WEBVTT 1 00:00:00.000 --> 00:00:04.000 Just let's do more work, but you have to in order to grow. 2 00:00:04.000 --> 00:00:06.240 So either you work overtime or you bring someone else 3 00:00:06.240 --> 00:00:08.640 in to work overtime or you do both, 4 00:00:08.640 --> 00:00:09.880 which is what I recommend. 5 00:00:09.880 --> 00:00:11.360 And that means it's going to be hard, 6 00:00:11.360 --> 00:00:13.400 which is why most people stay stuck. 7 00:00:16.400 --> 00:00:19.880 I wanted to make a video about five business lessons 8 00:00:19.880 --> 00:00:23.280 that I just learned, crossing 250 million in 2024. 9 00:00:23.280 --> 00:00:25.960 And I wanted to make this because like, 10 00:00:25.960 --> 00:00:27.560 I think at all levels you're always growing. 11 00:00:27.560 --> 00:00:29.560 Like when I was at $1 million a year, 12 00:00:30.400 --> 00:00:32.240 I had a certain amount of lessons that I had to learn. 13 00:00:32.240 --> 00:00:33.040 And I think it's a 10 million, 14 00:00:33.040 --> 00:00:34.200 there's certain lessons I had to learn. 15 00:00:34.200 --> 00:00:35.520 A hundred million, there's certain lessons I had to learn. 16 00:00:35.520 --> 00:00:38.000 This last year, there's five lessons that are outside new, 17 00:00:38.000 --> 00:00:39.880 but would have applied kind of retroactively 18 00:00:39.880 --> 00:00:42.720 to all stages of business growth for me. 19 00:00:42.720 --> 00:00:45.200 So the first one was the cost of change. 20 00:00:45.200 --> 00:00:47.520 And so it's like, what does that really mean? 21 00:00:47.520 --> 00:00:50.080 So it's the first time that I've actually quantified 22 00:00:50.080 --> 00:00:53.760 how much is changing something in the business actually cost? 23 00:00:53.760 --> 00:00:56.480 So if you would imagine a straight line, right? 24 00:00:56.480 --> 00:00:59.280 It's saying, okay, this is normal business activity, right? 25 00:00:59.320 --> 00:01:01.080 Straight line is going across. 26 00:01:01.080 --> 00:01:03.680 Now, let's imagine we want to change something, right? 27 00:01:03.680 --> 00:01:05.200 So that's like our normal revenue, 28 00:01:05.200 --> 00:01:06.360 but then we decide, you know what, 29 00:01:06.360 --> 00:01:08.200 I'm gonna change something in the business. 30 00:01:08.200 --> 00:01:11.640 So what ends up happening is this little line kind of dips down. 31 00:01:11.640 --> 00:01:13.640 And I've estimated just for my kind of like, 32 00:01:13.640 --> 00:01:15.280 this is again, there's no science behind this, 33 00:01:15.280 --> 00:01:18.520 just my estimate, that I get about a 20% decrease 34 00:01:18.520 --> 00:01:22.320 in effectiveness across any function that I'm going to change, 35 00:01:22.320 --> 00:01:23.480 especially if it's manual. 36 00:01:23.480 --> 00:01:25.120 Now, if you split this a headline that's different, 37 00:01:25.120 --> 00:01:27.240 but if you're like, hey, we're changing our onboarding process 38 00:01:27.240 --> 00:01:29.040 or we're changing our sales process or we're changing our, 39 00:01:29.040 --> 00:01:30.600 our bound process or we're changing our, 40 00:01:30.600 --> 00:01:32.840 something that people are involved with, 41 00:01:32.840 --> 00:01:36.960 we tend to get a decrease immediately of 20% in performance, 42 00:01:36.960 --> 00:01:38.520 all right, which is pretty significant. 43 00:01:38.520 --> 00:01:41.960 As soon as I realized that we had almost as guaranteed cost 44 00:01:41.960 --> 00:01:43.960 of change, which is about 20%, 45 00:01:43.960 --> 00:01:47.120 I was able to quantify what things were worth doing. 46 00:01:47.120 --> 00:01:48.120 Because if you're anything like me, 47 00:01:48.120 --> 00:01:49.920 I have like this big list of stuff, 48 00:01:49.920 --> 00:01:51.400 where I'm like, man, we should need to improve this, 49 00:01:51.400 --> 00:01:52.680 we need to improve this, we need to improve this. 50 00:01:52.680 --> 00:01:53.600 And I have all these ideas of things 51 00:01:53.600 --> 00:01:54.880 that I think that don't improve it. 52 00:01:54.880 --> 00:01:57.160 But when I actually am honest with myself, 53 00:01:57.240 --> 00:01:59.320 when I think, huh, how much is number one 54 00:01:59.320 --> 00:02:01.320 going to actually improve the business? 55 00:02:01.320 --> 00:02:04.240 If I say, well, I think I maybe get us a 5% improvement, 56 00:02:04.240 --> 00:02:07.200 well, if I have a guaranteed 20% decrease 57 00:02:07.200 --> 00:02:08.960 or a decrement in performance 58 00:02:08.960 --> 00:02:12.560 and I have a 5% incremental increase in performance, 59 00:02:12.560 --> 00:02:15.560 do I want to take a 20% guaranteed loss 60 00:02:15.560 --> 00:02:18.360 to have a potential for a 5% gain? 61 00:02:18.360 --> 00:02:19.680 Probably not. 62 00:02:19.680 --> 00:02:21.360 And so what's ended up happening is that 63 00:02:21.360 --> 00:02:24.040 there's all these little 5% improvements 64 00:02:24.040 --> 00:02:25.960 that I think could happen, 65 00:02:26.000 --> 00:02:30.680 but there's only like one or two 20, 30, 50% plus improvements 66 00:02:30.680 --> 00:02:32.040 I think we can do in the business. 67 00:02:32.040 --> 00:02:35.000 Some of these things I just choose to never do. 68 00:02:35.000 --> 00:02:36.480 And I'll try not to stay explicit here, 69 00:02:36.480 --> 00:02:39.320 but this is what reminds me of this concept, 70 00:02:39.320 --> 00:02:42.120 which is that some shit stays fucked. 71 00:02:42.120 --> 00:02:44.640 You just have to accept that the business will not be perfect, 72 00:02:44.640 --> 00:02:45.880 but your chase of perfection 73 00:02:45.880 --> 00:02:48.080 will actually make your current business worse 74 00:02:48.080 --> 00:02:49.440 because you're constantly changing things. 75 00:02:49.440 --> 00:02:51.560 But let me, let me spell this out one more level. 76 00:02:51.560 --> 00:02:53.520 So let's say you have your 20% loss. 77 00:02:53.520 --> 00:02:55.600 Now, let's say you do something that is good, 78 00:02:55.600 --> 00:02:56.680 you start going up, right? 79 00:02:56.680 --> 00:02:58.720 20% loss, the start's going back up. 80 00:02:58.720 --> 00:03:01.360 But what happens if you at the same time say, 81 00:03:01.360 --> 00:03:04.320 oh, well, now I'm going to start changing something else? 82 00:03:04.320 --> 00:03:07.920 Basically, you incur this permanent 20% decrease 83 00:03:07.920 --> 00:03:09.720 because you're always changing something, 84 00:03:09.720 --> 00:03:12.040 so you're always 20% below where you should be in the business. 85 00:03:12.040 --> 00:03:13.200 20% is a lot. 86 00:03:13.200 --> 00:03:14.560 Oftentimes in the business, 87 00:03:14.560 --> 00:03:16.080 my business has done exceptionally well 88 00:03:16.080 --> 00:03:17.960 and I just let them breathe 89 00:03:17.960 --> 00:03:20.360 because here's the other part that no one tells you. 90 00:03:20.360 --> 00:03:21.920 If you change nothing, 91 00:03:21.920 --> 00:03:24.000 you get about a 5% guaranteed improvement. 92 00:03:24.920 --> 00:03:25.920 Think about crazy that is, 93 00:03:25.920 --> 00:03:28.120 if you change nothing, you just, 94 00:03:28.120 --> 00:03:31.480 pop up up up up up up up, 5%, you can book it. 95 00:03:31.480 --> 00:03:32.600 Think about GDP. 96 00:03:32.600 --> 00:03:33.440 Partially something we're like, 97 00:03:33.440 --> 00:03:35.160 oh, that must be in relation to education, 98 00:03:35.160 --> 00:03:36.840 which in the US, it certainly isn't. 99 00:03:36.840 --> 00:03:38.320 It could be in relation to technology 100 00:03:38.320 --> 00:03:39.520 in terms of GDP improvement 101 00:03:39.520 --> 00:03:41.560 or it could be an increase because of population, 102 00:03:41.560 --> 00:03:43.680 which in the US, there's no population increase or not really. 103 00:03:43.680 --> 00:03:45.880 For me, I just kind of see that across all businesses 104 00:03:45.880 --> 00:03:47.280 that if you just let people do stuff, 105 00:03:47.280 --> 00:03:48.520 they just get better at it, right? 106 00:03:48.520 --> 00:03:49.680 People get more efficient at it. 107 00:03:49.680 --> 00:03:51.240 I'll leave you one tactical framework 108 00:03:51.240 --> 00:03:53.240 that you can kind of use to think through this, 109 00:03:53.240 --> 00:03:55.480 which is, this is actually from the investing world 110 00:03:55.480 --> 00:03:57.080 that I borrowed as an entrepreneur, 111 00:03:57.080 --> 00:03:58.680 which is called ICE, all right? 112 00:03:58.680 --> 00:03:59.880 And so it's an acronym, 113 00:03:59.880 --> 00:04:02.400 I stands for Impact, which is like, 114 00:04:02.400 --> 00:04:05.080 how big, that's that 20%, that's that 50%. 115 00:04:05.080 --> 00:04:06.240 How big of an impact 116 00:04:06.240 --> 00:04:07.800 what I think this is gonna make on the business, right? 117 00:04:07.800 --> 00:04:10.360 If I had to make, like, if this works, it's gonna do this. 118 00:04:10.360 --> 00:04:12.680 The second is, well, how confident am I 119 00:04:12.680 --> 00:04:13.520 that it's going to work? 120 00:04:13.520 --> 00:04:16.440 That's the C, which is, what's my confidence level? 121 00:04:17.640 --> 00:04:19.520 So I got this big thing with low confidence 122 00:04:19.520 --> 00:04:21.680 or this medium thing with high confidence, 123 00:04:21.680 --> 00:04:23.200 I'll probably take medium with high confidence. 124 00:04:23.240 --> 00:04:24.840 And then the third is ease, 125 00:04:24.840 --> 00:04:26.560 which is gonna come into a combination of, 126 00:04:26.560 --> 00:04:28.920 how many resources are we gonna have to deploy to do this, 127 00:04:28.920 --> 00:04:30.440 and also what's the timeline 128 00:04:30.440 --> 00:04:31.680 that we're gonna have to do this on? 129 00:04:31.680 --> 00:04:33.440 Impact, confidence, ease. 130 00:04:33.440 --> 00:04:35.120 And so we'd actually do this. 131 00:04:35.120 --> 00:04:38.240 Like, I have this massive sheet that it's called growth, 132 00:04:38.240 --> 00:04:39.440 and I have it in all caps, 133 00:04:39.440 --> 00:04:42.240 this is how I like, how I get my ADD out, 134 00:04:42.240 --> 00:04:43.680 is I put it all on this list, 135 00:04:43.680 --> 00:04:45.640 which would probably be the second big tactic, 136 00:04:45.640 --> 00:04:48.520 is that I have every big idea that I wanna try, 137 00:04:48.520 --> 00:04:50.280 and I have to let get it out and spell it out 138 00:04:50.280 --> 00:04:51.760 and say all the things that I wanna do, 139 00:04:51.760 --> 00:04:53.000 and I just put it somewhere, 140 00:04:53.000 --> 00:04:55.440 because the team can't handle the amount of ideas that I have, 141 00:04:55.440 --> 00:04:57.280 and probably your team can't either. 142 00:04:57.280 --> 00:04:59.440 You have to just like scratch that itch in some way. 143 00:04:59.440 --> 00:05:01.480 I do it by documenting, so I don't forget it, 144 00:05:01.480 --> 00:05:03.360 and then whenever the team has more bandwidth, 145 00:05:03.360 --> 00:05:05.200 I go back to that list and I'm like, 146 00:05:05.200 --> 00:05:06.640 all right, let's order this, 147 00:05:06.640 --> 00:05:07.920 which one has the highest impact, 148 00:05:07.920 --> 00:05:09.240 which one do we think's gonna work, 149 00:05:09.240 --> 00:05:10.640 which one's gonna be the easiest, 150 00:05:10.640 --> 00:05:12.320 we tabulate those together and we're like, 151 00:05:12.320 --> 00:05:14.680 okay, this is the one that we're gonna try. 152 00:05:14.680 --> 00:05:19.200 This one we know has a 30% shot or 50% chance increase. 153 00:05:19.200 --> 00:05:20.960 That's basically thing number one, 154 00:05:20.960 --> 00:05:23.320 and it has, I've tried to teach this down our portfolio, 155 00:05:23.320 --> 00:05:25.920 and also what we do at Acquisition.com is that, 156 00:05:25.920 --> 00:05:30.920 you just need to be willing to leave some things not perfect 157 00:05:31.320 --> 00:05:32.960 so that the business can occur 158 00:05:32.960 --> 00:05:35.360 as few guaranteed costs of change, 159 00:05:35.360 --> 00:05:37.240 and when you are gonna make a change, 160 00:05:37.240 --> 00:05:38.760 make sure it's worth it. 161 00:05:38.760 --> 00:05:41.480 So so far, number one, we cover the cost of change, right? 162 00:05:41.480 --> 00:05:45.600 So this is making sure that you are only taking bets 163 00:05:45.600 --> 00:05:49.880 that have 20% or higher upside 164 00:05:49.880 --> 00:05:53.200 to be worth the guaranteed cost that you're going to incur. 165 00:05:53.200 --> 00:05:56.240 And the framework that I use is ice impact confidates, 166 00:05:56.240 --> 00:05:57.120 all right, so that's number one. 167 00:05:57.120 --> 00:05:59.960 So the second thing is I used to have this idea 168 00:05:59.960 --> 00:06:01.360 about the virality of products. 169 00:06:01.360 --> 00:06:02.840 So I've talked a lot about referrals, 170 00:06:02.840 --> 00:06:03.920 talked a lot about word of mouth, 171 00:06:03.920 --> 00:06:06.360 and I still obviously believe in that. 172 00:06:06.360 --> 00:06:08.920 But I would say that I've had this big pendulum swinging, 173 00:06:08.920 --> 00:06:10.840 the very beginning of my career, 174 00:06:10.840 --> 00:06:12.520 and especially if you're, you know, seven million, 175 00:06:12.520 --> 00:06:13.520 you just gotta promote, right? 176 00:06:13.520 --> 00:06:14.680 You just gotta let people know about your stuff, 177 00:06:14.680 --> 00:06:16.160 no one knows you exist, you gotta advertise, right? 178 00:06:16.160 --> 00:06:17.240 You gotta learn how to sell. 179 00:06:17.240 --> 00:06:18.440 Cool, that's zero to a million, 180 00:06:18.440 --> 00:06:19.960 no questions asked, that's what it is. 181 00:06:19.960 --> 00:06:21.960 Now, to expand beyond that, I was like, okay, 182 00:06:21.960 --> 00:06:23.480 we kinda pendulum swinging back to, 183 00:06:23.480 --> 00:06:25.520 like we gotta make it super viral, right? 184 00:06:25.520 --> 00:06:28.560 Word of mouth is the best way to grow business. 185 00:06:28.560 --> 00:06:30.920 But I've thought more and more about this, 186 00:06:30.920 --> 00:06:33.960 and I think that it's an it depends answer. 187 00:06:33.960 --> 00:06:37.160 Now, there are some products that you want for sure 188 00:06:37.160 --> 00:06:38.960 to have people who buy and then buy again, 189 00:06:38.960 --> 00:06:41.240 that you want them to reoccur with you 190 00:06:41.240 --> 00:06:43.160 as in like a buy, buy a cool product. 191 00:06:43.160 --> 00:06:45.080 I might buy, you know, a can today, 192 00:06:45.080 --> 00:06:47.360 and I might buy a candidate restaurant later this week. 193 00:06:47.360 --> 00:06:48.800 And so it's like, am I on a subscription? 194 00:06:48.800 --> 00:06:51.080 No, but I buy again and again and again, right? 195 00:06:51.080 --> 00:06:52.480 Or you have, you know, your internet, 196 00:06:52.480 --> 00:06:54.040 which you just never cancel out of, right? 197 00:06:54.040 --> 00:06:55.680 Either those are things that are recurring 198 00:06:55.680 --> 00:06:57.880 if high revenue retention. 199 00:06:57.880 --> 00:07:00.640 But that is different than virality, right? 200 00:07:00.640 --> 00:07:01.480 That's very different. 201 00:07:01.480 --> 00:07:04.120 So on one level, you have does it stick. 202 00:07:04.120 --> 00:07:06.480 On the other level, you have do people share it 203 00:07:06.480 --> 00:07:07.320 with other people. 204 00:07:07.320 --> 00:07:08.800 This is the nuance of understanding 205 00:07:08.800 --> 00:07:10.120 that's kind of shifted for me this year, 206 00:07:10.120 --> 00:07:13.960 which is that some companies, like especially B2B, 207 00:07:14.880 --> 00:07:17.720 there's sometimes disincentives for a customer 208 00:07:17.720 --> 00:07:19.880 to bring in a competitor of theirs, right? 209 00:07:19.880 --> 00:07:22.560 If you service two types of similar businesses, 210 00:07:22.560 --> 00:07:24.800 they have literally a disincentive to tell people about it. 211 00:07:24.800 --> 00:07:26.080 Like they don't want anyone to know 212 00:07:26.080 --> 00:07:27.880 how you're helping them in whatever way, right? 213 00:07:27.880 --> 00:07:30.400 So that's kind of like thing number one. 214 00:07:30.400 --> 00:07:32.400 So it's like you have like a negative pressure 215 00:07:32.400 --> 00:07:33.520 on word of mouth. 216 00:07:33.520 --> 00:07:36.680 The second issue is that not even if you didn't have 217 00:07:36.680 --> 00:07:38.240 negative pressure on word of mouth, 218 00:07:38.240 --> 00:07:40.200 there has to be some sort of density 219 00:07:40.200 --> 00:07:42.800 in terms of the frequency of communication 220 00:07:42.800 --> 00:07:46.240 that your customers have with other potential customers. 221 00:07:46.240 --> 00:07:49.360 So if I've got a guy who runs a metal shop 222 00:07:49.360 --> 00:07:51.280 that specializes in arrow tech, 223 00:07:51.280 --> 00:07:54.080 for that guy to have very frequent communication 224 00:07:54.080 --> 00:07:55.760 with other arrow tech companies 225 00:07:55.760 --> 00:07:58.640 that might use my software, my internal tech, 226 00:07:58.640 --> 00:08:00.280 or whatever it is that I help them with, 227 00:08:00.280 --> 00:08:01.920 why is he going to be talking to competitors 228 00:08:01.920 --> 00:08:03.240 and if he is talking to competitors, 229 00:08:03.240 --> 00:08:04.800 like why would he want to share all my stuff? 230 00:08:04.800 --> 00:08:07.560 You can understand why sometimes it's not about word of mouth. 231 00:08:07.560 --> 00:08:09.960 And this is just a nuance of understanding that I would think 232 00:08:09.960 --> 00:08:11.760 as kind of my belief set is broken, 233 00:08:11.840 --> 00:08:14.440 I was very hardcore and like everything can grow 234 00:08:14.440 --> 00:08:15.800 on a word of mouth period. 235 00:08:15.800 --> 00:08:17.400 That's just not always the case. 236 00:08:17.400 --> 00:08:21.120 The gold standard should absolutely be revenue retention. 237 00:08:21.120 --> 00:08:22.400 Bar none, full stop. 238 00:08:22.400 --> 00:08:23.840 And I can say that with absolute confidence, 239 00:08:23.840 --> 00:08:25.320 no matter what business you're in if you're B2B, 240 00:08:25.320 --> 00:08:27.800 you're B2C, you want to be able to get recurring 241 00:08:27.800 --> 00:08:29.200 or reoccurring revenue. 242 00:08:30.200 --> 00:08:33.000 But the virality typically is going to be more 243 00:08:33.000 --> 00:08:33.960 on the consumer side. 244 00:08:33.960 --> 00:08:35.480 So if you have a really good soda, 245 00:08:35.480 --> 00:08:37.160 you as a customer is not like, 246 00:08:37.160 --> 00:08:38.280 oh, I don't want to tell my friend 247 00:08:38.280 --> 00:08:39.320 that the soda is really good. 248 00:08:39.320 --> 00:08:40.840 Yeah, I've got this shirt, it finally fits me. 249 00:08:40.840 --> 00:08:43.560 Cool, well, do I know other guys who are built more like me? 250 00:08:43.560 --> 00:08:45.960 Yes, do I have high frequency of communication with them? 251 00:08:45.960 --> 00:08:47.760 At least digitally, yes, okay, cool. 252 00:08:47.760 --> 00:08:48.680 So I'm going to have, 253 00:08:48.680 --> 00:08:50.840 there's some viral kind of coefficient there that goes in. 254 00:08:50.840 --> 00:08:52.680 And that applies to also consumer brands 255 00:08:52.680 --> 00:08:53.520 that are not tech. 256 00:08:53.520 --> 00:08:54.760 I want to be really clear about that. 257 00:08:54.760 --> 00:08:57.160 Like for those of you who have the drop-shipping e-commerce, 258 00:08:57.160 --> 00:08:58.440 retail products, it's like, 259 00:08:58.440 --> 00:09:00.760 you still absolutely need to have word of mouth 260 00:09:00.760 --> 00:09:01.840 that grows the business. 261 00:09:01.840 --> 00:09:03.200 There are just some businesses 262 00:09:03.200 --> 00:09:04.560 that are just never going to have that. 263 00:09:04.560 --> 00:09:07.200 And for everybody, you want to retain. 264 00:09:07.200 --> 00:09:08.440 So that was lesson number two. 265 00:09:08.440 --> 00:09:10.240 From a tactical perspective for that lesson, 266 00:09:10.240 --> 00:09:11.800 the big thing I would just want to measure 267 00:09:11.800 --> 00:09:13.920 is what percentage of customers that I have 268 00:09:13.920 --> 00:09:15.400 at the beginning of this year 269 00:09:15.400 --> 00:09:17.920 that 12 months later are still buying for me. 270 00:09:17.920 --> 00:09:19.520 That's the metric that we look at. 271 00:09:19.520 --> 00:09:21.840 We have a hundred customers at the beginning of the year. 272 00:09:21.840 --> 00:09:22.680 And at the end of the year, 273 00:09:22.680 --> 00:09:24.640 50 of those people are still buying. 274 00:09:24.640 --> 00:09:27.680 So this is day zero or Jan one, whatever. 275 00:09:27.680 --> 00:09:30.680 Jan one and then December 31. 276 00:09:31.720 --> 00:09:33.040 How many of them are still buying? 277 00:09:33.040 --> 00:09:34.880 If I have 50 versus 100, 278 00:09:34.880 --> 00:09:37.440 then I have 50% revenue retention. 279 00:09:37.440 --> 00:09:39.040 Now, you can have logo retention, 280 00:09:39.040 --> 00:09:40.840 which is a second nuance of this. 281 00:09:40.840 --> 00:09:43.440 Logo retention is of the 100 customers. 282 00:09:43.440 --> 00:09:45.520 Do I have 50 customers? 283 00:09:45.520 --> 00:09:48.680 Or did I go from 100 customers to 25 customers? 284 00:09:48.680 --> 00:09:50.800 But those 25 customers really like me 285 00:09:50.800 --> 00:09:52.880 and they now spend twice as much. 286 00:09:52.880 --> 00:09:54.200 So that's the difference between revenue retention 287 00:09:54.200 --> 00:09:55.160 and logo retention. 288 00:09:55.160 --> 00:09:56.560 For me, we look at revenue retention 289 00:09:56.560 --> 00:09:57.480 because that's what we care about. 290 00:09:57.480 --> 00:09:59.880 It's like, okay, if we just know that these 50, 291 00:09:59.880 --> 00:10:02.040 now that they're in are just going to keep paying 292 00:10:02.040 --> 00:10:04.680 and potentially even growing between 50 to 100 next year, 293 00:10:04.680 --> 00:10:06.040 this is a monster business. 294 00:10:06.040 --> 00:10:06.880 This is what we look at 295 00:10:06.880 --> 00:10:09.280 and we obsess over in any business that we invest in. 296 00:10:09.280 --> 00:10:12.560 Number two is making sure that the highest priority 297 00:10:12.560 --> 00:10:15.040 for the business is going to be revenue retention, 298 00:10:15.040 --> 00:10:16.680 not necessarily virality 299 00:10:16.680 --> 00:10:19.640 because not all products are meant to be viral. 300 00:10:19.640 --> 00:10:23.120 But if you are in a business that is consumer focused 301 00:10:23.120 --> 00:10:24.880 or something that doesn't have one 302 00:10:24.880 --> 00:10:28.640 a disincentive to share and a high frequency 303 00:10:28.640 --> 00:10:31.480 of interactions between your customers with one another, 304 00:10:31.480 --> 00:10:33.280 people who have basically high overlaps 305 00:10:33.280 --> 00:10:34.320 so they talk to lots of people 306 00:10:34.320 --> 00:10:35.800 who could potentially buy a product. 307 00:10:35.800 --> 00:10:38.360 If these two things are, you have a high disincentive 308 00:10:38.360 --> 00:10:39.760 and you have low frequency, 309 00:10:39.760 --> 00:10:41.600 then you're just not going to have virality in the product 310 00:10:41.600 --> 00:10:42.840 and you don't have to worry about it. 311 00:10:42.840 --> 00:10:45.360 But if you do, then obviously you want to have both. 312 00:10:45.360 --> 00:10:47.200 Number three, I've been very obsessed 313 00:10:47.200 --> 00:10:48.800 with the concept of LGBTQ to CAC. 314 00:10:48.800 --> 00:10:49.760 I've talked about it a lot, 315 00:10:49.760 --> 00:10:52.160 which is basically how much does it cost you to customer? 316 00:10:52.160 --> 00:10:55.280 Versus how much money you get from that customer 317 00:10:55.280 --> 00:10:57.320 over the lifespan, specifically in gross profit, 318 00:10:57.320 --> 00:10:58.960 not lifetime revenue. 319 00:10:58.960 --> 00:11:00.840 Now the reason I like to always delineate this 320 00:11:00.840 --> 00:11:03.560 and I say LTGP, which is a mouthful, 321 00:11:03.560 --> 00:11:06.680 is because most of the literature that exists on LTV, 322 00:11:06.680 --> 00:11:07.880 so lifetime value for a customer, 323 00:11:07.880 --> 00:11:10.360 how much they pay you in gross profit over time, 324 00:11:10.360 --> 00:11:12.200 is typically written in the software world 325 00:11:12.200 --> 00:11:15.040 and software tends to be virtually 100% gross margins 326 00:11:15.040 --> 00:11:16.040 in most businesses. 327 00:11:16.040 --> 00:11:18.120 Many businesses look at that literature and then say, 328 00:11:18.120 --> 00:11:20.360 oh, well, let me just say someone stays with me 329 00:11:20.360 --> 00:11:22.040 for 10 months, they pay $100 a month, 330 00:11:22.040 --> 00:11:24.840 therefore my lifetime value is $1,000. 331 00:11:24.840 --> 00:11:27.320 Well, that's only true if you sell information, 332 00:11:27.320 --> 00:11:28.320 media or software, 333 00:11:28.320 --> 00:11:30.120 something has zero incremental cost. 334 00:11:30.120 --> 00:11:31.880 But a lot of businesses don't have that. 335 00:11:31.880 --> 00:11:34.000 If you sell chocolate chip cookies 336 00:11:34.000 --> 00:11:37.960 and the cookies cost you $20 for each of those $100 shipments, 337 00:11:37.960 --> 00:11:39.120 I mean, these are expensive cookies, 338 00:11:39.120 --> 00:11:39.960 but let's just go with that. 339 00:11:39.960 --> 00:11:42.200 So this costs you 20 bucks for every $100 shipment. 340 00:11:42.200 --> 00:11:45.720 Your lifetime value is not $1,000, 341 00:11:45.720 --> 00:11:48.680 so we have our 100 bucks, right? 342 00:11:48.680 --> 00:11:51.960 Times 10 months, that's the revenue. 343 00:11:51.960 --> 00:11:54.280 What we're looking at is $80, 344 00:11:54.280 --> 00:11:56.440 because we have to take out the 20 and cost 345 00:11:56.440 --> 00:12:01.080 times the 10 months, which actually equals $800, 346 00:12:01.080 --> 00:12:04.080 which is our real lifetime gross profit, 347 00:12:04.080 --> 00:12:05.600 which in the business world, 348 00:12:05.600 --> 00:12:08.520 sometimes people refer to as CLV or LTV, 349 00:12:08.520 --> 00:12:09.920 they all more or less mean the same thing, 350 00:12:09.920 --> 00:12:11.320 which is how much money you're gonna get from the customer. 351 00:12:11.320 --> 00:12:14.960 Now, I put this as a frame for the big lesson that I had, 352 00:12:14.960 --> 00:12:16.600 which is in the software world, 353 00:12:16.600 --> 00:12:18.760 the big rule of thumb is three to one. 354 00:12:19.640 --> 00:12:21.040 That's the big rule of thumb. 355 00:12:21.040 --> 00:12:23.520 I actually now have worked with a lot of different businesses 356 00:12:23.520 --> 00:12:24.720 and invested different businesses. 357 00:12:24.720 --> 00:12:27.320 I think there's nuance to it, so let me explain. 358 00:12:27.320 --> 00:12:28.800 This is actually pretty cool. 359 00:12:28.840 --> 00:12:31.040 So there's three components to a business 360 00:12:31.040 --> 00:12:32.920 that I think influence that number. 361 00:12:32.920 --> 00:12:35.000 So you have the attraction component, 362 00:12:35.000 --> 00:12:37.680 which is the advertising, how are we advertising, 363 00:12:37.680 --> 00:12:38.800 how are we getting people in, 364 00:12:38.800 --> 00:12:41.000 how are we letting them know, how are we generating leads, 365 00:12:41.000 --> 00:12:42.280 then we have the conversion, 366 00:12:42.280 --> 00:12:45.440 whatever your sales motion is, right, sales. 367 00:12:45.440 --> 00:12:47.480 And then finally, you've got delivery, right, 368 00:12:47.480 --> 00:12:49.120 or fulfillment, how are we gonna get people, 369 00:12:49.120 --> 00:12:51.520 whatever they choose to pay for, right? 370 00:12:51.520 --> 00:12:54.440 So if we have these kind of three functions, 371 00:12:54.440 --> 00:12:59.240 the extent to which you need to have high LCV to CAC 372 00:12:59.240 --> 00:13:03.200 is predicated on how manual each of these processes is. 373 00:13:03.200 --> 00:13:04.520 So let me explain. 374 00:13:04.520 --> 00:13:06.240 If you have paid ads, 375 00:13:06.240 --> 00:13:08.800 which I would consider very high leverage, 376 00:13:08.800 --> 00:13:11.080 and very like one person could run a gazillion dollars 377 00:13:11.080 --> 00:13:13.000 of paid ads, high leverage, cool. 378 00:13:13.000 --> 00:13:14.180 That's number one. 379 00:13:14.180 --> 00:13:17.320 If we had a conversion process that's through a checkout page 380 00:13:17.320 --> 00:13:19.720 that's automated, then that's gonna be something else 381 00:13:19.720 --> 00:13:21.600 that's gonna give us leverage, okay? 382 00:13:21.600 --> 00:13:23.640 And then third is let's say that we have software 383 00:13:23.640 --> 00:13:24.920 as our backend that has unlimited, 384 00:13:24.920 --> 00:13:26.560 like we have no supply limitations, 385 00:13:26.560 --> 00:13:27.800 there's no logistics limitations, 386 00:13:27.800 --> 00:13:29.480 and pretty much it just works. 387 00:13:29.480 --> 00:13:31.240 If you're in one of those businesses, 388 00:13:31.240 --> 00:13:35.320 then you absolutely can be at three to one LCV to CAC 389 00:13:35.320 --> 00:13:36.000 over the long haul. 390 00:13:36.000 --> 00:13:38.200 Fine, you can even be at 1.5 to one. 391 00:13:38.200 --> 00:13:39.560 I mean, it wouldn't be ideal, 392 00:13:39.560 --> 00:13:41.360 but depending on the size and scale, 393 00:13:41.360 --> 00:13:42.680 you could still make money doing it, 394 00:13:42.680 --> 00:13:44.160 put a hundred dollars in, get 150 back, 395 00:13:44.160 --> 00:13:45.080 do it over and over again. 396 00:13:45.080 --> 00:13:46.720 If that's only true for them, 397 00:13:46.720 --> 00:13:48.440 what is it for a construction business? 398 00:13:48.440 --> 00:13:50.760 What is it for a plumbing company? 399 00:13:50.760 --> 00:13:52.320 What is it for any commerce business? 400 00:13:52.320 --> 00:13:54.480 The other experiments, I'm gonna just paint the extremes 401 00:13:54.480 --> 00:13:56.120 and you can kind of understand the middle. 402 00:13:56.120 --> 00:13:58.040 If I had, instead of paid ads, 403 00:13:58.040 --> 00:14:03.040 I had manual outbound, so outreach, 404 00:14:03.040 --> 00:14:03.960 or whatever you wanna call it, 405 00:14:03.960 --> 00:14:06.160 outreach reaching out to people one-on-one with a team, 406 00:14:06.160 --> 00:14:07.720 and then from a conversion process, 407 00:14:07.720 --> 00:14:09.360 I've got one-on-one sales, 408 00:14:10.600 --> 00:14:12.120 and then from a delivery process, 409 00:14:12.120 --> 00:14:13.840 I've got, call it, you know, 410 00:14:13.840 --> 00:14:16.240 concierge, one-on-one, 411 00:14:16.240 --> 00:14:19.240 or even many-to-one services, 412 00:14:19.240 --> 00:14:21.720 then I'm gonna want an LCV to CAC ratio 413 00:14:21.720 --> 00:14:23.080 that's gonna reflect that. 414 00:14:23.080 --> 00:14:25.200 For me, if I had a business like this, 415 00:14:25.200 --> 00:14:26.880 and this is gonna shock some of you, 416 00:14:26.880 --> 00:14:28.760 but just bear with me. 417 00:14:28.760 --> 00:14:32.320 I'm gonna want this thing to be like 20-to-one or more. 418 00:14:32.320 --> 00:14:33.320 Now, some of you guys are like, 419 00:14:33.320 --> 00:14:35.200 there's no way it's impossible. 420 00:14:35.200 --> 00:14:37.160 I would say I've made the material, 421 00:14:37.160 --> 00:14:39.480 the vast majority of the material wealth in my life, 422 00:14:39.480 --> 00:14:42.920 at 30-to-one, or a higher. 423 00:14:42.920 --> 00:14:43.960 And I've done it multiple times, 424 00:14:43.960 --> 00:14:45.440 and during those periods of time, 425 00:14:45.440 --> 00:14:47.320 is when a lot of the, basically the wealth 426 00:14:47.320 --> 00:14:48.960 that I've accumulated has come in. 427 00:14:48.960 --> 00:14:50.600 But in the times in between, 428 00:14:50.640 --> 00:14:52.000 instead of trying to scale something 429 00:14:52.000 --> 00:14:54.480 that's at, you know, five to one or eight to one, 430 00:14:54.480 --> 00:14:56.000 I'm just gonna continue to tinker. 431 00:14:56.000 --> 00:14:57.920 I'm gonna start, I'm gonna stick with my one location, 432 00:14:57.920 --> 00:14:59.080 I'm gonna keep working on the model, 433 00:14:59.080 --> 00:15:00.320 and just keep tinkering with it, 434 00:15:00.320 --> 00:15:02.440 until eventually get the economics that we need 435 00:15:02.440 --> 00:15:03.520 in order to scale. 436 00:15:03.520 --> 00:15:06.000 What if I'm, you know, I'm doing paid ads, 437 00:15:06.000 --> 00:15:09.240 we do one-on-one sales, and we sell, you know, 438 00:15:09.240 --> 00:15:11.080 a media or information or something like that? 439 00:15:11.080 --> 00:15:13.800 Then it's like, then you're gonna be somewhere in between. 440 00:15:13.800 --> 00:15:17.560 Real quick, guys, I have a special, special gift for you, 441 00:15:17.560 --> 00:15:20.360 for being loyal listeners of the podcast. 442 00:15:20.360 --> 00:15:23.120 Layla and I spent probably an entire quarter 443 00:15:23.120 --> 00:15:25.760 putting together our scaling roadmap. 444 00:15:25.760 --> 00:15:29.040 It's breaking scaling into 10 stages, 445 00:15:29.040 --> 00:15:31.440 and across all eight functions of the business. 446 00:15:31.440 --> 00:15:32.840 So you've got marketing, you've got sales, 447 00:15:32.840 --> 00:15:34.640 you've got product, you've got customer success, 448 00:15:34.640 --> 00:15:36.440 you've got IT, you've got recruiting, 449 00:15:36.440 --> 00:15:37.920 you've got HR, you've got finance, 450 00:15:37.920 --> 00:15:40.600 and we show the problems that emerged at every level of scale, 451 00:15:40.600 --> 00:15:42.040 and how to graduate to the next level. 452 00:15:42.040 --> 00:15:45.560 It's all free, and you can get it personalized to you, 453 00:15:45.560 --> 00:15:48.120 since about 30-ish pages for each of the stages. 454 00:15:48.120 --> 00:15:49.160 Once you answer the questions, 455 00:15:49.160 --> 00:15:51.080 it will tell you exactly where you're at, 456 00:15:51.080 --> 00:15:53.120 and what you need to do to grow. 457 00:15:53.120 --> 00:15:56.040 It's about 14 hours of stuff, but it's narrowed down, 458 00:15:56.040 --> 00:15:58.240 so that you only have to watch the part that's relevant to you, 459 00:15:58.240 --> 00:15:59.880 which will probably be about 90 minutes. 460 00:15:59.880 --> 00:16:01.320 And so if that's at all interesting, 461 00:16:01.320 --> 00:16:04.360 you can go to acquisition.com forward slash roadmap, 462 00:16:04.360 --> 00:16:06.440 R-O-A-D-Map, roadmap. 463 00:16:08.840 --> 00:16:10.440 But I have this as my rule of thumb, 464 00:16:10.440 --> 00:16:13.920 is that the three to one only matters at the companies 465 00:16:13.920 --> 00:16:18.320 that have 100% scale, 100% leverage across all three components here. 466 00:16:18.320 --> 00:16:21.120 If you have manual costs all three, you're going to be at, 467 00:16:21.120 --> 00:16:22.960 I would at least want to be at 20 to one, 468 00:16:22.960 --> 00:16:25.840 I shoot for 30 plus, a lot of people can't even believe that, fine. 469 00:16:25.840 --> 00:16:28.520 So, you know, fit it to whatever your calls are. 470 00:16:28.520 --> 00:16:31.200 I really do believe that you can just keep tinkering with the business, 471 00:16:31.200 --> 00:16:33.560 keep tinkering the offer, and find a way to get it 472 00:16:33.560 --> 00:16:36.200 so that you can have a huge discrepancy between these two numbers, 473 00:16:36.200 --> 00:16:38.400 because that's what allows you to scale. 474 00:16:38.400 --> 00:16:40.680 If you want to scale a business that's more manual, 475 00:16:40.680 --> 00:16:43.280 oh, some of you guys are listening, 78% of business in America 476 00:16:43.280 --> 00:16:45.800 are service-based businesses, so this applies to you. 477 00:16:45.800 --> 00:16:47.640 As you go into colder and colder markets, 478 00:16:47.640 --> 00:16:49.320 you will convert a smaller percentage of customers. 479 00:16:49.320 --> 00:16:51.160 These are customers who are less likely to purchase from you, 480 00:16:51.160 --> 00:16:52.480 but you have a bigger pool of people, 481 00:16:52.480 --> 00:16:53.960 so that's kind of the trade-off. 482 00:16:53.960 --> 00:16:55.560 But when you go into those colder, colder markets, 483 00:16:55.560 --> 00:16:59.080 smaller percentage convert, meaning it costs you more to get those customers. 484 00:16:59.080 --> 00:17:00.520 Basically, you sell more people, 485 00:17:00.520 --> 00:17:02.840 you're going to have more infrastructure that has to get built into business. 486 00:17:02.840 --> 00:17:04.960 So you have layers of management that will start costing you 487 00:17:04.960 --> 00:17:06.560 and not necessarily always be alpha, 488 00:17:06.560 --> 00:17:07.680 that can be value additive. 489 00:17:07.680 --> 00:17:09.680 With these two things that are working against you, 490 00:17:09.680 --> 00:17:12.840 you have to have this very large discrepancy 491 00:17:12.840 --> 00:17:14.120 due to what it costs you to get a customer, 492 00:17:14.120 --> 00:17:15.400 and what you're going to make from that customer 493 00:17:15.400 --> 00:17:16.960 in order to weather that storm, 494 00:17:16.960 --> 00:17:18.720 and allow you to kind of grow into that shit. 495 00:17:18.720 --> 00:17:20.720 You can almost like grow into your LTVDCAC, 496 00:17:20.720 --> 00:17:22.120 which is kind of how I think about it. 497 00:17:22.120 --> 00:17:24.520 So if you're thinking about this for you, 498 00:17:24.520 --> 00:17:27.120 number one, know what your true LTVDCAC is, 499 00:17:27.120 --> 00:17:28.920 and make sure you're doing off-growth profit, 500 00:17:28.920 --> 00:17:31.000 not off of revenue. 501 00:17:31.000 --> 00:17:33.760 And the number two, if you want to scale, 502 00:17:33.760 --> 00:17:36.880 make sure that your LTVDCAC ratio is appropriate 503 00:17:36.880 --> 00:17:40.560 for the level of leverage that you have within your existing business 504 00:17:40.560 --> 00:17:41.760 across all three functions. 505 00:17:41.760 --> 00:17:42.680 So you might be wondering, 506 00:17:42.680 --> 00:17:45.840 why doesn't the ratio still cover it 507 00:17:45.840 --> 00:17:49.640 for a supermanial business versus a business that's entirely automated? 508 00:17:49.640 --> 00:17:51.440 The main reason is lumpiness. 509 00:17:51.440 --> 00:17:52.920 You have to bring people in for outbound 510 00:17:52.920 --> 00:17:53.840 that are not going to be proficient. 511 00:17:53.840 --> 00:17:56.480 So you're going to incur the cost of new SDRs 512 00:17:56.480 --> 00:17:58.040 that either aren't going to work out at all 513 00:17:58.040 --> 00:17:59.320 or aren't going to work out in the beginning, 514 00:17:59.320 --> 00:18:00.160 and then eventually are going to work out. 515 00:18:00.160 --> 00:18:01.520 So you have to incur that cost, 516 00:18:01.520 --> 00:18:02.800 but imagine incurring that cost, 517 00:18:02.800 --> 00:18:05.880 and then also incurring the cost of new salespeople, 518 00:18:05.880 --> 00:18:07.880 who are actually going to be trying to convert those prospects, 519 00:18:07.880 --> 00:18:08.720 and they're going to suck, 520 00:18:08.720 --> 00:18:09.920 and they're going to lose opportunities, 521 00:18:09.920 --> 00:18:10.880 and they're going to be paying them 522 00:18:10.880 --> 00:18:13.240 while they literally close fewer sales for you. 523 00:18:13.240 --> 00:18:14.560 So you lose twice, 524 00:18:14.560 --> 00:18:17.360 and then also sometimes you spend all this money and time 525 00:18:17.360 --> 00:18:19.280 to get them hopefully to be proficient, 526 00:18:19.280 --> 00:18:20.120 and then they aren't. 527 00:18:20.120 --> 00:18:22.120 So they just lost you money three different ways. 528 00:18:23.960 --> 00:18:26.800 Real cool guys, thank you, thank you, thank you. 529 00:18:26.800 --> 00:18:27.760 You guys are awesome. 530 00:18:27.760 --> 00:18:29.200 This podcast continues to grow. 531 00:18:29.200 --> 00:18:31.760 We had our highest month ever last month, which is huge, 532 00:18:31.760 --> 00:18:34.520 and we don't run ads to grow the show. 533 00:18:34.520 --> 00:18:35.360 It's just you guys. 534 00:18:35.360 --> 00:18:36.200 It's just you guys. 535 00:18:36.200 --> 00:18:39.120 And so if this podcast has provided you value, 536 00:18:39.120 --> 00:18:40.440 if you could text it to a friend, 537 00:18:40.520 --> 00:18:41.800 or you could send it on Slack, 538 00:18:41.800 --> 00:18:43.080 or share it on your Instagram, 539 00:18:43.080 --> 00:18:44.280 that is how this podcast grows, 540 00:18:44.280 --> 00:18:45.920 and that is why I continue to make them. 541 00:18:45.920 --> 00:18:46.760 It's because you guys, 542 00:18:46.760 --> 00:18:47.920 so thank you guys first and foremost, 543 00:18:47.920 --> 00:18:49.320 and if you have it in your heart, 544 00:18:49.320 --> 00:18:50.440 there's somebody who could use this, 545 00:18:50.440 --> 00:18:51.440 and please send it. 546 00:18:51.440 --> 00:18:52.280 Lots of love. 547 00:18:52.280 --> 00:18:53.880 Enjoy the rest of the podcast. 548 00:18:54.880 --> 00:18:57.320 The third component of this is the delivery piece, 549 00:18:57.320 --> 00:18:58.320 which is like, okay, 550 00:18:58.320 --> 00:19:01.280 I'm going to have to onboard and hire all of these other people, 551 00:19:01.280 --> 00:19:03.640 and if you have anything that's like higher expertise, 552 00:19:03.640 --> 00:19:04.480 then forget about it. 553 00:19:04.480 --> 00:19:07.280 It's going to take even longer for you to both find these people, 554 00:19:07.280 --> 00:19:09.320 and then also to train these people up. 555 00:19:09.360 --> 00:19:12.480 But again, recruiting itself can be a super expensive task, 556 00:19:12.480 --> 00:19:13.280 like there's recruiting firms, 557 00:19:13.280 --> 00:19:15.080 and it usually costs you 25, 558 00:19:15.080 --> 00:19:17.280 sometimes 30% of their first year pay. 559 00:19:17.280 --> 00:19:18.720 And if you're paying someone 300,000 a year, 560 00:19:18.720 --> 00:19:21.760 it's like, you're going to pay 80 grand just to get somebody, 561 00:19:21.760 --> 00:19:24.120 let alone hope that they're proficient, 562 00:19:24.120 --> 00:19:25.480 and you still have all this onboarding. 563 00:19:25.480 --> 00:19:28.040 So you have this lumpiness of people 564 00:19:28.040 --> 00:19:29.440 that aren't going to be effective, 565 00:19:29.440 --> 00:19:31.960 and if you're at three to one, boom, you're done. 566 00:19:31.960 --> 00:19:34.520 Like that three to one disappears real fast. 567 00:19:34.520 --> 00:19:36.080 It's like, you have this lumpiness of like, 568 00:19:36.080 --> 00:19:38.440 okay, boom, we got these new SDRs in. 569 00:19:38.720 --> 00:19:40.200 Okay, like now this is coming back up, 570 00:19:40.200 --> 00:19:41.400 but then this starts growing down. 571 00:19:41.400 --> 00:19:44.320 So now, like we start at 20 to one or 31, 572 00:19:44.320 --> 00:19:46.480 but it's like, it's more like a wave, 573 00:19:46.480 --> 00:19:49.920 like it undulates with the efficiency of the business 574 00:19:49.920 --> 00:19:52.000 and how stable it is as you're scaling. 575 00:19:52.000 --> 00:19:53.520 And the faster you're scaling, 576 00:19:53.520 --> 00:19:55.240 the more inefficient it's going to be. 577 00:19:55.240 --> 00:19:57.080 So that's why you need to have as much as you can 578 00:19:57.080 --> 00:19:58.240 in terms of LWVDCAC. 579 00:19:58.240 --> 00:19:59.080 It's padding. 580 00:19:59.080 --> 00:20:01.600 The third piece here is that we just went over it, 581 00:20:01.600 --> 00:20:04.000 LTVDCAC, one, we want to make sure that we're doing this 582 00:20:04.000 --> 00:20:06.160 off of gross profit, not revenue, 583 00:20:06.160 --> 00:20:08.680 and secondarily, we want to make sure that 584 00:20:08.680 --> 00:20:10.440 if we are highly leveraged, 585 00:20:10.440 --> 00:20:11.840 then we can be at three to one. 586 00:20:11.840 --> 00:20:13.320 But if we're at low leverage, 587 00:20:13.320 --> 00:20:16.320 we want to be at 20 plus, you know, 21 or higher. 588 00:20:16.320 --> 00:20:18.760 And again, this sounds crazy and unrealistic 589 00:20:18.760 --> 00:20:19.600 for a lot of people. 590 00:20:19.600 --> 00:20:22.120 I get it, fine, at the very least be at 15 to one. 591 00:20:22.120 --> 00:20:24.880 Please, for the love of God, I promised you it's possible. 592 00:20:24.880 --> 00:20:27.400 You just have to work on it longer than you expect. 593 00:20:27.400 --> 00:20:29.320 Which brings us to number four, let's dive into it. 594 00:20:29.320 --> 00:20:32.040 Number four, I've thought, I've said a lot about this, 595 00:20:32.040 --> 00:20:34.520 which is that the one to three million area 596 00:20:34.520 --> 00:20:36.840 is a huge swamp, right? 597 00:20:36.840 --> 00:20:38.800 We call it the swamp, at least it equities.com. 598 00:20:38.800 --> 00:20:40.960 And why is one to three million so hard? 599 00:20:40.960 --> 00:20:43.520 Now, we've noticed that it's hard, 600 00:20:43.520 --> 00:20:45.000 but we were like, why is that rate hard? 601 00:20:45.000 --> 00:20:45.800 Now, for those of you who are like, 602 00:20:45.800 --> 00:20:46.800 this is not real for me, 603 00:20:46.800 --> 00:20:48.920 I'm just trying to make my first $10,000 a month, 604 00:20:48.920 --> 00:20:51.400 just keep listening, because believe it or not, 605 00:20:51.400 --> 00:20:53.040 some of these things will apply to you. 606 00:20:53.040 --> 00:20:54.480 So if you're at one to three million dollars, 607 00:20:54.480 --> 00:20:56.960 why is this one of the hardest periods? 608 00:20:56.960 --> 00:20:59.080 Because usually from zero to a million, 609 00:20:59.080 --> 00:21:01.680 you can usually do it with like you and two, three people. 610 00:21:01.720 --> 00:21:04.280 It's not that hard for you to keep track of the team. 611 00:21:04.280 --> 00:21:06.000 You can usually run very high margins, 612 00:21:06.000 --> 00:21:07.560 especially if you're a sole proprietor. 613 00:21:07.560 --> 00:21:10.400 You're basically just selling your time, which is fine, right? 614 00:21:10.400 --> 00:21:12.080 You don't need to obsess about your passive income 615 00:21:12.080 --> 00:21:14.200 before you max out your active income, good idea. 616 00:21:14.200 --> 00:21:15.520 By the way, a lot of billionaires, 617 00:21:15.520 --> 00:21:17.240 very high active income, FYI. 618 00:21:17.240 --> 00:21:19.160 Anyways, as you're scaling up, 619 00:21:19.160 --> 00:21:21.640 that first, you know, $500, 800, sometimes a million dollars a year 620 00:21:21.640 --> 00:21:22.760 is actually, in some ways, 621 00:21:22.760 --> 00:21:26.920 somewhere more profitable than the next two, three, four million. 622 00:21:26.920 --> 00:21:29.200 Because you have to install this level of infrastructure, 623 00:21:29.200 --> 00:21:31.040 because you're like, I just can't do it anymore. 624 00:21:31.080 --> 00:21:32.840 Now, you can always just keep jacking prices, 625 00:21:32.840 --> 00:21:34.680 and that's fine, and I'm a big advocate of that. 626 00:21:34.680 --> 00:21:36.240 But if you're like, no, I think this is the price 627 00:21:36.240 --> 00:21:37.280 that I want to service at, 628 00:21:37.280 --> 00:21:38.600 and I want to do more volume, 629 00:21:38.600 --> 00:21:40.560 then you're going to have to put in more infrastructure. 630 00:21:40.560 --> 00:21:42.720 But this is the map that I just realized 631 00:21:42.720 --> 00:21:43.840 is why it's so hard. 632 00:21:43.840 --> 00:21:46.560 So let's say you've got a two million dollar basis. 633 00:21:46.560 --> 00:21:48.440 You're right in the middle of the swamp, okay? 634 00:21:48.440 --> 00:21:50.040 And you probably noticed, anecdotally, 635 00:21:50.040 --> 00:21:51.840 for those you were kind of like in this business world, 636 00:21:51.840 --> 00:21:54.000 there's a lot of people in the one to three million dollar rates, 637 00:21:54.000 --> 00:21:56.920 like a ton, ton of businesses. 638 00:21:56.920 --> 00:21:57.760 It'd be fair. 639 00:21:57.760 --> 00:21:59.920 I mean, they're making one to three million dollars a profit. 640 00:21:59.960 --> 00:22:01.320 Businesses don't want a three million revenue, 641 00:22:01.320 --> 00:22:02.160 big difference. 642 00:22:02.160 --> 00:22:04.160 All right, but let's say we've got a two million dollar business, 643 00:22:04.160 --> 00:22:08.080 okay, and let's say that they're doing 20% marches. 644 00:22:08.080 --> 00:22:12.040 All right, so they're doing $400,000 per year 645 00:22:12.040 --> 00:22:14.200 in EBITDA or profit, okay? 646 00:22:14.200 --> 00:22:16.120 So we have $400,000 here. 647 00:22:16.120 --> 00:22:17.920 Now, here's the stick. 648 00:22:17.920 --> 00:22:20.800 At this point, for the business to evolve, 649 00:22:20.800 --> 00:22:22.080 for the business to level up, 650 00:22:22.080 --> 00:22:24.600 the entrepreneur typically has what I would consider 651 00:22:24.600 --> 00:22:25.920 an impossible choice. 652 00:22:25.920 --> 00:22:27.360 You have to choose one of two things, 653 00:22:27.360 --> 00:22:29.400 and sometimes the option is both, 654 00:22:29.400 --> 00:22:32.360 which is path one, you say, I need more help. 655 00:22:32.360 --> 00:22:33.440 Instead of getting more help, 656 00:22:33.440 --> 00:22:35.280 I'm just gonna work even more. 657 00:22:35.280 --> 00:22:38.800 I'm gonna go from 12 hours a day to working 16 hours a day. 658 00:22:38.800 --> 00:22:40.400 I'm gonna stop taking weekends off, 659 00:22:40.400 --> 00:22:42.200 and I'm gonna basically get through this hump, 660 00:22:42.200 --> 00:22:45.560 so I can push my way to $10 million a year, 661 00:22:46.840 --> 00:22:48.320 which you can do. 662 00:22:48.320 --> 00:22:53.000 It is hard, or I'm gonna bring in somebody 663 00:22:53.000 --> 00:22:54.120 who's gonna help me get there, 664 00:22:54.120 --> 00:22:56.520 and I'm gonna maintain a relatively long schedule, 665 00:22:56.520 --> 00:22:59.040 but still not the same as working. 666 00:22:59.040 --> 00:23:00.280 16 hours, seven days a week. 667 00:23:00.280 --> 00:23:02.360 Those are the kind of the two impossible choices, 668 00:23:02.360 --> 00:23:04.480 which is like other person. 669 00:23:04.480 --> 00:23:05.640 Here's the tough part. 670 00:23:05.640 --> 00:23:08.160 If you have $400,000 in profits that's left over, 671 00:23:08.160 --> 00:23:09.360 if you wanna bring in a stud 672 00:23:09.360 --> 00:23:10.480 who's gonna really help you there, 673 00:23:10.480 --> 00:23:14.120 you're probably gonna be looking at $250,000 per year 674 00:23:14.120 --> 00:23:16.280 in all-encompass, kind of at a minimum, 675 00:23:16.280 --> 00:23:19.040 to bring somebody who's a real star into the business. 676 00:23:19.040 --> 00:23:20.320 Let's look at that in comparison 677 00:23:20.320 --> 00:23:22.320 to what the profit is for this business. 678 00:23:22.320 --> 00:23:25.520 You're looking at risking more than half of your income 679 00:23:25.520 --> 00:23:28.840 on one person with the hopes that it's gonna work out, 680 00:23:28.840 --> 00:23:30.400 but what happens when this person comes in 681 00:23:30.400 --> 00:23:31.480 and then they aren't that good? 682 00:23:31.480 --> 00:23:33.360 They don't expand your capacity. 683 00:23:33.360 --> 00:23:35.960 It's like, well shoot, I just lost half my profit 684 00:23:35.960 --> 00:23:38.920 for a year, and then I'm still not further along. 685 00:23:38.920 --> 00:23:40.320 This is why this is the swamp, 686 00:23:40.320 --> 00:23:42.280 and I've just spent a lot of time thinking about that, 687 00:23:42.280 --> 00:23:44.280 because I was like, why is $1 to $3 million so hard? 688 00:23:44.280 --> 00:23:47.360 You need the help, but you don't have the money 689 00:23:47.360 --> 00:23:48.800 to afford the help. 690 00:23:48.800 --> 00:23:50.960 And so you either just gotta go overdrive 691 00:23:50.960 --> 00:23:52.960 and go nutso mode, right? 692 00:23:52.960 --> 00:23:56.120 Or you make a huge bet proportional to what you have 693 00:23:56.120 --> 00:23:58.960 in terms of net profit, to bring this person in. 694 00:23:58.960 --> 00:24:00.560 And that's why it's so hard. 695 00:24:00.560 --> 00:24:02.880 And so if you're in the swamp right now, 696 00:24:02.880 --> 00:24:05.080 my encouragement to you is this, 697 00:24:05.080 --> 00:24:07.480 I have almost always been the like, 698 00:24:07.480 --> 00:24:09.320 I'm gonna go into overdrive, 699 00:24:09.320 --> 00:24:12.040 and I'm gonna hire the person. 700 00:24:12.040 --> 00:24:14.200 Because the idea is, what if I just do things 701 00:24:14.200 --> 00:24:15.400 that are more unscalable, 702 00:24:15.400 --> 00:24:17.880 but still generate higher profits for the business, 703 00:24:17.880 --> 00:24:20.680 so that I can afford to take two or three shots 704 00:24:20.680 --> 00:24:22.520 with somebody else who's coming into the business, 705 00:24:22.520 --> 00:24:24.720 knowing that I'm not gonna get it out of the park 706 00:24:24.720 --> 00:24:25.560 on the first shot. 707 00:24:25.560 --> 00:24:27.080 I mean, if I do, I'm stoked, 708 00:24:27.080 --> 00:24:28.920 but I wanna win either way. 709 00:24:28.920 --> 00:24:31.640 And so either I'm gonna win with more profit faster 710 00:24:31.640 --> 00:24:33.000 or less profit slower, 711 00:24:33.000 --> 00:24:35.240 but I wanna make sure that I'm guaranteed to win. 712 00:24:35.240 --> 00:24:39.200 I kind of do this as a plus scenario. 713 00:24:39.200 --> 00:24:40.800 And then the fourth thing we just covered 714 00:24:40.800 --> 00:24:43.800 is why $1 to $3 million is the hardest. 715 00:24:43.800 --> 00:24:47.720 And the main thing is cash flow and time. 716 00:24:47.720 --> 00:24:48.800 You don't have the time, 717 00:24:48.800 --> 00:24:51.360 and you don't have the cash flow to do more work, 718 00:24:51.360 --> 00:24:53.680 but you have to in order to grow. 719 00:24:53.680 --> 00:24:55.000 So either you work overtime 720 00:24:55.000 --> 00:24:57.120 or you bring someone else into work overtime 721 00:24:57.120 --> 00:24:59.560 or you do both, which is what I recommend, 722 00:24:59.560 --> 00:25:01.040 and that means it's going to be hard, 723 00:25:01.040 --> 00:25:03.200 which is why most people stay stuck. 724 00:25:03.200 --> 00:25:05.240 So that's number four, number five. 725 00:25:05.240 --> 00:25:09.280 So 2024 was probably the first year 726 00:25:09.280 --> 00:25:11.360 that I didn't have FOMO. 727 00:25:11.360 --> 00:25:12.520 So fear of missing out. 728 00:25:12.520 --> 00:25:16.280 It is the hardest part of business is staying focused. 729 00:25:16.280 --> 00:25:17.080 It's the hardest part. 730 00:25:17.080 --> 00:25:19.280 The reason you hear Basos talk about it, 731 00:25:19.280 --> 00:25:20.560 you hear Hizuk talk about it, 732 00:25:20.560 --> 00:25:21.840 you hear Jobs talk about it, 733 00:25:21.840 --> 00:25:23.120 you hear Elon talk about it, 734 00:25:23.120 --> 00:25:25.960 like you have to be incredibly focused 735 00:25:25.960 --> 00:25:27.120 on what the points of greatest leverage 736 00:25:27.120 --> 00:25:27.960 are in the business. 737 00:25:27.960 --> 00:25:29.600 The reason that this was a big lesson for me, 738 00:25:29.600 --> 00:25:30.440 not the focus part, 739 00:25:30.440 --> 00:25:31.360 I obviously talk about that. 740 00:25:31.360 --> 00:25:33.440 But I was like, why was this your difference? 741 00:25:33.440 --> 00:25:35.680 I was this the first year where I didn't have FOMO. 742 00:25:35.680 --> 00:25:38.600 It's actually because the idea of rush 743 00:25:38.600 --> 00:25:41.640 is where the fear of missing out comes from. 744 00:25:41.640 --> 00:25:44.760 It's the arbitrary timeline that I set for myself 745 00:25:44.760 --> 00:25:46.600 that I just grab from thin air 746 00:25:46.600 --> 00:25:48.400 and then I measure myself against this thing 747 00:25:48.520 --> 00:25:51.680 that I made up to make myself miserable 748 00:25:51.680 --> 00:25:55.440 at all times from whatever success I'm achieving. 749 00:25:55.440 --> 00:25:56.840 In thinking about that, 750 00:25:56.840 --> 00:25:58.600 I have coined the term for myself 751 00:25:58.600 --> 00:26:01.600 which is that rush is imaginary. 752 00:26:01.600 --> 00:26:02.720 It's made up. 753 00:26:02.720 --> 00:26:04.040 It's completely made up. 754 00:26:04.040 --> 00:26:06.240 There's only one caveat that I'll make to this, 755 00:26:06.240 --> 00:26:08.920 which is and if this is you, you probably already know. 756 00:26:08.920 --> 00:26:11.160 If you have a business as a tremendous network effect 757 00:26:11.160 --> 00:26:12.360 and there's very small amount of people, 758 00:26:12.360 --> 00:26:13.920 or even a big amount of people in that network 759 00:26:13.920 --> 00:26:15.400 that you're trying to gather towards, 760 00:26:15.400 --> 00:26:17.000 then yes, it's likely that you have a winner 761 00:26:17.000 --> 00:26:18.240 to take all business model, 762 00:26:18.240 --> 00:26:20.400 in which case you've probably already raised a ton of money 763 00:26:20.400 --> 00:26:22.440 and you're probably trying to aggressively grow 764 00:26:22.440 --> 00:26:23.600 to capture that network 765 00:26:23.600 --> 00:26:24.760 so that eventually you can turn something 766 00:26:24.760 --> 00:26:26.040 into a profitable business. 767 00:26:26.040 --> 00:26:29.800 Fine, for everybody else who's not running a tech platform 768 00:26:29.800 --> 00:26:32.920 that's trying to build a network effect of some sort, 769 00:26:32.920 --> 00:26:34.360 you don't need to rush. 770 00:26:34.360 --> 00:26:35.440 There was Aani. 771 00:26:35.440 --> 00:26:37.600 Actually, I don't think her episodes come out yet, 772 00:26:37.600 --> 00:26:39.320 but anyways, I'm gonna give you a sneak peek. 773 00:26:39.320 --> 00:26:41.200 So I was talking to Aani Trong 774 00:26:41.200 --> 00:26:43.880 and she has nail salons, okay? 775 00:26:43.880 --> 00:26:46.600 And so she has one core nail salon 776 00:26:46.720 --> 00:26:47.680 that worked really well 777 00:26:47.680 --> 00:26:50.920 and then she decided to partner with other people 778 00:26:50.920 --> 00:26:53.400 doing like three or four other nail salons. 779 00:26:53.400 --> 00:26:55.400 And the biggest issue she has for growing right now 780 00:26:55.400 --> 00:26:57.160 is that her partnerships are kind of a mess. 781 00:26:57.160 --> 00:26:58.000 I'll just put it that way. 782 00:26:58.000 --> 00:26:59.840 Why did you do these partnerships? 783 00:26:59.840 --> 00:27:01.440 She said, because if I had more locations, 784 00:27:01.440 --> 00:27:02.440 I'd make more money. 785 00:27:02.440 --> 00:27:04.360 And I said, why didn't you just make more money 786 00:27:04.360 --> 00:27:06.600 with your existing location, save up the cash 787 00:27:06.600 --> 00:27:09.000 and then open a second location all for yourself? 788 00:27:09.000 --> 00:27:10.520 The thing that I kept trying to tease out of her 789 00:27:10.520 --> 00:27:12.520 is I was like, she was just in a rush. 790 00:27:12.520 --> 00:27:13.920 Like that was the reason. 791 00:27:13.920 --> 00:27:14.840 She was just in a rush. 792 00:27:14.840 --> 00:27:18.080 There's no actual reason for have three or four 793 00:27:18.080 --> 00:27:20.160 other different random partnerships 794 00:27:20.160 --> 00:27:22.240 with each of these locations. 795 00:27:22.240 --> 00:27:24.320 And the thing is, is that some of you guys are, 796 00:27:24.320 --> 00:27:25.160 you do this. 797 00:27:25.160 --> 00:27:27.640 There was a guy who was here at our headquarters yesterday, 798 00:27:27.640 --> 00:27:30.280 he has a TikTok shop management thing, right? 799 00:27:30.280 --> 00:27:32.560 Where he just like helps people start up their TikTok shops 800 00:27:32.560 --> 00:27:33.840 for e-commerce businesses. 801 00:27:33.840 --> 00:27:34.680 And then he was like, 802 00:27:34.680 --> 00:27:36.880 but I also have this brand that I started on my own 803 00:27:36.880 --> 00:27:39.720 using TikTok shop and it's doing really, really well. 804 00:27:39.720 --> 00:27:42.560 But I also wanna start investing in it and I'm like, dude, 805 00:27:42.560 --> 00:27:44.320 what's the rush? 806 00:27:44.320 --> 00:27:46.360 And so the counter action, like how do you, 807 00:27:46.360 --> 00:27:47.600 how do you counter the rush? 808 00:27:47.600 --> 00:27:48.840 How do you counter the rush? 809 00:27:48.840 --> 00:27:51.240 And I think the way that I have countered the rush 810 00:27:51.240 --> 00:27:53.640 is to look at the people who have the ultimate version 811 00:27:53.640 --> 00:27:54.760 of my business. 812 00:27:54.760 --> 00:27:57.520 Who are the people who are 20 years ahead of me? 813 00:27:57.520 --> 00:27:59.280 What do their businesses look like? 814 00:27:59.280 --> 00:28:01.880 And what's interesting about this is that the vast majority 815 00:28:01.880 --> 00:28:04.440 of them have one massive business. 816 00:28:04.440 --> 00:28:06.240 And in seeing that, I was like, huh, 817 00:28:06.240 --> 00:28:09.760 almost none of them have multiple massive businesses. 818 00:28:09.760 --> 00:28:10.600 They started. 819 00:28:10.600 --> 00:28:12.360 Elon is of course the one exception 820 00:28:12.360 --> 00:28:13.800 that everybody wants to bring up, right? 821 00:28:13.800 --> 00:28:16.560 For people who haven't just generated a hundred billion dollars 822 00:28:16.560 --> 00:28:17.400 in a year. 823 00:28:17.400 --> 00:28:18.600 If you haven't done that yet, 824 00:28:18.600 --> 00:28:21.560 then maybe consider every other person on the Forbes list 825 00:28:21.560 --> 00:28:24.440 that just did one thing for the entirety of their career. 826 00:28:24.440 --> 00:28:25.680 And it's like, basis has blurgeoned. 827 00:28:25.680 --> 00:28:29.560 Yeah, after 35 years of Amazon, you've got Mr. Panda. 828 00:28:29.560 --> 00:28:32.880 Still do, he's like, wait, he owns the Cosmo. 829 00:28:32.880 --> 00:28:36.360 Yeah, but he also did that after 45 years of Panda Express 830 00:28:36.360 --> 00:28:38.760 and Panda Express is still his cash cow. 831 00:28:38.760 --> 00:28:40.640 Okay, I've got this restaurant, it's working well. 832 00:28:40.640 --> 00:28:42.560 Some think about starting this agency, right? 833 00:28:42.840 --> 00:28:44.800 To help restaurants, it's like, dude, 834 00:28:44.800 --> 00:28:46.880 what is the ultimate version of this look like? 835 00:28:46.880 --> 00:28:48.960 The ultimate version of this look like either, 836 00:28:48.960 --> 00:28:51.520 you go all in and you build an enterprise agency 837 00:28:51.520 --> 00:28:53.760 that only works with very large restaurant chains 838 00:28:53.760 --> 00:28:54.920 and those tend to be sticky 839 00:28:54.920 --> 00:28:56.480 and those tend to be valuable businesses. 840 00:28:56.480 --> 00:28:59.240 But if you're like, well, I'm only dealing with small SMB 841 00:28:59.240 --> 00:29:04.240 restaurant owners for my agency, show me one, one agency 842 00:29:05.120 --> 00:29:09.600 that service SMBs in that 1,500, maybe $2,000 a month mark 843 00:29:09.600 --> 00:29:12.000 who has a $100,000,000 plus business, 844 00:29:12.000 --> 00:29:15.000 even just like revenue, just showing me one, 845 00:29:15.000 --> 00:29:16.680 why doesn't it happen? 846 00:29:16.680 --> 00:29:18.680 Because it's a bad model. 847 00:29:18.680 --> 00:29:20.800 Every single agency goes up market 848 00:29:20.800 --> 00:29:22.280 and they serve enterprise and this become really big. 849 00:29:22.280 --> 00:29:24.320 Look at Ogilvy, look at Vayner, right? 850 00:29:24.320 --> 00:29:26.040 Like look at Neop, NP Digital, 851 00:29:26.040 --> 00:29:27.840 all of these are massive, massive companies 852 00:29:27.840 --> 00:29:30.040 that only serve as really the Fortune 500. 853 00:29:30.040 --> 00:29:31.680 Why? Because they're sticky. 854 00:29:31.680 --> 00:29:33.320 Because if you have volatile customers, 855 00:29:33.320 --> 00:29:34.560 you have a volatile business. 856 00:29:34.560 --> 00:29:35.680 If you have a volatile business, 857 00:29:35.680 --> 00:29:37.440 you're not going to be able to weather the storms. 858 00:29:37.440 --> 00:29:39.680 You can't weather the storms, you're not going to last long. 859 00:29:39.680 --> 00:29:41.640 You don't last long, you're not going to get big. 860 00:29:41.640 --> 00:29:44.600 How do you counteract the idea of rushing? 861 00:29:44.600 --> 00:29:46.920 You have to look at the end state of the business. 862 00:29:46.920 --> 00:29:49.080 What is the ultimate version of my restaurant look like? 863 00:29:49.080 --> 00:29:51.760 It might be 2,000 locations nationwide. 864 00:29:51.760 --> 00:29:53.800 What is the ultimate version of my agency look like? 865 00:29:53.800 --> 00:29:55.960 It might be Ogilvy in Mathers, right? 866 00:29:55.960 --> 00:29:58.600 It might be we're doing $5 billion a year 867 00:29:58.600 --> 00:30:00.400 and let's look at the number of person in space. 868 00:30:00.400 --> 00:30:01.800 If what is the ultimate version 869 00:30:01.800 --> 00:30:03.360 of my lawn care business look like? 870 00:30:03.360 --> 00:30:06.080 Maybe it's a franchise, maybe it's you privately hold it. 871 00:30:06.080 --> 00:30:07.160 But no matter what it is, 872 00:30:07.160 --> 00:30:09.800 it's probably not three different businesses 873 00:30:09.800 --> 00:30:11.720 that you're trying to start all at the same time 874 00:30:11.720 --> 00:30:13.360 because you're in a rush. 875 00:30:13.360 --> 00:30:15.000 Because the thing is is that rush 876 00:30:15.000 --> 00:30:17.640 is what guarantees you're never going to get big. 877 00:30:17.640 --> 00:30:19.520 And I'm saying this because this is something 878 00:30:19.520 --> 00:30:22.760 that has plagued me, my whole career. 879 00:30:22.760 --> 00:30:23.920 And so it's just this last year 880 00:30:23.920 --> 00:30:25.600 was the first year that I didn't have FOMO 881 00:30:25.600 --> 00:30:27.200 and I was like, why is that? 882 00:30:27.200 --> 00:30:29.160 And I just think that I've just failed 883 00:30:29.160 --> 00:30:31.400 and messed it up enough times to be like, 884 00:30:31.400 --> 00:30:33.000 I just have to stick with one thing. 885 00:30:33.000 --> 00:30:35.080 And here's the fucked up part about this. 886 00:30:35.080 --> 00:30:39.280 You have to accept that you can't sleep with every girl. 887 00:30:39.280 --> 00:30:42.640 We can't date every guy, whatever your preferences. 888 00:30:42.640 --> 00:30:45.440 The point is our life is so limited. 889 00:30:45.440 --> 00:30:47.920 It's just so, we don't have that much time. 890 00:30:47.920 --> 00:30:50.360 If you want to do big stuff, you just don't have the most time. 891 00:30:50.360 --> 00:30:53.200 Because of that, it's like you just have to accept the fact 892 00:30:53.200 --> 00:30:54.400 you just got to pick. 893 00:30:54.400 --> 00:30:56.520 And you could have had four other timelines 894 00:30:56.520 --> 00:30:58.080 where you could have done each of these other things 895 00:30:58.080 --> 00:30:59.440 all the way to their extreme. 896 00:30:59.440 --> 00:31:01.040 But the likely that you're going to do all four 897 00:31:01.040 --> 00:31:02.720 those to the extreme when you start all four 898 00:31:02.720 --> 00:31:05.000 from the same time is zero. 899 00:31:05.000 --> 00:31:06.000 It's not going to happen. 900 00:31:06.000 --> 00:31:08.640 The first, business is built on hard choices. 901 00:31:08.640 --> 00:31:10.480 Business is built on the amount of knows 902 00:31:10.480 --> 00:31:11.920 that you're able to make. 903 00:31:11.920 --> 00:31:14.880 If you can't say no with the beginning of like, 904 00:31:14.880 --> 00:31:17.680 I'm not going to just pick one of these paths, right? 905 00:31:17.680 --> 00:31:20.600 One of my favorite little definitions of deciding 906 00:31:20.600 --> 00:31:23.480 comes from the Latin decadere, which means to cut off. 907 00:31:23.480 --> 00:31:25.280 Like if you want to decide, you have to cut off. 908 00:31:25.280 --> 00:31:26.560 You have to eliminate things. 909 00:31:26.560 --> 00:31:28.120 If you have three different paths 910 00:31:28.120 --> 00:31:30.000 or four different things that you're considering, 911 00:31:30.000 --> 00:31:32.320 pick for the love of God. 912 00:31:32.320 --> 00:31:34.360 And the reason and the thing is, 913 00:31:34.360 --> 00:31:36.320 is that you have made up some number 914 00:31:36.320 --> 00:31:38.240 because some person you know, makes a certain amount 915 00:31:38.240 --> 00:31:39.600 of money or some person you know, 916 00:31:39.600 --> 00:31:42.080 thinks that this amount of revenue is cool. 917 00:31:42.080 --> 00:31:43.280 And so you're like, why wouldn't it be cool? 918 00:31:43.280 --> 00:31:44.440 So I wouldn't hit that level out of revenue. 919 00:31:44.440 --> 00:31:47.080 And because you don't know how to grow the business you're in, 920 00:31:47.080 --> 00:31:48.800 you only know how to get to 100,000 a year. 921 00:31:48.800 --> 00:31:50.080 You only know how to get to a million dollars a year. 922 00:31:50.080 --> 00:31:51.920 Only know how to get the three million dollars a year. 923 00:31:51.920 --> 00:31:54.320 Then your way of growing is doing more three million dollar 924 00:31:54.320 --> 00:31:57.000 businesses when the reality is that you have to confront 925 00:31:57.000 --> 00:31:58.560 why is my three million dollar business 926 00:31:58.560 --> 00:32:00.240 not a 10 million dollar business? 927 00:32:00.240 --> 00:32:01.800 And you have to figure out that problem. 928 00:32:01.800 --> 00:32:03.320 That is the hard work. 929 00:32:03.320 --> 00:32:04.520 I talked to a lady yesterday, 930 00:32:04.520 --> 00:32:06.280 she was stuck in a million dollars a year for 10 years. 931 00:32:06.280 --> 00:32:09.440 I said, why haven't you gone to three million dollars a year? 932 00:32:09.440 --> 00:32:10.400 Like what's stopped you? 933 00:32:10.400 --> 00:32:11.520 Because she had a very clear motto. 934 00:32:11.520 --> 00:32:13.360 I was like, why don't you just double how much you're doing? 935 00:32:13.360 --> 00:32:14.880 And she was like, well, it's a pain. 936 00:32:14.880 --> 00:32:16.800 And I was like, oh, because it's hard. 937 00:32:16.800 --> 00:32:17.560 Because it's hard. 938 00:32:17.560 --> 00:32:19.160 She's like, no, no, it's not because it's hard. 939 00:32:19.160 --> 00:32:21.600 And I was like, well, then why haven't you done it? 940 00:32:21.600 --> 00:32:24.120 She was like, well, it's just like, it's inconvenient. 941 00:32:24.120 --> 00:32:26.360 And there's like, it's more time allotment 942 00:32:26.400 --> 00:32:27.200 and all this stuff. 943 00:32:27.200 --> 00:32:29.720 And I was like, yeah, that sounds like hard. 944 00:32:29.720 --> 00:32:30.560 It sounds like hard. 945 00:32:30.560 --> 00:32:32.800 It's hard for us to hear that we're not willing 946 00:32:32.800 --> 00:32:36.600 to do hard things because the hard changes. 947 00:32:36.600 --> 00:32:39.160 The hard is constant, but the nature of it changes. 948 00:32:39.160 --> 00:32:41.360 Just like suffering is you and being is constant. 949 00:32:41.360 --> 00:32:42.320 It's not gonna go away. 950 00:32:42.320 --> 00:32:43.160 There's nothing wrong with you 951 00:32:43.160 --> 00:32:44.680 because you're suffering while you're in business. 952 00:32:44.680 --> 00:32:46.520 It's just that the nature of the suffering changes. 953 00:32:46.520 --> 00:32:48.320 In the beginning, no one knows you exist. 954 00:32:48.320 --> 00:32:50.960 And that's tough, because you feel ignored and irrelevant. 955 00:32:50.960 --> 00:32:52.680 And then you start to let people know about your stuff. 956 00:32:52.680 --> 00:32:53.920 And then as soon as that happens, 957 00:32:53.920 --> 00:32:54.960 you have a different kind of heart, 958 00:32:55.080 --> 00:32:56.360 which is that no one wants to give you money. 959 00:32:56.360 --> 00:32:58.000 And then all of a sudden, people start giving you money. 960 00:32:58.000 --> 00:32:59.000 And then what happens? 961 00:32:59.000 --> 00:32:59.840 Then people start complaining 962 00:32:59.840 --> 00:33:01.080 because your things not that good. 963 00:33:01.080 --> 00:33:03.040 But all of these things are hard. 964 00:33:03.040 --> 00:33:05.360 And so we have this idea that it's this rocky cutscene 965 00:33:05.360 --> 00:33:06.760 that we're gonna be fighting. 966 00:33:06.760 --> 00:33:08.360 It's like, we gotta just keep gritting through it. 967 00:33:08.360 --> 00:33:12.440 But it's like, no, we are so equipped to save our egos 968 00:33:12.440 --> 00:33:14.160 that we will come up with a hundred ways 969 00:33:14.160 --> 00:33:16.240 that our heart is not hard. 970 00:33:16.240 --> 00:33:18.560 It's different because we're special, right? 971 00:33:18.560 --> 00:33:20.960 But the reality is hard morphs. 972 00:33:20.960 --> 00:33:22.640 That's what makes people get stuck 973 00:33:22.640 --> 00:33:24.680 is because they learn how to conquer one heart, 974 00:33:24.680 --> 00:33:26.080 but not the next kind of heart. 975 00:33:26.080 --> 00:33:28.680 I think that a lot of the hardness is, 976 00:33:28.680 --> 00:33:30.600 is sometimes learning is saying no. 977 00:33:30.600 --> 00:33:31.840 It's learning to focus. 978 00:33:31.840 --> 00:33:33.080 That's the hard part. 979 00:33:33.080 --> 00:33:34.800 It's not getting punched in the face. 980 00:33:34.800 --> 00:33:38.360 It's being willing to let one of your children die, 981 00:33:38.360 --> 00:33:39.880 to let the other one live. 982 00:33:39.880 --> 00:33:41.240 We get the Sophie's choice. 983 00:33:41.240 --> 00:33:44.160 We actually do have to do that in business all the time. 984 00:33:44.160 --> 00:33:47.360 And so you have to accept that there is a life 985 00:33:47.360 --> 00:33:50.440 in the future that you will not be able to live. 986 00:33:50.440 --> 00:33:52.960 And it's actually, it's honestly, it's acceptance. 987 00:33:52.960 --> 00:33:55.720 And this has just been a really good lesson for me, 988 00:33:55.720 --> 00:33:57.360 which is like, there are opportunities 989 00:33:57.360 --> 00:33:58.720 that I think I could crush. 990 00:33:58.720 --> 00:33:59.960 And I think they're amazing. 991 00:33:59.960 --> 00:34:00.840 And you know what? 992 00:34:00.840 --> 00:34:02.560 I'm never gonna be able to do them 993 00:34:02.560 --> 00:34:04.720 because I still have the one that I'm working on right now. 994 00:34:04.720 --> 00:34:06.640 And I have to continue to say yes to this. 995 00:34:06.640 --> 00:34:09.200 And by saying yes to this, I have to say no to everything else. 996 00:34:09.200 --> 00:34:11.000 These have been the five big business lessons 997 00:34:11.000 --> 00:34:13.320 that I've learned more recently 998 00:34:13.320 --> 00:34:14.800 and I thought you might enjoy them.