WEBVTT 1 00:00:00.000 --> 00:00:05.680 So I've been looking to have in this conversation for a couple months and it was just sitting on the schedule like I'm looking forward to it and 2 00:00:06.240 --> 00:00:11.360 I found myself you know a couple minutes into the phone call and I said hey just out of curiosity 3 00:00:11.360 --> 00:00:14.560 How much are your companies doing a year in revenue right now? 4 00:00:15.080 --> 00:00:18.960 He said well, I think we're doing over a billion dollars a year now 5 00:00:20.160 --> 00:00:23.040 Welcome to the game where we talk about how to get more customers how to make more 6 00:00:23.040 --> 00:00:26.880 Procure and how to keep them longer and the many failures and lessons we have learned along the way 7 00:00:26.880 --> 00:00:32.640 I hope you enjoy and subscribe what I want to share with you is some of the kind of excerpts of the private conversations that I had 8 00:00:33.200 --> 00:00:38.520 With a man doing a billion dollars a year in revenue. That's privately held so his company or companies are privately held 9 00:00:38.520 --> 00:00:45.200 He owns a 50% of them and he's probably in his mid 70s for the security of that individual 10 00:00:45.200 --> 00:00:46.880 I'm not going to reveal his identity 11 00:00:46.880 --> 00:00:52.240 But what I will do is give you all the lessons that I wrote down as a result of this conversation all right 12 00:00:52.320 --> 00:00:57.360 The first thing that I think before I even get into it that I'm going to get asked from this video is like 13 00:00:57.360 --> 00:00:59.920 Well, how do you get access to guys like that and 14 00:01:00.640 --> 00:01:05.520 For the long this video. I'll explain how he went from a hundred million dollars to a billion dollars a year in revenue 15 00:01:05.840 --> 00:01:10.960 His processes around that also talk about how he organized his personnel and did his incentive programs 16 00:01:11.520 --> 00:01:16.000 Where he was allocating his capital that he felt he had got the best returns from so 17 00:01:16.480 --> 00:01:20.400 Jam packed lots of good stuff for you from a man who has done it and lived it 18 00:01:20.880 --> 00:01:24.240 And so the first one is about how do you get access to something like this and so 19 00:01:25.360 --> 00:01:30.960 One of the things that I think I hear on like the entrepreneur channels and things that I cruise around and stoop around down 20 00:01:31.520 --> 00:01:38.720 Is I hear these big mass market people say like just go buy a millionaire lunch or just say you'll go work with a millionaire for free 21 00:01:39.760 --> 00:01:43.760 I don't think that's realistic because you have nothing to offer that person 22 00:01:44.400 --> 00:01:49.360 And so I think the first step is self-awareness of understanding that like you only have x amount of value now your 23 00:01:49.920 --> 00:01:55.120 Intention should be to increase that value you have in the achievements that you have so that you can get access to higher level people 24 00:01:55.600 --> 00:01:57.280 so now 25 00:01:57.280 --> 00:01:58.880 I've got to the point of my career where you know 26 00:01:58.960 --> 00:02:00.960 He knows that we're doing just under a hundred million a year 27 00:02:01.040 --> 00:02:05.760 And so I had real questions that I wanted to ask him and the person who made the introduction was like hey this guy's legit 28 00:02:06.160 --> 00:02:09.440 You know he he loves all your all your content on your books and things like that 29 00:02:09.840 --> 00:02:12.720 Could you which you know would you mind helping him out or taking a call? 30 00:02:12.800 --> 00:02:16.400 And so he agreed which was crazy for me and I was really really thrilled about it 31 00:02:16.480 --> 00:02:23.360 But you know if you don't even where you're at you can probably just add you know a zero or multiply whatever you're doing by five 32 00:02:24.000 --> 00:02:29.120 And that's probably around where somebody where your cutoff might be so if you're making a hundred thousand dollars a year 33 00:02:29.520 --> 00:02:34.320 Then you know gaining access to making a million dollars a year is probably around where the cutoff is going to be for what your 34 00:02:34.400 --> 00:02:39.760 You know achievements will give you access to and that's kind of the the reason that I think a lot of these coaching programs and masterminds 35 00:02:39.760 --> 00:02:43.600 And things like that exist is because people can't gain access to that level of person 36 00:02:44.480 --> 00:02:49.040 Without some sort of you know prior achievement and if you haven't achieved it then you have to compensate that 37 00:02:49.040 --> 00:02:51.120 That person with money in some way right 38 00:02:51.120 --> 00:02:55.600 We got on the phone call and this was Laila and I play this my wife. She runs these companies with me 39 00:02:55.600 --> 00:02:58.160 She's cosy yo she actually just started YouTube channel if you want to check that out 40 00:02:58.320 --> 00:03:01.600 But the the first thing that I asked him was I said hey, Ben 41 00:03:02.480 --> 00:03:05.120 I had been stuck at you know mid 30 million dollars a year 42 00:03:05.760 --> 00:03:08.640 Between 30 and 40 for three years and you know 43 00:03:08.800 --> 00:03:13.360 I just from listening to some of the stuff that you had really understood the breakthrough of how to get to a hundred 44 00:03:13.360 --> 00:03:15.920 And right now we're we're pacing probably about 85 45 00:03:16.000 --> 00:03:18.000 But I think that that breakthrough 46 00:03:19.040 --> 00:03:23.360 Was was key which was understanding to focus on people now you might be like well 47 00:03:23.360 --> 00:03:26.960 Duh I have heard that everywhere Alex. Why are you so dumb great question 48 00:03:27.920 --> 00:03:32.160 I think that what I did not understand was that as the entrepreneur we 49 00:03:32.560 --> 00:03:36.160 Believe that we are source of everything and at a certain point 50 00:03:36.320 --> 00:03:40.160 There's only so much influence that you can have and maybe I'm just not influential enough. That's that's possible 51 00:03:40.160 --> 00:03:47.120 Right, but your ability to influence people one level two level three level four levels of management below where you're at 52 00:03:47.360 --> 00:03:50.000 But you know delutes over time like you are potent 53 00:03:50.240 --> 00:03:56.480 But you become disseminated as levels of manage and get introduced which is natural with any when that word or you grow an organization 54 00:03:56.960 --> 00:03:58.800 The first thing that he said that I thought was 55 00:03:59.600 --> 00:04:03.040 Really powerful was understanding what levels of town exist 56 00:04:03.520 --> 00:04:05.840 And so he said there's really just stars and superstars 57 00:04:06.480 --> 00:04:11.600 And one of the things that he said completely shifted my perspective about how to view those things 58 00:04:11.920 --> 00:04:13.760 And I'll tell you what that wasn't a second 59 00:04:13.760 --> 00:04:18.880 But the key point that he said is that every business that is going to grow and be self-sustaining must have three superstars 60 00:04:19.520 --> 00:04:22.080 And I was like, huh, that's really interesting 61 00:04:22.160 --> 00:04:27.040 And where he divided the superstars out was actually exactly where I would have divided them out as well 62 00:04:27.120 --> 00:04:29.840 Which was you need to have somebody who's in charge of acquisition 63 00:04:30.320 --> 00:04:35.520 You know someone who's in charge of delivery and someone who's in charge of operations and shared shared services right 64 00:04:35.840 --> 00:04:39.680 That means one person gets new clients one person delivers on promises 65 00:04:40.000 --> 00:04:45.680 And the third person keeps the first two out of jail by making sure that bills are paid and and payroll happens and legal and IT 66 00:04:45.680 --> 00:04:48.720 And all the lovely things that that come with running a business that no one ever thinks about 67 00:04:48.960 --> 00:04:53.200 He was like, if you have three superstars then that business can grow on its own 68 00:04:54.400 --> 00:04:59.120 The second thing was layering on the incentive packages appropriately 69 00:04:59.120 --> 00:05:02.880 And this is something that, you know, Charlie Munger, Warren Buffett, you know, in this guy 70 00:05:03.280 --> 00:05:06.800 I feel like I see this common theme around the guys who make the most money in the world 71 00:05:06.880 --> 00:05:12.560 Is that they are not afraid to give up a little bit of the pie to make more people wealthy so that the pie itself can grow 72 00:05:13.120 --> 00:05:18.560 It's easy to say it's hard to do and I think one of the biggest mistakes that I made for the vast majority of my early business 73 00:05:18.640 --> 00:05:22.160 career was not understanding how to align incentives 74 00:05:22.720 --> 00:05:26.080 And you know, I think Charlie Munger says like show me the incentives and I'll show you the outcomes 75 00:05:26.560 --> 00:05:28.400 And so when I started out on my career 76 00:05:28.400 --> 00:05:32.480 I thought that I just had to partner with everyone and that wasn't the right call for me at the time 77 00:05:32.480 --> 00:05:36.480 Because I ended up partnering with people who had the same skill sets as me because they seem cool and we like the same things 78 00:05:36.880 --> 00:05:40.000 But the reality is that I should have been partnering with people if I was going to partner 79 00:05:40.560 --> 00:05:42.400 With people who had different skill sets 80 00:05:42.480 --> 00:05:46.320 So I might have been the acquisition guy because that's probably I would say my my skill set 81 00:05:47.040 --> 00:05:51.680 But I should have partnered with somebody who was really good at delivery service product etc 82 00:05:52.400 --> 00:05:56.400 And had somebody who really owned the operational, you know, portion of the business 83 00:05:57.280 --> 00:05:59.600 And so that's what I should have thought of now mind you 84 00:06:00.240 --> 00:06:02.800 I had a mentor early on in that time of my life who said listen 85 00:06:02.800 --> 00:06:03.680 You might need an accountant 86 00:06:03.680 --> 00:06:06.320 It doesn't mean that you have to give them equity in your company, right? 87 00:06:06.320 --> 00:06:10.160 You just pay them as a vendor and that was again something that I did not understand when I was earlier on 88 00:06:10.160 --> 00:06:12.160 And so just if you're starting out your career 89 00:06:12.480 --> 00:06:16.000 You know, you don't need to give away equity in your company to get things done 90 00:06:16.000 --> 00:06:18.480 You can just pay for them and that's okay 91 00:06:18.480 --> 00:06:24.480 In fact, it's encouraged because the most expensive equity you typically give away is in the beginning 92 00:06:24.480 --> 00:06:28.400 And so being mindful of that and leveling up your skill sets so that you don't have to 93 00:06:28.400 --> 00:06:30.880 I think a lot of times can yield disproportionate returns 94 00:06:30.880 --> 00:06:34.480 And in the companies that I have grown to, you know, eight figures, multiple figures and now 95 00:06:34.480 --> 00:06:38.400 knocking on nine have come from companies that I that I own, right? 96 00:06:38.400 --> 00:06:42.560 And have very small percentage of equity that I allocate to people who are star performers 97 00:06:42.560 --> 00:06:46.640 Which leads me to one of the things that he talked about that I referenced earlier 98 00:06:46.640 --> 00:06:49.200 Which is understanding that just need superstars and stars 99 00:06:49.920 --> 00:06:51.600 And so 100 00:06:51.600 --> 00:06:53.920 He said something that really stuck with me 101 00:06:54.640 --> 00:06:57.520 And after this, I'll tell you what he said about how he allocates his money in one knock 102 00:06:57.520 --> 00:06:58.800 Because I think that was really cool 103 00:06:58.800 --> 00:07:01.680 But how he identifies superstars 104 00:07:01.680 --> 00:07:04.720 He said listen, we all want superstars, right? 105 00:07:04.720 --> 00:07:06.400 And we know when we see him 106 00:07:06.400 --> 00:07:08.880 But what I have noticed is that 107 00:07:08.880 --> 00:07:14.000 I've never not thought someone was a superstar and then later realized they were 108 00:07:14.000 --> 00:07:17.520 He said now I've had people who came in and I thought they were superstars 109 00:07:17.520 --> 00:07:20.320 And then they turned out they weren't superstars 110 00:07:20.320 --> 00:07:22.560 But I've never had the reverse happen where someone comes in 111 00:07:22.560 --> 00:07:24.560 I don't think they're a star or a superstar 112 00:07:24.560 --> 00:07:25.920 And then they become one 113 00:07:25.920 --> 00:07:28.160 And so I took that as a key learning for myself 114 00:07:28.160 --> 00:07:30.320 Which is once we're bringing in high-level talent 115 00:07:30.320 --> 00:07:32.480 We're bringing in leaders, we're bringing in drivers 116 00:07:33.200 --> 00:07:36.000 That if we don't immediately think that they're a superstar 117 00:07:36.000 --> 00:07:38.480 Then it means that they're probably not a fit for that role 118 00:07:38.480 --> 00:07:41.200 And that can be hard because one of the biggest things that gets in the way of 119 00:07:41.200 --> 00:07:42.560 Excellent is good enough 120 00:07:42.560 --> 00:07:45.520 I can tell you as somebody who's who's hired so many good enough people 121 00:07:46.320 --> 00:07:49.920 And I think later now hired true superstars 122 00:07:49.920 --> 00:07:52.640 The difference is is uncanny, it's night and day 123 00:07:52.640 --> 00:07:56.480 That they're able to solve problems, bring solutions to the table 124 00:07:56.480 --> 00:07:58.960 And implement them without your input 125 00:07:59.040 --> 00:08:01.520 Often times what you have to end up doing 126 00:08:01.520 --> 00:08:04.080 Which is why the gap between 30 to 100 million 127 00:08:04.080 --> 00:08:06.480 Is about giving up the next level of control 128 00:08:06.480 --> 00:08:10.800 Which is kind of the control around high-level decisions 129 00:08:10.800 --> 00:08:12.880 You have to give people the autonomy and the power 130 00:08:12.880 --> 00:08:14.720 Because a superstar wants that kind of power 131 00:08:14.720 --> 00:08:16.000 They want that kind of authority 132 00:08:16.000 --> 00:08:17.280 They want that responsibility 133 00:08:17.280 --> 00:08:18.560 They want the responsibility 134 00:08:18.560 --> 00:08:20.640 Because they want the credit for the outcome 135 00:08:21.440 --> 00:08:24.480 And so this was something that took me a long time to understand 136 00:08:24.480 --> 00:08:26.800 And the way that he incentivized those people 137 00:08:26.800 --> 00:08:28.000 That he shared with me 138 00:08:28.000 --> 00:08:29.360 And I will share with you right now 139 00:08:29.360 --> 00:08:31.920 So you guys don't have to get a billion dollar a year 140 00:08:31.920 --> 00:08:33.440 You know, to put her on the phone 141 00:08:33.440 --> 00:08:36.400 And she said he would set up profit shares for those CEOs 142 00:08:36.400 --> 00:08:38.800 And he only did it for the CEOs of his companies 143 00:08:38.800 --> 00:08:41.040 He had so many beliefs, I'll share one of them with you right now 144 00:08:41.040 --> 00:08:44.000 He said, I don't believe that businesses should make a profit 145 00:08:44.000 --> 00:08:46.880 And so this man is clearly a philosopher at this point in his career 146 00:08:46.880 --> 00:08:49.040 Just FYI, the guys mid-70s 147 00:08:49.040 --> 00:08:51.040 Peaceful as can be salt to the earth 148 00:08:51.840 --> 00:08:53.440 And I was like, I don't even know what that means 149 00:08:53.440 --> 00:08:55.200 He said, as can you clarify that? 150 00:08:55.200 --> 00:08:57.600 He said, I believe that profits are unnatural 151 00:08:57.600 --> 00:08:59.200 He said, I don't think that they're naturally occurring 152 00:08:59.200 --> 00:09:00.720 I think that a business 153 00:09:00.720 --> 00:09:03.040 If left on its, you know, lift to its own devices 154 00:09:03.040 --> 00:09:05.040 Will pretty much break even 155 00:09:05.040 --> 00:09:06.080 And I thought about that 156 00:09:06.080 --> 00:09:08.080 And I thought more and I thought more about it 157 00:09:08.080 --> 00:09:09.200 And I was like, I guess that's true 158 00:09:09.200 --> 00:09:10.960 And he's like, it's unnatural 159 00:09:10.960 --> 00:09:12.320 To create profits 160 00:09:12.320 --> 00:09:14.160 And it takes willpower 161 00:09:14.160 --> 00:09:15.200 To create profits 162 00:09:15.200 --> 00:09:16.960 Because you have to create outsize returns 163 00:09:16.960 --> 00:09:17.840 Compared to the marketplace 164 00:09:17.840 --> 00:09:19.200 Because everyone else 165 00:09:19.200 --> 00:09:21.280 Most of the time is the same resources as you do 166 00:09:21.280 --> 00:09:22.880 Or you know, they have the same 24 hours 167 00:09:23.360 --> 00:09:26.240 Many times the same access the skill and talent that you do 168 00:09:26.240 --> 00:09:28.240 And so if you have the same access skill and talent 169 00:09:28.240 --> 00:09:29.520 You know, and you have the same resources 170 00:09:29.520 --> 00:09:30.720 Or similar resources 171 00:09:30.720 --> 00:09:32.960 Then how is it that you're going to all compete them 172 00:09:32.960 --> 00:09:34.320 It takes something unnatural 173 00:09:34.320 --> 00:09:36.480 It takes something above and beyond 174 00:09:36.480 --> 00:09:38.880 And so for him, he believed that creating profits 175 00:09:38.880 --> 00:09:40.720 As a natural and his sole responsibility 176 00:09:40.720 --> 00:09:42.240 Of the CEO, which I thought was interesting 177 00:09:42.240 --> 00:09:43.280 I'm not sorry, 100% agree 178 00:09:43.280 --> 00:09:45.120 It might not, I just might not be at that level yet 179 00:09:45.120 --> 00:09:46.320 I don't know 180 00:09:46.320 --> 00:09:47.840 But he said that he shared 181 00:09:47.840 --> 00:09:50.160 5% of profits with those entrepreneurs 182 00:09:50.240 --> 00:09:53.760 And he also gave them the opportunity to buy in 183 00:09:53.760 --> 00:09:55.680 Truly buy in, not just like giving equity 184 00:09:55.680 --> 00:09:58.240 But buy in bigger and bigger chunks of the companies 185 00:09:58.240 --> 00:10:00.000 That I think one of his biggest companies 186 00:10:00.000 --> 00:10:02.640 That he has the CEO owns like 30 something percent 187 00:10:02.640 --> 00:10:04.960 Of that company now and started at 5 or 10 188 00:10:04.960 --> 00:10:07.040 And so the reason I'm sharing this is that 189 00:10:07.040 --> 00:10:08.800 Like at a certain point 190 00:10:08.800 --> 00:10:11.280 The company becomes a conglomeration of companies 191 00:10:11.280 --> 00:10:15.360 Of drivers who are driving growth across channels 192 00:10:15.360 --> 00:10:17.200 Right across individual profit centers 193 00:10:17.200 --> 00:10:20.080 That all roll into one larger conglomerate 194 00:10:22.640 --> 00:10:25.040 Hey guys, love that you're listening to the podcast 195 00:10:25.040 --> 00:10:27.840 If you ever want to have the video version of this 196 00:10:27.840 --> 00:10:29.040 Which usually has more effects 197 00:10:29.040 --> 00:10:30.400 More visuals, more graphs 198 00:10:30.400 --> 00:10:31.840 You know, drawn out stuff 199 00:10:31.840 --> 00:10:34.320 Sometimes it can help hit the brain centers 200 00:10:34.320 --> 00:10:34.960 In different ways 201 00:10:34.960 --> 00:10:36.000 You can check my YouTube channel 202 00:10:36.000 --> 00:10:37.120 It's absolutely free 203 00:10:37.120 --> 00:10:38.880 To check that out if that's what you are into 204 00:10:38.880 --> 00:10:40.480 And if not, keep enjoying the show 205 00:10:40.960 --> 00:10:47.120 And so just fundamentally shifting my understanding of 206 00:10:47.120 --> 00:10:49.120 Like what business will become 207 00:10:49.120 --> 00:10:50.960 Instead of like, oh I'm going to sell 208 00:10:50.960 --> 00:10:52.880 You know, 100 doors now I'm going to sell a thousand doors 209 00:10:52.880 --> 00:10:54.160 Now I'm going to sell 10,000 doors 210 00:10:54.160 --> 00:10:56.320 Right and I say door it could be pens or ball caps 211 00:10:56.320 --> 00:10:57.120 Or what doesn't really matter 212 00:10:57.120 --> 00:10:58.960 But the point is that we're selling a widget of some sort 213 00:10:58.960 --> 00:11:02.000 Right instead it's you might have a business 214 00:11:02.000 --> 00:11:04.320 That sells 100, you know, door knobs 215 00:11:04.320 --> 00:11:06.320 And 100 doors and 100 door frames 216 00:11:06.320 --> 00:11:07.520 And door insurance 217 00:11:07.520 --> 00:11:09.520 And all that type of stuff around 218 00:11:09.600 --> 00:11:11.840 And each one of those things becomes a profit center 219 00:11:11.840 --> 00:11:13.360 For the overarching glomerate 220 00:11:13.360 --> 00:11:15.520 And it has a driver who has specialization 221 00:11:15.520 --> 00:11:18.000 Within that industry and has done it before 222 00:11:18.000 --> 00:11:19.440 And so I think what he shared this to me 223 00:11:19.440 --> 00:11:20.960 Like 224 00:11:20.960 --> 00:11:22.640 It reinforced one of my core beliefs 225 00:11:22.640 --> 00:11:23.280 Which is 226 00:11:23.280 --> 00:11:24.640 Advanced people are advanced 227 00:11:24.640 --> 00:11:26.560 Because they never don't do the basics 228 00:11:26.560 --> 00:11:28.960 Like so many people, you know, myself included 229 00:11:28.960 --> 00:11:30.000 I would see people on stage 230 00:11:30.000 --> 00:11:31.040 And they would say what they were doing 231 00:11:31.040 --> 00:11:33.440 And I was like there's no way it's that simple 232 00:11:33.440 --> 00:11:35.120 But I think the reality is that it is that simple 233 00:11:35.120 --> 00:11:36.400 It's just not easy 234 00:11:36.400 --> 00:11:37.680 Finding good people is hard 235 00:11:37.680 --> 00:11:39.440 It's the number one issue all businesses have 236 00:11:39.440 --> 00:11:40.720 It's like because if fundamentally 237 00:11:40.720 --> 00:11:42.320 Every single person who's listening to this right now 238 00:11:42.320 --> 00:11:43.920 It's three amazing hires away 239 00:11:43.920 --> 00:11:45.760 From all the growth you've ever wanted 240 00:11:45.760 --> 00:11:46.960 Like think about that 241 00:11:46.960 --> 00:11:48.400 Like we're all three hires away 242 00:11:49.040 --> 00:11:50.720 From all the growth we ever wanted 243 00:11:50.720 --> 00:11:51.920 And our time back 244 00:11:51.920 --> 00:11:54.320 And I feel like I'm just beginning to really experience 245 00:11:54.320 --> 00:11:55.280 This as an entrepreneur 246 00:11:55.280 --> 00:11:56.320 And I'll tell you it's trippy 247 00:11:56.320 --> 00:11:57.120 It's weird 248 00:11:57.120 --> 00:11:58.400 Not being needed 249 00:11:58.400 --> 00:11:59.440 And I would encourage it 250 00:11:59.440 --> 00:12:00.640 And I think that there are multiple times 251 00:12:00.640 --> 00:12:02.320 There are my career where I thought 252 00:12:02.320 --> 00:12:03.280 That I was not needed 253 00:12:03.280 --> 00:12:04.160 And I stepped away 254 00:12:04.160 --> 00:12:05.680 And then things crashed 255 00:12:05.680 --> 00:12:06.960 And then I had to jump back in 256 00:12:07.040 --> 00:12:08.960 And so maybe you've had that experience too 257 00:12:08.960 --> 00:12:10.400 But when that happens 258 00:12:10.400 --> 00:12:12.560 Sure there's process issues etc 259 00:12:12.560 --> 00:12:15.200 But most times it's because there's a lack of talent 260 00:12:15.200 --> 00:12:17.920 And I'll share one conclusion that I made from this 261 00:12:17.920 --> 00:12:19.200 Thinking that I'll tell you what 262 00:12:19.200 --> 00:12:20.960 His investment advice was 263 00:12:20.960 --> 00:12:23.200 But one of the conclusions that I have is that 264 00:12:23.200 --> 00:12:25.360 The size of the corporation 265 00:12:25.360 --> 00:12:26.960 Is directly proportional 266 00:12:26.960 --> 00:12:29.120 To the amount of superstars that are present 267 00:12:29.920 --> 00:12:31.760 And so when you think I'm like superstar 268 00:12:31.760 --> 00:12:33.200 So I'm not talking stars 269 00:12:33.200 --> 00:12:33.840 Stars are great 270 00:12:33.840 --> 00:12:34.960 You need a player right 271 00:12:34.960 --> 00:12:37.280 But who are the people of that ex-factor 272 00:12:37.280 --> 00:12:38.000 That it fact 273 00:12:38.000 --> 00:12:39.360 That's something different 274 00:12:39.360 --> 00:12:40.960 That can really drive 275 00:12:40.960 --> 00:12:41.600 Right 276 00:12:41.600 --> 00:12:43.120 And as a company gets bigger 277 00:12:43.120 --> 00:12:43.920 He even shared this theory 278 00:12:43.920 --> 00:12:45.760 He said you need fewer drivers 279 00:12:45.760 --> 00:12:47.200 And you need superstar tenders 280 00:12:47.200 --> 00:12:48.800 You need people who are not hunters 281 00:12:48.800 --> 00:12:50.000 But farmers 282 00:12:50.000 --> 00:12:51.600 Who can just tend to 283 00:12:51.600 --> 00:12:52.880 The company overall 284 00:12:52.880 --> 00:12:54.240 And make the incremental improvements 285 00:12:54.240 --> 00:12:56.080 Because a lot of times companies grow 286 00:12:56.080 --> 00:12:57.280 In a stepwise fashion 287 00:12:57.280 --> 00:12:58.480 So it's huge growth 288 00:12:58.480 --> 00:12:59.440 Plato, huge growth 289 00:12:59.440 --> 00:13:00.160 Plato, huge growth 290 00:13:00.160 --> 00:13:00.800 Plato 291 00:13:00.800 --> 00:13:02.160 And then we as entrepreneurs think we're 292 00:13:02.160 --> 00:13:02.480 You know 293 00:13:02.480 --> 00:13:03.280 Breaking something 294 00:13:03.280 --> 00:13:03.920 When and reality 295 00:13:03.920 --> 00:13:05.680 That just oftentimes is how growth occurs 296 00:13:05.680 --> 00:13:06.560 Because there are bottlenecks 297 00:13:06.560 --> 00:13:07.520 There are constraints 298 00:13:07.520 --> 00:13:08.240 That are on the business 299 00:13:08.240 --> 00:13:09.520 And then you debottle neck them 300 00:13:09.520 --> 00:13:11.280 And then you experience the next level of growth 301 00:13:11.280 --> 00:13:12.560 And usually you debottle neck them 302 00:13:12.560 --> 00:13:14.160 With a person who has experience 303 00:13:14.160 --> 00:13:16.160 Or who has talent in that specific area 304 00:13:16.160 --> 00:13:17.120 Who can solve the problem 305 00:13:17.120 --> 00:13:18.400 For you and has done it before 306 00:13:18.400 --> 00:13:18.960 As promised 307 00:13:18.960 --> 00:13:19.520 What I'm going to do is 308 00:13:19.520 --> 00:13:20.560 I'm going to wrap this puppy up 309 00:13:20.560 --> 00:13:22.560 With his advice 310 00:13:22.560 --> 00:13:23.360 On investing 311 00:13:23.360 --> 00:13:24.560 And so he said 312 00:13:25.040 --> 00:13:26.000 So I'm just giving you 313 00:13:26.000 --> 00:13:26.880 Straight from the horses out 314 00:13:26.880 --> 00:13:27.920 This is what he told me 315 00:13:27.920 --> 00:13:28.560 So he said 316 00:13:28.560 --> 00:13:30.000 We've done really well in real estate 317 00:13:30.000 --> 00:13:31.040 We have a couple hundred million dollars 318 00:13:31.040 --> 00:13:32.000 In real estate 319 00:13:32.080 --> 00:13:34.080 And we've done it all through the company 320 00:13:34.080 --> 00:13:35.280 And so he and his partner 321 00:13:36.240 --> 00:13:37.760 Shared share the equity 322 00:13:37.760 --> 00:13:38.720 And the deals that they do 323 00:13:39.440 --> 00:13:42.400 And they buy all multi-family real estate 324 00:13:42.400 --> 00:13:44.400 So big buildings with lots of apartments 325 00:13:44.400 --> 00:13:44.800 He said 326 00:13:45.680 --> 00:13:46.480 When I buy 327 00:13:46.480 --> 00:13:46.960 He said 328 00:13:46.960 --> 00:13:50.240 I'm more concerned on return of capital 329 00:13:50.240 --> 00:13:52.240 Than return on capital 330 00:13:52.240 --> 00:13:53.280 So I'll say that again 331 00:13:53.280 --> 00:13:54.080 He said 332 00:13:54.080 --> 00:13:55.760 I'm more concerned when I invest 333 00:13:55.760 --> 00:13:57.680 With return of capital 334 00:13:57.680 --> 00:13:59.280 Than return on capital 335 00:13:59.280 --> 00:14:00.160 And I thought that was 336 00:14:00.240 --> 00:14:02.480 It just consistently reinforces what I keep finding 337 00:14:02.480 --> 00:14:03.680 With the people who are 338 00:14:03.680 --> 00:14:04.880 Worth so much more 339 00:14:04.880 --> 00:14:05.840 We're worth 500 million 340 00:14:05.840 --> 00:14:06.720 Worth a billion dollars 341 00:14:06.720 --> 00:14:07.120 Is that 342 00:14:07.120 --> 00:14:08.160 The high risk stuff 343 00:14:08.800 --> 00:14:10.320 Everybody who's poor 344 00:14:10.320 --> 00:14:11.840 Wants to buy the lottery ticket 345 00:14:11.840 --> 00:14:12.880 But everyone who's rich 346 00:14:12.880 --> 00:14:16.000 Just wants to own the lottery game 347 00:14:16.000 --> 00:14:17.360 And make 10% a year on it 348 00:14:17.360 --> 00:14:18.000 Right 349 00:14:18.000 --> 00:14:18.720 And so 350 00:14:18.720 --> 00:14:20.160 He said that for him 351 00:14:20.160 --> 00:14:21.440 He just wants to invest in things 352 00:14:21.440 --> 00:14:22.400 Because he realized that 353 00:14:22.400 --> 00:14:23.280 He's like no matter what 354 00:14:23.280 --> 00:14:25.520 He's like the tenants are paying for the mortgage for me 355 00:14:25.520 --> 00:14:26.160 He said sure 356 00:14:26.160 --> 00:14:26.800 You know some of them 357 00:14:26.800 --> 00:14:27.680 We did better some of them 358 00:14:27.680 --> 00:14:28.160 We did worse 359 00:14:28.160 --> 00:14:28.400 He's like 360 00:14:28.400 --> 00:14:29.200 But overall as long as 361 00:14:29.200 --> 00:14:30.640 I thought all the fundamentals were sound 362 00:14:31.600 --> 00:14:33.200 Then I was going to 363 00:14:33.200 --> 00:14:34.800 Just have a great store 364 00:14:34.800 --> 00:14:35.600 For my wealth 365 00:14:36.320 --> 00:14:37.120 And he's like 366 00:14:37.120 --> 00:14:38.320 And sure we lucked out a few times 367 00:14:38.880 --> 00:14:40.080 But for me 368 00:14:40.080 --> 00:14:41.120 This is him saying this 369 00:14:41.120 --> 00:14:41.440 He's like 370 00:14:41.440 --> 00:14:42.960 But for me that has been a really 371 00:14:42.960 --> 00:14:43.520 Great vehicle 372 00:14:43.520 --> 00:14:43.840 And I was like 373 00:14:43.840 --> 00:14:44.160 Okay well 374 00:14:44.160 --> 00:14:45.120 Do you have any rules of thumb 375 00:14:45.120 --> 00:14:45.440 You know 376 00:14:45.440 --> 00:14:46.640 Just off the top of mind 377 00:14:48.080 --> 00:14:49.360 Of how you pick those spots 378 00:14:49.360 --> 00:14:49.760 And he says 379 00:14:49.760 --> 00:14:50.400 You know in general 380 00:14:50.400 --> 00:14:50.880 I never 381 00:14:50.880 --> 00:14:52.080 I never passed 382 00:14:52.080 --> 00:14:53.280 A cap rate of 8 383 00:14:53.280 --> 00:14:53.840 He said so 384 00:14:53.840 --> 00:14:54.560 If it was below 8 385 00:14:54.560 --> 00:14:55.920 I wouldn't do it 386 00:14:55.920 --> 00:14:56.480 And that's 387 00:14:56.480 --> 00:14:57.360 That's how 388 00:14:57.360 --> 00:14:57.920 He 389 00:14:57.920 --> 00:14:59.120 Picked his deals 390 00:14:59.120 --> 00:15:00.320 And I thought that was really interesting 391 00:15:00.320 --> 00:15:01.120 And so you know 392 00:15:01.120 --> 00:15:02.320 Layla and I have looked at that 393 00:15:02.320 --> 00:15:03.440 In terms of rules of thumb 394 00:15:03.440 --> 00:15:05.120 For the purchases that we're looking at 395 00:15:05.120 --> 00:15:05.920 And whatnot 396 00:15:05.920 --> 00:15:06.960 He would rather have 397 00:15:06.960 --> 00:15:08.800 Slightly higher value 398 00:15:08.800 --> 00:15:09.760 Buildings 399 00:15:09.760 --> 00:15:11.760 That he thought there was less risk in 400 00:15:11.760 --> 00:15:12.960 That he felt more guaranteed 401 00:15:12.960 --> 00:15:14.880 That his capital would come back to him 402 00:15:14.880 --> 00:15:15.760 Than trying to 403 00:15:15.760 --> 00:15:17.520 You know maximize his internal rate of return 404 00:15:17.520 --> 00:15:18.480 And I think to a certain degree 405 00:15:18.480 --> 00:15:19.280 That goes with 406 00:15:19.280 --> 00:15:20.560 The leverage that he might employ 407 00:15:20.560 --> 00:15:21.920 Like how much debt is he going to take on 408 00:15:21.920 --> 00:15:22.960 To buy this facility 409 00:15:22.960 --> 00:15:24.080 Because if you get more debt 410 00:15:24.080 --> 00:15:25.120 Then you're going to get better returns 411 00:15:25.120 --> 00:15:26.720 But you also increase your risk 412 00:15:26.720 --> 00:15:27.680 And so 413 00:15:27.840 --> 00:15:29.440 Coming from a man who 414 00:15:29.440 --> 00:15:31.040 Obviously doesn't need anything else in life 415 00:15:31.760 --> 00:15:33.200 I thought that was also valuable 416 00:15:33.200 --> 00:15:34.160 Because I think as you 417 00:15:34.160 --> 00:15:35.280 As you grow as an entrepreneur 418 00:15:35.280 --> 00:15:36.480 It becomes so much more about 419 00:15:36.480 --> 00:15:37.280 Downside mitigation 420 00:15:37.280 --> 00:15:38.080 Because 421 00:15:38.080 --> 00:15:38.400 You know 422 00:15:38.400 --> 00:15:38.960 Add it you know 423 00:15:38.960 --> 00:15:39.840 Doubling your net worth 424 00:15:39.840 --> 00:15:41.280 Doesn't really change anything about your life 425 00:15:41.280 --> 00:15:43.280 But cutting your net worth in half does 426 00:15:43.280 --> 00:15:44.320 And so it's really about like 427 00:15:44.320 --> 00:15:44.800 What are we 428 00:15:44.800 --> 00:15:45.920 What problem are we solving 429 00:15:45.920 --> 00:15:47.360 What are we trying to accomplish here 430 00:15:47.360 --> 00:15:48.240 And making sure that the way 431 00:15:48.240 --> 00:15:49.920 That we make decisions is aligned with that 432 00:15:49.920 --> 00:15:51.600 These were some of the notes that I have 433 00:15:51.600 --> 00:15:52.240 Let me make sure 434 00:15:52.240 --> 00:15:52.640 Oh 435 00:15:52.640 --> 00:15:53.680 And I'll tell you the one last thing 436 00:15:53.680 --> 00:15:54.160 They told me 437 00:15:54.160 --> 00:15:54.640 I said 438 00:15:54.640 --> 00:15:55.520 All right 439 00:15:55.520 --> 00:15:57.360 So we followed your advice of getting 440 00:15:57.360 --> 00:15:59.280 You know from 30 million to 100 million 441 00:15:59.280 --> 00:16:00.400 This is this is really good 442 00:16:00.400 --> 00:16:01.520 You're going to want to listen to this one 443 00:16:02.240 --> 00:16:03.200 I said okay well then 444 00:16:03.200 --> 00:16:05.520 How do you get from 100 million to a billion 445 00:16:05.520 --> 00:16:07.920 And this is stuff that you will never find anywhere 446 00:16:07.920 --> 00:16:09.920 All right you will not find this anywhere written down 447 00:16:09.920 --> 00:16:11.840 Because there are so few billionaires 448 00:16:11.840 --> 00:16:13.280 And there's so few people who are doing a billion dollars 449 00:16:13.280 --> 00:16:13.920 You're in revenue 450 00:16:13.920 --> 00:16:15.520 We can actually share this with 451 00:16:15.520 --> 00:16:16.240 With truth 452 00:16:16.240 --> 00:16:18.000 And his answer will crack you up 453 00:16:18.000 --> 00:16:19.520 Or at least it cracked me up 454 00:16:19.520 --> 00:16:21.040 And so he said 455 00:16:21.040 --> 00:16:21.920 He said well 456 00:16:21.920 --> 00:16:22.960 I'll be honest with you man 457 00:16:22.960 --> 00:16:23.600 He said you know 458 00:16:23.600 --> 00:16:24.160 When we were at 459 00:16:24.160 --> 00:16:25.440 We did 100 million 460 00:16:25.440 --> 00:16:26.400 A year for 461 00:16:26.400 --> 00:16:27.520 For four or five years 462 00:16:28.160 --> 00:16:30.000 And he said in honest that we got so burnt out 463 00:16:30.000 --> 00:16:31.200 Because we kept wanting to go 464 00:16:31.200 --> 00:16:31.920 You know wanting to grow 465 00:16:31.920 --> 00:16:33.120 We just couldn't grow it anymore 466 00:16:33.120 --> 00:16:34.880 So we couldn't get past 100 million 467 00:16:34.880 --> 00:16:37.120 He said so we pretty much just gave up 468 00:16:37.120 --> 00:16:38.720 And we we took the company 469 00:16:38.720 --> 00:16:40.720 We broke it into a hundred little pieces 470 00:16:40.720 --> 00:16:41.520 And we gave 471 00:16:42.480 --> 00:16:43.520 You know profit sharing 472 00:16:43.520 --> 00:16:44.480 And small equity pieces 473 00:16:44.480 --> 00:16:45.440 Phantom equity 474 00:16:45.440 --> 00:16:48.160 To our our best superstars and our drivers 475 00:16:48.160 --> 00:16:50.880 And he said me and my partner pretty much kind of checked out 476 00:16:50.880 --> 00:16:52.240 He said and here's what's great 477 00:16:52.240 --> 00:16:53.360 Five years later 478 00:16:53.360 --> 00:16:54.880 We were at 500 million 479 00:16:54.960 --> 00:16:56.800 And five years after that he said we were at a billion 480 00:16:57.680 --> 00:16:59.040 And I was like wow 481 00:16:59.040 --> 00:17:00.640 And I was like so so 482 00:17:00.640 --> 00:17:02.240 I mean what would you what would you say 483 00:17:02.240 --> 00:17:03.920 How like so how do you how do you go to a billion 484 00:17:03.920 --> 00:17:04.720 He was like 485 00:17:04.720 --> 00:17:06.480 I think the way you get to a billion is 486 00:17:06.480 --> 00:17:07.600 Not trying to get to a billion 487 00:17:08.480 --> 00:17:10.240 I was like man 488 00:17:10.240 --> 00:17:12.000 Like that's like it was it was 489 00:17:12.000 --> 00:17:12.880 That I felt that 490 00:17:12.880 --> 00:17:13.840 I was like really 491 00:17:13.840 --> 00:17:15.200 He said I think it was luck 492 00:17:15.200 --> 00:17:16.880 So like I think there was a lot of things that happened 493 00:17:16.880 --> 00:17:18.480 And that you know things were aligned 494 00:17:19.360 --> 00:17:21.440 A it showed the humility that the man had 495 00:17:21.440 --> 00:17:22.720 But also that you know he's like 496 00:17:22.720 --> 00:17:23.840 And there was a couple key decisions 497 00:17:23.840 --> 00:17:25.760 That were super important 498 00:17:25.760 --> 00:17:27.600 For our development within those companies 499 00:17:28.560 --> 00:17:29.760 And he said and I opposed them 500 00:17:29.760 --> 00:17:31.920 But it was it was decisions that were made 501 00:17:31.920 --> 00:17:33.680 By the leaders of the company 502 00:17:33.680 --> 00:17:34.640 And they did it anyways 503 00:17:34.640 --> 00:17:36.080 He's like and they were right 504 00:17:36.080 --> 00:17:37.120 I was wrong 505 00:17:37.120 --> 00:17:37.920 And so I think it just 506 00:17:37.920 --> 00:17:39.200 Underlined A he's humility 507 00:17:39.200 --> 00:17:40.800 But the reality that for most of us entrepreneurs 508 00:17:40.800 --> 00:17:42.000 Like we don't have all the answers 509 00:17:42.000 --> 00:17:43.040 Like we have a lot of answers 510 00:17:43.040 --> 00:17:44.400 But we don't have them all 511 00:17:44.400 --> 00:17:46.080 And I think that seeing how he did that 512 00:17:46.080 --> 00:17:48.160 Going from 100 million to a billion dollars year 513 00:17:48.160 --> 00:17:49.040 And that he was like 514 00:17:49.040 --> 00:17:49.920 It's luck 515 00:17:49.920 --> 00:17:52.240 And it was basically incentivizing a lot of people 516 00:17:52.240 --> 00:17:53.280 And it was growing the pie 517 00:17:53.280 --> 00:17:55.600 It was making other people wealthy 518 00:17:55.600 --> 00:17:57.840 And allowing you to participate 519 00:17:57.840 --> 00:17:59.920 In their creation of their own wealth 520 00:17:59.920 --> 00:18:01.040 And I think that makes a lot of sense 521 00:18:01.040 --> 00:18:02.080 Because the drive 522 00:18:02.800 --> 00:18:04.000 I will say personally 523 00:18:04.000 --> 00:18:05.840 As an entrepreneur to make more money 524 00:18:07.040 --> 00:18:08.080 After a certain point 525 00:18:08.080 --> 00:18:09.840 At least for me in my current chapter 526 00:18:09.840 --> 00:18:12.240 Has diminished significantly 527 00:18:12.240 --> 00:18:14.880 And my desire has shifted far more to 528 00:18:15.680 --> 00:18:16.880 Making things like this 529 00:18:16.880 --> 00:18:17.920 And helping other people out 530 00:18:17.920 --> 00:18:19.680 Because I think the world needs it 531 00:18:19.680 --> 00:18:20.160 So 532 00:18:20.960 --> 00:18:22.480 I think that the reason that his company 533 00:18:22.480 --> 00:18:23.200 Was able to grow 534 00:18:23.200 --> 00:18:24.480 And this is just from my perspective 535 00:18:24.480 --> 00:18:26.080 Is that all these other people 536 00:18:26.080 --> 00:18:27.840 Were getting their kind of first nut 537 00:18:27.840 --> 00:18:29.280 For lack of better term 538 00:18:29.280 --> 00:18:32.000 And he was able to capitalize on them 539 00:18:32.000 --> 00:18:33.680 Getting their, you know, 540 00:18:33.680 --> 00:18:35.200 Driving so hard 541 00:18:35.920 --> 00:18:38.400 Because he was able to give them that incentive 542 00:18:38.400 --> 00:18:39.200 To do so 543 00:18:39.200 --> 00:18:42.000 And so hearing him say that was really cool for me 544 00:18:42.800 --> 00:18:44.720 And I think that for me as an entrepreneur 545 00:18:44.720 --> 00:18:46.320 Hearing that it was much more like 546 00:18:46.320 --> 00:18:48.080 Well the way to go forward 547 00:18:48.080 --> 00:18:49.520 Is really finding the superstars 548 00:18:49.600 --> 00:18:50.800 Putting them in the right places 549 00:18:50.800 --> 00:18:51.840 Giving them incentive 550 00:18:51.840 --> 00:18:53.040 Not being greedy 551 00:18:53.040 --> 00:18:55.600 And being humble enough to accept 552 00:18:55.600 --> 00:18:56.800 That we don't have all the answers 553 00:18:56.800 --> 00:18:57.360 And so 554 00:18:57.360 --> 00:18:59.120 Anyways I hope this private conversation 555 00:18:59.120 --> 00:19:00.480 With a billion dollar year revenue 556 00:19:01.440 --> 00:19:02.160 This was revenue 557 00:19:02.160 --> 00:19:03.600 Right what Cash collected 558 00:19:03.600 --> 00:19:04.480 Per year 559 00:19:04.480 --> 00:19:05.920 Entrepreneur had to share 560 00:19:05.920 --> 00:19:06.800 About his investments 561 00:19:06.800 --> 00:19:08.480 About how he saw business in general 562 00:19:08.480 --> 00:19:10.480 About how he thought profits were unnatural 563 00:19:10.480 --> 00:19:11.520 And I hope you found value in this 564 00:19:11.520 --> 00:19:12.640 Because I 565 00:19:12.640 --> 00:19:13.520 I definitely did 566 00:19:13.520 --> 00:19:14.800 And I hope you did the same 567 00:19:14.800 --> 00:19:15.600 So if you like this 568 00:19:15.600 --> 00:19:16.560 Hit subscribe 569 00:19:16.560 --> 00:19:17.920 And I'll see you next time