WEBVTT 1 00:00:00.000 --> 00:00:05.600 The way to create a fortune in business is to only sell things that people do not stop buying. 2 00:00:06.960 --> 00:00:09.840 Welcome to the game where we talk about how to get more customers, how to make more 3 00:00:09.840 --> 00:00:13.360 customers, how to keep them longer, and the many failures and lessons we have learned along 4 00:00:13.360 --> 00:00:19.360 the way. I hope you enjoy and subscribe. I'm want to go my wife and I sold our feed figures 5 00:00:19.360 --> 00:00:24.800 software company and that deal closed 30 days ago. And so what I wanted to share with you was 6 00:00:25.760 --> 00:00:29.600 one of the biggest and most profound takeaways that I had from selling that business. 7 00:00:29.600 --> 00:00:35.120 And what we look at when we're buying our own companies. If you guys don't know who I am, 8 00:00:35.120 --> 00:00:39.680 I'm Alex Ramazzi, I own acquisition.com or my wife and I own acquisition.com. Our portfolio 9 00:00:39.680 --> 00:00:44.400 is about $85 million in revenue. So what I want to talk about today is one of the things that took 10 00:00:44.400 --> 00:00:50.240 me way too long to realize in looking at creating products and ultimately buying and selling 11 00:00:50.240 --> 00:00:56.160 businesses that are valuable. The biggest piece or biggest takeaway that I've had in creating 12 00:00:56.160 --> 00:01:03.280 quote fortunes is understanding one concept. It's so simple to understand and so hard to do. 13 00:01:03.280 --> 00:01:11.440 The key, the one way direction to creating a fortune through business is to only sell things 14 00:01:11.440 --> 00:01:17.360 that people do not stop buying. I'll say it again. The way to create a fortune in business 15 00:01:18.000 --> 00:01:24.640 is to only sell things that people do not stop buying. Some of you probably drink Starbucks. 16 00:01:24.640 --> 00:01:28.800 You probably will not stop drinking Starbucks. Some of you drink Coca-Cola and we'll probably not 17 00:01:28.800 --> 00:01:34.400 stop drinking Coca-Cola. Some of you buy Apple and we'll probably not stop buying Apple. Some of you 18 00:01:34.400 --> 00:01:38.960 watch Netflix and we'll probably never stop watching Netflix provided. They just continue to do 19 00:01:38.960 --> 00:01:43.680 what they're currently doing. The thing that is disheartening and I'll say this because I think it's 20 00:01:43.680 --> 00:01:48.240 it's just like these are the obvious things that are so obvious known does them. Simple scales, 21 00:01:48.240 --> 00:01:52.480 fancy fails. I repeat successful actions. Do the boring work. These are saying we have in our 22 00:01:52.480 --> 00:01:58.080 community because most of the success that I've had with business has not been from curing cancer 23 00:01:58.080 --> 00:02:02.640 or inventing a new technology but improving something to the point that people want to continue 24 00:02:02.640 --> 00:02:08.160 to buy it and continue to pay for it. And so right now this is the thought experiment that if you 25 00:02:08.160 --> 00:02:14.000 are a small business owner, I would like you to do. If you were to write down the total number of 26 00:02:14.000 --> 00:02:21.200 people that you have ever sold, ever all time and you were to tally that number up and then you 27 00:02:21.200 --> 00:02:28.000 were to multiply that by your current average monthly price. How much money would that be? 28 00:02:29.200 --> 00:02:34.960 Probably a lot. Maybe a lot more than you currently are making. The next thing to do is if that is 29 00:02:34.960 --> 00:02:40.080 the amount of money that you were making, how much money would you have available for you to spend 30 00:02:40.080 --> 00:02:46.240 in acquiring your customers? Probably a lot. How convicted would you be if every customer you sold 31 00:02:46.240 --> 00:02:53.600 you knew you would not lose? Probably very. And so I think rather than thinking about all of the 32 00:02:53.600 --> 00:02:58.960 many tactics and there are lots of them of making more money. How do I get more leads? How do I 33 00:02:58.960 --> 00:03:04.080 optimize my pricing? How do I sell a higher percentage? All of that stuff. Those are a lot of the 34 00:03:04.080 --> 00:03:09.200 hand-to-hand combat and I don't want to be mistaken here. You can become a millionaire just learning 35 00:03:09.200 --> 00:03:14.960 to be okay at those things. If you just learn how to market and sell, you'll be able to make money. 36 00:03:14.960 --> 00:03:21.040 You won't be able to build a fortune but you will be able to make money. The thing is is that if you 37 00:03:21.040 --> 00:03:26.640 can optimize around the single question, which is what is something that I can sell that people will 38 00:03:26.640 --> 00:03:31.840 never stop buying it after they start? And how do I structure the thing in such a way that the 39 00:03:31.840 --> 00:03:36.000 value they're getting is so far in excess of what they're paying me that they never want to leave? 40 00:03:36.000 --> 00:03:40.960 That they call me when their credit card goes down to make sure that they continue to stay and 41 00:03:41.520 --> 00:03:46.320 pay. So right now many of you probably with your Wi-Fi, right? If your Wi-Fi went out because your 42 00:03:46.320 --> 00:03:50.640 card didn't go through, you would probably immediately update your card and get the Wi-Fi back up. 43 00:03:50.640 --> 00:03:54.880 If your phone service went down, you would immediately update your card and get it back going. 44 00:03:54.880 --> 00:04:00.880 If your Netflix got canceled, you do the same thing, right? And that is because we value those 45 00:04:00.880 --> 00:04:05.040 services far in excess of the price. There is what is called a customer surplus, which means 46 00:04:05.040 --> 00:04:09.520 you are getting far more than what you pay for and so you feel like you're not only getting a good 47 00:04:09.520 --> 00:04:13.280 deal, you're getting a crazy deal and so you never want to stop buying it because the value 48 00:04:13.280 --> 00:04:21.200 exchange is so far in your favor. And so when I am now looking at businesses, I am seeing what the 49 00:04:21.200 --> 00:04:25.600 overall opportunity is that we're pursuing and what the main value proposition is. And I am 50 00:04:25.600 --> 00:04:29.280 thinking to myself, so I'm just giving you the mental frameworks that I'm working with, which is 51 00:04:29.280 --> 00:04:33.600 how can I turn this thing that is valuable into something that someone will never want to stop 52 00:04:34.240 --> 00:04:40.000 buying. So there's a couple of frameworks that I will walk you through. This is probably the most, 53 00:04:40.000 --> 00:04:44.480 this is for B to B scenario, but you can probably apply to anything. Many times, 54 00:04:44.480 --> 00:04:49.040 there are especially like the e-learning space. People will sell a method, which I think by the way 55 00:04:49.040 --> 00:04:53.280 is silly because people will never stop. They will definitely buy the method and then never need 56 00:04:53.280 --> 00:04:58.720 the method, right? Which is why I prefer models to methods. A model can have lots of methods that 57 00:04:58.720 --> 00:05:04.240 feed into it, but a method can only, it's like a one and done, right? And so ideally, you want to 58 00:05:04.240 --> 00:05:08.560 transition your business from a method selling business to a model selling business because then 59 00:05:08.560 --> 00:05:13.360 you will have a model that can always evolve over time. Franchises, some models, and the marketing 60 00:05:13.360 --> 00:05:18.560 will change. It was Groupon, then it was email. It was Facebook ads and Instagram ads and 61 00:05:18.560 --> 00:05:22.320 YouTube ads and all the things that have happened since, right? Media will change, but the model 62 00:05:22.320 --> 00:05:25.760 will remain the same. And so if the model is something that someone needs to continue to have, 63 00:05:25.760 --> 00:05:29.840 then that's something that they will not get rid of, right? Now, in the Netflix video that I 64 00:05:29.840 --> 00:05:32.960 made, like how I crack recurring revenue, there's eight sees that I look at to make something stick. 65 00:05:32.960 --> 00:05:38.320 You're all of those things will increase the stick, but the biggest one by far is the simple 66 00:05:38.320 --> 00:05:42.880 customer surplus, the value description, what you sell, sorry, what you deliver in the price 67 00:05:42.880 --> 00:05:46.880 that you charge for it, right? And most people try and cut their prices in order to get there. 68 00:05:46.880 --> 00:05:51.200 When in reality, we should be increasing the value so that, like you can create a customer 69 00:05:51.200 --> 00:05:54.400 surplus by lowering the price so much. The thing is, is there not a lot of profit left over, 70 00:05:54.400 --> 00:05:58.000 and you won't have a big business. And so unless you have something that causes zero dollars to 71 00:05:58.000 --> 00:06:04.400 reproduce, you know, like the, you know, Dropbox, right? The virtually zero dollars to reproduce 72 00:06:04.400 --> 00:06:08.160 more storage, then it's very difficult to do something like that, right? 73 00:06:10.960 --> 00:06:15.360 Real quick guys, if you can think about how you found this podcast, somebody probably tweeted it, 74 00:06:15.360 --> 00:06:19.920 told you about it, shared it on Instagram, or something like that. The only way this grows is 75 00:06:19.920 --> 00:06:24.160 through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. 76 00:06:24.160 --> 00:06:28.320 My only ask is that you continue to pay it forward. Whoever showed you or however you found out 77 00:06:28.320 --> 00:06:32.960 about this podcast that you do the exact same thing. So if it was a review, if it was a post, 78 00:06:32.960 --> 00:06:35.840 if you do that, it would mean the world to me and you'll throw some good karma out there for another 79 00:06:35.840 --> 00:06:43.360 entrepreneur. The idea, if you want to create a fortune, is to think consistently, how can I make 80 00:06:43.360 --> 00:06:49.680 this so that no one stops buying? And in the software world, which I highly recommend you look at 81 00:06:49.680 --> 00:06:54.720 all the writers for business in software because software is software as a service, right? 82 00:06:54.720 --> 00:06:58.560 SAS, right? Now, that means that all the metrics and all the things that they have quantitatively 83 00:06:58.560 --> 00:07:03.360 been able to measure in software as a service, 100% applies to service because it's just software 84 00:07:03.360 --> 00:07:08.320 doing the job that service is supposed to be doing. And so if we can do that, right? If we can 85 00:07:08.320 --> 00:07:12.720 quantitate it in this way, quantify it in this way, then this is the three step process that they 86 00:07:12.720 --> 00:07:16.480 go through when they're trying to create a billion dollar unicorn company, all right? And I got this 87 00:07:16.480 --> 00:07:22.480 from Mark Rebearers, who was one of the early guys in HubSpot, right? I think he took them from 88 00:07:22.480 --> 00:07:26.400 0 to 100 million. And now he's a lecturer at Harvard, all right? This is the process that they go 89 00:07:26.400 --> 00:07:34.000 through. The first step is getting enough promotion so that you can get customers, all right? He said, 90 00:07:34.000 --> 00:07:38.320 we're not worried about pricing, we're not worried about value. We needed to be priced high enough 91 00:07:38.320 --> 00:07:43.040 that people will care, but not so high that we're trying to maximize profit because that's not the 92 00:07:43.040 --> 00:07:48.160 goal of this period of time, all right? Now this unfortunately is where most of the internet marketing 93 00:07:48.160 --> 00:07:51.600 community stops. They learn how to promote and they think that that's how they're going to make 94 00:07:51.600 --> 00:07:56.240 money, but that's not, you'll make some money, but you won't build a fortune that way, right? So 95 00:07:56.240 --> 00:08:01.760 the promotion period is simply to get customers, all right? You make sales to get customers, 96 00:08:01.760 --> 00:08:06.480 you're not getting making customers to get sales, all right? Very important distinction. And so when 97 00:08:06.480 --> 00:08:11.840 we do that, the idea is that we're continually testing the product until we get to the point where 98 00:08:11.840 --> 00:08:17.360 people don't leave. And in theory, we should never really leave here until we have figured this 99 00:08:17.360 --> 00:08:23.760 piece out. Once we have figured this piece out, then we can start scaling it, right? And so if 100 00:08:23.760 --> 00:08:27.680 you're thinking about this in sequence, it's promotion, which is usually zero to a million, 101 00:08:28.640 --> 00:08:33.120 product, which is one to 10 million, which is where you're optimizing your product so that people 102 00:08:33.120 --> 00:08:37.520 never want to leave. They never want to stop buying. And then once you have something where the 103 00:08:37.520 --> 00:08:41.920 product is such that people don't stop buying, all of your marketing efforts in and of themselves 104 00:08:41.920 --> 00:08:46.080 will start compounding because people won't leave. And so it's just like you've got this glue 105 00:08:46.080 --> 00:08:50.480 and you're blowing all this traffic at this glue and it just sticks and it just keeps. And if you 106 00:08:50.480 --> 00:08:55.680 never lose a customer, you will literally never stop making more money year over year. Think 107 00:08:55.680 --> 00:08:59.520 about that. Just like piped that up. You just think about that for a second. You will never stop 108 00:08:59.520 --> 00:09:05.200 making money. You will never stop making more money year over year if you never lose a customer. 109 00:09:05.280 --> 00:09:10.160 And I think that it's just such a profound like ideology shift. It's so easy to say and so hard 110 00:09:10.160 --> 00:09:13.600 to do, which is why most people don't want to do it. But if you're part of Mosination and you like 111 00:09:13.600 --> 00:09:16.880 doing the boring work, you like doing the things that other people are not willing to do, 112 00:09:17.520 --> 00:09:22.080 then these are the things. These are the keys to the kingdom is creating things that people will 113 00:09:22.080 --> 00:09:26.080 never stop buying. And that means that you're interviewing customers. It means you're surveying 114 00:09:26.080 --> 00:09:30.000 them. It means you're looking at usage patterns. You're looking at the things that they're consuming. 115 00:09:30.000 --> 00:09:34.480 You're looking at how you can increase the collateral within your community so that people don't 116 00:09:34.480 --> 00:09:40.400 want to leave. And we do these things over and over and over again until we get to the point 117 00:09:40.400 --> 00:09:48.640 we're at 1% 2% monthly churn at most rather than 10 or 20% which is what most people have. 118 00:09:48.640 --> 00:09:53.200 And if that sounds hard, of course it is. But the thing is that I guarantee that no one else is 119 00:09:53.200 --> 00:09:57.120 doing it. Everyone's obsessing about their Stripe account screenshots. But the thing is that the 120 00:09:57.120 --> 00:10:02.000 fortunes are not even made in the follow up. The fortunes are made in never losing customers. 121 00:10:02.000 --> 00:10:05.760 Because then you have time on your side because then over a long enough time horizon, 122 00:10:05.760 --> 00:10:10.160 even if you suck at marketing, people will find out about your product over a long enough time 123 00:10:10.160 --> 00:10:15.760 horizon. And if you have a product that people never stop using, you will be able to make a 124 00:10:15.760 --> 00:10:20.960 tremendous amount of money because in 20 years, if you were to think about whatever amount of sales 125 00:10:20.960 --> 00:10:24.240 you have right now as a small business owner, you might have been doing this for three years or 126 00:10:24.240 --> 00:10:28.560 five years, whatever it is, right? If you were to multiply this in your 20 years into your career, 127 00:10:28.560 --> 00:10:32.320 you've actually been doing the same thing. One, it would be far more likely that you'd have 128 00:10:32.320 --> 00:10:35.280 something that you would have figured out how to make the product so good that people wouldn't 129 00:10:35.280 --> 00:10:40.560 wouldn't leave. But also 20 years from now, you'd have so many customers, even if you weren't 130 00:10:40.560 --> 00:10:44.800 that good at promotion that your business would be gigantic, all right? And so I think I've 131 00:10:44.800 --> 00:10:50.640 told the story before, but I had a consulting engagement that I did years ago where somebody 132 00:10:50.640 --> 00:10:54.560 was selling the exact same amount of clients as I was. And they were making 300,000 a month. 133 00:10:54.640 --> 00:10:59.520 And we were doing 4 million a month. And I think I had 100 times the profit of their company. 134 00:11:00.480 --> 00:11:03.840 And it wasn't because they were like, we were selling the same amount of customers. It was just that 135 00:11:03.840 --> 00:11:07.040 we had such a better monetization. If you were such a better product, we were able to deliver so much 136 00:11:07.040 --> 00:11:13.120 more value that we were able to grow to a much bigger size. Like if you sell 100 clients a month B2B, 137 00:11:13.120 --> 00:11:17.600 you should be able to build that into a $100 million enterprise. You have the sales velocity. 138 00:11:17.600 --> 00:11:21.200 And so then it's just simply, and I know that's like, well, what about pricing over a long enough 139 00:11:21.200 --> 00:11:24.720 time horizon, you should still probably, if you're B2B, you'll probably be in a price point where 140 00:11:24.720 --> 00:11:29.200 you would get there. If here's the big if, you don't lose customers. And so I think the vast 141 00:11:29.200 --> 00:11:33.840 majority of there's one message from this video, it's, what can we look at or reimagine within our 142 00:11:33.840 --> 00:11:37.600 customer experience and the product that we deliver that will deliver outsize returns so that we 143 00:11:37.600 --> 00:11:41.680 have a customer surplus, which means the amount of value provide is far and excess to the price 144 00:11:41.680 --> 00:11:45.520 that we charge. And that doesn't matter what the price is. So when someone says I charge high ticket, 145 00:11:45.520 --> 00:11:50.240 I think it's a silly, silly concept altogether, right? Because it really should just be high value. 146 00:11:50.240 --> 00:11:54.480 That's the real concept, which is high value. All right, because what is expensive? 147 00:11:54.480 --> 00:11:59.520 Right? If I said, hey, I'll give you my, you know, my Lambo for 20 grand is that a good deal? 148 00:11:59.520 --> 00:12:03.600 Absolutely, right? Prices what you pay, values what you get in that discrepancy is going to be 149 00:12:03.600 --> 00:12:08.000 the customer surplus. And so right now, if I said that to this channel, hey, I need the first person 150 00:12:08.000 --> 00:12:13.200 who wires me 20 grand, right? Guess the Lambo. A lot of people will probably wire me 20 grand, 151 00:12:13.200 --> 00:12:17.200 right? Because the value is clear to understand. If I was selling a house and I said, hey, give me, 152 00:12:17.200 --> 00:12:21.600 you know, it's a $500,000 house. Give it to you for 50 grand. It's a great deal. Most people 153 00:12:21.600 --> 00:12:25.760 would make that offer. And so the thing is, is that that is what the business, like that is 154 00:12:25.760 --> 00:12:32.080 where fortunes are built is finding a way to build a house for less than $50,000 to build a 500,000 155 00:12:32.080 --> 00:12:39.040 dollar house, build it for $10,000, build it for $5,000 and sell it for $50,000. That's the game 156 00:12:39.040 --> 00:12:43.360 that we're trying to play. That is where fortunes are made. That is where fortunes are founded. That is 157 00:12:43.360 --> 00:12:48.320 where you sell things that people will never stop buying. And that is the real key to making more 158 00:12:48.320 --> 00:12:52.400 wealth and more money than you know what to do with. And the reality is, it's very simple to say 159 00:12:52.400 --> 00:12:57.120 and very hard to do. And that's why most people will never be wealthy. But you are part of Mozy Nation. 160 00:12:57.120 --> 00:13:01.360 And you are not going to be one of those people because we do the boring work. We do the things 161 00:13:01.360 --> 00:13:05.200 that people are not willing to do so that we can have success that they have never dreamed of. So 162 00:13:05.200 --> 00:13:08.480 anyways, keeping awesome. If you enjoyed this, my name is Alex from Mozy, I'm an acquisition.com. 163 00:13:09.200 --> 00:13:12.880 We do $85 million in revenue and I have absolutely nothing to sell you. I guess if you like this, 164 00:13:12.880 --> 00:13:16.240 hit the subscribe button. We have a lot more tactical videos on how to grow your business. 165 00:13:17.120 --> 00:13:21.120 And if you if you didn't like this, then I love you the way I keep being awesome because you're 166 00:13:21.120 --> 00:13:29.680 in the game and I will always appreciate you for that. So keep being awesome. Catch you soon. Bye!