00:04:45.280 If I went after SMBs, small business owners, 143 00:04:45.280 --> 00:04:47.360 it would be going after aspiring business owners 144 00:04:47.360 --> 00:04:50.280 or watchmeners or business opportunity seekers, right? 145 00:04:50.280 --> 00:04:52.280 That's what going down market is. 146 00:04:52.280 --> 00:04:53.920 The advantages of going down market 147 00:04:53.920 --> 00:04:55.800 is you never run out of customers. 148 00:04:55.800 --> 00:04:57.600 They're always making new ones every day. 149 00:04:57.600 --> 00:04:59.560 People float in and out of the market 150 00:04:59.560 --> 00:05:00.880 because they're not established. 151 00:05:00.880 --> 00:05:02.320 They're more emotional buyers. 152 00:05:02.320 --> 00:05:03.720 There's an ocean of them. 153 00:05:03.720 --> 00:05:06.760 The downside is it's hard to build a recurring revenue 154 00:05:06.760 --> 00:05:07.760 business from them. 155 00:05:07.760 --> 00:05:08.840 They are not consistent. 156 00:05:08.840 --> 00:05:10.040 They don't follow through. 157 00:05:10.040 --> 00:05:11.280 You have constant payment issues. 158 00:05:11.280 --> 00:05:12.880 They change their minds, right? 159 00:05:12.880 --> 00:05:15.440 And have, in general, unrealistic expectations 160 00:05:15.440 --> 00:05:16.520 because they're poor. 161 00:05:16.520 --> 00:05:19.120 And they believe because $50 matters to them, 162 00:05:19.120 --> 00:05:21.960 that it should also entitle them to you flying out 163 00:05:21.960 --> 00:05:23.760 to walk them through whatever it is in person 164 00:05:23.760 --> 00:05:24.800 every step of the way. 165 00:05:24.800 --> 00:05:25.640 It is what it is. 166 00:05:25.640 --> 00:05:27.360 You can try to educate them, but for the most part, 167 00:05:27.360 --> 00:05:29.200 it is the avatar, all right? 168 00:05:29.200 --> 00:05:31.680 So the key to making it work in this market 169 00:05:31.680 --> 00:05:33.800 is having very strong marketing and sales. 170 00:05:33.800 --> 00:05:36.640 It's less about the product in this sub-segment, 171 00:05:36.640 --> 00:05:38.200 because even if you have an amazing product, 172 00:05:38.200 --> 00:05:39.760 30% of them go out of business every year 173 00:05:39.760 --> 00:05:41.320 because it's who they are. 174 00:05:41.320 --> 00:05:43.280 So a friend of mine has a CRM that targets 175 00:05:43.280 --> 00:05:45.400 super small watchmen or small business owners, 176 00:05:45.400 --> 00:05:48.080 and they have 4% monthly term, which is insanely high 177 00:05:48.080 --> 00:05:49.160 for a CRM. 178 00:05:49.160 --> 00:05:51.000 And he processes all the payments everything. 179 00:05:51.000 --> 00:05:52.840 And I was like, where's your term coming from? 180 00:05:52.840 --> 00:05:54.520 And he said, 100% of my term comes from people 181 00:05:54.520 --> 00:05:56.000 going out of business or starting new things. 182 00:05:56.000 --> 00:05:59.200 And I was like, oh, wow, that's structural term. 183 00:05:59.200 --> 00:06:01.080 He can't do anything about. 184 00:06:01.080 --> 00:06:03.160 And so the bottom line is, if you're better at marketing 185 00:06:03.160 --> 00:06:05.080 and sales, then you are product and delivery. 186 00:06:05.080 --> 00:06:06.960 Going down market might be a better fit for you 187 00:06:06.960 --> 00:06:09.520 in the beginning until you get better at delivery. 188 00:06:09.520 --> 00:06:11.200 Because you always have new customers to iterate 189 00:06:11.200 --> 00:06:12.040 and improve on. 190 00:06:12.040 --> 00:06:13.560 And then you can make another move over time. 191 00:06:13.560 --> 00:06:15.440 It's not going to make necessarily most valuable business, 192 00:06:15.440 --> 00:06:17.000 but it will give you a lot of iterations, 193 00:06:17.000 --> 00:06:18.840 because there's just so many of them, right? 194 00:06:18.840 --> 00:06:20.080 Which brings me to the third move 195 00:06:20.080 --> 00:06:21.760 that you can make to scale your business, 196 00:06:21.760 --> 00:06:23.800 which is that you can go to an adjacent market. 197 00:06:23.800 --> 00:06:26.080 So these are markets that often sell the same promise 198 00:06:26.080 --> 00:06:27.720 but deliver in a different way. 199 00:06:27.720 --> 00:06:29.680 So for example, if I worked with Harris-Salons 200 00:06:29.680 --> 00:06:32.840 to reuse the same example again, they sell beauty, right? 201 00:06:32.840 --> 00:06:35.080 So I'd go to Nails-Salons as an adjacent market, 202 00:06:35.080 --> 00:06:38.040 like who else sells beauty that's a service-based business 203 00:06:38.040 --> 00:06:39.280 as a big order, okay, cool. 204 00:06:39.280 --> 00:06:41.280 Nails-Salons, that would be adjacent, right? 205 00:06:41.320 --> 00:06:44.240 They sell the same avatar that often wants the same thing 206 00:06:44.240 --> 00:06:46.320 and likely suffer from the same problems. 207 00:06:46.320 --> 00:06:48.640 So if I worked with car factors as an additional example, 208 00:06:48.640 --> 00:06:49.960 I look at physical therapists 209 00:06:49.960 --> 00:06:52.600 as they likely have similar audiences with similar needs. 210 00:06:52.600 --> 00:06:55.600 If I sold to gyms, I could sell to dance studios, et cetera. 211 00:06:55.600 --> 00:06:58.800 These are all adjacent markets, they're right next door, all right? 212 00:06:58.800 --> 00:07:01.080 Triangle next door, all right? 213 00:07:01.080 --> 00:07:02.840 The advantages of moving adjacent 214 00:07:02.840 --> 00:07:05.480 is that you can usually provide the same amount of value 215 00:07:05.480 --> 00:07:07.000 as your first market. 216 00:07:07.000 --> 00:07:08.800 It's a slower expansion play, 217 00:07:08.800 --> 00:07:10.680 because you go vertical by vertical by vertical, 218 00:07:10.680 --> 00:07:13.240 but it allows you to extract maximal value. 219 00:07:13.240 --> 00:07:16.160 So oftentimes you don't need to iterate your main thing 220 00:07:16.160 --> 00:07:17.880 or your core product too much. 221 00:07:17.880 --> 00:07:20.280 Usually it's just some lipstick and kind of a different wrapper 222 00:07:20.280 --> 00:07:22.480 since they suffer for more or less the same problem, right? 223 00:07:22.480 --> 00:07:24.960 So the same solutions work for them most of the time. 224 00:07:24.960 --> 00:07:26.720 So you just need to market it a little bit differently 225 00:07:26.720 --> 00:07:28.240 using their language. 226 00:07:28.240 --> 00:07:30.320 And so if you decide to do this, 227 00:07:30.320 --> 00:07:32.000 you need to get an ally in your company. 228 00:07:32.000 --> 00:07:34.080 So you need to find someone from that new world 229 00:07:34.080 --> 00:07:36.160 that adjacent market and bring them in. 230 00:07:36.160 --> 00:07:37.880 They'll have enough trench and industry knowledge 231 00:07:37.880 --> 00:07:39.120 to help you bridge the gap, 232 00:07:39.200 --> 00:07:42.240 but this often just comes from an enterprising motherfucker, 233 00:07:42.240 --> 00:07:44.720 right, from that space that sees your success in your niche 234 00:07:44.720 --> 00:07:46.360 and says, hey, do you think it would work for me? 235 00:07:46.360 --> 00:07:48.120 And gives it a shot, makes the minor tweaks, 236 00:07:48.120 --> 00:07:50.000 and then they figure out how to make your thing work 237 00:07:50.000 --> 00:07:51.240 in their market, right? 238 00:07:51.240 --> 00:07:53.720 And then all you have to do is find a way to pay that person 239 00:07:53.720 --> 00:07:55.080 and then they'll help you unlock 240 00:07:55.080 --> 00:07:57.360 this entire new category of revenue. 241 00:07:57.360 --> 00:07:59.520 And this can help double or triple your market size 242 00:07:59.520 --> 00:08:00.760 just with one move. 243 00:08:00.760 --> 00:08:02.320 Now, those are the advantages. 244 00:08:02.320 --> 00:08:05.480 The disadvantages are that this is a slower way to grow 245 00:08:05.480 --> 00:08:06.400 than the other ways. 246 00:08:06.400 --> 00:08:08.800 And so you'll need more specialized knowledge to do it well. 247 00:08:08.800 --> 00:08:10.600 That's why that person's so key. 248 00:08:10.600 --> 00:08:12.160 So all the stuff you know about your industry, 249 00:08:12.160 --> 00:08:14.000 you're gonna have to know that same depth 250 00:08:14.000 --> 00:08:16.280 about theirs or find someone who does. 251 00:08:16.280 --> 00:08:18.360 And so here's the bottom line for moving adjacent 252 00:08:18.360 --> 00:08:19.840 or scaling in an adjacent market. 253 00:08:19.840 --> 00:08:22.160 Is that it's a great way to extract maximal value. 254 00:08:22.160 --> 00:08:24.760 It's a slow way to grow, which is not necessarily bad, 255 00:08:24.760 --> 00:08:25.840 when you think about it long-term, 256 00:08:25.840 --> 00:08:27.320 because you can keep copying and pasting 257 00:08:27.320 --> 00:08:29.600 the play vertical by vertical by vertical. 258 00:08:29.600 --> 00:08:31.320 All right, and that allows you to get the most amount 259 00:08:31.320 --> 00:08:33.520 of money per unit of effort, but it takes a little bit longer, 260 00:08:33.520 --> 00:08:36.200 but it can also build an incredibly valuable company, 261 00:08:36.200 --> 00:08:38.000 which brings me to the fourth way that you can scale, 262 00:08:38.040 --> 00:08:39.160 which is going broader. 263 00:08:39.160 --> 00:08:40.640 So we've got our triangle, you go up, 264 00:08:40.640 --> 00:08:43.040 you can go down, you can go side, or you can go broader. 265 00:08:43.040 --> 00:08:45.440 All right, so this means that you generalize 266 00:08:45.440 --> 00:08:47.480 your core product or core promise 267 00:08:47.480 --> 00:08:50.040 across all verticals that solve the same problem. 268 00:08:50.040 --> 00:08:52.720 So for example, going broader would be going from 269 00:08:52.720 --> 00:08:55.720 hair salons to beauty in general, right? 270 00:08:55.720 --> 00:08:57.800 That would include hair, nails, aesthetics, 271 00:08:57.800 --> 00:08:59.880 meds, bomb massage, et cetera, right? 272 00:08:59.880 --> 00:09:01.240 All encompassing. 273 00:09:01.240 --> 00:09:03.800 So you put all the verticals together, 274 00:09:03.800 --> 00:09:06.560 and then you generalize your language more 275 00:09:06.600 --> 00:09:07.680 and you go after them all. 276 00:09:07.680 --> 00:09:09.360 Like that's the big pivot that would happen there. 277 00:09:09.360 --> 00:09:11.600 So core promise, you expand the language 278 00:09:11.600 --> 00:09:12.760 and then it applies to all of them. 279 00:09:12.760 --> 00:09:13.920 That's going broader. 280 00:09:15.800 --> 00:09:16.640 We'll go quiz. 281 00:09:16.640 --> 00:09:18.960 You guys already know that I don't run any ads on this 282 00:09:18.960 --> 00:09:20.280 and I don't sell anything. 283 00:09:20.280 --> 00:09:22.120 And so the only ask that I can ever have 284 00:09:22.120 --> 00:09:23.520 if you guys said that you helped me spread the words 285 00:09:23.520 --> 00:09:25.000 so we could not more entrepreneurs, 286 00:09:25.000 --> 00:09:26.720 make more money, feed their families, 287 00:09:26.720 --> 00:09:29.120 make better products, and have better experiences 288 00:09:29.120 --> 00:09:30.720 for their employees and customers. 289 00:09:30.720 --> 00:09:32.920 And the only way we do that is if you can rate 290 00:09:32.920 --> 00:09:35.160 and review and share this podcast. 291 00:09:35.200 --> 00:09:36.520 So the single thing that I ask you to do 292 00:09:36.520 --> 00:09:37.760 is you can just leave review, 293 00:09:37.760 --> 00:09:39.720 but take 10 seconds or one type of the thug 294 00:09:39.720 --> 00:09:40.960 that it means the absolute will to me 295 00:09:40.960 --> 00:09:43.000 and more importantly, it may change the world 296 00:09:43.000 --> 00:09:43.840 for someone else. 297 00:09:45.480 --> 00:09:47.520 As a different example, if I were in gyms, 298 00:09:47.520 --> 00:09:49.520 I would go to fitness centers in general. 299 00:09:49.520 --> 00:09:52.440 This might mean big box gyms, microgyms, boutique studios, 300 00:09:52.440 --> 00:09:54.440 dance studios, spin studios, martial arts, right? 301 00:09:54.440 --> 00:09:57.160 All the different verticals in one, right? 302 00:09:57.160 --> 00:09:59.080 Now the advantages are that you can scale up 303 00:09:59.080 --> 00:10:00.200 faster this way. 304 00:10:00.200 --> 00:10:03.600 You can 10x your total adjustment market overnight. 305 00:10:03.600 --> 00:10:05.280 The downside is it's harder to provide 306 00:10:05.280 --> 00:10:06.280 the same amount of value. 307 00:10:06.280 --> 00:10:08.640 So if we're comparing this to going vertical by vertical, 308 00:10:08.640 --> 00:10:09.680 you have to generalize more. 309 00:10:09.680 --> 00:10:11.240 It's gonna be more templated, right? 310 00:10:11.240 --> 00:10:13.280 So you're not gonna be able to have the same depth 311 00:10:13.280 --> 00:10:15.520 of nuance as you could if you go vertical by vertical 312 00:10:15.520 --> 00:10:16.600 if you just go broader, 313 00:10:16.600 --> 00:10:19.240 but you immediately have access to 10x the amount of customers 314 00:10:19.240 --> 00:10:21.640 or sometimes 100x the amount of customers. 315 00:10:21.640 --> 00:10:23.520 And so it becomes more like fill in the blank 316 00:10:23.520 --> 00:10:25.520 than copy and paste, right? 317 00:10:25.520 --> 00:10:28.000 And so the other downside is that you also not compete 318 00:10:28.000 --> 00:10:30.840 against every other person in all of those industries. 319 00:10:30.840 --> 00:10:31.960 So you widen your pool, 320 00:10:31.960 --> 00:10:33.960 but you also compete against a lot more fishermen. 321 00:10:33.960 --> 00:10:36.120 And many of them are more experienced and more interesting 322 00:10:36.120 --> 00:10:38.600 because you're competing against all the vertical players 323 00:10:38.600 --> 00:10:41.440 who are just doing that silo as you try and hit all of them, 324 00:10:41.440 --> 00:10:42.720 right? So you have more customers, 325 00:10:42.720 --> 00:10:45.120 but all your competition are better in their micro niches. 326 00:10:45.120 --> 00:10:47.720 But once you've achieved a certain amount of scale 327 00:10:47.720 --> 00:10:50.960 and expertise, you may have earned the right to go broader, 328 00:10:50.960 --> 00:10:51.800 which does happen. 329 00:10:51.800 --> 00:10:53.400 It's not saying you don't earn the right. 330 00:10:53.400 --> 00:10:56.200 I will say though, oftentimes people go too broad 331 00:10:56.200 --> 00:10:57.640 too soon because they're not good enough yet 332 00:10:57.640 --> 00:10:58.840 and they haven't really earned the right. 333 00:10:58.840 --> 00:11:01.480 So how do you know when the right time is? 334 00:11:01.480 --> 00:11:04.480 When you have made it work in the other verticals 335 00:11:04.480 --> 00:11:07.120 and you have champions in multiple other verticals 336 00:11:07.120 --> 00:11:11.080 that have used your services or your products across them 337 00:11:11.080 --> 00:11:13.000 and you have kind of case studies that demonstrate 338 00:11:13.000 --> 00:11:14.280 what changes you need to make 339 00:11:14.280 --> 00:11:15.520 and you know that you can generalize it 340 00:11:15.520 --> 00:11:17.760 while still providing pretty significant value 341 00:11:17.760 --> 00:11:18.600 to each of them, 342 00:11:18.600 --> 00:11:21.240 then it becomes more of showing multiple case studies 343 00:11:21.240 --> 00:11:22.640 of how it works in each of them. 344 00:11:22.640 --> 00:11:24.840 So you still try and hit all of it at the same point 345 00:11:24.840 --> 00:11:27.480 but the overarching message is beauty industry, 346 00:11:27.480 --> 00:11:30.080 fitness industry, investment industry, whatever. 347 00:11:30.080 --> 00:11:32.360 Clinicians, pain, et cetera. 348 00:11:32.360 --> 00:11:35.320 But bottom line, if you wanna go fast, go broad. 349 00:11:35.320 --> 00:11:36.720 But if you wanna be good, 350 00:11:36.720 --> 00:11:39.200 you'd be better served staying narrow for a little 351 00:11:39.200 --> 00:11:40.040 in scaling out. 352 00:11:40.040 --> 00:11:41.600 Like for example, Facebook started in colleges 353 00:11:41.600 --> 00:11:42.440 before expanding out. 354 00:11:42.440 --> 00:11:44.120 So it's not like you have to go broad immediately. 355 00:11:44.120 --> 00:11:45.520 Like you start narrow and then you continue 356 00:11:45.520 --> 00:11:47.160 to generalize over time. 357 00:11:47.160 --> 00:11:48.560 Now I said there was five, right? 358 00:11:48.560 --> 00:11:49.400 So we covered four. 359 00:11:49.400 --> 00:11:51.240 We said you can go up market, you can go down market, 360 00:11:51.240 --> 00:11:53.040 you can go adjacent, you can go broader. 361 00:11:53.040 --> 00:11:54.440 The other thing is you can go narrower. 362 00:11:54.440 --> 00:11:57.040 Now I said that you can scale anything that way 363 00:11:57.040 --> 00:11:58.920 and the way that you scale by going narrow 364 00:11:58.920 --> 00:11:59.760 is a little bit different. 365 00:11:59.760 --> 00:12:02.320 Now part of that is the niching down component, sure. 366 00:12:02.320 --> 00:12:04.280 But I'm gonna explain a very different way of going narrow 367 00:12:04.280 --> 00:12:05.960 that ultimately makes you more money. 368 00:12:05.960 --> 00:12:08.760 So I like to think about this as becoming more specific. 369 00:12:08.760 --> 00:12:10.560 All right, so I actually wrote an entire chapter 370 00:12:10.560 --> 00:12:12.080 on this that got cut last minute 371 00:12:12.080 --> 00:12:13.520 from my $100 million offers book. 372 00:12:13.520 --> 00:12:14.520 And the chapters for you on my site, 373 00:12:14.520 --> 00:12:15.480 by the way, you can opt in anywhere, 374 00:12:15.480 --> 00:12:16.320 you can get it. 375 00:12:16.320 --> 00:12:17.600 It's called your first avatar. 376 00:12:17.600 --> 00:12:19.280 And sorry if you can go, got that, whatever. 377 00:12:19.280 --> 00:12:23.320 So the basic idea is that you go from a small business owner 378 00:12:23.320 --> 00:12:25.000 to let's say small businesses 379 00:12:25.000 --> 00:12:27.520 with $30,000 a month of revenue and at least two employees. 380 00:12:27.520 --> 00:12:29.960 Or hair swans with at least ex clients, 381 00:12:29.960 --> 00:12:31.800 Y staff and Z revenue, right? 382 00:12:31.800 --> 00:12:33.080 So you get narrower. 383 00:12:33.080 --> 00:12:35.520 And the idea is how do I increase the quality 384 00:12:35.520 --> 00:12:38.720 of my prospects without necessarily going up market? 385 00:12:38.720 --> 00:12:40.720 So you're not changing the nature of your avatar, 386 00:12:40.720 --> 00:12:42.960 you're just changing your adding qualifications to them. 387 00:12:42.960 --> 00:12:44.600 So I learned about this from the former head 388 00:12:44.600 --> 00:12:47.280 of packaging and pricing at Vista Private Equity. 389 00:12:47.280 --> 00:12:49.440 The quick story on this is that I was at this event, 390 00:12:49.440 --> 00:12:52.000 guy got up on stage, I thought I was hot shit. 391 00:12:52.000 --> 00:12:53.760 And they're like, this guy manages, you know, 392 00:12:53.760 --> 00:12:55.480 run the pricing and packaging at Vista, 393 00:12:55.480 --> 00:12:57.120 which is a $50 billion fund. 394 00:12:57.120 --> 00:12:59.240 I was like, oh, this guy is much bigger than thickening me. 395 00:12:59.240 --> 00:13:01.040 So I was like, okay, I should listen to him. 396 00:13:01.040 --> 00:13:03.640 And then he went on to proceed to explain that 397 00:13:03.640 --> 00:13:05.520 the way that Vista would attack companies 398 00:13:05.520 --> 00:13:07.840 and get outsized returns is that they would do 399 00:13:07.840 --> 00:13:10.280 a huge customer analysis of every customer 400 00:13:10.280 --> 00:13:12.080 of a company that they want to acquire. 401 00:13:12.080 --> 00:13:15.080 And then they would do a fractal basically analysis. 402 00:13:15.080 --> 00:13:16.080 Basically, there's 80, 20. 403 00:13:16.080 --> 00:13:17.760 They would look at the 20% of customers 404 00:13:17.760 --> 00:13:18.960 that brought them the most money 405 00:13:18.960 --> 00:13:20.760 and look at the 80% that didn't. 406 00:13:20.760 --> 00:13:22.680 And they would say, how do we get more of these 20 407 00:13:22.680 --> 00:13:24.000 and ignore these other ones? 408 00:13:24.000 --> 00:13:25.760 And so they would look for the common character traits, 409 00:13:25.760 --> 00:13:28.240 the channels, et cetera, around that 20 410 00:13:28.240 --> 00:13:29.400 and say, well, what if we just made 411 00:13:29.400 --> 00:13:31.920 all of our customers that 20% when they did that, 412 00:13:31.920 --> 00:13:33.120 they're able to five extra company 413 00:13:33.120 --> 00:13:35.460 without even having to occur a significant infrastructure 414 00:13:35.460 --> 00:13:37.320 across because the actual total number of customers 415 00:13:37.320 --> 00:13:38.600 didn't change dramatically. 416 00:13:38.600 --> 00:13:41.280 All right, and by doing that became significantly more profitable 417 00:13:41.280 --> 00:13:42.800 and ultimately created a lot of value. 418 00:13:42.800 --> 00:13:44.480 So I learned that concept from him 419 00:13:44.480 --> 00:13:45.480 and that's where kind of this concept 420 00:13:45.480 --> 00:13:47.600 around going near where it comes from. 421 00:13:47.600 --> 00:13:50.120 So here's the process for doing this in your own business. 422 00:13:50.120 --> 00:13:51.880 Number one is you survey all your customers 423 00:13:51.880 --> 00:13:53.360 to find out what their stats are 424 00:13:53.360 --> 00:13:55.320 and what they like most about your services. 425 00:13:55.320 --> 00:13:57.000 I go in depth on this step-by-step 426 00:13:57.000 --> 00:13:59.000 in that chapter, which you can grab. 427 00:13:59.000 --> 00:13:59.840 Like I said, it's free. 428 00:13:59.840 --> 00:14:00.680 You can grab it online. 429 00:14:00.680 --> 00:14:01.680 That goes just in our home. 430 00:14:01.680 --> 00:14:03.440 Two is you look at your best customers 431 00:14:03.440 --> 00:14:05.960 and the ones who spent the most and stayed longest. 432 00:14:05.960 --> 00:14:08.320 Number three, you do a common factor analysis 433 00:14:08.320 --> 00:14:10.280 which is just a fancy way of saying 434 00:14:10.280 --> 00:14:11.600 you see what they all have in common. 435 00:14:11.600 --> 00:14:13.720 Ideally, you want it to be as few things as possible. 436 00:14:13.720 --> 00:14:16.520 Think like two to five traits, no more than five 437 00:14:16.520 --> 00:14:18.040 because each time you add a layer, 438 00:14:18.040 --> 00:14:19.400 you narrow your target even more. 439 00:14:19.400 --> 00:14:20.640 And so what you're essentially trying to figure out 440 00:14:20.640 --> 00:14:22.600 is who are my most qualified buyers? 441 00:14:22.600 --> 00:14:25.280 Who are the people who get the most value for my stuff? 442 00:14:25.280 --> 00:14:26.680 All right, that's step three. 443 00:14:26.680 --> 00:14:28.800 Step four, once you find that out, you do two things. 444 00:14:28.800 --> 00:14:31.240 Number one, is you change all your marketing language 445 00:14:31.240 --> 00:14:32.760 to attract that specific avatar 446 00:14:32.760 --> 00:14:35.480 who has traits X, Y, and Z, right? 447 00:14:35.480 --> 00:14:36.640 And number two, is you figure out 448 00:14:36.640 --> 00:14:38.720 what process they all went through to buy. 449 00:14:38.720 --> 00:14:41.720 Often, they consumed certain pieces of content 450 00:14:41.720 --> 00:14:43.240 or they came in through a specific channel, 451 00:14:43.240 --> 00:14:46.440 might be SEO or might be a group or a discord or YouTube ads 452 00:14:46.440 --> 00:14:47.400 or whatever it is, right? 453 00:14:47.400 --> 00:14:50.040 You'll figure out that these people consume this thing 454 00:14:50.040 --> 00:14:52.280 to go through this process to go through this channel. 455 00:14:52.280 --> 00:14:54.080 And then what happens is you reverse engineer 456 00:14:54.080 --> 00:14:57.040 the buying process to force every customer 457 00:14:57.040 --> 00:14:58.600 to go through that process. 458 00:14:58.600 --> 00:15:02.840 And basically, you make your best and most qualified customers. 459 00:15:02.840 --> 00:15:06.000 And so you kind of force the on-the-fence prospects 460 00:15:06.000 --> 00:15:07.960 to become the higher quality prospects 461 00:15:07.960 --> 00:15:10.480 by reverse engineering, what the best guys went through 462 00:15:10.480 --> 00:15:14.000 by accident, except now you do it on purpose. 463 00:15:14.000 --> 00:15:16.000 And so the advantages of going narrower 464 00:15:16.000 --> 00:15:17.480 are that you can increase your prices 465 00:15:17.480 --> 00:15:18.680 and your profits significantly. 466 00:15:18.680 --> 00:15:20.080 Because remember, we're now finding the people 467 00:15:20.080 --> 00:15:22.000 who we provide the most value to, right? 468 00:15:22.000 --> 00:15:24.080 Because you do, in a real way, provide more value 469 00:15:24.080 --> 00:15:25.320 to this sub-segment. 470 00:15:25.320 --> 00:15:28.040 And so you also stop wasting time with shitty customers. 471 00:15:28.040 --> 00:15:29.840 And so you also fewer people to compete against 472 00:15:29.840 --> 00:15:30.880 in this very narrow space. 473 00:15:30.880 --> 00:15:33.480 And it also costs you less to service fewer people, right? 474 00:15:33.480 --> 00:15:35.440 So all of these things are good things for business 475 00:15:35.440 --> 00:15:37.720 that, especially on the smaller side, 476 00:15:37.720 --> 00:15:39.000 that wants to just become more profitable. 477 00:15:39.000 --> 00:15:41.280 So that's you, this would be a play, 478 00:15:41.280 --> 00:15:43.760 which is often one that we start with some of our portfolio 479 00:15:43.760 --> 00:15:45.840 companies is like, we can three or four X the profit 480 00:15:45.840 --> 00:15:47.000 of the business just by going narrower 481 00:15:47.000 --> 00:15:48.720 and getting very clear on the avatars, right? 482 00:15:48.720 --> 00:15:51.320 By running this process, which, there you go. 483 00:15:51.320 --> 00:15:52.680 That's it, you can do it. 484 00:15:52.680 --> 00:15:54.480 Now, here are the disadvantages. 485 00:15:54.480 --> 00:15:57.000 You have fewer people to sell to, which is significant. 486 00:15:57.000 --> 00:15:59.040 But if you're not making $10 million a year or more, 487 00:15:59.040 --> 00:16:00.960 then you shouldn't be worried about that. 488 00:16:00.960 --> 00:16:02.720 So if you're not there, then don't worry about that. 489 00:16:02.720 --> 00:16:04.440 You just want to figure out who you provide the most value 490 00:16:04.440 --> 00:16:07.480 to and then focus ruthlessly on serving that avatar. 491 00:16:07.480 --> 00:16:09.160 And that means saying no to people 492 00:16:09.160 --> 00:16:12.160 who aren't the new, better, narrow avatar. 493 00:16:12.160 --> 00:16:13.920 Means saying no, that's the strategies. 494 00:16:13.920 --> 00:16:16.040 You have to know who you're not going to serve. 495 00:16:16.040 --> 00:16:18.160 So bottom line, if you're starting out, 496 00:16:18.160 --> 00:16:19.760 there's a reason they say to go narrow. 497 00:16:19.760 --> 00:16:22.480 You can be laser targeted in your marketing and delivery 498 00:16:22.480 --> 00:16:24.000 and start to build a reputation for yourself, 499 00:16:24.000 --> 00:16:25.240 which takes time, right? 500 00:16:25.240 --> 00:16:27.920 But if you do it right, the other four plays, 501 00:16:27.920 --> 00:16:30.680 going broader, going up market, going down market, 502 00:16:30.680 --> 00:16:32.520 going adjacent market, all of those plays 503 00:16:32.520 --> 00:16:34.080 open themselves up to you. 504 00:16:34.080 --> 00:16:35.280 Think about this. 505 00:16:35.280 --> 00:16:38.640 Elon started Tesla super expensive, right? 506 00:16:38.640 --> 00:16:39.880 Selling electric cars to the rich. 507 00:16:39.880 --> 00:16:41.600 And then once he had a reputation, 508 00:16:41.600 --> 00:16:43.560 he went down market one step, right? 509 00:16:43.560 --> 00:16:46.040 And then he just created normal expensive cars, right? 510 00:16:46.040 --> 00:16:48.320 And then he went down a step again and he reached the masses. 511 00:16:48.320 --> 00:16:51.640 Zuck, for example, went college kids, then he went broader. 512 00:16:51.640 --> 00:16:54.200 Salesforce started with SMBs and then they went up. 513 00:16:54.200 --> 00:16:55.200 You learn as you go. 514 00:16:55.200 --> 00:16:56.200 So no matter where you are, 515 00:16:56.200 --> 00:16:58.240 you can scale up your tim in any of the five ways 516 00:16:58.240 --> 00:16:59.720 that are just outlined in the number of people 517 00:16:59.720 --> 00:17:01.600 you sell to by going up market, 518 00:17:01.600 --> 00:17:04.120 by going down market, by going to adjacent market, 519 00:17:04.120 --> 00:17:06.680 by going broader, or we're going narrower. 520 00:17:06.680 --> 00:17:08.680 Or my personal favorite, door number six, 521 00:17:08.680 --> 00:17:10.920 which is just keep getting better at what you do 522 00:17:10.920 --> 00:17:12.880 and you'll ultimately make more money. 523 00:17:12.880 --> 00:17:15.000 Those days you can keep crushing, love you guys, 524 00:17:15.000 --> 00:17:16.160 rock on, bye.