WEBVTT 1 00:00:00.000 --> 00:00:03.920 One of the biggest and most profound takeaways that I had from selling that business, 2 00:00:03.920 --> 00:00:07.360 and what we look at when we're buying our own companies. 3 00:00:07.360 --> 00:00:10.240 Welcome to the game where we talk about how to get more customers, how to make more 4 00:00:10.240 --> 00:00:13.440 customers, how to keep them longer, and the many failures and lessons we have learned 5 00:00:13.440 --> 00:00:15.680 along the way. I hope you enjoy and subscribe. 6 00:00:15.680 --> 00:00:22.000 I'm going to go my wife when I sold our 8 figures software company and that deal closed 30 days ago. 7 00:00:22.000 --> 00:00:27.600 And so what I wanted to share with you was one of the biggest and most profound takeaways that 8 00:00:27.600 --> 00:00:32.480 I had from selling that business and what we look at when we're buying our own companies. 9 00:00:33.280 --> 00:00:36.320 If you guys don't know who I am, I'm Alex Ramazzi, I'm an acquisition.com, or my wife, 10 00:00:36.320 --> 00:00:40.320 and I own acquisition.com. Our portfolio is about $85 million in revenue. 11 00:00:40.320 --> 00:00:44.400 So what I want to talk about today is one of the things that took me way too long to realize 12 00:00:44.400 --> 00:00:50.480 in looking at creating products and ultimately buying and selling businesses that are valuable, 13 00:00:50.560 --> 00:00:56.640 right? And the biggest piece or biggest takeaway that I've had in creating, quote, 14 00:00:56.640 --> 00:01:03.120 fortunes is understanding one concept. It's so simple to understand and so hard to do. 15 00:01:04.480 --> 00:01:12.880 The key, the one way direction to creating a fortune through business is to only sell things that 16 00:01:12.880 --> 00:01:18.640 people do not stop buying. I'll say it again. The way to create a fortune in business 17 00:01:19.280 --> 00:01:22.480 is to only sell things that people do not stop buying. 18 00:01:23.840 --> 00:01:27.920 Some of you probably drink Starbucks. You probably will not stop drinking Starbucks. 19 00:01:27.920 --> 00:01:31.760 Some of you drink Coca-Cola and we'll probably not stop drinking Coca-Cola. 20 00:01:31.760 --> 00:01:35.280 Some of you buy Apple and we'll probably not stop buying Apple, right? 21 00:01:35.280 --> 00:01:39.200 Some of you watch Netflix and we'll probably never stop watching Netflix provided. 22 00:01:39.200 --> 00:01:44.560 They just continue to do what they're currently doing. And the thing that is disheartening, 23 00:01:44.560 --> 00:01:48.560 right? And I'll say this because I think it's, it's just like these are the obvious things that 24 00:01:48.560 --> 00:01:52.880 are so obvious no one does them, right? Simple scales, fancy fails. All right, repeat successful 25 00:01:52.880 --> 00:01:57.200 actions. Do the boring work. Like these are saying we have in our community because most of the 26 00:01:57.200 --> 00:02:02.400 success that I've had with business has not been from curing cancer or inventing a new technology, 27 00:02:02.400 --> 00:02:06.880 but improving something to the point that people want to continue to buy it and continue to pay for 28 00:02:06.880 --> 00:02:11.760 it. And so right now, this is the thought experiment that if you were a small business owner, 29 00:02:11.840 --> 00:02:18.000 I would like you to do. If you were to write down the total number of people that you have ever sold 30 00:02:19.440 --> 00:02:26.160 ever all time and you were to tally that number up and then you were to multiply that by your 31 00:02:26.160 --> 00:02:33.600 current average monthly price. How much money would that be? Probably a lot, maybe a lot more 32 00:02:33.600 --> 00:02:38.480 than you currently are making. The next thing to do is if that is the amount of money that you 33 00:02:38.480 --> 00:02:43.920 were making, how much money would you have available for you to spend in acquiring your customers? 34 00:02:45.200 --> 00:02:50.800 Probably a lot. How convicted would you be if every customer you sold you knew you would not lose? 35 00:02:51.920 --> 00:02:58.960 Probably very. And so I think rather than thinking about all of the many tactics and there are 36 00:02:58.960 --> 00:03:04.000 lots of them of making more money. How do I get more leads? How do I optimize my pricing? How do I 37 00:03:04.000 --> 00:03:09.200 sell a higher percentage? All of that stuff. Those are a lot of the hand-to-hand combat and I don't 38 00:03:09.200 --> 00:03:15.440 want to be mistaken here. You can become a millionaire just learning to be okay at those things. If you 39 00:03:15.440 --> 00:03:20.160 just learn how to market and sell, you'll be able to make money. You won't be able to build a 40 00:03:20.160 --> 00:03:27.680 fortune, but you will be able to make money. And the thing is that if you can optimize around this 41 00:03:27.680 --> 00:03:32.960 single question, which is what is something that I can sell that people will never stop buying it 42 00:03:32.960 --> 00:03:38.000 after they start. And how do I structure the thing in such a way that the value they're getting 43 00:03:38.000 --> 00:03:42.480 is so far in excess of what they're paying me that they never want to leave, that they call me 44 00:03:42.480 --> 00:03:47.520 when their credit card goes down to make sure that they continue to stay in pay. So right now, 45 00:03:47.520 --> 00:03:52.160 many of you probably, with your Wi-Fi, right, if your Wi-Fi went out because your card didn't go 46 00:03:52.160 --> 00:03:56.800 through, you would probably immediately update your card and get the Wi-Fi back up. If your phone 47 00:03:56.800 --> 00:04:01.520 service went down, you would immediately update your card and get it back going. If your Netflix got 48 00:04:01.520 --> 00:04:07.360 canceled, you do the same thing, right? And that is because we value those services far in excess 49 00:04:07.360 --> 00:04:11.920 of the price. There is what is called a customer surplus, which means you are getting far more 50 00:04:11.920 --> 00:04:15.680 than what you pay for. And so you feel like you're not only getting a good deal, you're getting a 51 00:04:15.680 --> 00:04:19.680 crazy deal, and so you never want to stop buying it because the value exchange is so far in your 52 00:04:19.680 --> 00:04:27.680 favor. And so when I am now looking at businesses, I am seeing what the overall opportunity is that 53 00:04:27.680 --> 00:04:32.240 we're pursuing and what the main value proposition is, and I am thinking to myself, so I'm just giving 54 00:04:32.240 --> 00:04:36.880 you the mental frameworks that I'm working with, which is how can I turn this thing that is valuable 55 00:04:36.880 --> 00:04:41.120 into something that someone will never want to stop buying, all right? So there's a couple of 56 00:04:41.120 --> 00:04:47.040 frameworks that I will walk you through. This is probably the most, this is for B2B scenario, 57 00:04:47.040 --> 00:04:52.560 but you can probably apply to anything. Many times, there are especially like the e-learning space. 58 00:04:53.280 --> 00:04:57.680 People will sell a method, which I think by the way is silly because people will never stop. 59 00:04:57.680 --> 00:05:02.800 They will definitely buy the method and then never need the method, right? Which is why I prefer 60 00:05:02.800 --> 00:05:07.760 models to methods, right? A model can have lots of methods that feed into it, but a method can only 61 00:05:07.760 --> 00:05:12.880 it's like a one and done, right? And so ideally you want to transition your business from a method 62 00:05:12.880 --> 00:05:17.040 selling business to a model selling business, because then you will have a model that can always 63 00:05:17.040 --> 00:05:21.520 evolve over time. Franchises, some models, and the marketing will change. It was Groupon, the 64 00:05:21.520 --> 00:05:26.320 one that it was e-mail. It was Facebook ads and Instagram ads and YouTube ads and all the 65 00:05:26.320 --> 00:05:30.240 things that have happened since, right? Media will change, but the model will remain the same. 66 00:05:30.240 --> 00:05:33.200 And so if the model is something that someone needs to continue to have, then that's something 67 00:05:33.200 --> 00:05:37.520 that they will not get rid of, right? Now, in the Netflix video that I made, like how I crack 68 00:05:37.520 --> 00:05:40.720 recurring revenue, there's 8Cs that I look at to make something stickier. All of those things 69 00:05:40.720 --> 00:05:46.560 will increase the stick, but the biggest one by far is the simple customer surplus, the value 70 00:05:46.560 --> 00:05:52.320 discrepancy and what you deliver in the price that you charge for it, right? And most people try 71 00:05:52.320 --> 00:05:56.240 and cut their prices in order to get there, when in reality we should be increasing the value, 72 00:05:56.240 --> 00:06:00.240 so that, like you can create a customer surplus by lowering the price so much. The thing is, 73 00:06:00.240 --> 00:06:03.520 there's not a lot of profit left over and you won't have a big business. And so unless you have 74 00:06:03.520 --> 00:06:10.000 something that causes zero dollars to reproduce, you know, like the drop box, right? The virtually 75 00:06:10.000 --> 00:06:15.120 zero dollars to reproduce more storage. Then it's very difficult to do something like that, right? 76 00:06:17.680 --> 00:06:22.400 Hey guys, real quick for those of you guys who are $100 million off for fans. I love you. 77 00:06:22.400 --> 00:06:26.720 I added in a lost chapter that has never been released. I'm releasing it now. 78 00:06:26.720 --> 00:06:31.280 Transparently, I'm doing that to build hype for $100 million leads, but you will have the 79 00:06:31.280 --> 00:06:35.920 unreleased chapter. It talks about your first avatar and how to segment customers to make more money. 80 00:06:35.920 --> 00:06:39.760 You can get it by going to acquisition.com forward slash leads. It's 81 00:06:39.760 --> 00:06:44.720 hopefully in exchange for email so that I can email you when we launch $100 million leads and so 82 00:06:44.720 --> 00:06:48.160 that you cannot miss out on it because last time I sold out for like eight straight weeks, 83 00:06:48.160 --> 00:06:51.600 really fast. So that is my way of making sure that y'all get first dips. 84 00:06:54.320 --> 00:07:00.160 And so the idea if you want to create a fortune is to think consistently, how can I make this so 85 00:07:00.160 --> 00:07:06.720 that no one stops buying? And in the software world, which I highly recommend you look at all the 86 00:07:06.720 --> 00:07:12.400 writers for business in software because software is software as a service, right? SaaS, right? 87 00:07:12.400 --> 00:07:15.200 Now, that means that all the metrics and all the things that they have quantitatively been 88 00:07:15.200 --> 00:07:19.840 able to measure in software as a service, 100% applies to service because it just software 89 00:07:19.840 --> 00:07:24.960 doing the job that service is supposed to be doing, right? And so if we can do that, right? 90 00:07:24.960 --> 00:07:28.640 If we can, if we can quantitative in this way, quantify it in this way, then this is the 91 00:07:28.640 --> 00:07:32.000 this is the three-step process that they go through when they're trying to create a billion 92 00:07:32.000 --> 00:07:36.960 dollar unicorn company, all right? And I got this from Mark Rebares who was the one of the one of 93 00:07:36.960 --> 00:07:40.960 the early guys in in HubSpot, right? I think he took them from zero to 100 million and now he's 94 00:07:40.960 --> 00:07:46.160 a lecturer at Harvard, all right? So this is the process that they go through. The first step 95 00:07:46.720 --> 00:07:52.400 is is is is getting enough promotion so that you can get customers, all right? He said we're not 96 00:07:52.400 --> 00:07:56.960 worried about pricing. We're not worried about value. We need to be priced high enough that people 97 00:07:56.960 --> 00:08:01.680 will care, but not so high that we're trying to maximize profit because that's not the goal 98 00:08:01.680 --> 00:08:06.240 of this period of time, all right? Now this unfortunately is where most of the internet marketing 99 00:08:06.240 --> 00:08:09.680 community stops. They learn how to promote and they think that that's how they're going to make 100 00:08:09.680 --> 00:08:14.320 money, but that's not you'll make some money, but you won't build a fortune that way, right? So 101 00:08:14.320 --> 00:08:20.000 the promotion period is simply to get customers, all right? You make sales to get customers. You're 102 00:08:20.000 --> 00:08:24.960 not getting making customers to get sales, all right? Very important distinction. And so when we do 103 00:08:24.960 --> 00:08:30.320 that, the idea is that we're continually testing the product until we get to the point where people 104 00:08:30.320 --> 00:08:35.920 don't leave. And in theory, we should never really leave here until we have figured this piece out. 105 00:08:36.560 --> 00:08:42.000 Once we have figured this piece out, then we can start scaling it, right? And so if you're 106 00:08:42.000 --> 00:08:45.840 thinking about this in sequence, it's promotion, which is usually zero to a million, 107 00:08:46.800 --> 00:08:51.280 product, which is one to 10 million, which is where you're optimizing your product so that people 108 00:08:51.280 --> 00:08:55.520 will never want to leave. They never want to stop buying. And then once you have something where 109 00:08:55.520 --> 00:09:00.080 the product is such that people don't stop buying, all of your marketing efforts in and of themselves 110 00:09:00.080 --> 00:09:04.240 will start compounding because people won't leave. And so it's just like you've got this glue 111 00:09:04.240 --> 00:09:08.640 and you're blowing all this traffic at this glue and it just sticks and it just keeps. And if you 112 00:09:08.640 --> 00:09:13.600 never lose a customer, you will literally never stop making more money year over year. 113 00:09:14.400 --> 00:09:18.080 Think about that. Just like piped that up. Just think about that for a second. You will never 114 00:09:18.080 --> 00:09:23.600 stop making money. You will never stop making more money year over year if you never lose a 115 00:09:23.600 --> 00:09:29.200 customer. And I think that it's just such a profound like ideology shift. It's so easy to say and 116 00:09:29.200 --> 00:09:32.880 so hard to do, which is why most people don't want to do it. But if you're part of Mosination and 117 00:09:32.880 --> 00:09:36.400 you like doing the the boring work you like doing the things that other people are not willing to do, 118 00:09:37.040 --> 00:09:41.600 then these are the things. These are the keys to the kingdom is creating things that people will 119 00:09:41.600 --> 00:09:45.840 never stop buying. All right. And that means that you're interviewing customers. It means you're 120 00:09:45.840 --> 00:09:49.360 surveying them. It means you're looking at usage patterns. You're looking at the things that 121 00:09:49.360 --> 00:09:53.840 they're consuming. You're looking at how you can increase the collateral within your community 122 00:09:53.840 --> 00:10:00.240 so that people don't want to leave, right? And we do these things over and over and over again 123 00:10:00.240 --> 00:10:08.960 until we get to the point we're at 1% 2% monthly churn at most rather than 10 or 20% which is what 124 00:10:08.960 --> 00:10:13.840 most people have. And if that sounds hard, of course it is. But the thing is that I guarantee you 125 00:10:13.840 --> 00:10:17.200 that no one else is doing it. Everyone's obsessing about their Stripe account screenshots. But the 126 00:10:17.200 --> 00:10:22.000 thing is is that the fortunes are not even made in the follow up. The fortunes are made in 127 00:10:22.000 --> 00:10:26.320 never losing customers because then you have time on your side because then over a long enough 128 00:10:26.320 --> 00:10:30.960 time horizon, even if you suck at marketing, people will find out about your product over a long 129 00:10:30.960 --> 00:10:36.960 enough time horizon. And if you have a product that people never stop using, you will be able to make 130 00:10:36.960 --> 00:10:42.320 a tremendous amount of money because in 20 years, if you were to think about whatever amount of sales 131 00:10:42.320 --> 00:10:45.600 you have right now is a small business owner. You might have been doing this for three years or 132 00:10:45.600 --> 00:10:49.840 five years, whatever it is, right? If you were to multiply this in your 20 years into your career 133 00:10:49.840 --> 00:10:53.600 and you've actually been doing the same thing, one, it would be far more likely that you'd have 134 00:10:53.600 --> 00:10:56.560 something that you would have figured out how to make the product so good that people wouldn't 135 00:10:56.560 --> 00:11:01.920 wouldn't leave. But also 20 years from now, you'd have so many customers even if you weren't 136 00:11:01.920 --> 00:11:06.320 that good at promotion that your business would be gigantic, all right? And so I think I've told 137 00:11:06.320 --> 00:11:12.160 the story before but I had a consulting engagement that I did years ago where somebody was 138 00:11:12.160 --> 00:11:16.160 selling the exact same amount of clients as I was and they were making 300,000 a month and we 139 00:11:16.160 --> 00:11:20.800 were doing four million a month. And I think I had a hundred times the profit of their company. 140 00:11:21.840 --> 00:11:25.200 And it wasn't because they were like, we were selling the same amount of customers. It was just that 141 00:11:25.200 --> 00:11:28.320 we had such a better monetization. If you were such a better product, we were able to deliver so much 142 00:11:28.320 --> 00:11:33.840 more value that we were able to grow to a much bigger size. Like if you sell 100 clients a month B to 143 00:11:33.840 --> 00:11:38.160 B, you should be able to build that into into a hundred million dollar enterprise. You have the sales 144 00:11:38.160 --> 00:11:42.160 velocity. And so then it's just simply and I know that's like, well, what about pricing? Over a 145 00:11:42.160 --> 00:11:45.520 long enough time horizon, you should still probably, if you're B to B, you'll probably be in a 146 00:11:45.520 --> 00:11:50.160 price point where you would get there. If here's the big if, you don't lose customers. And so I think 147 00:11:50.160 --> 00:11:54.800 the vast majority of there's one message from this video, it's, what can we look at or reimagine 148 00:11:54.800 --> 00:11:58.560 within our customer experience and the product that we deliver that will deliver outsize returns 149 00:11:58.560 --> 00:12:02.480 so that we have a customer surplus, which means the amount of value provide is far and excess 150 00:12:02.480 --> 00:12:06.400 to the price that we charge. And that doesn't matter what the price is. So when someone says I charge 151 00:12:06.400 --> 00:12:10.720 high ticket, I think it's a silly, silly concept altogether, right? Because it really should just be 152 00:12:10.720 --> 00:12:15.840 high value. That's the real concept, which is high value. All right, because what is expensive? 153 00:12:15.840 --> 00:12:20.880 Right? If I said, hey, I'll give you my, you know, my Lambo for 20 grand is that a good deal? 154 00:12:20.880 --> 00:12:24.960 Absolutely. Right? Price is what you pay values, what you get in that discrepancy is going to be 155 00:12:24.960 --> 00:12:29.280 the customer surplus. And so right now, if I said that to this channel, hey, I need the first person 156 00:12:29.280 --> 00:12:34.800 who wires me 20 grand, right? Guess the Lambo. A lot of people will probably wire me 20 grand, right? 157 00:12:34.800 --> 00:12:38.480 Because the value is clear to understand. If I was selling a house and I said, hey, give me, 158 00:12:38.480 --> 00:12:42.800 you know, it's a $500,000 house, give it to you for 50 grand. It's a great deal. Most people 159 00:12:42.800 --> 00:12:47.040 would make that offer. And so the thing is, is that that is what the business, like that is 160 00:12:47.040 --> 00:12:53.920 where fortunes are built is finding a way to build a house for less than $50,000. So build a $500,000 161 00:12:53.920 --> 00:13:01.040 house, build it for $10,000, build it for $5,000, and sell it for $50,000. That's the game that we're 162 00:13:01.040 --> 00:13:05.280 trying to play. That is where fortunes are made. That is where fortunes are founded. That is where 163 00:13:05.280 --> 00:13:10.400 you sell things that people will never stop buying. And that is the real key to making more wealth 164 00:13:10.400 --> 00:13:14.160 and more money than you know what to do with. And the reality is, it's very simple to say, 165 00:13:14.160 --> 00:13:18.880 and very hard to do. And that's why most people will never be wealthy. But you are part of Mozy Nation, 166 00:13:18.880 --> 00:13:23.120 and you are not going to be one of those people. Because we do the boring work. We do the things 167 00:13:23.120 --> 00:13:26.800 that people are not willing to do so that we can have success that they have never dreamed of. 168 00:13:26.800 --> 00:13:30.560 So anyways, keeping awesome. If you enjoyed this, my name is Alex Ramose, I own acquisition.com. 169 00:13:30.560 --> 00:13:34.640 We do $85 million in revenue, and I have absolutely nothing to sell you. Like I said, if you like this, 170 00:13:34.640 --> 00:13:38.000 hit the subscribe button. We have a lot more tactical videos on how to grow your business. 171 00:13:38.880 --> 00:13:42.960 And if you, if you didn't like this, then I love you the right, keeping awesome because you're 172 00:13:42.960 --> 00:13:51.840 in the game. And I will always appreciate you for that. So keep being awesome. Catch you soon. Bye!