WEBVTT 1 00:00:00.000 --> 00:00:04.800 Five business lessons that I just learned crossing 250 million in 2024. 2 00:00:04.800 --> 00:00:07.200 So the first one was the cost of change. 3 00:00:07.200 --> 00:00:12.800 It was the first time that I've actually quantified how much just changing something in the business actually cost. 4 00:00:12.800 --> 00:00:15.600 So if you would imagine a straight line, right? 5 00:00:15.600 --> 00:00:20.000 It's saying, okay, this is normal business activity, right? Straight line is going across. 6 00:00:20.000 --> 00:00:22.800 Now let's imagine we want to change something, right? 7 00:00:22.800 --> 00:00:27.200 So that's like our normal revenue, but then we decide, you know what, I'm going to change something in the business. 8 00:00:27.200 --> 00:00:30.400 So what ends up happening is this little line kind of dips down. 9 00:00:30.400 --> 00:00:35.400 And I've estimated just for my kind of like, this is again, there's no science behind this, just my estimate. 10 00:00:35.400 --> 00:00:42.600 Then I get about a 20% decrease in effectiveness across any function that I'm going to change, especially if it's manual. 11 00:00:42.600 --> 00:00:46.400 Now if you split this a headline that's different, but if you're like, hey, we're changing our onboarding processor, 12 00:00:46.400 --> 00:00:51.800 we're changing our sales processor, we're changing our outbound processor, we're changing our something that people are involved with. 13 00:00:51.800 --> 00:00:56.400 We tend to get a decrease immediately of 20% in a performance, right? 14 00:00:56.400 --> 00:00:58.000 Which is pretty significant. 15 00:00:58.000 --> 00:01:04.000 And so as soon as I realized that we had almost as guaranteed cost of change, which is about 20%, 16 00:01:04.000 --> 00:01:07.200 I was able to quantify what things were worth doing. 17 00:01:07.200 --> 00:01:11.600 Because if you're anything like me, I have like this big list of stuff where I'm like, man, we should need to improve this, 18 00:01:11.600 --> 00:01:14.800 we need to improve this, we need to improve this, and I've all these ideas of things that I think that don't improve it. 19 00:01:14.800 --> 00:01:21.400 But when I actually am honest with myself and I think, huh, how much is number one going to actually improve the business? 20 00:01:21.400 --> 00:01:24.200 If I say, well, I think I maybe get us a 5% improvement. 21 00:01:24.200 --> 00:01:32.600 Well, if I have a guaranteed 20% decrease or a decrement in performance, and I have a 5% incremental increase in performance, 22 00:01:32.600 --> 00:01:38.400 do I want to take a 20% guaranteed loss to have a potential for a 5% gain? 23 00:01:38.400 --> 00:01:39.800 Probably not. 24 00:01:39.800 --> 00:01:47.200 And so what's ended up happening is that there's all these little 5%, 5% little improvements that I think could happen. 25 00:01:47.400 --> 00:01:53.400 But there's only like one or two 20, 30, 50% plus improvements I think we can do in the business. 26 00:01:53.400 --> 00:01:57.600 And so what happens is some of these things I just choose to never do. 27 00:01:57.600 --> 00:02:04.000 And I'll try not to say explicit here, but some stays, you just have to accept that the business will not be perfect, 28 00:02:04.000 --> 00:02:08.800 but your chase of perfection will actually make your current business worse because you're constantly changing things. 29 00:02:08.800 --> 00:02:11.000 But let me, let me spell this out one more level. 30 00:02:11.000 --> 00:02:13.400 So let's say you have your 20% loss, right? 31 00:02:13.400 --> 00:02:15.400 Now, let's say you do something that is good, right? 32 00:02:15.400 --> 00:02:17.400 And you start going up, right? 33 00:02:17.400 --> 00:02:19.400 20% loss to start going back up. 34 00:02:19.400 --> 00:02:25.400 But what happens if you at the same time say, oh, well, now I'm going to start changing something else, right? 35 00:02:25.400 --> 00:02:31.200 And so basically you incur this permanent 20% decrease because you're always changing something. 36 00:02:31.200 --> 00:02:33.400 So you're always 20% below where you should be in the business. 37 00:02:33.400 --> 00:02:34.400 20% is a lot. 38 00:02:34.400 --> 00:02:39.400 Oftentimes in the business, my business is exceptionally well, and I just let them breathe. 39 00:02:39.400 --> 00:02:43.400 Because here is the other part that no one tells you. 40 00:02:43.400 --> 00:02:47.400 If you change nothing, you get about a 5% guaranteed improvement. 41 00:02:47.400 --> 00:02:48.400 Think about craze that is. 42 00:02:48.400 --> 00:02:53.400 If you change nothing, you just, buh, buh, buh, buh, buh, buh, buh, buh, 5%. 43 00:02:53.400 --> 00:02:54.400 You can book it. 44 00:02:54.400 --> 00:02:59.400 Think about GDP, partially something, we're like, oh, that must be, you know, that could be in relation to education which in the US certainly isn't. 45 00:02:59.400 --> 00:03:02.400 It could be in relation to technology in terms of GDP improvement. 46 00:03:02.400 --> 00:03:06.400 Or it could be an increase because of population, which in the US there was no population increase or not really. 47 00:03:06.400 --> 00:03:08.800 For me, I just kind of see that across all businesses 48 00:03:08.800 --> 00:03:10.160 that if you just let people do stuff, 49 00:03:10.160 --> 00:03:11.440 they just get better at it, right? 50 00:03:11.440 --> 00:03:12.600 People get more efficient at it. 51 00:03:12.600 --> 00:03:14.140 I'll leave you one tactical framework 52 00:03:14.140 --> 00:03:16.120 that you can kind of use to think through this, 53 00:03:16.120 --> 00:03:18.360 which is this is actually from the investing world 54 00:03:18.360 --> 00:03:19.960 that I borrowed as an entrepreneur, 55 00:03:19.960 --> 00:03:21.560 which is called ICE, all right? 56 00:03:21.560 --> 00:03:24.800 And so it's an acronym, I stands for Impact, 57 00:03:24.800 --> 00:03:27.960 which is like how big, that's that 20%, that's that 50%. 58 00:03:27.960 --> 00:03:30.000 How big of an impact do I think this is gonna make 59 00:03:30.000 --> 00:03:30.840 on the business, right? 60 00:03:30.840 --> 00:03:33.280 If I had to make, like if this works, it's gonna do this. 61 00:03:33.280 --> 00:03:35.600 The second is, well, how confident am I 62 00:03:35.600 --> 00:03:37.320 that it's going to work, that's the C, 63 00:03:37.320 --> 00:03:39.360 which is, what's my confidence level? 64 00:03:40.560 --> 00:03:42.440 So I got this big thing with low confidence 65 00:03:42.440 --> 00:03:44.600 or this medium thing with high confidence, 66 00:03:44.600 --> 00:03:46.960 I'll probably take medium with high confidence, right? 67 00:03:46.960 --> 00:03:48.600 And then the third is ease, 68 00:03:48.600 --> 00:03:50.360 which is gonna come into a combination of 69 00:03:50.360 --> 00:03:52.720 how many resources are we gonna have to deploy to do this 70 00:03:52.720 --> 00:03:54.560 and also what's the timeline that we're gonna have 71 00:03:54.560 --> 00:03:55.480 to do this on? 72 00:03:55.480 --> 00:03:57.240 Impact, confidence, ease. 73 00:03:57.240 --> 00:03:58.920 And so we'd actually do this, 74 00:03:58.920 --> 00:04:02.040 like I have this massive sheet that it's called growth 75 00:04:02.040 --> 00:04:04.680 and I have it at all caps and this is, 76 00:04:04.960 --> 00:04:07.480 how I like, how I get my ADD out, 77 00:04:07.480 --> 00:04:08.920 is I put it all on this list, 78 00:04:08.920 --> 00:04:10.880 which would probably be the second big tactic, 79 00:04:10.880 --> 00:04:13.680 is that I have every big idea that I wanna try 80 00:04:13.680 --> 00:04:15.560 and I have to let get it out and spell it out 81 00:04:15.560 --> 00:04:17.000 and say all the things that I wanna do 82 00:04:17.000 --> 00:04:18.240 and I just put it somewhere 83 00:04:18.240 --> 00:04:20.680 because the team can't handle the amount of ideas that I have 84 00:04:20.680 --> 00:04:22.520 and probably your team can't either. 85 00:04:22.520 --> 00:04:24.720 You have to just like scratch that itch in some way, 86 00:04:24.720 --> 00:04:26.720 I do it by documenting so I don't forget it 87 00:04:26.720 --> 00:04:28.600 and then whenever the team has more bandwidth, 88 00:04:28.600 --> 00:04:30.440 I go back to that list and I'm like, 89 00:04:30.440 --> 00:04:33.200 all right, let's order this, which one has the highest impact, 90 00:04:33.200 --> 00:04:34.480 which one do we think's gonna work, 91 00:04:34.480 --> 00:04:35.920 which one's gonna be the easiest, 92 00:04:35.920 --> 00:04:38.720 we tabulate those together and we're like, okay, 93 00:04:38.720 --> 00:04:39.960 this is the one that we're gonna try, 94 00:04:39.960 --> 00:04:42.800 this one we know has a 30% shot 95 00:04:42.800 --> 00:04:44.480 or a 50% chance increase. 96 00:04:44.480 --> 00:04:46.240 That's basically thing number one 97 00:04:46.240 --> 00:04:48.560 and it has, I've tried to teach this down our portfolio 98 00:04:48.560 --> 00:04:50.320 and also what we do at acquisition.com 99 00:04:50.320 --> 00:04:54.560 is that you just need to be willing to leave 100 00:04:54.560 --> 00:04:57.760 some things not perfect so that the business can 101 00:04:57.760 --> 00:05:00.560 occur as few guaranteed costs of change 102 00:05:00.560 --> 00:05:02.480 and when you are gonna make a change, 103 00:05:02.480 --> 00:05:04.000 make sure it's worth it. 104 00:05:04.000 --> 00:05:06.720 So so far, number one, we cover the cost of change, right? 105 00:05:06.720 --> 00:05:10.840 So this is making sure that you are only taking bets 106 00:05:10.840 --> 00:05:15.120 that have 20% or higher upside 107 00:05:15.120 --> 00:05:18.120 to be worth the guaranteed cost that you're going to incur 108 00:05:18.120 --> 00:05:21.160 and the framework that I use is ice impact confidencies, 109 00:05:21.160 --> 00:05:22.000 all right, so it's number one. 110 00:05:22.000 --> 00:05:24.840 So the second thing is I used to have this idea 111 00:05:24.840 --> 00:05:26.280 about the virality of products. 112 00:05:26.280 --> 00:05:27.720 So I've talked a lot about referrals, 113 00:05:27.720 --> 00:05:28.840 talked a lot about word of mouth 114 00:05:28.840 --> 00:05:31.240 and I'm still obviously believing that. 115 00:05:31.240 --> 00:05:33.800 But I would say that I've had this big pendulum swinging, 116 00:05:33.800 --> 00:05:35.720 the very beginning of my career, 117 00:05:35.720 --> 00:05:37.400 and especially if you're, you know, seven million, 118 00:05:37.400 --> 00:05:38.440 you just gotta promote, right? 119 00:05:38.440 --> 00:05:39.560 You just gotta let people know about your stuff, 120 00:05:39.560 --> 00:05:41.080 no one knows you exist, you gotta advertise, right? 121 00:05:41.080 --> 00:05:42.120 You gotta learn how to sell. 122 00:05:42.120 --> 00:05:43.360 Cool, that's zero to a million. 123 00:05:43.360 --> 00:05:45.880 No questions asked, that's what it is. 124 00:05:45.880 --> 00:05:47.680 Now, to expand beyond that, I was like, 125 00:05:47.680 --> 00:05:49.400 okay, we kind of pendulum swinging back to, 126 00:05:49.400 --> 00:05:51.480 like we gotta make it super viral, right? 127 00:05:51.480 --> 00:05:54.520 Word of mouth is the best way to grow a business. 128 00:05:54.520 --> 00:05:56.840 But I've thought more and more about this 129 00:05:56.840 --> 00:05:59.920 and I think that it's an it depends answer. 130 00:05:59.920 --> 00:06:03.120 Now, there are some products that you want for sure 131 00:06:03.120 --> 00:06:04.960 to have people who buy and then buy again. 132 00:06:04.960 --> 00:06:06.200 That you want them to, you know, 133 00:06:06.200 --> 00:06:09.120 reoccur with you as in like a buy, buy a Coca-Cola product. 134 00:06:09.120 --> 00:06:10.920 I might buy, you know, a can today, 135 00:06:10.920 --> 00:06:13.240 and I might buy a can at a restaurant later this week. 136 00:06:13.240 --> 00:06:14.800 And so it's like, am I on a subscription? 137 00:06:14.800 --> 00:06:17.080 No, but I buy again and again and again, right? 138 00:06:17.080 --> 00:06:18.480 Or you have, you know, your internet, 139 00:06:18.480 --> 00:06:20.040 which you just never cancel out of, right? 140 00:06:20.040 --> 00:06:21.640 Either those are things that are recurring 141 00:06:21.640 --> 00:06:23.880 they have high revenue retention. 142 00:06:23.880 --> 00:06:26.600 But that is different than virality, right? 143 00:06:26.600 --> 00:06:27.440 That's very different. 144 00:06:27.440 --> 00:06:30.120 So on one level, you have, does it stick? 145 00:06:30.120 --> 00:06:32.480 On the other level, you have, do people share it 146 00:06:32.480 --> 00:06:33.320 with other people. 147 00:06:33.320 --> 00:06:34.800 This is the nuance of understanding 148 00:06:34.800 --> 00:06:36.120 that's kind of shifted for me this year, 149 00:06:36.120 --> 00:06:39.960 which is that some companies, like especially B2B, 150 00:06:40.920 --> 00:06:43.760 there's sometimes disincentives for a customer 151 00:06:43.760 --> 00:06:45.920 to bring in a competitor of theirs, right? 152 00:06:45.920 --> 00:06:48.560 If you serve as two types of similar businesses, 153 00:06:48.560 --> 00:06:50.840 they have literally a disincentive to tell people about it. 154 00:06:50.840 --> 00:06:52.080 Like they don't want anyone to know 155 00:06:52.080 --> 00:06:53.920 how you're helping them in whatever way, right? 156 00:06:53.920 --> 00:06:56.080 So that's kind of like thing number one. 157 00:06:56.080 --> 00:06:58.360 You have like a negative pressure on word of mouth. 158 00:06:58.360 --> 00:07:00.520 The second issue is that not, 159 00:07:00.520 --> 00:07:03.080 even if you didn't have negative pressure on word of mouth, 160 00:07:03.080 --> 00:07:05.000 there has to be some sort of density 161 00:07:05.000 --> 00:07:07.640 in terms of the frequency of communication 162 00:07:07.640 --> 00:07:11.080 that your customers have with other potential customers. 163 00:07:11.080 --> 00:07:14.200 So if I've got a guy who runs a metal shop 164 00:07:14.200 --> 00:07:16.060 that specializes in aero-tech, 165 00:07:16.060 --> 00:07:18.880 for that guy to have very frequent communication 166 00:07:18.880 --> 00:07:20.560 with other aero-tech companies 167 00:07:20.560 --> 00:07:23.440 that might use my software, my internal tech, 168 00:07:23.440 --> 00:07:25.160 or whatever it is that I help them with. 169 00:07:25.160 --> 00:07:26.760 Why is he gonna be talking to competitors 170 00:07:26.760 --> 00:07:28.040 and if he is talking to competitors, 171 00:07:28.040 --> 00:07:29.600 like why would he want to share all my stuff? 172 00:07:29.600 --> 00:07:32.360 You can understand why sometimes it's not about word of mouth. 173 00:07:32.360 --> 00:07:34.760 And this is just a nuance of understanding that I would think 174 00:07:34.760 --> 00:07:36.600 is kind of my belief set is broken. 175 00:07:36.600 --> 00:07:39.240 Because I was very hardcore on like everything can grow 176 00:07:39.240 --> 00:07:40.600 on a word of mouth period. 177 00:07:40.600 --> 00:07:42.240 But that's just not always the case. 178 00:07:42.240 --> 00:07:45.960 The gold standard should absolutely be revenue retention. 179 00:07:45.960 --> 00:07:47.200 Bar none, full stop. 180 00:07:47.200 --> 00:07:48.640 And I can say that with absolute confidence, 181 00:07:48.640 --> 00:07:50.160 no matter what business you're in for B2B, 182 00:07:50.160 --> 00:07:52.640 your B2C, you want to be able to get recurring 183 00:07:52.640 --> 00:07:54.080 or reoccurring revenue. 184 00:07:55.040 --> 00:07:57.840 But the virality typically is gonna be more 185 00:07:57.840 --> 00:07:58.840 on the consumer side. 186 00:07:58.840 --> 00:08:00.360 So if you have a really good soda, 187 00:08:00.360 --> 00:08:02.000 you as a customer is not like, 188 00:08:02.000 --> 00:08:04.240 oh, I don't wanna tell my friend that this soda is really good. 189 00:08:04.240 --> 00:08:05.680 I've got this shirt, it finally fits me. 190 00:08:05.680 --> 00:08:08.360 Cool, well, do I know other guys who are built more like me? 191 00:08:08.360 --> 00:08:10.760 Yes, do I have high frequency of communication with them? 192 00:08:10.760 --> 00:08:12.560 At least digitally, yes, okay, cool. 193 00:08:12.560 --> 00:08:14.280 So I'm gonna have, there's some viral 194 00:08:14.280 --> 00:08:15.640 kind of coefficient there that goes in. 195 00:08:15.640 --> 00:08:18.360 And that applies to also consumer brands that are not tech. 196 00:08:18.360 --> 00:08:19.560 I wanna be really clear about that. 197 00:08:19.560 --> 00:08:21.960 Like for those of you who have the drop-shipping e-commerce, 198 00:08:21.960 --> 00:08:24.800 retail products, it's like you still absolutely need 199 00:08:24.800 --> 00:08:26.680 to have word of mouth that grows the business. 200 00:08:26.680 --> 00:08:28.040 There are just some businesses 201 00:08:28.040 --> 00:08:29.400 that are just never going to have that. 202 00:08:29.400 --> 00:08:32.040 And for everybody, you wanna retain. 203 00:08:32.040 --> 00:08:33.240 So that was lesson number two. 204 00:08:33.240 --> 00:08:35.040 From a tactical perspective for that lesson, 205 00:08:35.040 --> 00:08:36.600 the big thing I just wanna measure 206 00:08:36.600 --> 00:08:38.720 is what percentage of customers that I have 207 00:08:38.720 --> 00:08:40.240 at the beginning of this year 208 00:08:40.240 --> 00:08:42.720 that 12 months later are still buying from me. 209 00:08:42.720 --> 00:08:44.360 That's the metric that we look at. 210 00:08:44.360 --> 00:08:46.640 We have a hundred customers at the beginning of the year. 211 00:08:46.640 --> 00:08:49.480 And at the end of the year, 50 of those people are still buying. 212 00:08:49.480 --> 00:08:52.480 So this is day zero or gin one, whatever. 213 00:08:52.480 --> 00:08:55.480 Gin one and then December 31. 214 00:08:56.560 --> 00:08:57.880 How many of them are still buying? 215 00:08:57.880 --> 00:08:59.720 If I have 50 versus the hundred, 216 00:08:59.720 --> 00:09:02.280 then I have 50% revenue retention. 217 00:09:02.280 --> 00:09:03.920 Now, you can have logo retention, 218 00:09:03.920 --> 00:09:05.680 which is a second nuance of this. 219 00:09:05.680 --> 00:09:08.280 Logo retention is of the hundred customers. 220 00:09:08.280 --> 00:09:12.200 Do I have 50 customers or did I go from 100 customers 221 00:09:12.200 --> 00:09:15.640 to 25 customers, but this 25 customers really like me 222 00:09:15.640 --> 00:09:17.720 and they now spend twice as much. 223 00:09:17.720 --> 00:09:19.080 So that's the difference between revenue retention 224 00:09:19.080 --> 00:09:20.000 and logo retention. 225 00:09:20.000 --> 00:09:21.360 For me, we look at revenue retention 226 00:09:21.360 --> 00:09:22.320 because that's what we care about. 227 00:09:22.320 --> 00:09:24.680 It's like, okay, if we just know that these 50, 228 00:09:24.680 --> 00:09:26.840 now that they're in are just going to keep paying 229 00:09:26.840 --> 00:09:29.480 and potentially even growing between 50 to 100 next year, 230 00:09:29.480 --> 00:09:30.840 this is a monster business. 231 00:09:30.840 --> 00:09:32.720 This is what we look at and we obsess over 232 00:09:32.720 --> 00:09:34.200 in any business that we invest in. 233 00:09:34.200 --> 00:09:35.040 Now, no matter what, 234 00:09:35.040 --> 00:09:37.240 you might not have a viral product for word of mouth, 235 00:09:37.240 --> 00:09:39.320 but if you want seven different ways 236 00:09:39.320 --> 00:09:40.760 that you can generate word of mouth, 237 00:09:40.760 --> 00:09:42.320 inside of the $100 million leads book, 238 00:09:42.320 --> 00:09:43.920 I've got a whole chapter in referrals. 239 00:09:43.920 --> 00:09:47.000 And I took out the things that were the actual best ways 240 00:09:47.000 --> 00:09:49.120 that I have seen from a tactical perspective. 241 00:09:49.120 --> 00:09:51.440 So I say I have six kind of thematic things, 242 00:09:51.720 --> 00:09:53.800 so these are things that you can do to your product 243 00:09:53.800 --> 00:09:55.600 to improve stick, to improve activation, 244 00:09:55.600 --> 00:09:56.800 to improve the number of customers 245 00:09:56.800 --> 00:09:58.800 who actually want to stay and continue to pay with you. 246 00:09:58.800 --> 00:10:00.560 And then on the other side, 247 00:10:00.560 --> 00:10:03.040 I have basically the tactics that I have seen 248 00:10:03.040 --> 00:10:05.160 work best for me and our businesses. 249 00:10:05.160 --> 00:10:07.520 And so these things that actually drew in referrals, 250 00:10:07.520 --> 00:10:09.640 so I have this whole section on one side of referrals, 251 00:10:09.640 --> 00:10:10.680 two side of referrals, 252 00:10:10.680 --> 00:10:12.480 how to ask for at the right time, 253 00:10:12.480 --> 00:10:13.880 so time is a huge component of it, 254 00:10:13.880 --> 00:10:15.120 how to run referral events, 255 00:10:15.120 --> 00:10:16.640 how to have ongoing referral programs, 256 00:10:16.640 --> 00:10:18.120 unlockable referral bonuses, 257 00:10:18.120 --> 00:10:19.800 seven different taxes that I've used work, 258 00:10:19.800 --> 00:10:21.360 inside of the $100 million leads book, 259 00:10:21.360 --> 00:10:23.520 you can grab them somewhere on my site or on Amazon. 260 00:10:23.520 --> 00:10:26.800 Number two is making sure that the highest priority 261 00:10:26.800 --> 00:10:29.280 for the business is going to be revenue retention, 262 00:10:29.280 --> 00:10:30.920 not necessarily virality, 263 00:10:30.920 --> 00:10:33.880 because not all products are meant to be viral. 264 00:10:33.880 --> 00:10:37.360 But if you are in a business that is consumer focused 265 00:10:37.360 --> 00:10:39.120 or something that doesn't have one 266 00:10:39.120 --> 00:10:42.920 a disincentive to share and a high frequency 267 00:10:42.920 --> 00:10:45.760 of interactions between your customers with one another, 268 00:10:45.760 --> 00:10:47.560 people who have basically high overlaps, 269 00:10:47.560 --> 00:10:48.600 so they talk to lots of people 270 00:10:48.600 --> 00:10:50.080 who could potentially buy a product. 271 00:10:50.080 --> 00:10:51.440 If these two things are, 272 00:10:51.440 --> 00:10:54.040 you have a high disincentive and you have low frequency, 273 00:10:54.040 --> 00:10:55.880 then you're just not going to have virality in the product, 274 00:10:55.880 --> 00:10:57.120 and you don't have to worry about it. 275 00:10:57.120 --> 00:10:59.640 But if you do, then obviously you want to have both. 276 00:10:59.640 --> 00:11:01.480 Number three, I've been very obsessed 277 00:11:01.480 --> 00:11:03.080 with the concept of LTV to CAC, 278 00:11:03.080 --> 00:11:04.040 I've talked about it a lot, 279 00:11:04.040 --> 00:11:06.400 which is basically how much does it cost you to customer, 280 00:11:06.400 --> 00:11:09.520 versus how much money you get from that customer 281 00:11:09.520 --> 00:11:10.280 over the lifespan, 282 00:11:10.280 --> 00:11:13.240 specifically in gross profit, not lifetime revenue. 283 00:11:13.240 --> 00:11:15.120 Now the reason I like to always delineate this, 284 00:11:15.120 --> 00:11:17.800 and I say LTVGP, which is a mouthful, 285 00:11:17.840 --> 00:11:20.960 is because most of the literature that exists on LTV, 286 00:11:20.960 --> 00:11:22.160 so lifetime value for a customer, 287 00:11:22.160 --> 00:11:24.640 how much they pay you in gross profit over time, 288 00:11:24.640 --> 00:11:26.440 is typically written in the software world, 289 00:11:26.440 --> 00:11:29.320 and software tends to be virtually 100% gross margins 290 00:11:29.320 --> 00:11:30.280 in most businesses. 291 00:11:30.280 --> 00:11:32.360 Many businesses look at that literature and then say, 292 00:11:32.360 --> 00:11:33.920 oh, well, let me just say, 293 00:11:33.920 --> 00:11:35.160 someone stays with me for 10 months, 294 00:11:35.160 --> 00:11:36.280 they pay $100 a month, 295 00:11:36.280 --> 00:11:39.080 therefore my lifetime value is $1,000. 296 00:11:39.080 --> 00:11:41.560 Well, that's only true if you sell information, 297 00:11:41.560 --> 00:11:42.560 media, or software, 298 00:11:42.560 --> 00:11:44.360 something has zero incremental cost, 299 00:11:44.360 --> 00:11:46.160 but a lot of businesses don't have that. 300 00:11:46.160 --> 00:11:48.280 If you sell chocolate chip cookies, 301 00:11:48.280 --> 00:11:52.240 and the cookies cost you $20 for each of those $100 shipments, 302 00:11:52.240 --> 00:11:53.400 I mean, these are expensive cookies, 303 00:11:53.400 --> 00:11:54.240 well, let's just go with that. 304 00:11:54.240 --> 00:11:56.480 So this costs you 20 bucks for every $100 shipment. 305 00:11:56.480 --> 00:12:00.000 Your lifetime value is not $1,000, 306 00:12:00.000 --> 00:12:02.960 so we have our hundred bucks, right? 307 00:12:02.960 --> 00:12:06.240 Times 10 months, that's the revenue. 308 00:12:06.240 --> 00:12:08.560 What we're looking at is $80, 309 00:12:08.560 --> 00:12:10.720 because we have to take out the 20 and cost 310 00:12:10.720 --> 00:12:12.400 times the 10 months, 311 00:12:12.400 --> 00:12:15.360 which actually equals $800, 312 00:12:15.360 --> 00:12:18.360 which is our real lifetime gross profit, 313 00:12:18.360 --> 00:12:19.840 which in the business world, 314 00:12:19.840 --> 00:12:22.760 sometimes people refer to as CLV or LTV, 315 00:12:22.760 --> 00:12:24.160 they all more or less mean the same thing, 316 00:12:24.160 --> 00:12:25.560 which is how much money you're gonna get from the cost work. 317 00:12:25.560 --> 00:12:29.240 Now, I put this as a frame for the big lesson that I had, 318 00:12:29.240 --> 00:12:30.880 which is in the software world, 319 00:12:30.880 --> 00:12:33.040 the big rule of thumb is three to one. 320 00:12:34.440 --> 00:12:38.200 Real quick, guys, I have a special, special gift for you 321 00:12:38.200 --> 00:12:41.000 for being loyal listeners of the podcast. 322 00:12:41.000 --> 00:12:43.760 Layla and I spent probably an entire quarter 323 00:12:43.800 --> 00:12:46.440 putting together our scaling roadmap. 324 00:12:46.440 --> 00:12:49.720 It's breaking scaling into 10 stages 325 00:12:49.720 --> 00:12:52.120 and across all eight functions of the business. 326 00:12:52.120 --> 00:12:53.520 So you've got marketing, you've got sales, 327 00:12:53.520 --> 00:12:55.320 you've got product, you've got customer success, 328 00:12:55.320 --> 00:12:57.120 you've got IT, you've got recruiting, 329 00:12:57.120 --> 00:12:58.600 you've got HR, you've got finance, 330 00:12:58.600 --> 00:13:01.280 and we show the problems that emerge at every level of scale 331 00:13:01.280 --> 00:13:02.720 and how to graduate to the next level. 332 00:13:02.720 --> 00:13:06.240 It's all free and you can get it personalized to you, 333 00:13:06.240 --> 00:13:08.800 so it's about 30-ish pages for each of the stages. 334 00:13:08.800 --> 00:13:09.840 Once you answer the questions, 335 00:13:09.840 --> 00:13:11.800 it will tell you exactly where you're at 336 00:13:11.800 --> 00:13:13.840 and what you need to do to grow. 337 00:13:13.840 --> 00:13:16.760 It's about 14 hours of stuff, but it's narrowed down 338 00:13:16.760 --> 00:13:18.760 so that you only have to watch the part that's relevant 339 00:13:18.760 --> 00:13:20.560 to you, which will probably be about 90 minutes. 340 00:13:20.560 --> 00:13:22.040 And so if that's at all interesting, 341 00:13:22.040 --> 00:13:25.080 you can go to acquisition.com forward slash roadmap, 342 00:13:25.080 --> 00:13:27.160 R-O-A-D, map, roadmap. 343 00:13:29.920 --> 00:13:31.280 That's the big rule of thumb. 344 00:13:31.280 --> 00:13:33.760 I actually now have worked with a lot of different businesses 345 00:13:33.760 --> 00:13:34.960 and invested different businesses. 346 00:13:34.960 --> 00:13:37.560 I think there's nuance to it, so let me explain. 347 00:13:37.560 --> 00:13:39.080 This is actually pretty cool. 348 00:13:39.080 --> 00:13:41.240 So there's three components to a business 349 00:13:41.240 --> 00:13:43.160 that I think influence that number. 350 00:13:43.160 --> 00:13:45.240 So you have the attraction component, 351 00:13:45.240 --> 00:13:47.880 which is the advertising, how are we advertising, 352 00:13:47.880 --> 00:13:49.000 how are we getting people in, 353 00:13:49.000 --> 00:13:51.200 how are we letting them know, how are we generating leads, 354 00:13:51.200 --> 00:13:52.520 then we have the conversion, 355 00:13:52.520 --> 00:13:55.720 whatever your sales motion is, right, sales. 356 00:13:55.720 --> 00:13:57.720 And then finally, you've got delivery, right, 357 00:13:57.720 --> 00:13:59.360 or fulfillment, how are we gonna get people 358 00:13:59.360 --> 00:14:01.760 whatever they chose to pay for, right? 359 00:14:01.760 --> 00:14:04.640 So if we have these kind of three functions, 360 00:14:04.640 --> 00:14:07.040 the extent to which you need to have 361 00:14:07.040 --> 00:14:11.480 high LCV to CAC is predicated on how manual 362 00:14:11.480 --> 00:14:13.400 each of these processes is. 363 00:14:13.400 --> 00:14:14.720 So let me explain. 364 00:14:14.720 --> 00:14:16.440 If you have paid ads, 365 00:14:16.440 --> 00:14:19.000 which I would consider very high leverage, 366 00:14:19.000 --> 00:14:21.280 and very like one person could run a gazillion dollars 367 00:14:21.280 --> 00:14:23.200 of paid ads, high leverage, cool. 368 00:14:23.200 --> 00:14:24.360 That's number one. 369 00:14:24.360 --> 00:14:27.520 If we had a conversion process that's through a checkout page 370 00:14:27.520 --> 00:14:29.960 that's automated, then that's gonna be something else 371 00:14:29.960 --> 00:14:31.720 that's gonna give us leverage, okay? 372 00:14:31.720 --> 00:14:33.920 And then third is let's say that we have software 373 00:14:33.920 --> 00:14:35.160 as our backend that has unlimited, 374 00:14:35.160 --> 00:14:36.800 like we have no supply limitations, 375 00:14:36.880 --> 00:14:38.040 no logistics limitations, 376 00:14:38.040 --> 00:14:39.720 and pretty much it just works. 377 00:14:39.720 --> 00:14:41.440 If you're in one of those businesses, 378 00:14:41.440 --> 00:14:44.600 then you absolutely can be at three to one 379 00:14:44.600 --> 00:14:46.200 LCV to CAC over the long haul. 380 00:14:46.200 --> 00:14:48.400 Fine, you can even be at 1.5 to one. 381 00:14:48.400 --> 00:14:49.760 I mean, it wouldn't be ideal, 382 00:14:49.760 --> 00:14:51.560 but depending on the size and scale, 383 00:14:51.560 --> 00:14:52.880 you could still make money doing it. 384 00:14:52.880 --> 00:14:55.320 Put $100 in, get $150 back, do it over and over again. 385 00:14:55.320 --> 00:14:56.960 If that's only true for them, 386 00:14:56.960 --> 00:14:58.680 what is it for a construction business? 387 00:14:58.680 --> 00:15:01.000 What is it for a plumbing company? 388 00:15:01.000 --> 00:15:02.560 What is it for any commerce business? 389 00:15:02.560 --> 00:15:03.560 The other extreme, 390 00:15:03.560 --> 00:15:04.720 I'm gonna just paint the extremes 391 00:15:04.720 --> 00:15:06.360 and you can kind of understand the middle. 392 00:15:06.360 --> 00:15:08.240 If I had, instead of paid ads, 393 00:15:08.240 --> 00:15:11.040 I had a manual outbound, 394 00:15:12.560 --> 00:15:14.160 so outreach or whatever you wanna call it, 395 00:15:14.160 --> 00:15:16.360 outreach reaching out to people one-on-one with the team. 396 00:15:16.360 --> 00:15:17.880 And then from a conversion process, 397 00:15:17.880 --> 00:15:19.600 I've got one-on-one sales, 398 00:15:20.800 --> 00:15:22.320 and then from a delivery process, 399 00:15:22.320 --> 00:15:24.040 I've got, call it, you know, 400 00:15:24.040 --> 00:15:26.440 concierge, one-on-one, 401 00:15:26.440 --> 00:15:29.240 or even many to one services. 402 00:15:31.360 --> 00:15:33.880 Then I'm gonna want an LCV to CAC ratio 403 00:15:33.880 --> 00:15:35.280 that's gonna reflect that. 404 00:15:35.280 --> 00:15:37.360 For me, if I had a business like this, 405 00:15:37.360 --> 00:15:39.040 and this is gonna shock some of you, 406 00:15:39.040 --> 00:15:40.920 but just bear with me. 407 00:15:40.920 --> 00:15:44.480 I'm gonna want this thing to be like 20 to one or more. 408 00:15:44.480 --> 00:15:45.480 Now, some of you guys are like, 409 00:15:45.480 --> 00:15:47.360 there's no way it's impossible. 410 00:15:47.360 --> 00:15:49.320 I would say I've made the material, 411 00:15:49.320 --> 00:15:51.640 the vast majority of the material wealth in my life, 412 00:15:51.640 --> 00:15:55.080 at 30 to one, or a higher. 413 00:15:55.080 --> 00:15:56.120 And I've done it multiple times, 414 00:15:56.120 --> 00:15:57.600 and during those periods of time, 415 00:15:57.600 --> 00:15:59.480 is when a lot of the, basically the wealth 416 00:15:59.480 --> 00:16:01.120 that I've accumulated has come in. 417 00:16:01.120 --> 00:16:02.760 But in the times in between, 418 00:16:02.760 --> 00:16:04.680 instead of trying to scale something that's at, 419 00:16:04.680 --> 00:16:06.640 you know, five to one, or eight to one, 420 00:16:06.640 --> 00:16:08.160 I'm just gonna continue to tinker. 421 00:16:08.160 --> 00:16:10.040 I'm gonna start, I'm gonna stick with my one location, 422 00:16:10.040 --> 00:16:11.240 I'm gonna keep working on the model, 423 00:16:11.240 --> 00:16:12.480 and just keep tinkering with it, 424 00:16:12.480 --> 00:16:14.600 until eventually get the economics that we need 425 00:16:14.600 --> 00:16:15.680 in order to scale. 426 00:16:15.680 --> 00:16:17.440 What if I'm doing paid ads, 427 00:16:17.440 --> 00:16:18.720 but we do 101 sales, 428 00:16:18.720 --> 00:16:21.720 and we sell media, information, or something like that? 429 00:16:21.720 --> 00:16:23.520 Then it's like, then you're gonna be somewhere in between. 430 00:16:23.520 --> 00:16:25.120 But I have this as my rule of thumb, 431 00:16:25.120 --> 00:16:27.880 is that the three to one only matters 432 00:16:27.880 --> 00:16:30.480 at the companies that have 100% scale, 433 00:16:30.480 --> 00:16:32.960 100% leverage across all three components here. 434 00:16:32.960 --> 00:16:34.960 If you have manual costs all three, 435 00:16:34.960 --> 00:16:37.600 you're gonna be at, I would at least wanna be at 20 to one, 436 00:16:37.600 --> 00:16:38.760 I shoot for 30 plus, 437 00:16:38.760 --> 00:16:40.480 a lot of people can't even believe that, fine. 438 00:16:40.480 --> 00:16:43.200 So, you know, fit it to whatever your calls are. 439 00:16:43.200 --> 00:16:45.400 I really do believe that you can just keep tinkering 440 00:16:45.400 --> 00:16:47.200 with the business, keep tinkering the offer, 441 00:16:47.200 --> 00:16:48.280 and find a way to get it, 442 00:16:48.280 --> 00:16:49.880 so that you can have a huge discrepancy 443 00:16:49.880 --> 00:16:50.920 between these two numbers, 444 00:16:50.920 --> 00:16:53.120 because that's what allows you to scale. 445 00:16:53.120 --> 00:16:55.440 If you want to scale a business that's more manual, 446 00:16:55.440 --> 00:16:56.720 some of you guys are listening, 447 00:16:56.720 --> 00:16:59.520 78% of business in America are service-based businesses, 448 00:16:59.520 --> 00:17:00.520 so this applies to you. 449 00:17:00.520 --> 00:17:02.320 As you go into colder and colder markets, 450 00:17:02.360 --> 00:17:04.000 you will convert a smaller percentage of customers. 451 00:17:04.000 --> 00:17:05.840 These are customers who are less likely to purchase from you, 452 00:17:05.840 --> 00:17:07.120 but you have a bigger pool of people, 453 00:17:07.120 --> 00:17:08.600 so that's kind of the trade-off. 454 00:17:08.600 --> 00:17:10.200 But when you go into those colder, colder markets, 455 00:17:10.200 --> 00:17:11.720 smaller percentage convert, 456 00:17:11.720 --> 00:17:13.760 meaning it costs you more to get those customers. 457 00:17:13.760 --> 00:17:15.200 Basically, you sell more people, 458 00:17:15.200 --> 00:17:16.360 you're gonna have more infrastructure 459 00:17:16.360 --> 00:17:17.520 that has to get built into the business, 460 00:17:17.520 --> 00:17:18.680 so you have layers of management 461 00:17:18.680 --> 00:17:19.680 that will start costing you 462 00:17:19.680 --> 00:17:21.240 and not necessarily always be alpha 463 00:17:21.240 --> 00:17:22.360 that can be value additive. 464 00:17:22.360 --> 00:17:24.360 With these two things that are working against you, 465 00:17:24.360 --> 00:17:27.520 you have to have this very large discrepancy 466 00:17:27.520 --> 00:17:28.800 between what it costs you to get a customer 467 00:17:28.800 --> 00:17:30.080 and what you're gonna make from that customer 468 00:17:30.080 --> 00:17:31.520 in order to weather that storm, 469 00:17:31.560 --> 00:17:33.400 and allow you to kind of grow into that shit. 470 00:17:33.400 --> 00:17:35.360 You can almost like grow into your LTV2CAC, 471 00:17:35.360 --> 00:17:36.720 which is kind of how I think about it. 472 00:17:36.720 --> 00:17:39.160 So if you're thinking about this for you, 473 00:17:39.160 --> 00:17:41.760 number one, know what your true LTV2CAC is, 474 00:17:41.760 --> 00:17:43.560 and make sure you're doing off gross profit, 475 00:17:43.560 --> 00:17:45.600 not off of revenue. 476 00:17:45.600 --> 00:17:48.400 And the number two, if you want to scale, 477 00:17:48.400 --> 00:17:51.520 make sure that your LTV2CAC ratio is appropriate 478 00:17:51.520 --> 00:17:54.240 for the level of leverage that you have 479 00:17:54.240 --> 00:17:56.400 within your existing business across all three functions. 480 00:17:56.400 --> 00:17:57.320 So you might be wondering, 481 00:17:57.320 --> 00:18:00.520 why doesn't the ratio still cover it 482 00:18:00.520 --> 00:18:03.400 for a super manual business versus a business 483 00:18:03.400 --> 00:18:04.360 that's entirely automated? 484 00:18:04.360 --> 00:18:06.160 The main reason is lumpiness. 485 00:18:06.160 --> 00:18:07.640 You have to bring people in for outbound 486 00:18:07.640 --> 00:18:08.600 that are not gonna be proficient. 487 00:18:08.600 --> 00:18:11.200 So you're gonna incur the cost of new SDRs 488 00:18:11.200 --> 00:18:12.800 that either aren't gonna work out at all 489 00:18:12.800 --> 00:18:14.080 or aren't gonna work out in the beginning, 490 00:18:14.080 --> 00:18:14.920 and then eventually gonna work out. 491 00:18:14.920 --> 00:18:16.240 So you have to incur that cost. 492 00:18:16.240 --> 00:18:17.520 But imagine incurring that cost 493 00:18:17.520 --> 00:18:20.600 and then also incurring the cost of new salespeople 494 00:18:20.600 --> 00:18:22.640 who are actually gonna be trying to convert those prospects 495 00:18:22.640 --> 00:18:24.640 and they're gonna suck and they're gonna lose opportunities 496 00:18:24.640 --> 00:18:25.600 and they're gonna be paying them 497 00:18:25.600 --> 00:18:27.960 while they literally close fewer sales for you. 498 00:18:27.960 --> 00:18:29.280 So you lose twice. 499 00:18:29.320 --> 00:18:31.680 And then also sometimes you spend all this money 500 00:18:31.680 --> 00:18:34.040 and time to get them hopefully to be proficient 501 00:18:34.040 --> 00:18:34.880 and then they aren't. 502 00:18:34.880 --> 00:18:36.760 So they just lost you money three different ways. 503 00:18:36.760 --> 00:18:39.200 The third component of this is the delivery piece, 504 00:18:39.200 --> 00:18:42.240 which is like, okay, I'm gonna have to onboard and hire 505 00:18:42.240 --> 00:18:43.200 all of these other people. 506 00:18:43.200 --> 00:18:45.540 And if you have anything that's like higher expertise, 507 00:18:45.540 --> 00:18:46.380 then forget about it. 508 00:18:46.380 --> 00:18:49.160 It's gonna take even longer for you to both find these people 509 00:18:49.160 --> 00:18:51.200 and then also to train these people up. 510 00:18:51.200 --> 00:18:54.400 But again, recruiting itself can be a super expensive task. 511 00:18:54.400 --> 00:18:55.960 There's recruiting firms and if you're gonna 512 00:18:55.960 --> 00:18:58.520 recruit a high level person, it usually costs you 25, 513 00:18:58.520 --> 00:19:00.640 sometimes 30% of their first year pay. 514 00:19:00.640 --> 00:19:02.160 And if you're paying someone 300 thousand a year, 515 00:19:02.160 --> 00:19:05.200 it's like, you're gonna pay 80 grand just to get somebody, 516 00:19:05.200 --> 00:19:07.560 let alone hope that they're proficient 517 00:19:07.560 --> 00:19:08.960 and you still have all this onboarding. 518 00:19:08.960 --> 00:19:11.520 So you have this lumpiness of people 519 00:19:11.520 --> 00:19:12.880 that aren't gonna be effective. 520 00:19:12.880 --> 00:19:15.400 And if you're at three to one, boom, you're done. 521 00:19:15.400 --> 00:19:18.000 Like that three to one disappears real fast. 522 00:19:18.000 --> 00:19:19.560 It's like you have this lumpiness of like, 523 00:19:19.560 --> 00:19:22.160 okay, boom, we got these new SDRs in, crap. 524 00:19:22.160 --> 00:19:23.680 Okay, like now this is coming back up 525 00:19:23.680 --> 00:19:24.840 but then this starts growing down. 526 00:19:24.840 --> 00:19:27.800 So now we start at 20 to one or 30 to one, 527 00:19:27.800 --> 00:19:29.920 but it's like, it's more like a wave. 528 00:19:29.920 --> 00:19:33.360 Like it unulates with the efficiency of the business 529 00:19:33.360 --> 00:19:35.480 and how stable it is as you're scaling. 530 00:19:35.480 --> 00:19:37.000 And the faster you're scaling, 531 00:19:37.000 --> 00:19:38.680 the more inefficient it's going to be. 532 00:19:38.680 --> 00:19:40.520 So that's why you need to have as much as you can 533 00:19:40.520 --> 00:19:41.680 in terms of LTV2CAC. 534 00:19:41.680 --> 00:19:42.520 It's padding. 535 00:19:42.520 --> 00:19:45.080 The third piece here is that we just went over it, 536 00:19:45.080 --> 00:19:47.320 LTV2CAC, one, we wanna make sure that we're doing 537 00:19:47.320 --> 00:19:49.640 this off of gross profit, not revenue. 538 00:19:49.640 --> 00:19:51.680 And secondarily, we wanna make sure 539 00:19:51.680 --> 00:19:53.920 that if we are highly leveraged, 540 00:19:53.920 --> 00:19:55.320 then we can be at three to one. 541 00:19:55.320 --> 00:19:56.800 But if we're at low leverage, 542 00:19:56.800 --> 00:19:59.800 we wanna be at 20 plus, you know, 21 or higher. 543 00:19:59.800 --> 00:20:02.240 And again, this sounds crazy and unrealistic 544 00:20:02.240 --> 00:20:03.080 for a lot of people. 545 00:20:03.080 --> 00:20:05.600 I get it, fine, at the very least be at 15 to one. 546 00:20:05.600 --> 00:20:08.360 Please, for the love of God, I promised you it's possible. 547 00:20:08.360 --> 00:20:10.840 You just have to work on it longer than you expect. 548 00:20:10.840 --> 00:20:12.800 Which brings us to number four, let's dive into it. 549 00:20:12.800 --> 00:20:15.520 Number four, I've thought, I've said a lot about this, 550 00:20:15.520 --> 00:20:18.760 which is that the one to three million area 551 00:20:18.760 --> 00:20:21.880 is a huge swamp, right? 552 00:20:21.880 --> 00:20:23.840 We call it the swamp, at least it equities not calm. 553 00:20:23.840 --> 00:20:26.000 And why is one to three million so hard? 554 00:20:26.000 --> 00:20:28.520 Now we've noticed that it's hard, 555 00:20:28.520 --> 00:20:30.040 but we were like, why is that range hard? 556 00:20:30.040 --> 00:20:31.840 Now for those of you who are like, this is not real for me, 557 00:20:31.840 --> 00:20:33.960 I'm just trying to make my first $10,000 a month, 558 00:20:33.960 --> 00:20:36.440 just keep listening, because believe it or not, 559 00:20:36.440 --> 00:20:38.120 some of these things will apply to you. 560 00:20:38.120 --> 00:20:39.560 So if you're at one to three million dollars, 561 00:20:39.560 --> 00:20:42.000 why is this one of the hardest periods? 562 00:20:42.000 --> 00:20:44.120 Because usually from zero to a million, 563 00:20:44.120 --> 00:20:46.760 you can usually do it with like you and two, three people. 564 00:20:46.760 --> 00:20:49.360 It's not that hard for you to keep track of the team. 565 00:20:49.360 --> 00:20:51.080 You can usually run very high margins, 566 00:20:51.080 --> 00:20:52.600 especially if you're a sole proprietor. 567 00:20:52.600 --> 00:20:54.080 So you're basically just selling your time, 568 00:20:54.080 --> 00:20:55.440 which is fine, right? 569 00:20:55.440 --> 00:20:57.080 You don't need to obsess about your passive income 570 00:20:57.080 --> 00:20:58.680 before you max out your active income. 571 00:20:58.680 --> 00:20:59.520 Good idea. 572 00:20:59.520 --> 00:21:00.520 By the way, a lot of billionaires, 573 00:21:00.520 --> 00:21:02.240 very high active income, FYI. 574 00:21:02.240 --> 00:21:04.160 Anyways, as you're scaling up, 575 00:21:04.160 --> 00:21:06.680 that first, you know, $500, 800 sometimes a million a year 576 00:21:06.680 --> 00:21:09.680 is actually in some ways, somewhere more profitable 577 00:21:09.680 --> 00:21:12.000 than the next two, three, four million. 578 00:21:12.000 --> 00:21:14.320 Because you have to install this level of infrastructure, 579 00:21:14.320 --> 00:21:16.120 you're like, I just can't do it anymore. 580 00:21:16.120 --> 00:21:17.880 Now you can always just keep jacking prices, 581 00:21:17.880 --> 00:21:19.720 and that's fine, and I'm a big advocate of that. 582 00:21:19.720 --> 00:21:21.280 But if you're like, no, I think this is the price 583 00:21:21.280 --> 00:21:22.320 that I want to service at, 584 00:21:22.360 --> 00:21:23.600 and I want to do more volume, 585 00:21:23.600 --> 00:21:25.600 then you're gonna have to put in more infrastructure. 586 00:21:25.600 --> 00:21:29.360 But this is the math that I just realized is why it's so hard. 587 00:21:29.360 --> 00:21:32.120 So let's say you've got a two million dollar visits, 588 00:21:32.120 --> 00:21:33.960 you're right in the middle of the swamp, okay? 589 00:21:33.960 --> 00:21:35.600 And you probably noticed, anecdotally, 590 00:21:35.600 --> 00:21:37.360 for those of you who were kind of like in this business world, 591 00:21:37.360 --> 00:21:39.520 there's a lot of people in the $1 to $3 million range, 592 00:21:39.520 --> 00:21:42.480 like a ton, a ton of businesses. 593 00:21:42.480 --> 00:21:45.440 To be fair, I mean, they're making $1 to $3 million in profit, 594 00:21:45.440 --> 00:21:46.840 which means they're doing $1 to $3 million in revenue, 595 00:21:46.840 --> 00:21:47.680 big difference. 596 00:21:47.680 --> 00:21:50.240 All right, but let's say we've got a $2 million business, okay? 597 00:21:50.280 --> 00:21:54.160 And let's say that they're doing 20% margins, all right? 598 00:21:54.160 --> 00:21:59.160 So they're doing $400,000 per year in EBITDA or profit, okay? 599 00:21:59.760 --> 00:22:01.640 So we have $400,000 here. 600 00:22:01.640 --> 00:22:03.440 Now, here's the stick. 601 00:22:03.440 --> 00:22:06.320 At this point, for the business to evolve, 602 00:22:06.320 --> 00:22:07.600 for the business to level up, 603 00:22:07.600 --> 00:22:10.160 the entrepreneur typically has what I would consider 604 00:22:10.160 --> 00:22:11.480 an impossible choice. 605 00:22:11.480 --> 00:22:12.880 You have to choose one of two things, 606 00:22:12.880 --> 00:22:14.920 and sometimes the option is both, 607 00:22:14.920 --> 00:22:17.320 which is path one, instead of getting more help, 608 00:22:17.320 --> 00:22:19.120 I'm just gonna work even more. 609 00:22:19.120 --> 00:22:22.640 I'm gonna go from 12 hours a day to working 16 hours a day. 610 00:22:22.640 --> 00:22:24.240 I'm gonna stop taking weekends off, 611 00:22:24.240 --> 00:22:26.040 and I'm gonna basically get through this hump 612 00:22:26.040 --> 00:22:29.760 so I can push my way to $10 million a year, 613 00:22:29.760 --> 00:22:31.200 which you can do. 614 00:22:31.200 --> 00:22:35.920 It is hard, or I'm gonna bring in somebody 615 00:22:35.920 --> 00:22:37.040 who's gonna help me get there, 616 00:22:37.040 --> 00:22:39.400 and I'm gonna maintain a relatively long schedule, 617 00:22:39.400 --> 00:22:43.200 but still not the same as working 16 hours, 70s a week. 618 00:22:43.200 --> 00:22:45.280 Those are the two impossible choices, 619 00:22:45.280 --> 00:22:47.400 which is like other person. 620 00:22:47.400 --> 00:22:48.560 Here's the tough part. 621 00:22:48.560 --> 00:22:51.080 If you have $400,000 in profits that's left over, 622 00:22:51.080 --> 00:22:53.400 if you wanna bring in a stud who's gonna really help you there, 623 00:22:53.400 --> 00:22:57.040 you're probably gonna be looking at $250,000 per year 624 00:22:57.040 --> 00:22:59.200 in all income, kind of at a minimum, 625 00:22:59.200 --> 00:23:01.920 to bring somebody who's a real star into the business. 626 00:23:01.920 --> 00:23:03.200 Let's look at that in comparison 627 00:23:03.200 --> 00:23:05.200 to what the profit is for this business. 628 00:23:05.200 --> 00:23:08.400 You're looking at risking more than half of your income 629 00:23:08.400 --> 00:23:11.720 on one person with the hopes that it's gonna work out, 630 00:23:11.720 --> 00:23:13.280 but what happens when this person comes in, 631 00:23:13.280 --> 00:23:14.360 and then they aren't that good, 632 00:23:14.360 --> 00:23:16.240 they don't expand your capacity. 633 00:23:16.240 --> 00:23:18.040 It's like, well shoot, I just lost 634 00:23:18.040 --> 00:23:19.760 half my profit for a year, 635 00:23:19.760 --> 00:23:21.760 and then I'm still not further along. 636 00:23:21.760 --> 00:23:23.160 This is why this is the swamp, 637 00:23:23.160 --> 00:23:25.120 and I've just spent a lot of time thinking about that 638 00:23:25.120 --> 00:23:27.120 because I was like, why is $1 to $3 million so hard? 639 00:23:27.120 --> 00:23:30.240 You need the help, but you don't have the money 640 00:23:30.240 --> 00:23:31.640 to afford the help, 641 00:23:31.640 --> 00:23:33.800 and so you either just gotta go overdrive 642 00:23:33.800 --> 00:23:35.840 and go nuts o' mode, right? 643 00:23:35.840 --> 00:23:39.000 Or you make a huge bet proportional to what you have 644 00:23:39.000 --> 00:23:41.760 in terms of net profit to bring this person in. 645 00:23:41.760 --> 00:23:43.360 And that's why it's so hard. 646 00:23:43.360 --> 00:23:45.720 And so if you're in the swamp right now, 647 00:23:45.720 --> 00:23:47.960 my encouragement to you is this, 648 00:23:47.960 --> 00:23:50.360 I have almost always been the like, 649 00:23:50.360 --> 00:23:52.200 I'm gonna go into overdrive, 650 00:23:52.200 --> 00:23:54.920 and I'm gonna hire the person. 651 00:23:54.920 --> 00:23:55.960 Because the idea is, 652 00:23:55.960 --> 00:23:58.320 what if I just do things that are more unscalable, 653 00:23:58.320 --> 00:24:00.760 but still generate higher profits for the business, 654 00:24:00.760 --> 00:24:03.560 so that I can afford to take two or three shots 655 00:24:03.560 --> 00:24:06.120 with somebody else who's coming into the business knowing 656 00:24:06.120 --> 00:24:08.120 that I'm not gonna get it out of the park on the first shot. 657 00:24:08.120 --> 00:24:11.760 I mean, if I do, I'm stoked, but I wanna win either way. 658 00:24:11.760 --> 00:24:14.520 And so either I'm gonna win with more profit faster 659 00:24:14.520 --> 00:24:15.880 or less profit slower, 660 00:24:15.880 --> 00:24:18.160 but I wanna make sure that I'm guaranteed to win. 661 00:24:18.160 --> 00:24:22.120 I kind of do this as a plus scenario. 662 00:24:22.120 --> 00:24:24.920 So if you happen to be in that $1 to $3 million range, 663 00:24:24.920 --> 00:24:26.360 it's something that we know obviously a lot about 664 00:24:26.360 --> 00:24:27.560 with acquisition.com. 665 00:24:27.560 --> 00:24:29.640 And we put together a scaling roadmap. 666 00:24:29.640 --> 00:24:31.160 So when we looked at our whole portfolio 667 00:24:31.160 --> 00:24:32.560 and the companies that we've worked with over the years, 668 00:24:32.560 --> 00:24:33.960 we're like, what are the things? 669 00:24:33.960 --> 00:24:36.360 Where do we get stuck and how do we get unstuck, right? 670 00:24:36.360 --> 00:24:38.120 And when we put it all together on a map, 671 00:24:38.120 --> 00:24:40.760 what we realized that it actually isn't by revenue, 672 00:24:40.760 --> 00:24:41.920 it's by head count. 673 00:24:41.920 --> 00:24:44.280 You might be doing $1 to $3 million a year and be here, 674 00:24:44.280 --> 00:24:45.680 or you might be doing $1 to $3 million a year 675 00:24:45.680 --> 00:24:47.720 and be at level five proxies, right? 676 00:24:47.720 --> 00:24:50.040 So it really depends on the nature of the business 677 00:24:50.040 --> 00:24:50.880 that you're in. 678 00:24:50.880 --> 00:24:53.360 Do you wanna know what level of the scaling roadmap you're at 679 00:24:53.360 --> 00:24:56.600 and more importantly, what things we've done in the past 680 00:24:56.600 --> 00:24:57.960 for businesses of this size 681 00:24:57.960 --> 00:25:00.080 or at this stage to get to the next level, 682 00:25:00.080 --> 00:25:02.440 then you go to acquisition.com for a slash roadmap, 683 00:25:02.440 --> 00:25:03.760 you put in your business information 684 00:25:03.760 --> 00:25:05.480 and it'll spit out and it'll help you figure out 685 00:25:05.480 --> 00:25:08.160 which stage you're at so that you can get to the next level. 686 00:25:08.160 --> 00:25:10.720 On the thank you page, if you like our team, 687 00:25:10.720 --> 00:25:12.480 tell me figure out which stage you're at 688 00:25:12.480 --> 00:25:15.000 and those specific steps and personalize that. 689 00:25:15.000 --> 00:25:16.160 We'd love to invite you out to Vegas, 690 00:25:16.160 --> 00:25:17.520 you can book, call on the next page 691 00:25:17.520 --> 00:25:19.080 and if it's a fit, love to see you. 692 00:25:19.080 --> 00:25:20.680 And then the fourth thing we just covered 693 00:25:20.680 --> 00:25:23.720 is why one to three million is the hardest 694 00:25:23.720 --> 00:25:27.640 and the main thing is is cash flow and time. 695 00:25:27.640 --> 00:25:29.880 You don't have the time and you don't have the cash flow, 696 00:25:29.880 --> 00:25:33.560 it's do more work, but you have to in order to grow. 697 00:25:33.560 --> 00:25:34.920 So either you work over time 698 00:25:34.920 --> 00:25:37.000 or you bring someone else into work over time 699 00:25:37.000 --> 00:25:39.320 or you do both which is what I recommend 700 00:25:39.320 --> 00:25:40.960 and that means it's going to be hard 701 00:25:40.960 --> 00:25:43.080 which is why most people stay stuck. 702 00:25:43.080 --> 00:25:45.160 So that's number four, number five. 703 00:25:45.160 --> 00:25:49.200 So 2024 was probably the first year 704 00:25:49.200 --> 00:25:51.280 that I didn't have FOMO. 705 00:25:51.280 --> 00:25:52.400 So fear of missing out. 706 00:25:52.400 --> 00:25:56.120 It is the hardest part of business is staying focused. 707 00:25:56.120 --> 00:25:56.960 It's the hardest part. 708 00:25:56.960 --> 00:25:59.160 The reason you hear Basos talk about it, 709 00:25:59.160 --> 00:26:00.480 you hear his duck talk about it, 710 00:26:00.480 --> 00:26:01.680 you hear jobs talk about it, 711 00:26:01.680 --> 00:26:03.000 you hear Elon talk about it, 712 00:26:03.000 --> 00:26:05.840 like you have to be incredibly focused 713 00:26:05.840 --> 00:26:07.840 on what the points at greatest leverage are in the business. 714 00:26:07.840 --> 00:26:09.440 The reason that this was a big lesson for me, 715 00:26:09.440 --> 00:26:10.280 not the focus part, 716 00:26:10.280 --> 00:26:11.200 I obviously talk about that. 717 00:26:11.200 --> 00:26:13.280 But I was like why was this year different? 718 00:26:13.280 --> 00:26:15.560 Why was this the first year where I didn't have FOMO? 719 00:26:15.560 --> 00:26:18.480 It's actually because the idea of rush 720 00:26:18.480 --> 00:26:21.480 is where the fear of missing out comes from. 721 00:26:21.480 --> 00:26:24.640 It's the arbitrary timeline that I set for myself 722 00:26:24.640 --> 00:26:26.400 that I just grab from thin air 723 00:26:26.400 --> 00:26:28.240 and then I measure myself against this thing 724 00:26:28.240 --> 00:26:31.520 that I made up to make myself miserable 725 00:26:31.520 --> 00:26:35.280 at all times from whatever success I'm achieving. 726 00:26:35.280 --> 00:26:36.680 In thinking about that, 727 00:26:36.680 --> 00:26:38.440 I have coined the term for myself 728 00:26:38.440 --> 00:26:41.440 which that rush is imaginary. 729 00:26:41.440 --> 00:26:43.880 It's made up, it's completely made up. 730 00:26:43.880 --> 00:26:46.080 There's only one caveat that I'll make to this, 731 00:26:46.080 --> 00:26:48.760 which is and if this is you, you probably already know. 732 00:26:48.760 --> 00:26:51.000 If you have a business as a tremendous network effect 733 00:26:51.000 --> 00:26:52.200 and there's very small amount of people, 734 00:26:52.200 --> 00:26:53.800 or even a big amount of people in that network 735 00:26:53.800 --> 00:26:55.200 that you're trying to gather towards, 736 00:26:55.200 --> 00:26:58.080 then yes, it's likely that you have a winner-take-all business model 737 00:26:58.080 --> 00:26:59.480 and in which case you've probably already raised 738 00:26:59.480 --> 00:27:02.280 a ton of money and you're probably trying to aggressively grow 739 00:27:02.280 --> 00:27:03.440 to capture that network 740 00:27:03.440 --> 00:27:04.600 so that eventually you can turn something 741 00:27:04.600 --> 00:27:05.880 into a profitable business. 742 00:27:05.880 --> 00:27:09.640 Fine, for everybody else who's not running a tech platform 743 00:27:09.640 --> 00:27:12.760 that's trying to build a network effect of some sort, 744 00:27:12.760 --> 00:27:14.240 you don't need to rush. 745 00:27:14.240 --> 00:27:16.960 There was Ani, actually I don't think her episodes 746 00:27:16.960 --> 00:27:19.200 come out yet, but anyways, I'm gonna give you a sneak peek. 747 00:27:19.200 --> 00:27:21.040 So I was talking to Ani Trong 748 00:27:21.040 --> 00:27:23.720 and she has nail salons, okay. 749 00:27:23.720 --> 00:27:27.440 And so she has one core nail salon that worked really well 750 00:27:27.440 --> 00:27:30.800 and then she decided to partner with other people 751 00:27:30.800 --> 00:27:33.280 doing like three or four other nail salons. 752 00:27:33.280 --> 00:27:35.280 And the biggest issue she has for growing right now 753 00:27:35.280 --> 00:27:37.040 is that her partnerships are kind of a mess. 754 00:27:37.040 --> 00:27:37.880 I'll just put it like that. 755 00:27:37.880 --> 00:27:39.720 Why did you do these partnerships? 756 00:27:39.720 --> 00:27:41.320 She said, because if I had more locations, 757 00:27:41.320 --> 00:27:42.040 I'd make more money. 758 00:27:42.040 --> 00:27:44.280 And I said, why didn't you just make more money 759 00:27:44.280 --> 00:27:46.520 with your existing location, save up the cash 760 00:27:46.520 --> 00:27:48.880 and then open a second location all for yourself? 761 00:27:48.880 --> 00:27:50.440 The thing that I kept trying to tease out of her 762 00:27:50.440 --> 00:27:52.400 is I was like, she was just in a rush. 763 00:27:52.400 --> 00:27:53.800 Like that was the reason. 764 00:27:53.800 --> 00:27:54.720 She was just in a rush. 765 00:27:54.720 --> 00:27:56.360 There's no actual reason 766 00:27:56.360 --> 00:28:00.040 for have three or four other different random partnerships 767 00:28:00.040 --> 00:28:02.120 with each of these locations. 768 00:28:02.120 --> 00:28:04.200 And the thing is, is that some of you guys are, 769 00:28:04.200 --> 00:28:05.040 you do this. 770 00:28:05.760 --> 00:28:07.560 Who's here at our headquarters yesterday, 771 00:28:07.560 --> 00:28:10.160 he has a TikTok shop management thing, right? 772 00:28:10.160 --> 00:28:12.480 Where he just helps people start their TikTok shops 773 00:28:12.480 --> 00:28:13.640 for e-commerce businesses. 774 00:28:13.640 --> 00:28:14.480 And then he was like, 775 00:28:14.480 --> 00:28:16.800 but I also have this brand that I started on my own 776 00:28:16.800 --> 00:28:19.640 using TikTok shop and it's doing really, really well. 777 00:28:19.640 --> 00:28:21.640 But I also want to start investing in it. 778 00:28:21.640 --> 00:28:24.240 I'm like, dude, what's the rush? 779 00:28:24.240 --> 00:28:27.480 And so the counteraction, how do you counter the rush? 780 00:28:27.480 --> 00:28:28.760 How do you counter the rush? 781 00:28:28.760 --> 00:28:31.120 And I think the way that I have countered the rush 782 00:28:31.120 --> 00:28:33.560 is to look at the people who have the ultimate version 783 00:28:33.560 --> 00:28:34.680 of my business. 784 00:28:34.680 --> 00:28:37.440 Who are the people who are 20 years ahead of me? 785 00:28:37.440 --> 00:28:39.200 What do their businesses look like? 786 00:28:39.200 --> 00:28:40.560 And what's interesting about this 787 00:28:40.560 --> 00:28:44.360 is that the vast majority of them have one massive business. 788 00:28:44.360 --> 00:28:46.160 And in seeing that, I was like, huh, 789 00:28:46.160 --> 00:28:49.680 almost none of them have multiple massive businesses 790 00:28:49.680 --> 00:28:50.520 they started. 791 00:28:50.520 --> 00:28:52.280 Elon is of course the one exception 792 00:28:52.280 --> 00:28:53.560 that everybody wants to bring up. 793 00:28:53.560 --> 00:28:54.640 And if you're Elon, 794 00:28:54.640 --> 00:28:56.920 you already fucking know how to speak alien. 795 00:28:56.920 --> 00:28:59.040 So don't worry about this video. 796 00:28:59.040 --> 00:29:01.640 But for everyone who doesn't know how to speak alien, right? 797 00:29:01.640 --> 00:29:03.200 For people who haven't just generated 798 00:29:03.200 --> 00:29:04.760 $100 billion in a year. 799 00:29:04.760 --> 00:29:06.480 If you haven't done that yet, 800 00:29:06.480 --> 00:29:09.240 then maybe consider every other person on the Forbes 801 00:29:09.240 --> 00:29:12.600 that just did one thing for the entirety of their career. 802 00:29:13.920 --> 00:29:15.280 And it's like, basis has blurgeon. 803 00:29:15.280 --> 00:29:17.920 Yeah, after 35 years of Amazon, 804 00:29:17.920 --> 00:29:19.960 you've got Mr. Panda still do, 805 00:29:19.960 --> 00:29:22.480 he's like, wait, he owns the Cosmo. 806 00:29:22.480 --> 00:29:26.000 Yeah, but he also did that after 45 years of Panda Express 807 00:29:26.000 --> 00:29:28.360 and Panda Express is still his cash cow. 808 00:29:28.360 --> 00:29:30.240 Okay, I've got this restaurant, it's working well. 809 00:29:30.240 --> 00:29:32.160 Some thing about starting this agency, right? 810 00:29:32.480 --> 00:29:34.440 To help restaurants, it's like, dude, 811 00:29:34.440 --> 00:29:36.520 what is the ultimate version of this look like? 812 00:29:36.520 --> 00:29:38.600 The ultimate version of this look like either, 813 00:29:38.600 --> 00:29:41.160 you go all in and you build an enterprise agency 814 00:29:41.160 --> 00:29:43.400 that only works with very large restaurant chains 815 00:29:43.400 --> 00:29:44.560 and those tend to be sticky 816 00:29:44.560 --> 00:29:46.120 and those tend to be valuable businesses. 817 00:29:46.120 --> 00:29:47.120 But if you're like, 818 00:29:47.120 --> 00:29:49.880 while I'm only dealing with small SMB restaurant owners 819 00:29:49.880 --> 00:29:54.880 for my agency, show me one, one agency that service 820 00:29:55.320 --> 00:29:59.200 SMBs in that 1,500, maybe $2,000 a month mark 821 00:29:59.200 --> 00:30:01.600 who has a $100 million plus business, 822 00:30:01.600 --> 00:30:04.640 even just like revenue, just show me one, 823 00:30:04.640 --> 00:30:06.320 why doesn't it happen? 824 00:30:06.320 --> 00:30:08.320 Because it's a bad model. 825 00:30:08.320 --> 00:30:10.400 Every single agency goes up market 826 00:30:10.400 --> 00:30:11.920 and they serve enterprise and this become really big. 827 00:30:11.920 --> 00:30:13.920 Look at Ogilvy, look at Vayner, right? 828 00:30:13.920 --> 00:30:15.680 Like look at Neop, NP Digital, 829 00:30:15.680 --> 00:30:17.440 all of these are massive, massive companies 830 00:30:17.440 --> 00:30:19.640 that only service really the Fortune 500. 831 00:30:19.640 --> 00:30:20.480 Why? 832 00:30:20.480 --> 00:30:21.320 Because they're sticky. 833 00:30:21.320 --> 00:30:22.920 Because if you have volatile customers, 834 00:30:22.920 --> 00:30:24.160 you have a volatile business. 835 00:30:24.160 --> 00:30:25.280 If you have a volatile business, 836 00:30:25.280 --> 00:30:27.040 you're not gonna be able to weather the storms. 837 00:30:27.040 --> 00:30:28.200 If you can't weather the storms, 838 00:30:28.200 --> 00:30:29.280 you're not gonna last long. 839 00:30:29.280 --> 00:30:31.280 You don't last long, you're not gonna get big. 840 00:30:31.280 --> 00:30:34.200 How do you counteract the idea of rushing? 841 00:30:34.200 --> 00:30:36.520 You have to look at the end state of the business. 842 00:30:36.520 --> 00:30:38.680 What is the ultimate version of my restaurant look like? 843 00:30:38.680 --> 00:30:41.360 It might be 2,000 locations nationwide. 844 00:30:41.360 --> 00:30:43.400 What is the ultimate version of my agency look like? 845 00:30:43.400 --> 00:30:45.560 It might be Ogilvy in Mathers, right? 846 00:30:45.560 --> 00:30:48.200 It might be we're doing $5 billion a year 847 00:30:48.200 --> 00:30:50.000 and let's look at the number of person in space. 848 00:30:50.000 --> 00:30:51.360 If what is the ultimate version 849 00:30:51.360 --> 00:30:52.960 of my lawn care business look like? 850 00:30:52.960 --> 00:30:55.680 Maybe it's a franchise, maybe it's you privately hold it. 851 00:30:55.680 --> 00:30:56.760 But no matter what it is, 852 00:30:56.760 --> 00:30:59.400 it's probably not three different businesses 853 00:30:59.400 --> 00:31:01.320 that you're trying to start all at the same time 854 00:31:01.320 --> 00:31:03.000 because you're in a rush. 855 00:31:03.000 --> 00:31:04.600 Because the thing is is that rush 856 00:31:04.600 --> 00:31:07.240 is what guarantees you're never gonna get big. 857 00:31:07.240 --> 00:31:09.160 And I'm saying this because this is something 858 00:31:09.160 --> 00:31:12.400 that has plagued me, my whole career. 859 00:31:12.400 --> 00:31:13.520 And so it's just this last year 860 00:31:13.520 --> 00:31:15.240 was the first year that I didn't have FOMO 861 00:31:15.240 --> 00:31:16.680 and I was like, why is that? 862 00:31:16.680 --> 00:31:18.800 And I just think that I've just failed 863 00:31:18.800 --> 00:31:21.000 and messed it up enough times to be like, 864 00:31:21.000 --> 00:31:22.640 I just have to stick with one thing 865 00:31:22.640 --> 00:31:24.720 and here's the part about this. 866 00:31:24.720 --> 00:31:27.000 You have to accept that you, 867 00:31:27.000 --> 00:31:28.920 you can't sleep with every girl. 868 00:31:28.920 --> 00:31:30.520 We can't date every guy, whatever you know, 869 00:31:30.520 --> 00:31:32.280 whatever your preferences. 870 00:31:32.280 --> 00:31:35.080 The point is our life is so limited. 871 00:31:35.080 --> 00:31:36.400 It's just so, we just don't have that many, 872 00:31:36.400 --> 00:31:37.520 we don't have that much time. 873 00:31:37.520 --> 00:31:39.960 If you wanna do big stuff, you just don't have that much time. 874 00:31:39.960 --> 00:31:42.840 Because of that, it's like you just have to accept the fact 875 00:31:42.840 --> 00:31:43.920 you just gotta pick. 876 00:31:43.920 --> 00:31:46.160 And you could have had four other timelines 877 00:31:46.160 --> 00:31:47.720 where you could have done each of these other things 878 00:31:47.720 --> 00:31:49.080 all the way to their extreme. 879 00:31:49.080 --> 00:31:50.840 But the likely that you're gonna do all four of those 880 00:31:50.840 --> 00:31:52.480 to the extreme when you start all four of them 881 00:31:52.480 --> 00:31:54.600 at the same time is zero. 882 00:31:54.600 --> 00:31:55.880 It's not gonna happen. 883 00:31:55.880 --> 00:31:58.560 The first business is built on hard choices. 884 00:31:58.560 --> 00:32:00.400 Businesses built on the amount of knows 885 00:32:00.400 --> 00:32:01.760 that you're able to make. 886 00:32:01.760 --> 00:32:04.320 If you can't say no with the beginning 887 00:32:04.320 --> 00:32:07.320 of like, I'm not gonna just pick one of these paths. 888 00:32:07.320 --> 00:32:09.120 Right, one of my favorite little definitions 889 00:32:09.120 --> 00:32:11.760 of deciding comes from the Latin decadera, 890 00:32:11.760 --> 00:32:13.320 which means to cut off. 891 00:32:13.320 --> 00:32:15.120 Like if you wanna decide, you have to cut off. 892 00:32:15.120 --> 00:32:16.400 You have to eliminate things. 893 00:32:16.400 --> 00:32:17.960 If you have three different paths 894 00:32:17.960 --> 00:32:19.880 or four different things that you're considering, 895 00:32:19.880 --> 00:32:22.080 pick for the love of God. 896 00:32:22.080 --> 00:32:24.240 And the reason and the thing is, 897 00:32:24.240 --> 00:32:26.200 is that you have made up some number 898 00:32:26.200 --> 00:32:27.480 because some person you know 899 00:32:27.480 --> 00:32:29.480 makes a certain amount of money or some person you know, 900 00:32:29.480 --> 00:32:31.960 you thinks that this amount of revenue was cool. 901 00:32:31.960 --> 00:32:33.200 And so you're like, why wouldn't it be cool? 902 00:32:33.200 --> 00:32:34.320 So I wouldn't hit that level out of revenue. 903 00:32:34.320 --> 00:32:36.320 And because you don't know how to grow the business 904 00:32:36.320 --> 00:32:38.680 you're in, you only know how to get to 100,000 a year. 905 00:32:38.680 --> 00:32:39.960 You only know how to get to a million dollars a year. 906 00:32:39.960 --> 00:32:41.800 Only know how to get the $3 million a year. 907 00:32:41.800 --> 00:32:44.960 Then your way of growing is doing more $3 million businesses. 908 00:32:44.960 --> 00:32:46.880 When the reality is that you have to confront 909 00:32:46.880 --> 00:32:50.120 why is my $3 million business not a $10 million business? 910 00:32:50.120 --> 00:32:51.680 And you have to figure out that problem. 911 00:32:51.680 --> 00:32:53.200 That is the hard work. 912 00:32:53.200 --> 00:32:54.400 I talked to a lady yesterday, 913 00:32:54.400 --> 00:32:56.200 she was stuck at a million dollars a year for 10 years. 914 00:32:56.200 --> 00:32:59.320 I said, why haven't you gone to $3 million a year? 915 00:32:59.320 --> 00:33:00.320 Like what's stopped you? 916 00:33:00.320 --> 00:33:01.480 Because she had a very clear model. 917 00:33:01.480 --> 00:33:03.240 I was like, why don't you just double how much you're doing? 918 00:33:03.240 --> 00:33:04.720 And she was like, well, it's a pain. 919 00:33:04.720 --> 00:33:07.400 And I was like, oh, because it's hard, because it's hard. 920 00:33:07.400 --> 00:33:09.000 She's like, no, no, it's not because it's hard. 921 00:33:09.000 --> 00:33:11.480 And I was like, well, then why haven't you done it? 922 00:33:11.480 --> 00:33:14.040 And she was like, well, it's just like, it's inconvenient. 923 00:33:14.040 --> 00:33:16.800 And there's like, it's more time allotment and all this stuff. 924 00:33:16.800 --> 00:33:19.640 And I was like, yeah, that sounds like hard. 925 00:33:19.640 --> 00:33:20.480 It sounds like hard. 926 00:33:20.480 --> 00:33:23.840 It's hard for us to hear that we're not willing to do hard things 927 00:33:23.840 --> 00:33:26.520 because the hard changes. 928 00:33:26.520 --> 00:33:29.080 The hard is constant, but the nature of it changes. 929 00:33:29.080 --> 00:33:31.280 Just like suffering is a human being is constant. 930 00:33:31.280 --> 00:33:32.240 It's not gonna go away. 931 00:33:32.240 --> 00:33:33.040 There's nothing wrong with you 932 00:33:33.040 --> 00:33:34.600 because you're suffering while you're in business. 933 00:33:34.600 --> 00:33:36.440 It's just that the nature of the suffering changes. 934 00:33:36.440 --> 00:33:38.240 In the beginning, no one knows you exist. 935 00:33:38.240 --> 00:33:40.840 And that's tough, because you feel ignored and irrelevant. 936 00:33:40.840 --> 00:33:42.520 And then you start to let people know about your stuff. 937 00:33:42.520 --> 00:33:43.760 And then as soon as that happens, 938 00:33:43.760 --> 00:33:44.840 you have a different kind of hard, 939 00:33:44.840 --> 00:33:46.160 which is that no one wants to give you money. 940 00:33:46.160 --> 00:33:47.840 And then all of a sudden, people start giving you money. 941 00:33:47.840 --> 00:33:48.840 And then what happens? 942 00:33:48.840 --> 00:33:49.720 Then people start complaining, 943 00:33:49.720 --> 00:33:50.920 because your things not that good. 944 00:33:50.920 --> 00:33:52.880 But all of these things are hard. 945 00:33:52.880 --> 00:33:55.200 And so we have this idea that it's this rocky cutscene 946 00:33:55.200 --> 00:33:56.600 that we're gonna be fighting. 947 00:33:56.600 --> 00:33:58.200 It's like, we gotta just keep gritting through it. 948 00:33:58.200 --> 00:34:02.240 But it's like, no, we are so equipped to save our egos 949 00:34:02.240 --> 00:34:04.000 that we will come up with a hundred ways 950 00:34:04.000 --> 00:34:06.080 that our heart is not hard. 951 00:34:06.080 --> 00:34:08.400 It's different because we're special, right? 952 00:34:08.400 --> 00:34:10.800 But the reality is hard morphs. 953 00:34:10.800 --> 00:34:12.480 That's what makes people get stuck 954 00:34:12.480 --> 00:34:14.480 is because they learn out of conquer one hard, 955 00:34:14.480 --> 00:34:15.920 but not the next kind of hard. 956 00:34:15.920 --> 00:34:18.560 I think that a lot of the hardness is, 957 00:34:18.560 --> 00:34:20.440 is sometimes learning is saying no. 958 00:34:20.440 --> 00:34:21.680 It's learning to focus. 959 00:34:21.720 --> 00:34:22.960 That's the hard part. 960 00:34:22.960 --> 00:34:24.640 It's not getting punched in the face. 961 00:34:24.640 --> 00:34:28.240 It's being willing to let one of your children die, 962 00:34:28.240 --> 00:34:29.760 to let the other one live. 963 00:34:29.760 --> 00:34:31.120 We get the Sophie's choice. 964 00:34:31.120 --> 00:34:34.000 We actually do have to do that in business all the time. 965 00:34:34.000 --> 00:34:37.240 And so you have to accept that there is a life 966 00:34:37.240 --> 00:34:40.320 in the future that you will not be able to live. 967 00:34:40.320 --> 00:34:42.840 And it's actually, it's honestly, it's acceptance. 968 00:34:42.840 --> 00:34:45.560 And this has just been a really good lesson for me, 969 00:34:45.560 --> 00:34:47.240 which is like, there are opportunities 970 00:34:47.240 --> 00:34:48.560 that I think I could crush. 971 00:34:48.560 --> 00:34:49.800 And I think they're amazing. 972 00:34:49.800 --> 00:34:50.680 And you know what? 973 00:34:50.680 --> 00:34:52.400 I'm never gonna be able to do them. 974 00:34:52.400 --> 00:34:54.560 Because I still have the one that I'm working on right now, 975 00:34:54.560 --> 00:34:56.440 and I have to continue to say yes to this. 976 00:34:56.440 --> 00:34:59.040 And by saying yes to this, I have to say no to everything else. 977 00:34:59.040 --> 00:35:01.480 These have been the five big business lessons 978 00:35:01.480 --> 00:35:03.760 that I've learned more recently, 979 00:35:03.760 --> 00:35:05.520 and I thought you might enjoy them. 980 00:35:05.520 --> 00:35:06.680 Have an amazing day. 981 00:35:06.680 --> 00:35:08.320 And I'm sure I have other videos 982 00:35:08.320 --> 00:35:10.040 that you can find somewhere along here 983 00:35:10.040 --> 00:35:11.680 that if you like this, you'll like those.