WEBVTT 1 00:00:00.000 --> 00:00:04.240 If you understand the steps that I'm about to share with you in this video, you will be able to 2 00:00:04.240 --> 00:00:08.000 step by step create a fortune. If you don't know who I am, I cross a hundred million dollars 3 00:00:08.000 --> 00:00:12.320 in that work when I was 32. We have a portfolio at Acquisition.com that is 200 million dollars 4 00:00:12.320 --> 00:00:16.480 a year with me way too long to learn how fortunes are built. If you imagine the amount of people 5 00:00:16.480 --> 00:00:20.480 that you have sold in your lifetime and whatever business you have, whatever it is, side hustles, 6 00:00:20.480 --> 00:00:25.680 gigs, anything, and you were to instead add up all of them together and then they continue to pay 7 00:00:25.680 --> 00:00:30.720 you month over month over month that would ever price you sell stuff at. How much bigger would 8 00:00:30.720 --> 00:00:36.320 you or business be? If it were mine, a lot bigger. My first big business was called Jim Launch. 9 00:00:36.320 --> 00:00:41.440 Jim Launch to date has 5,000 brick and mortar gyms that have purchased the licensing from it. 10 00:00:41.440 --> 00:00:47.520 If I had 5,000 of those gyms still pay right now, that company would be worth over a billion dollars. 11 00:00:47.520 --> 00:00:50.960 That company is probably worth now close to about a hundred million. So I've missed out on about 12 00:00:50.960 --> 00:00:55.840 900 million dollars during my career just from that one company alone because it took me so long 13 00:00:55.840 --> 00:00:59.920 to learn what I'm about to share with you. The big problem that most people have when they are 14 00:00:59.920 --> 00:01:04.560 starting their business is that they are in the selling business, not in the reorder business. 15 00:01:04.560 --> 00:01:10.240 They don't have recurring revenue. They have one time sales. When you see these merch drops and 16 00:01:10.240 --> 00:01:14.560 these things where people are just selling crap and they get the one time purchase and no one buys 17 00:01:14.560 --> 00:01:19.040 again, the reason they can't make money is because they have no compounding vehicle. What that means 18 00:01:19.120 --> 00:01:24.080 is that if I sell somebody today, I want to get credit for that person that I sold today in a year. 19 00:01:24.080 --> 00:01:27.600 Because what happens is if you don't have that, then you're always selling for tomorrow. 20 00:01:27.600 --> 00:01:30.960 You're always selling for the paycheck this month. You're always selling to pay rent, 21 00:01:30.960 --> 00:01:35.520 rather than benefiting from a sale you made 10 years ago and having that person still pay you today. 22 00:01:35.520 --> 00:01:39.920 Because the thing is that you need to harness time. The people who understand wealth, 23 00:01:39.920 --> 00:01:44.720 understand time. If time is a liability against you, it means you're thinking like a poor person. 24 00:01:44.800 --> 00:01:51.200 For the wealthy, time becomes an asset because the longer you wait, the more you win. 25 00:01:51.200 --> 00:01:56.480 And so you imagine a business as a wall of glue and you're blowing people at it. If you never 26 00:01:56.480 --> 00:02:02.320 even increase the amount of people you sell, let's just say you sell one person a week. In 10 years, 27 00:02:02.320 --> 00:02:07.440 you'd have 500 customers every month who pay you. And if you have any price point that is 28 00:02:07.440 --> 00:02:12.640 reasonable, that is a lot of money. That is a fortune. And the reason people don't have that 29 00:02:12.640 --> 00:02:16.880 happen is because they don't get it. And they're only thinking about the short sale for tomorrow. 30 00:02:16.880 --> 00:02:20.080 The easiest question that I like to ask when we're analyzing one of the businesses that we're 31 00:02:20.080 --> 00:02:24.560 thinking about purchasing. And is there a way that we can get someone to buy this and never stop 32 00:02:24.560 --> 00:02:28.800 paying for it? Is there a way that we can make this so good? The moment their card changes or they 33 00:02:28.800 --> 00:02:33.600 get a new credit card, they call us ahead of time because they don't want to stop receiving value. 34 00:02:33.600 --> 00:02:37.040 If your phone gets changed, do your phone carrier and your credit card goes out? What do you do? 35 00:02:37.040 --> 00:02:40.720 You call your phone carrier and you replace it because the value is there. If your credit card 36 00:02:41.200 --> 00:02:44.240 goes out, what do you call Netflix? You're going to make sure that your card goes through. If 37 00:02:44.240 --> 00:02:48.320 your utilities go out because your card doesn't go through, you fucking pay it. If your rent doesn't 38 00:02:48.320 --> 00:02:53.040 go through, you make sure that it's paid on time because these are things that cannot live without. 39 00:02:53.040 --> 00:02:58.880 The goal is to figure out a way to make our value so high that people don't want to stop paying. 40 00:02:58.880 --> 00:03:03.600 You want to be in the reorder, not the order business. There are recurring revenue businesses 41 00:03:03.600 --> 00:03:08.400 and reoccurring revenue. So this applies whether you have a subscription business or you have 42 00:03:08.400 --> 00:03:13.360 a one-time purchase business, the point is that people come back. Facebook is a massive company. 43 00:03:13.360 --> 00:03:19.040 They do not have a recurring revenue model. They have a reoccurring revenue model. Meaning, 44 00:03:19.040 --> 00:03:24.320 I go to the Facebook store today, I buy some eyeballs, and tomorrow I might go back again and buy 45 00:03:24.320 --> 00:03:29.520 more eyeballs. I don't have a subscription, but I reorder over and over and over again. The question 46 00:03:29.520 --> 00:03:33.520 that I ask the portfolio companies that we're trying to grow them early on and really get the 47 00:03:33.520 --> 00:03:38.800 product to be exceptional is if tomorrow you could not market anything, you could not get any new 48 00:03:38.800 --> 00:03:43.280 customers whatsoever. And the only thing you had were the customers you have today and any new 49 00:03:43.280 --> 00:03:48.320 customer that you get could only come from referral and word of mouth of the people you have right 50 00:03:48.320 --> 00:03:52.320 now. How differently would you treat them? How different would their experience be? And how much 51 00:03:52.320 --> 00:03:56.320 better would your product be if the only way you could get new customers was them sending new 52 00:03:56.320 --> 00:03:59.920 businesses your way. When you start thinking like that, you start thinking like the wealthy, 53 00:03:59.920 --> 00:04:04.240 not like the poor, we're always in a rush for the next sale, the next paycheck because the 54 00:04:04.240 --> 00:04:09.680 reality is you don't get customers to make sales. You make sales to get customers. It's an 55 00:04:09.680 --> 00:04:14.400 important distinction. We only transact in order to create the relationship so that we can have 56 00:04:14.400 --> 00:04:18.640 revenue again and again and again. You want that customer to exist like a node of revenue in your 57 00:04:18.640 --> 00:04:24.800 business that pumps money your way month after month after month. So the big issues that the 58 00:04:24.800 --> 00:04:28.800 stuff that most people self sucks, they're constantly focused on promotion. They're constantly trying 59 00:04:28.800 --> 00:04:32.960 to find the next customer but they haven't confronted the real issue is that you're just not that good 60 00:04:32.960 --> 00:04:37.360 and that's okay. But the problem is that you're not focusing on the hard work which is getting better. 61 00:04:37.360 --> 00:04:40.560 There are three steps that you look at when you're actually trying to scale a business. 62 00:04:40.560 --> 00:04:43.680 You want to go to zero to a million, make a couple of million bucks a year, you can just promote 63 00:04:43.680 --> 00:04:49.120 and sell shit all day long and never build real well. For me, I want to build a fortune. And the only 64 00:04:49.120 --> 00:04:53.440 way to build a fortune is to get people to never stop paying. If that is our goal, we only need to 65 00:04:53.440 --> 00:04:58.240 learn how to promote as much as we just need people to start trying our product. The point of making 66 00:04:58.240 --> 00:05:02.720 the first sales is to get customers. The point of those first customers is to give you feedback. 67 00:05:02.720 --> 00:05:08.000 And you keep getting feedback and not even caring too much about how hard you're marketing because 68 00:05:08.000 --> 00:05:13.040 the goal is to get the product and service better and better and better. And this is why most people 69 00:05:13.040 --> 00:05:17.760 can't scale because they start selling a little bit and say, oh, I should promote even more. 70 00:05:17.760 --> 00:05:21.680 But the problem is they never fix the product. They keep selling more and more shit and then what 71 00:05:21.680 --> 00:05:25.280 happens is if you sell a hundred people this month, you have to sell a hundred people next month 72 00:05:25.360 --> 00:05:29.840 just to maintain. And then the month after that, if you up to 200 new sales a month, then the next 73 00:05:29.840 --> 00:05:35.040 month you have to sell 200 just to maintain. But if you have 10 customers a month and they never 74 00:05:35.040 --> 00:05:40.720 leave you in five years, you have 600 customers a month that are paying you only with 10 new 75 00:05:40.720 --> 00:05:45.680 customers a month. When you get customers who do not leave you, you can afford it any marketing. 76 00:05:45.680 --> 00:05:49.920 You can afford to outspend everyone. There's a company that we're about to make a huge investment 77 00:05:50.080 --> 00:05:56.800 and right now they're lifetime value per customer compared to their competition is 10x and 78 00:05:56.800 --> 00:06:02.560 their cost to acquire customer is the same as their competition. Who's going to win in a bidding 79 00:06:02.560 --> 00:06:07.520 auction for who can buy the next customer on Facebook or YouTube or pay for the eyeballs between 80 00:06:07.520 --> 00:06:11.280 them and their competitors but wait every time because when you get that right, everything 81 00:06:11.280 --> 00:06:16.720 else is easy. Step one is you promote just to get people to become customers. Promote it so that you 82 00:06:16.720 --> 00:06:21.680 get the first seed, which is consumption. The second piece is that actual improvement loop. 83 00:06:21.680 --> 00:06:26.480 What happens is when their business gets hard, when they hit a plateau, when people can't 84 00:06:26.480 --> 00:06:31.040 grow anymore, they do one of two things. They start marketing more, which is crazy because it 85 00:06:31.040 --> 00:06:35.600 means more people find out about the stuff that you sell that sucks. Or they create another product. 86 00:06:35.600 --> 00:06:39.040 If people don't consume your product, people don't consume your service, it's not that they're 87 00:06:39.040 --> 00:06:43.600 numb nuts. It means that you suck. Means you have created such a difficult experience for someone 88 00:06:43.600 --> 00:06:47.920 to interact with. You made it so difficult for someone to onboard that they never even experienced 89 00:06:47.920 --> 00:06:52.160 the benefit. The amount of people that I hear, especially in the internet space where we're like, 90 00:06:52.160 --> 00:06:57.680 oh, these people don't work hard. They never follow through. Does Amazon complain about all the 91 00:06:57.680 --> 00:07:02.960 service tickets they get? No, because they fixed the products. They spent the time to keep solving 92 00:07:02.960 --> 00:07:08.000 problem after problem after problem until there were almost no problems left with the product. 93 00:07:08.000 --> 00:07:11.680 Taking full responsibility and saying, you know what, we can make this better. And the way you do 94 00:07:11.680 --> 00:07:17.440 that is through surveying the customers to figure out what you can do better. Looking at their client 95 00:07:17.440 --> 00:07:22.000 experience, looking at the results, seeing if you can make it happen faster, seeing if you can make 96 00:07:22.000 --> 00:07:26.160 it have an easier, making sure that you've added so much value that there's no one else that they 97 00:07:26.160 --> 00:07:30.640 can compare your product to. You keep doing the feedback loop on those customers until you get a 98 00:07:30.640 --> 00:07:35.840 product where people are referring business to you. To add the cherry and sprinkle on top, 99 00:07:35.840 --> 00:07:41.040 you make it harder to leave. And if you're in a B2B situation, you want to add in collateral or 100 00:07:41.040 --> 00:07:45.360 controlling the money flow. If you work with Stripe, they probably process your money. They control 101 00:07:45.360 --> 00:07:48.720 the money flow. They don't worry about the client cards because they collect your money for you 102 00:07:48.720 --> 00:07:53.440 upfront. The person who controls the money has leverage. And then once you crack that, once you say, 103 00:07:53.440 --> 00:07:57.440 I'm only going to sell so that I make sales to get customers, I'm going to continue to improve and 104 00:07:57.440 --> 00:08:02.240 iterate the same product over and over and over again until the point where I have so many people 105 00:08:02.240 --> 00:08:06.240 who are coming to me because of how good it is, then I'll put gas on it and spend as much money 106 00:08:06.320 --> 00:08:10.800 as I can on the market because now I can outspend everyone. In the same marketplace, 107 00:08:10.800 --> 00:08:15.600 I'm making 10 times, a hundred times more than my competitors because when people buy for me, 108 00:08:15.600 --> 00:08:20.960 they don't want to stop. But most people do it in reverse. They sell as many as they possibly can, 109 00:08:20.960 --> 00:08:24.800 burn all the good while they have, and then come out with another product, put a lot to hype around 110 00:08:24.800 --> 00:08:29.120 it, sell a bunch of them, and then do it again and again. But they cannot build a compounding 111 00:08:29.120 --> 00:08:33.760 vehicle of enterprise value because if every single launch, if every single customer that they had 112 00:08:33.760 --> 00:08:37.120 sold for the last 10 years, we're still paying them today, they would have more money than 113 00:08:37.120 --> 00:08:41.120 they know to do it. It's not about the price in an absolute term. It's all relative to the value 114 00:08:41.120 --> 00:08:45.040 that someone receives. So if someone's price is here and the value delivers here, you can make this 115 00:08:45.040 --> 00:08:49.040 price whatever you want. If this price is a million and they get 10 million of value, they will pay 116 00:08:49.040 --> 00:08:53.600 you for it. The price is what you pay, values what you get. What we want is a customer surplus. We 117 00:08:53.600 --> 00:08:58.640 want an insane deal. We want a bargain that people do call ahead of time to make sure that they never 118 00:08:58.720 --> 00:09:04.560 stop getting built. The game is saying, hey, I've got a $500,000 house. I'll sell to you for 50 grand, 119 00:09:04.560 --> 00:09:08.080 and I learned how to build it for 10. Even if you provide more value upfront and it's less 120 00:09:08.080 --> 00:09:11.920 profitable, that's okay because then through the iterations that you have of getting better, 121 00:09:11.920 --> 00:09:16.080 you get more and more efficient, and you can drive down your costs while also increasing the value, 122 00:09:16.080 --> 00:09:22.000 and maintaining your brand and reputation. This lesson took me seven years to really internalize, 123 00:09:22.000 --> 00:09:27.760 because when I looked back at my own customer list and I saw 5,000 locations on them.