WEBVTT 1 00:00:00.000 --> 00:00:04.240 So what the brand does is give you pricing power and that pricing power 2 00:00:04.240 --> 00:00:06.480 translates directly to bottom line profits. 3 00:00:07.920 --> 00:00:10.200 Welcome to the game where we talk about how to get more customers, 4 00:00:10.200 --> 00:00:12.200 how to make more customers, how to keep them longer, 5 00:00:12.200 --> 00:00:14.640 and the many failures and lessons we have learned along the way. 6 00:00:14.680 --> 00:00:15.960 I hope you enjoy and subscribe. 7 00:00:17.680 --> 00:00:22.320 Our portfolio of companies does $75,000 per working hour, 8 00:00:22.320 --> 00:00:25.560 40 hours per week and building this has taken a long time. 9 00:00:25.600 --> 00:00:28.640 And so what I share with you is 10 lessons that I have learned in 10 00:00:28.640 --> 00:00:31.720 observing all of those companies over the last 10 years. 11 00:00:32.160 --> 00:00:33.640 And so let's start with the first one. 12 00:00:34.120 --> 00:00:36.760 And if you don't know, I have my name's Alchemy, I'm an acquisition.com. 13 00:00:36.800 --> 00:00:38.520 It's portfolio of companies does all that stuff. 14 00:00:38.600 --> 00:00:41.880 All right. So the first one is something that I actually learned from the 15 00:00:41.880 --> 00:00:46.360 private equity managing partner who acquired two of the companies last year. 16 00:00:46.920 --> 00:00:51.400 Number one is that most things don't matter and a few things matter a lot. 17 00:00:51.760 --> 00:00:55.800 And you can achieve outsides returns by only focusing on those few. 18 00:00:56.280 --> 00:00:58.360 And so once you figure out those few things, 19 00:00:58.400 --> 00:01:00.200 you can ruthlessly eliminate the rest. 20 00:01:00.320 --> 00:01:03.880 And the thing is is that this is very hard because a lot of us get really excited. 21 00:01:03.880 --> 00:01:06.200 We've got to workshops, we've got to seminars, we see ads on Facebook, 22 00:01:06.200 --> 00:01:09.560 and we think, oh, you know, I should be doing this new sexy thing. 23 00:01:09.920 --> 00:01:12.720 And the reality is that there are very few things that can give you 10x, 24 00:01:12.720 --> 00:01:13.840 50x results. 25 00:01:14.120 --> 00:01:17.520 And so if you just focus on those few things, you can get a lot of other stuff 26 00:01:17.520 --> 00:01:21.720 wrong. And I think all of us could use more second chances and more padding, right? 27 00:01:21.720 --> 00:01:24.680 And so if you can just focus on those big things, you can make those mistakes 28 00:01:24.680 --> 00:01:25.560 and still succeed. 29 00:01:25.880 --> 00:01:29.320 And so when the private equity partner who kind of taught me this lesson is when 30 00:01:29.320 --> 00:01:31.840 I was observing some of the things that he's doing, general entrepreneurs, 31 00:01:31.840 --> 00:01:35.000 these labs during the last quarterly meeting, you know, 32 00:01:35.000 --> 00:01:38.680 our team was going through all the things that that they were doing to kind of, 33 00:01:38.680 --> 00:01:40.120 you know, improve the company and grow. 34 00:01:40.520 --> 00:01:44.640 And I could tell that he was only interested in only two conversations that occurred. 35 00:01:45.000 --> 00:01:48.320 Number one is that, you know, we were building in some technology to the business 36 00:01:48.320 --> 00:01:51.320 because that would yield a much bigger multiple for the business in the future. 37 00:01:51.840 --> 00:01:56.640 The second was a creative, which means basically value additive M&A. 38 00:01:56.720 --> 00:02:00.720 So looking at companies that are similar in the space that they could roll in to the 39 00:02:00.720 --> 00:02:05.040 overall conglomerate because in his mind, he knew that the only way to, you know, 40 00:02:05.040 --> 00:02:08.000 sell that, you know, those two particular companies for over, you know, 41 00:02:08.000 --> 00:02:13.360 250 million or more, which is the goal would probably come from those two main 42 00:02:13.360 --> 00:02:17.800 things. And the rest of it, for the most part, he just considered blocking 43 00:02:17.800 --> 00:02:20.680 and tackling, which is just, yeah, of course, you know, we'll grow, we'll do these 44 00:02:20.680 --> 00:02:25.840 things. But the big, the big nuts, the big levers for getting that growth was going 45 00:02:25.840 --> 00:02:28.920 to come from very few things. And that is where he allocated all of his attention. 46 00:02:28.920 --> 00:02:32.440 And to me, that was a very important lesson to witness. That was number one. 47 00:02:32.960 --> 00:02:37.200 Number two is that the size of your slice of the pie matters more than the shape. 48 00:02:37.360 --> 00:02:40.040 All right. So a lot of people's egos might include it, right? 49 00:02:40.040 --> 00:02:42.840 Want a hundred percent of the pie, which is a perfect circle, right? 50 00:02:42.840 --> 00:02:46.240 We want a hundred percent of the pie, but our big accounts only care about how much 51 00:02:46.240 --> 00:02:49.440 that slice of pie weighs, right? If you were a one percent owner and Facebook, 52 00:02:49.440 --> 00:02:52.000 you'd be significantly wealthier than owning a hundred percent of probably the small 53 00:02:52.000 --> 00:02:56.560 businesses that you have, right? And so the thing is, is that in order to do that, 54 00:02:56.560 --> 00:03:00.320 it means you have to go up slices of the pie because it takes more people to build big 55 00:03:00.320 --> 00:03:05.120 things, right? And so getting other people tied and compensated for the achievement 56 00:03:05.120 --> 00:03:08.360 of your vision is one of the key things that is required. And I noticed that 57 00:03:08.360 --> 00:03:11.520 because as soon as we've done profit sharing plans and given, you know, 58 00:03:11.600 --> 00:03:16.720 bonus pools and things like that to tie leaders into the success and the achievement 59 00:03:16.720 --> 00:03:22.240 of the overall vision, we got significantly outsized returns in excess of what we had given up. 60 00:03:22.240 --> 00:03:27.920 And so it's just the the weight of the slice that we have or that we keep is now worth more 61 00:03:27.920 --> 00:03:31.920 than if we had had a hundred percent and not had that incremental growth through enlisting 62 00:03:31.920 --> 00:03:36.800 the spirit and willpower and drive of other people, right? And one of the interesting things 63 00:03:36.800 --> 00:03:39.440 that I've witnessed is that if you look at the richest people in the world, the vast majority 64 00:03:39.440 --> 00:03:42.960 of them do not own a hundred percent of their company. I mean, the vast majority don't even 65 00:03:42.960 --> 00:03:47.440 own majority of their company. Look at basis, only it's 10% of a Amazon at this point. Elon 66 00:03:47.440 --> 00:03:52.960 owns 20 and 17% of SpaceX and Tesla, right? And so, you know, if we take lessons from these people, 67 00:03:52.960 --> 00:03:57.040 it's that the more people you make wealthy, the more wealthy you will become, right? And it's true 68 00:03:57.040 --> 00:04:01.440 from a business to consumer standpoint, if you sell kind of B2B, but also just from the overall 69 00:04:02.080 --> 00:04:06.560 infrastructure of the of the marketplace, like the more people you have who are rooting for you, 70 00:04:06.560 --> 00:04:10.400 because they are vested in their success, the more you will ultimately make. And this is 71 00:04:10.400 --> 00:04:15.520 difficult for our egos and this took me way, way too long to realize. Number three, 72 00:04:15.520 --> 00:04:19.760 is that big things take time, all right? I knew that when I was, you know, younger in the entrepreneurial 73 00:04:19.760 --> 00:04:23.680 game, I was very obsessed with fast wins, fast wins, fast wins. What can we do this week? What 74 00:04:23.680 --> 00:04:28.160 can we do this month? Rather than thinking 10 years out, 20 years out. And the thing is, is that when 75 00:04:28.160 --> 00:04:32.720 I and I learned this lesson from Andrew Charm who owns Panda Express and he lives in the building 76 00:04:32.720 --> 00:04:37.520 above me, and he actually owns this entire building, which he bought for I think like 150 million, 77 00:04:37.520 --> 00:04:42.560 and he owns the building next to us, which he bought for 5.6 billion. So yeah, big, big dude, 78 00:04:42.560 --> 00:04:48.720 and he owns 2,600 locations of Panda Express, and he owns them all 100% use, no franchises, no 79 00:04:48.720 --> 00:04:52.880 licensors. And when asked on an interview, what the geese to success were, there were two themes 80 00:04:52.880 --> 00:04:58.320 that that came out. One, he said, your customers absolutely love your product. And number two, 81 00:04:59.040 --> 00:05:04.160 is that big things take time, right? It took him 45 years and he still continues to grow this day, 82 00:05:04.160 --> 00:05:07.840 and the majority of the growth has happened in the last, you know, five years or so this year, 83 00:05:07.840 --> 00:05:14.640 he opened up 600 locations of those 2600. So a huge chunk happens near the end, and that depth 84 00:05:14.640 --> 00:05:19.200 of expertise takes time to build. Because remember, we're competing against other people who've also 85 00:05:19.200 --> 00:05:22.800 been doing this for a long period of time, and the one thing that we can take to our advantages, 86 00:05:22.800 --> 00:05:26.640 if we've just been doing this longer, right? And we get these compounding results that happen 87 00:05:26.720 --> 00:05:30.560 over a long period of time. And so I think rather than making this a patient's platitude, 88 00:05:30.560 --> 00:05:35.920 thinking of this as, what could I do for a very, very long period of time? Because the only things 89 00:05:35.920 --> 00:05:40.560 that will be very big will take a long time and I must be motivated to not change my course 90 00:05:40.560 --> 00:05:45.600 or see some shiny object that's going to take me away from my overarching vision or goal. 91 00:05:45.600 --> 00:05:50.320 And so I think when I started thinking this way, the companies that I had continue to grow better 92 00:05:50.320 --> 00:05:54.800 with higher quality people, I made higher quality decisions because it wasn't about the short win. 93 00:05:54.800 --> 00:05:58.960 It was just, is this going to matter in 10 years? And what are the few things that don't matter 94 00:05:58.960 --> 00:06:03.040 in that long period of time? And then let's ruthlessly limit everything else and just focus on those 95 00:06:03.040 --> 00:06:08.640 things. Number four, brand matters a lot. All right. And so this is something that took me again 96 00:06:08.640 --> 00:06:12.720 a very long time to understand. And the way that you build brand is that you make promises, 97 00:06:12.720 --> 00:06:17.360 and you keep promises not only to the level that you made the promise, but in excess of that. 98 00:06:17.360 --> 00:06:21.680 So you make a promise and then you deliver above that promise. And so brand is simply the reputation 99 00:06:21.840 --> 00:06:25.440 that you have in the marketplaces. What people say behind your back, right? And what most people 100 00:06:25.440 --> 00:06:30.240 don't have is the invisible hand behind the scenes that pushing higher and higher return on advertising 101 00:06:30.240 --> 00:06:34.800 because more and more people have heard of you from a friend before seeing your ads or your 102 00:06:34.800 --> 00:06:38.800 reach outs or whatever it is that you use to get customers, right? And so what happens is that 103 00:06:38.800 --> 00:06:43.760 most people do the opposite of that. They make big promises. They under fulfill. And then over time, 104 00:06:43.760 --> 00:06:49.040 their cost of acquisition raises beyond the increase in cost per impression or cost of time 105 00:06:49.040 --> 00:06:52.960 on their labor because they have an invisible hand that's pressing their growth, which is negative 106 00:06:52.960 --> 00:06:57.680 word of mouth, which is much stronger and much more viral than positive word of mouth. And so 107 00:06:57.680 --> 00:07:01.920 people don't understand they think they blame the platforms. They blame pixel changes and things 108 00:07:01.920 --> 00:07:04.720 like that. When the reality is that they have a negative word of mouth that's working against them 109 00:07:04.720 --> 00:07:10.080 and they just don't know how big of a deal it is. All right. And so the beauty of brand, if you build 110 00:07:10.080 --> 00:07:14.640 it the right way is that it gives you this is the tactical behind brand is that branding gives you 111 00:07:14.640 --> 00:07:19.760 premium pricing power. If you look at a cup of coffee that's plain, a cup of coffee that Starbucks, 112 00:07:19.760 --> 00:07:23.840 they can charge four or five times the price. If you look at a white t-shirt that's plain and you 113 00:07:23.840 --> 00:07:28.240 look a white t-shirt that has a Nike logo on it, they can charge 10 times more. You put a Gucci 114 00:07:28.240 --> 00:07:34.000 logo on it, you can charge it 100 times more. And so what the brand does is give you pricing power. 115 00:07:34.000 --> 00:07:39.280 And that pricing power translates directly to bottom line profits. And so when you have that 116 00:07:39.280 --> 00:07:44.000 branding power you can have outsized profits compared to the marketplace and give yourself a 117 00:07:44.000 --> 00:07:49.280 competitive mode that over time if things if cost of goods increase or supply chain gets broken 118 00:07:49.280 --> 00:07:52.800 down. The people who are trading commodities and do not have a brand behind them will buy a business 119 00:07:52.800 --> 00:07:57.360 worries you will have the padding of your profit margin to continue whether the storm and endure 120 00:07:57.360 --> 00:08:03.680 for the long haul. Number five, simple scales fancy fails. All right. When I look at the companies 121 00:08:03.680 --> 00:08:07.200 that we have that are the biggest in the portfolio, they have these simplest business models. 122 00:08:07.200 --> 00:08:11.520 Because scale creates complexity all on its own. You don't need to add complexity. We don't 123 00:08:11.520 --> 00:08:17.680 need to help complexity exist. It already exists at scale. And so we have to make the fundamental 124 00:08:17.680 --> 00:08:21.600 units as simple as humanly possible. We have to make our offer suite as simple as humanly possible. 125 00:08:21.600 --> 00:08:25.280 We have to make the customer journey as simple as humanly possible and who we serve as simple 126 00:08:25.280 --> 00:08:29.280 as humanly possible so we can streamline our messaging, streamline the customer experience, 127 00:08:29.280 --> 00:08:34.080 streamline the products, streamline the pricing so that the customers understand what we're doing, 128 00:08:34.080 --> 00:08:37.520 the sales team understands what we're doing, the customer service team and success team understands 129 00:08:37.520 --> 00:08:44.400 what we're doing. And so all we're doing is adding more to that machine rather than adding complexity 130 00:08:44.400 --> 00:08:48.320 and adding new due to ads. And I love this quote because I think it's a really good one, which is 131 00:08:49.280 --> 00:08:53.040 do not risk the empire for a pot of gold, which I heard from my good friend, 132 00:08:53.040 --> 00:08:57.360 Sharon Sarvata, who sold his company for a zillion dollars. All right. And I just really, 133 00:08:57.360 --> 00:09:02.800 really like that. So simple scales, fancy fails, and a lot of times we need to ignore the shiny objects 134 00:09:03.520 --> 00:09:08.480 that are sent here to test how we are as entrepreneurs and how dedicated we are to keeping things simple 135 00:09:08.480 --> 00:09:11.840 because if you cannot keep it simple, a lot of times it means you do not understand it, 136 00:09:11.840 --> 00:09:16.880 which means you may not even understand your own business. Number six, emotions are the enemy. 137 00:09:16.880 --> 00:09:20.320 When I look at the portfolio founders who are the most successful, they are the least 138 00:09:20.320 --> 00:09:24.000 emotionally reactive. They are the most rational in the decision making. They are the most long-term 139 00:09:24.000 --> 00:09:30.400 minded. And so one of the trusums that I've adopted is nothing is ever as good or as bad as we 140 00:09:30.480 --> 00:09:34.800 expect, except for the things that we don't expect. All right. And so I'll unpack that. 141 00:09:34.800 --> 00:09:39.040 So from a tactical perspective, when we make these projections, we think there's this new thing 142 00:09:39.040 --> 00:09:42.240 that we want to add. A lot of times it's not going to be as good as we think it is, right? It's 143 00:09:42.240 --> 00:09:45.760 usually going to be less than that. And to the same degree, equal opposite side of the coin is that 144 00:09:45.760 --> 00:09:51.040 if there's some threat that comes in, most times, it's not as bad as we think it is or it's going to 145 00:09:51.040 --> 00:09:56.320 be. So we catastrophize negatively worse than it really is and we and we project that something 146 00:09:56.320 --> 00:09:59.200 that's going to be much better than it is. And most times it's in the middle. It's less than our 147 00:09:59.200 --> 00:10:04.000 imagination could anticipate, except for the things that we never expected, which is why the 148 00:10:04.000 --> 00:10:09.040 outsize returns often come from things that we didn't expect at all, right? And so most times, 149 00:10:09.040 --> 00:10:14.880 we need to be much more conservative in our estimates on either direction so that we do not become 150 00:10:14.880 --> 00:10:21.440 emotionally reactive and swayed by the greed or excitement of the upside or the depression and 151 00:10:21.440 --> 00:10:25.600 fear of the downside. And I can tell you the amount of times that I thought I was going to lose 152 00:10:25.600 --> 00:10:30.160 the different companies that I've owned over time is a lot. And the amount of times that we have 153 00:10:30.160 --> 00:10:35.920 lost them is zero up to this point, you know, in the last 10 years. And so a lot of times we think 154 00:10:35.920 --> 00:10:40.240 things are much worse than they are and we make bad decisions because we think we're up against a 155 00:10:40.240 --> 00:10:46.000 while we think that things are going to die. And so that's not true. That's your mind fooling you. 156 00:10:46.000 --> 00:10:49.920 And I think one of the disciplines when the character traits that has to be honed over time is a 157 00:10:49.920 --> 00:10:56.080 decrease in emotional reactivity. Real quick guys, you guys already know that I don't run any ads 158 00:10:56.080 --> 00:11:00.240 on this and I don't sell anything. And so the only ask that I can ever have if you guys say that 159 00:11:00.240 --> 00:11:04.320 you help me spread the word so we can have more entrepreneurs, make more money, feed their families, 160 00:11:04.320 --> 00:11:08.720 make better products and have better experiences for their employees and customers. And the only 161 00:11:08.720 --> 00:11:13.680 way we do that is if you can rate and review and share this podcast. So the single thing that I 162 00:11:13.680 --> 00:11:17.280 asked you to do is you can just leave review, let's take 10 seconds or one type of the thumb, 163 00:11:17.440 --> 00:11:21.040 the absolute world to me and more importantly, it may change the world to someone else. 164 00:11:23.040 --> 00:11:28.080 Number seven, level 10 talent is only attracted to level 10 opportunities. I learned this from 165 00:11:28.800 --> 00:11:33.040 Stephen Schwartzman who wrote what it takes. He's the founder of Blackstone. Now he's worth I think 166 00:11:33.040 --> 00:11:39.600 30 billion and his and Blackstone I think manages almost 700 billion dollars. So a lot of money. 167 00:11:39.600 --> 00:11:45.360 And he said this very well. So I'm not going to try and pair it as though it's my own. He says, 168 00:11:45.360 --> 00:11:49.520 you need level 10 talent to build anything big, right? And so we have to think long and hard 169 00:11:49.520 --> 00:11:54.640 about how big this can be so that other people dreams can fit inside of it. And so like if you want to 170 00:11:54.640 --> 00:11:58.400 build a dry cleaning, a local dry cleaning business, there's nothing wrong with that. It's just that 171 00:11:58.400 --> 00:12:02.320 level 10 talent is not going to probably be attracted to that opportunity. And so we have to think 172 00:12:02.320 --> 00:12:06.000 long and hard. Now if you think my true goal, you're not just saying this, but it has to be true to 173 00:12:06.000 --> 00:12:10.640 you is that I want to build a different way for people to clean their clothes in a convenient way 174 00:12:10.640 --> 00:12:13.600 because that's something that you are driven to do and you think you can do it for very long period of 175 00:12:13.600 --> 00:12:16.960 time and you don't think you get distracted by other things that are shiny objects, et cetera, 176 00:12:16.960 --> 00:12:20.960 you will be able to build it to a size where other people start to believe you and then you will 177 00:12:20.960 --> 00:12:25.120 be able to enlist level 10 talent. And I also learned this from Farron because I like this this 178 00:12:25.120 --> 00:12:30.160 quote a lot. He said, your best talent isn't even on your team yet. The best talent exists in 179 00:12:30.160 --> 00:12:33.600 the future. And so we have to make room for those people which goes back to the slice of pine 180 00:12:33.600 --> 00:12:36.880 things that I was talking about earlier. All right. Number eight in terms of lessons that I've 181 00:12:36.880 --> 00:12:41.440 learned in building our portfolio. Compounding in business creates breathtaking results when you 182 00:12:41.440 --> 00:12:47.280 add the one ingredient that people hate the most time. Everyone hates to add time because everyone 183 00:12:47.280 --> 00:12:51.120 is impatient. And if you look at the people who I think in my opinion, I look up to or the most 184 00:12:51.120 --> 00:12:54.640 successful, they have one thing under control, which is their impulses. They can control their 185 00:12:54.640 --> 00:12:59.120 impulses because they see that adding time is the single greatest variable to achieving the 186 00:12:59.120 --> 00:13:03.280 out the outsize returns that you are looking for. And so one of the things that I have noticed of 187 00:13:03.280 --> 00:13:08.400 the portfolio companies that we have, the biggest companies are portfolio obsessed over the 101% 188 00:13:08.400 --> 00:13:13.920 improvements versus trying to double in 90 days. They can extrapolate the fact that a 10% per 189 00:13:13.920 --> 00:13:19.760 quarter growth rate means a 40x growth rate over a decade. And they can actually think in decades 190 00:13:19.760 --> 00:13:24.560 because you know what? Right now if you're doing a million bucks a year, if 10 years make you do 40 191 00:13:24.560 --> 00:13:28.000 million year, would you be okay with that? You don't need to swing for the fences every time. If 192 00:13:28.000 --> 00:13:32.640 you just hit singles and you do that consistently, you set goals that are far more achievable, 193 00:13:32.640 --> 00:13:36.560 be that people will actually believe they can do and see it gives you room to over achieve those 194 00:13:36.560 --> 00:13:40.080 things. And I think that the goals that I have set for the portfolio companies and in my own 195 00:13:40.080 --> 00:13:45.440 companies has consistently got more and more conservative. Now, some people set goals that are 196 00:13:45.440 --> 00:13:49.360 completely silly, right? And they're useless in that they're so achievable that they're not 197 00:13:49.360 --> 00:13:53.840 worth anything. And so that's not who I'm talking to and I would say the vast majority of 198 00:13:53.840 --> 00:13:56.880 entrepreneurs I talk with, that is not their problem. They're usually setting goals that are way 199 00:13:56.880 --> 00:14:01.120 too unrealistic and that goes back to the expectations of thinking that things are going to be better 200 00:14:01.120 --> 00:14:06.160 than they really are, right? And so we have to set goals that in my opinion, if we were just to do 201 00:14:06.320 --> 00:14:10.480 these things and that were the assumption, if we just did 10% or quarter, how much bigger would 202 00:14:10.480 --> 00:14:14.160 it be at the end of the year? If we did just 10% or quarter for the next two years, how much 203 00:14:14.160 --> 00:14:17.520 bigger would it be, right? And obviously, give ourselves rooms to over achieve those things, 204 00:14:17.520 --> 00:14:22.640 but if we just did those things, what would it look like? And a lot of times, it would look really, 205 00:14:22.640 --> 00:14:27.120 really juicy. But most people are unwilling to take that short term goal and say, I'm just going 206 00:14:27.120 --> 00:14:31.600 to hit the 10%. We're just going to, we're going to make sure that beyond any shadow of doubt, 207 00:14:31.600 --> 00:14:36.640 we can hit that, right? Because that is where the breathtaking results occur, is that those 1%, 208 00:14:36.640 --> 00:14:41.280 5%, 10% improvements that happen over the very long period of time. And that is what creates the 209 00:14:41.280 --> 00:14:45.200 magic in compounding, right? A lot of people talk about compounding from an investment perspective. 210 00:14:45.200 --> 00:14:48.800 But if you are in your own business, shifting your hat a little bit more to the investor hat, 211 00:14:48.800 --> 00:14:52.240 even though all of your net worth are probably the majority of your net worth is in your company. 212 00:14:52.240 --> 00:14:55.280 If you can think about it like an investor, you will start to getting the investor like your 213 00:14:55.280 --> 00:15:00.160 returns, which is probably what you want, rather than the erratic, unreliable. You know, 214 00:15:00.160 --> 00:15:04.240 it would do or die type of mentality that happens, especially in the earlier stages of business. 215 00:15:04.240 --> 00:15:09.040 But as you mature in the business itself and the business pitchers, the thinking must change. 216 00:15:10.000 --> 00:15:16.000 Number nine, any number, no matter how big, multiplied by zero, is still zero, all right? 217 00:15:16.000 --> 00:15:20.560 And so risks are to be respected. All right, the biggest companies take actions that have very 218 00:15:20.560 --> 00:15:26.400 little downside. All right? And so you would only take a company-sized risk, you put your company 219 00:15:26.400 --> 00:15:31.600 in the line when not doing so risks the company more. All right? And so that's the big thing is I 220 00:15:31.600 --> 00:15:36.240 see people who want to be portfolio companies. So companies do it, you know, 3,000, 5,000, etc. 221 00:15:36.240 --> 00:15:39.200 Who right when we hop on the phone with them, they're like, hey, I want to do this big thing. 222 00:15:39.200 --> 00:15:42.960 And I'm like, you know, that's extremely risky for for the business at the size right now. 223 00:15:42.960 --> 00:15:47.120 They're like, yeah, we have to do it. And I always kind of think, do we though? 224 00:15:48.000 --> 00:15:51.440 Like, do we really? Because the answer is probably no. And it's usually emotions that are 225 00:15:51.440 --> 00:15:58.000 causing a distortion in reality for the founder. And so you only take a company-sized risk when you 226 00:15:58.000 --> 00:16:02.960 really know that if you do not do, if inaction or continuing to do what you were doing, 227 00:16:02.960 --> 00:16:08.800 we'll create a failure. Now, we've heard the case studies of Kodak, you know, losing their business 228 00:16:08.800 --> 00:16:13.920 and, you know, blockbuster losing their business. But there are far, far, far, far more times where 229 00:16:13.920 --> 00:16:18.560 business was perfectly fine. And the founder basically destroyed it because of their own irrational 230 00:16:18.560 --> 00:16:23.520 fears or excitement or exuberance over a new opportunity that was not core to the business. And 231 00:16:23.520 --> 00:16:29.920 then put the business on the line and lost. And so you do not take company-sized risks unless the 232 00:16:29.920 --> 00:16:34.080 company is truly on the line. And you have very strong evidence to support that, which is the vast 233 00:16:34.080 --> 00:16:38.560 minority of circumstances. And most times, if you were solving a problem that most people suffer 234 00:16:38.560 --> 00:16:41.760 from because you already have product market fit because people already buying the thing, 235 00:16:41.760 --> 00:16:45.920 people are always going to want to make more money. People are always going to want to improve 236 00:16:45.920 --> 00:16:49.040 skills. People are always going to want to lose weight. People are always going to want to have 237 00:16:49.040 --> 00:16:52.080 better relationships. People are always going to want, there are a lot of things that those demands, 238 00:16:52.080 --> 00:16:55.680 those desires will not disappear. And the reason that we invest in businesses that are 239 00:16:56.560 --> 00:17:01.440 non-tech-related for the most part is because we know that we can consistently, I would say 80% 240 00:17:01.440 --> 00:17:05.360 of it probably is not tech-based, right? So the vast majority of businesses, we know that if we can 241 00:17:05.360 --> 00:17:09.520 do the boring work, we can repeat successful actions. Once we find product market fit where people 242 00:17:09.520 --> 00:17:13.920 want this thing solved and we can solve it well, most of the growth comes from not putting the 243 00:17:13.920 --> 00:17:17.920 company on the line, but doing the things that no one wants to do, which is simply improving, 244 00:17:17.920 --> 00:17:22.000 simply getting better at fulfilling the promise. And I'll give you a quick story on this. 245 00:17:22.000 --> 00:17:26.240 Dragging dictation way long ago, there was a dictating software, this is probably like 20 years ago 246 00:17:26.240 --> 00:17:30.240 that came out, very early days, in computing, because a lot of people weren't even going to typing 247 00:17:30.240 --> 00:17:35.360 this, so they created drag and mutation. They created a 2.0 version of drag and mutation that had 248 00:17:35.360 --> 00:17:42.960 zero new features, zero. All it did was be more accurate at dictation. When people would speak, 249 00:17:42.960 --> 00:17:48.880 they would get more accurate results on the screen. And they were praised by so many people for 250 00:17:48.880 --> 00:17:54.000 making this move, but the thing is that most of us don't want to do that hard work of making the 251 00:17:54.000 --> 00:17:58.320 thing that we actually sell better, improving the experience, decreasing the time to experience 252 00:17:58.320 --> 00:18:03.040 results, decreasing the time to value, improving the customer health score, segmenting customers by 253 00:18:03.120 --> 00:18:07.120 their needs, and trying to match those better with the products that we have. A lot of people don't 254 00:18:07.120 --> 00:18:11.760 want to do that work because it feels boring, feels heavy. It's not sexy. It's not exciting, but that 255 00:18:11.760 --> 00:18:16.000 is where you drive the outsized value. That is where you build a brand that gives you the premium 256 00:18:16.000 --> 00:18:20.000 pricing powder. That is where you build the word of mouth that ultimately creates the competitive 257 00:18:20.000 --> 00:18:29.280 mode that you can stand on as a company for years, not days. Number 10. Sell what the customer wants, 258 00:18:29.280 --> 00:18:34.400 not what you want to build. This was a big one because our egos want to matter. The thing is 259 00:18:34.400 --> 00:18:39.520 is that we don't matter. We want to be right, but what matters more is what the data says. We have 260 00:18:39.520 --> 00:18:44.560 to lead with data rather than ego. There is a company that we have in our portfolio that really wanted 261 00:18:44.560 --> 00:18:50.480 to do this at a new ascension, a new product line that was going to be an upsell and a very high 262 00:18:50.480 --> 00:18:55.680 ticket thing in their business. I felt strongly that it was not what the clients wanted. They're like, 263 00:18:56.240 --> 00:19:03.680 good at this. This would provide so much value. Let's just survey. Let's survey. This is what I 264 00:19:03.680 --> 00:19:09.760 think we should offer, which was more of what people were already buying. Just an increased version 265 00:19:09.760 --> 00:19:16.240 of the thing or this new thing that's really exciting for you guys. We did the survey and guess 266 00:19:16.240 --> 00:19:22.320 what came back. 85% of the people who were customers just wanted more of the thing that they already had. 267 00:19:23.120 --> 00:19:28.480 15% one of the new shiny thing. To things is that these types of huge pivotal decisions in a 268 00:19:28.480 --> 00:19:34.000 business can completely offer you and destroy your business by simply not taking this step to listen 269 00:19:34.000 --> 00:19:38.160 to your customer because a lot of times our egos don't want to listen to that. We want to be right. 270 00:19:38.160 --> 00:19:41.920 We want to do the thing that sounds exciting to us, but that a lot of times isn't what the business 271 00:19:41.920 --> 00:19:47.840 requires. With the business requires is a founder or CEO whose customer's centric, whose customer 272 00:19:47.840 --> 00:19:52.160 focused who's not focused on building what they think is exciting, but building exactly what the 273 00:19:52.160 --> 00:19:56.080 customer wants, even if it's born to them. If it's born to you, awesome. It means you're already 274 00:19:56.080 --> 00:20:00.880 probably pretty good at it. That is where the depth of expertise gets built and compounded over time. 275 00:20:01.840 --> 00:20:08.560 Number 11. This is my simplest way of putting business success into a series of statements. 276 00:20:08.560 --> 00:20:16.480 The recipe for success, in my opinion, can be boiled down to this. Make promises, keep promises, 277 00:20:17.280 --> 00:20:22.960 build brand, use brand to increase pricing power above the market, use extra profits that were 278 00:20:22.960 --> 00:20:27.680 supported by the brand to spur growth through hiring better people and adding new acquisition channels, 279 00:20:28.320 --> 00:20:33.200 give slices of the pie to get a bigger slice overall and enlist more people in your vision, 280 00:20:33.200 --> 00:20:39.840 and then give time, time. That is it. If you don't know how I'm going to 281 00:20:40.400 --> 00:20:45.840 say, I'm managing partner acquisition.com. We take $3 million companies to $30 million plus and 282 00:20:45.840 --> 00:20:49.840 beyond. That is what we do every day. You can find out more at acquisition.com. Love you guys, 283 00:20:49.840 --> 00:20:53.680 mousy nation. You guys are amazing. I don't deserve you, but I appreciate you nonetheless. If you 284 00:20:53.680 --> 00:20:57.120 knew the channel, welcome. I'll see you guys on the other side. Bye.