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The top 1% of business owners aren't smarter than you. They do things differently.

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And that's what I'm explaining in this video. I'm Alex Ramozzi. I own Acquisition.com.

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It's a portfolio of companies that generate hundreds of millions of dollars per year in revenue.

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And so I've seen a lot of different patterns across businesses that we both invested in scaled in,

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or something that we turned down. If you feel stuck, it's because what got you from 0 to 100,000,

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or 100,000 dollars per million, or a million to 10 million, or 10 million to 30 million,

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isn't going to be the thing that gets you to the next level. And you're probably working on

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something that was once very important, but is no longer. So to make this real, I'm going to give you

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three examples of my own business experience of what I thought the business I was in versus the

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one I was actually in. So in the very beginning, I was into fitness. I got into it thinking that my

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life was going to be about what workouts were going to be and how it's going to structure the weights

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and the intensity. And then as soon as I actually got into the business, I realized that the biggest

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issue is most people don't even show up to the gym. All of my attention was like, oh my god, I have to

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get people first in the door. How do I get them to stay? And how do I run this profit balloon?

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I've got rent. I've got trainers. I've got equipment that breaks. And all of a sudden, I was like,

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oh my god, I thought I was going to be in the scientific fitness business. When in reality,

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I was in the sales and marketing business. One of the easiest ways to identify what business

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you're really in is to zoom all the way out to the people who are already a hundred steps ahead of you.

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Not just one or two steps, but like a hundred steps. And the reason for that is because

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if I said, if you just look at someone who's one or two steps ahead of you, you should do what they do.

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The thing is that they're one or two steps ahead of you and they're probably going to get lost too.

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But if you look at the people who are all the way at the top, typically it's because they figured out

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something that you haven't figured out. If you look at the biggest fitness businesses that are gyms,

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most of them are basically in the sales and marketing business. They have absolutely mechanized

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the ability of getting people in the door. Their general managers for each location are just people

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who have membership quotas who are driving sales day in and day out. And so for me, I'd never even

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sold a poor. I didn't know what a lead was. I didn't know what email marketing was. I didn't know

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any of this stuff. And the thing is, as I signed a lease and 30 days later, I had to come up with $5,000

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and I'm like, how am I going to do that? When I was begging people to buy my gym memberships,

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that was a form of sales, not good sales, but it was a form of sales nonetheless. All of a sudden,

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through repetition, I was like, okay, so I have to have these consistent conversations that can

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people to buy. And if I do that more effectively than all of a sudden, I make more money. Okay, cool.

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So this is really important to this business because believe it or not, people don't wake up

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someday and say, you know what? I'm going to sign up for a gym membership. Doesn't usually happen

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that way. Usually they got to get interrupted. So they have to get interrupted with some sort of ad

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and that then reminds them that they're not in the shape that they want to be, or they put on

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their clothes in the morning. They're like, oh my god, I can't close this thing. But still,

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they don't just say, oh, I'm going to call the gym up. Not usually how it happens. Instead, again,

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it's other people stopping them in the parking lot being like, hey, do you want a free workout

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or a thing or showing up to their office of work and saying, hey, we made these protein muffins.

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Hey, while you're eating these muffins of ours, can I tell you about what semi-private training

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might do for you? You have to get in front of people in order to ultimately bring them into the gym.

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The other problem with gyms that I didn't know I was in is that basically no one sticks with gyms.

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Now, there's a very small select group of people who are hardcore lifters who do absolutely get

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obsessed with gyms. But here's the crazy part that everyone in the industry doesn't tell you.

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They are such a small percentage that they're the ones who actually take up all the space

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in the gym. And if the amount of people that actually were subscribed to the gym,

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all of them came. No gym model would work at $10, $20, $30 a month. Like if you actually had people

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pay who only used it, your gym membership would have to be something like $200 to $300 a month,

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which just so happens to coincide with the vast majority of service-based gyms,

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what cross-training facilities, and boot camps, and semi-private training facilities.

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All of those have clients who all show up, and that's why those prices are where they're at.

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Even a business like Crunch or Planet Fitness, they have $10 a month membership,

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but they still have like five or six percent per month of their customers who turn out.

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So that's like half the customers per year are leaving out the door. You've got thousands of

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customers and you lose half the member year. Guess what else you need? A machine for generating

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another few thousand customers to fill up the bucket. These very large companies know how to

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train sales staff, recruit sales staff, market across different channels to get customers in the door.

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And once I figured that out, my gyms started growing. But until I did, I was like, lost.

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I might be like, okay, so every business has to be a marketing and sales business.

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Uh, kind of. And so then I got into the someone's business. So this business for sure is about

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what's inside of the bottle. So I got Dr. Cash. He's the smartest human being that I know.

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He's a PhD biochemist. Got his, you know, PhD when he was 21 years old. He also did this

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tax for Olympic teams. And he has a national log wrestler. So I was like, this guy is going to come

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with the most efficacious product, the best ingredients. And I just said, listen, you make the best

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thing you could possibly make. I'll figure out how to sell it. That was the business that I thought I

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was in. The actual business that I was in with supplements is actually in the brand and distribution

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business. The ugly secret of the supplement business, at least in the United States is that if

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something actually works, it's most of the time illegal. Because if something works a little bit,

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then typically if you put a lot of it in, it works a lot of it. Now, I think supplements are good for,

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you know, filling up holes, nutritional holes and people's diets so that they can get some of these

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other, you know, minerals or whatever. But the thing is, is that if you're a customer,

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when you have two different proteins that have the exact same calories and macros, what gets you

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to buy the brand. And so because every single supplement supplier has access to the same ingredients

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more or less as everyone else and the research studies that are out there, anyone who says that

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they know the research, the customers certainly don't know what the research is nor do they really

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care what they really care about is how good does it taste and do I feel cool when I drink it or

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eat it? And I was like, oh my god, this is not at all what I spent my entire time building this

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business today. Then I learned all this stuff about bread. Now, I didn't know anything about

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bread at that time. And so that business kind of got to what I would consider like a direct sales

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model. But what I really missed was the cool factor. I didn't understand how to make my products

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cool. And if somebody's got to buy a cretin for me versus a cretin that's 14 bucks and mine's 60,

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why are they going to buy it? I didn't have a good answer to that question. And not only that,

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I didn't have distribution that was convenient. In the beginning for a business like this,

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you can sell online to consumers. They cover the shipping and stuff. But a lot of times,

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people still like buying supplements in person because it's very easy. You don't have to be the

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extra shipping. The business that I thought I was in was a combination of sales and making it

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great product. But the business I was really in was a brand and distribution business. And you

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may be like, okay, so that business was maybe different. But the third time he'll definitely get

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it right. You would hope that. But I I didn't. The next business that I had that I wasn't good at

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was my first software company. At this point when I got into it, I was like, okay, listen,

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I can market and sell this thing. That's all that's going to matter because I had, you know,

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again, I learned I hit everything with the marketing and sales hammer because that was what I was

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good at. But when I got into the software business, I realized that you could sell software really,

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really easily because most software solves a problem that's pretty easy to describe. And the

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technology is supposed to remove a lot of pain. The problem is that as soon as someone logs in and

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it doesn't solve that problem or it solves that problem by introducing even more pain into their

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lives, which is very common, they then immediately hate it and you by default. I thought I was in the

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marketing and sales business yet again, when in reality, I was in the product business. I didn't

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know anything about products from like a software. I didn't know how to I didn't know how to write

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code. I didn't know what UX or design is like I'm still not that good at design. The whole thing was

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just kind of like screwed from the from the onset. I didn't have any of the talent in my strategy

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was not around product. So the fundamental issue with that business was that the product wasn't good

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enough to deliver on the promise. And the problem was I needed to make a better product and I didn't

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know how I at the time hired an outsourced development team, right? And so I just had them build the

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product. I was like, yeah, do all the code stuff and you know, ship it back to me. But the issue that

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I ran into is a couple things. Number one is that I literally aligned myself with someone who had a

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disincentive to do a good job. So they go, they built hourly. And so their incentive is to charge

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as much as humanly possible and do as little as possible in that period of time and just keep me on

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long enough that I don't cancel. Now, the longer you work with an outsourced development shop,

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the harder it is to leave them because they have all these developers who are dedicated to your

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account. And they're all read up on the code. You're like, well, I can't switch now because they

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already have five or 10 or 20 developers that are allocated to me. And here's the even worse part.

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Let's say that you're still really good at marketing and sales. Guess what happens next?

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They see how much money you're making. They own the damn software, right? So they can see that

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you're making money. And you know what's crazy is that I, I noticed as we kept making more money,

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my fees just kept going up wild almost so much that I was like, wait, where's my profit? At the

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end of the day, the dev shop was more or less taking advantage of us. And because I had no technical

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proficiency, nor did I have a co-founder who was really technical because you can't absolutely have

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a business like this. Somebody's got to know how to code, right? Somebody's got to understand technology.

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And I didn't know it and I didn't have anybody else in his business. I didn't have anybody else

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who is incentivized to help because in the software business, you can make the promise of good fast

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cheap and people are going to buy, but you have to fulfill that promise. And that's fundamentally

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what makes that business so hard, but also so lucrative when you get it right. And so I learned

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that lesson too late. I ended up selling that company to somebody who did have a full in-house

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dev team. And I had built because of my sales and marketing ability, still a pretty decent-sized

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distribution base that he could then leverage with his software and continue to expand the business.

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So that worked out okay. So I'll give you another example of what business you really have. So I

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talked to a guy recently who is in the M&A world, so emergency acquisitions and he was buying

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up plumbing businesses. And so he bought up a plumbing business and I was like, okay, well what's

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limiting the business? And he said, I can't find good plumbers. So I was like, well, what's your

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system for getting plumbers? And honestly, he didn't have one. And so I was like, okay, dude,

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if we think about what the product of this business is, when you're in a service business, the product

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is the service, meaning the people who deliver the service are the thing you sell. And the margin of

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the business is the difference between what you have to pay them and what you get to charge for

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their work. Our acquisition process to scale the business doesn't have to be customer-facing because

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you've got a phone drinking off the hook. There's already tons of demand. There's insufficient supply.

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And so the question is, what are you doing to outmarket your competition for talent? I

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introduced to him a concept that I love to talk about, which is the cost of acquiring talent,

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relative to the lifetime gross profit per employee. All right, it's a lot of letters. Basically,

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this is how much it costs you to get people. This is how much you make from them. And so I said,

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well, how much does it, how much do you make from a plumber per year in gross profit? So revenue

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minus what you pay them, what do you make? He said probably about 300,000 dollars a year. And I was

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like, okay, I was like, so what are you willing to spend to get another plumber? And he's like, well,

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I think we have like a $500 referral thing if any of the guys refer somebody else. And I was like,

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okay, so think about how wild this is. You're willing to pay $500 for $300,000 per year. This

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is per year from your plumbers. I was like, does this feel a little bit low? Of course it did. It's

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insanely low because the thing is that if you're a smart competitor, what am I going to do? I'm

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going to be like, well, shoot, I'll pay $30,000. So all of a sudden, if I offer $30,000 to everyone

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and my staff if they can go get somebody, what do you think's going to happen? They're probably

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going to find more plumbers for me. But guess what else I can do with $30,000? I could also say,

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you know what, I'm willing to spend that in paid ads or in recruiting or head hunting of people

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who just go and post people from firm to firm. How do I know if it's going to work out? Well,

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if you're doing a referral bonus, you can say that it's after their productive at month six.

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Now you've got somebody who did the referral who's super invested in making sure that it works

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out. Most recruiting firms have 90-day clauses to make sure that if the person doesn't work out

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in the first 90 days, they'll swap them out for free. That's pretty typical offer. If you're

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running ads, you don't have to worry about either of those because it's just the cost of the ads.

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The question is, if the one thing that's limiting this business is that he doesn't have enough

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plumbers, literally everything that he does with this time that is not about creating an acquisition

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system for talent is the thing that's limiting the business. I'll give you a different example.

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And the reason I'm keeping these examples is because it happens in every business and this is

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typically what keeps business owners stuck. You start doing something maybe it worked and then

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it stops working. But you think, oh, I need to keep doing this thing or do more of this thing when

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sometimes that's the truth. But a lot of times it's just that the game changed or the real

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constraint of the business is not the thing you think it is. So I was talking to a media company,

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super large YouTuber, big creator, right? And I said, well, what's the goal? And they said, we want

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to build, you know, make more money. I said, okay, great. So what do you think it is right now?

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And they're like, well, you know, right now, just to give you context, they're a way bigger

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general than me. Very big. Many millions, tens of millions. I said, what are you doing right now?

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They're like, well, we think that we've really mechanized our process of creating content. And,

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you know, we think that we can get this these new levels of efficiency in the concentration.

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And I was like, okay. So out of a hundred compared to the marketplace, what would you guys rate your

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your content out right now? So it's funny is that like they were, they were like, I think we're like

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maybe a 90, but I'm like, guy, like if you just do percentiles here, like your points,

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yours, yours, because everybody, when it's your own game, you know so much about it.

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You've forgotten more than people who have been in this for two years know about it. You guys

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are probably like a 99 out of 100 on marketing. The issue with your business, despite the hundreds

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of millions of impressions per week that you're generating is that you're just not making that much

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money. So would you really think that doing more media is the solution? And so they looked at me

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for a second. I was like, what do you sell to make your money? And they're like, well, I mean,

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you know, we do sponsorships every once in a while. We basically this and that. I was like, okay,

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do you think it's possible that not having a clear monetization mechanism

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is the issue? What would you rate your monetization strategy at? And they're like, oh, we're

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probably like a five out of a hundred. I was like, okay, so you've been deploying all your resources

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to go from 99 to 99.5% rather than taking those same resources. And the thing is that when you're

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this low, going from five to like 25, probably takes less effort than going from 99 to 99.5. And so

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what we need to do is fix the monetization of this business. When they had this larger goal,

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the business that they thought they were in, which is media, but to get to where they want to go,

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they were going to have to enter into having a business model. They're going to have

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enter into monetization as the issue in the business. The problem that most businesses have is they

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don't know the business they're actually in. And they keep trying to solve the problem that

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they enjoy solving rather than the one that the business requires to be solved. Every business

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has a big, hairy problem. And this has been my experience. And maybe it just because it took me

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too long to learn or I, you know, I only learned about it once I get into it as a recommendation.

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So this is a hack of hacks. If you're entering a new marketplace, talk to the people already in

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that marketplace and ask them what the hardest part of their business is. And a lot of people follow

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me because they're in education or consulting and information products. So think to yourself,

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well, if you're in that world, what business do you think you're really in? Well, if you learn

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the basics of marketing and sales, just like any business, but if you want to make it big,

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look at the big consulting firms, look at McKinsey, look at Bane, look at Ernstson Young,

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or KPMG, these are all recruiting machines. Because on a long enough time, you have to learn

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how to do other stuff because you can only keep selling infinite people for a period of time until

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eventually you've sold everyone within a marketplace and there's no one left. You've already pillaged

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the land. Instead, we have to find a way to keep people to keep buying. If it's in the service

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business, it means having exceptional people. If it's in a physical products thing, it's how do we

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get customers to come back again and again? If you're in the software business, it's the same thing,

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except you're doing it via code rather than kind of recurring, how do we basically engineer a

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consumption? A lot of entrepreneurs who are in the education space, and I bring this up because I'm

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literally educating right now, is that they have one talented person, they have some guru,

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and then they hire people who really aren't as good, and then they dilute the service quality

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over time, and then they're surprised that somehow their business stops growing when they were

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small or you're really fast because you had a good product, which was you. You were exceptional,

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and then you hired all these other people, and they're not exceptional. But then you're like,

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oh, I love this one. I decided to stop doing it because it's not scalable. One of my favorite

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lines to hear, I'm going to try not to curse. It's going to be hard not to. I'm like really strong

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line. Motherfucker, they are building cities in the middle of the ocean. We are sending rockets

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to space and building internet from satellites globally. We have electric cars. We have AI robots,

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and you think that you can't scale service? Of course it's scalable. You're just not good enough,

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but when you phrase it that way, now it becomes a problem that you can solve. This is a second

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hack of hacks for figuring this out. Insert the problem that you claim to have that is unsolvable,

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and frame it in the form of an I don't know. So for example, no one can sell like me. I hear this

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all the time. No one can sell like me. What if you said, I don't know how to get anyone to sell

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like me. Sales people suck. I don't know how to find good salespeople. There's no good plumbers.

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I don't know how to recruit higher and train good plumbers. All the leads are crap. I don't know

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how to advertise to get good leads. One is a complaint, the other is a question, and the question

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has an answer. And so as soon as you can actually ask the right question, you start walking down

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the path to getting the thing that your business actually needs, rather than you're just complaining

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and giving yourself an excuse for why your business isn't growing anymore. And then you cast all

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the power out to some external thing. And that way you feel good and you can rock yourself to

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sleep every night saying, you know what, I gave it the good fight. But there are some people who

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actually want to fucking win. And so for those people who want to make this video for, the thing

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that you're doing right now, if you keep doing it, and it's not working, is the wrong thing.

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So let me give you one that you might not know as much about. So in the investing world, so I got

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into this, right? So Laila and I took out, you know, many tens of millions of dollars in

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distributions, then we also sold the company for lots of tens of millions of dollars. And so we

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had enough money that we could start our own family office and actually start buying companies

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and investing. I thought investing was about doing lots of deals at good prices. And what's

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interesting about this is that in some businesses, it does work that way. So like if you were selling

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cars, a lot of times the price of a Honda 2000, whatever is this, basically your proprietary way

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of getting a commodity for less, you're not going to get it by by jipping people on the sale.

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Sure, you want to close at retailers, it close to as possible, but you're not going to buy a Honda

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and then all of a sudden sell for a hundred grand. So you're going to make more of the money on

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where you buy and then you make up the difference on the sale at market rate. Whereas in the investing

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world, this is what like I thought it functioned that way, but it assumed businesses were commodities.

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Think about this for a second. It assumed that, okay, I'm just going to try and buy as many businesses

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I can and buy them as far as those possible. But the problem I was missing is that a really good

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business can outperform all of your bad ones with one good deal. For me, what I thought I was in

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was the high volume discount deals. The business that I was really in was learning how to say no

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at a much higher velocity to a much higher number of deals because you only need one Facebook. So

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let's confront the real problem. At each stage, I've had these learning curves where I thought I

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knew what the business was about. And then I realized what it was really about. The big Harry

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problem that I had to solve. Here's how I think through this. It can be painful because oftentimes

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we spend so much time trying to solve every other problem that we think we know how to solve

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rather than solving the one that we know we need to solve but don't know how to. That's a lot of

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times what makes that big Harry problem so hard is that you just don't know what to do. And this is

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why so many entrepreneurs start a second business because they're like, I don't know how to solve

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to grow those investors one and then they make up a reason and then they start another business

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because they think somehow the second business can be different than the first. When in reality,

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you're just going to reach a plateau that you don't know and then you're going to stop again.

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So you have to confront the issue. You have to confront the problem. And so this is how I

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mentally trick myself into getting to being okay with solving hard problems that I've no idea how

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to solve. I imagine myself, this is purely hypothetical. All right. So let's say that I've got a

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business that's doing $10 million a year. You can use whatever zeros you want. Okay. And let's say

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that it's got you know, $3 million in profit. Okay. So this is top line. This is bottom line,

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aka profit, leftover, cashola, cheese, cheddar, lettuce, money in the bank account, whatever you

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want to say. So that's our top line bottom line. Let's say that we've got this big area problem.

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So we got this big area problem. Now we think that if we solve this big area problem,

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we're going to be able to continue to grow the business to $20 million a year in top line revenue.

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And that three because we've covered a lot of our base, our fixed costs in the 10 million

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is actually going to jump all the way to like seven or eight million. All right. In profit. So big,

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a disproportionate profit increase with the increase in top line, which is not uncommon.

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So here's what's crazy. This business might be worth somewhere in the neighborhood of $15 million.

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I'm just going to make an estimate. That's a five X on this $3 million. Okay. Now this $8 million

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business might be closer to worth maybe like $72 million. That's with a nine X. And so the

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difference between these two amounts is $57 million. That is a big a lot of dollars. Here's

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how I mentally trick myself. I say, man, this big hairy problem is big and hairy. But if someone

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paid me $57 million to solve it, would I be willing to solve it? I'm like, oh, yeah, I probably

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solve for a million dollars. And so I've got this nice $56 million surplus of what I'm willing to do

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it for versus what it's actually worth. I tell our founders in the portfolio. I say, once we figure

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out what this big hairy problem is, I always try and remember to do this. I say, hey, if we do this,

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this is going to lock $50 million in price value. This is going to lock $100 million in price value.

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If we solve this one problem, there's a comment saying in the venture capital world, which is,

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is this a feature? Is this a bug? There are some businesses that I will see founders

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bang their heads against the wall, being like, I have to solve the churn issue in my gym. I have to

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get it so no one leaves. I can tell you right now, you're never going to solve churn in fitness.

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You're not going to do it because it's a human problem. It's not a bug. It's a feature. We have to

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look at what are the features of our business versus what are the bugs of our business?

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The bugs are the business are the things that you can and should work on that can help you get to

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the next level. The features of the business is like, this is the core way this business works.

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If you know for a fact that people are going to cancel fitness because let's face it, people do,

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then what then becomes the issue? I need to build a marketing machine so that I never run out of

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people. Now, the good news, a couple of pieces of good news if you're in one of those businesses,

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is that one, some people come back into the business, right? So if people lose weight or they don't

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lose weight in two or three years, they might still want to lose weight and try again. Whereas

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there's other companies, let's say you're your internet bill, probably haven't switched providers

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into water. Who does your banking for you? You've probably been with the same banks since you got

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a looney to this account when you were six. And so you've probably had this around the same banks for

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a while because it's a pain to change and you probably don't care that much about it. And so for

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those businesses, they're all about aggregating market judges having a really sticky customer base.

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But guess what? They have problems too. My former CFO gave me this piece of advice that I just

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absolutely loved. And I was, I was gripping to her one day about, about basically features of

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this business. Like these are things that are absolutely true about this business and I was

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basically just complaining because there's nothing I can do about it. And she said, Alex, you know,

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I've been in business and I've seen a lot of different businesses over my career.

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She said, the grass is always greener on the other side because no one sees that's fertilized with

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and she's like, it's all they're all every business. But the idea is that every business has

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overhead, every business has stuff that has features and there's bugs, things that are wrong with

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your service that should get fixed and things that are inherent to the very nature of this business.

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There's core features inherent to every business and we just have to be able to confront the issue

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that is at hand and oftentimes it's big, it's hairy and it sucks. We got to make sure that we're not

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trying to spend all of our effort trying to fix a term problem that will literally never get fixed

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because you're trying to gascumence to stop being human. If you think about entrepreneurship

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as a video game, which I often do, all right, so let's imagine that we've got these levels here.

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All right, so we've got level zero, we've got one, two, three, four, five, six, whatever. I should

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probably end on seven because seven feels like a better level then. But let's go with six. Maybe

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in the very beginning, you have to figure out what you're going to sell, all right, you've got a what.

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And the biggest issue at this point is that you just can't make decisions. You're completely

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indecisive. You can't commit to anything. You have the fallacy of the perfect pick. You think that

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whatever you pick has to be the one thing that you're going to stick with the first or your life.

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But the reality is that you're probably not because you don't even know what you're doing. You don't

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have the perspective from which to make a judgment. And the only way you can gain perspective

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in which to make a judgment is to actually pick something and then start and then gain more data.

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You have to do that first. Now let's say that you graduated from that level and you actually made

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a selection. Congratulations. Now you have something to sell. So then you have to learn advertising

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101 because no one's going to buy your thing unless they know about it, right? So you have to learn

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that skill at every one of these levels. You will have entrepreneurs that just get to level one.

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And then they they don't learn level two. Let's say that let's let's say level two is they learn

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how to profit, right? They learn a business model around it that they wrap a business around it.

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Okay, let's say that's that's level two. Well, they get to level one and then they say, you know what?

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I just saw this thing over here that looks easier to scale up. So I'm going to I'm going to race

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through level one and level two here and they do and here's the crazy part. This next business,

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they do this in one third of the time and they're like, oh, yeah, this was a great idea. I just

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boom. Look how fast I'm going. They crash. They crash in the same level again. They're still stuck at

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level two because they never learned it. The big Harry problem is typically the problem that you

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need to solve to get to the next level and it typically requires an entirely different skill set.

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Most people can't confront that level of uncertainty or that level of dissatisfaction with

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themselves and so they just start something else. This is and I will I will probably keep repeating

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this because it needs repeating is that the woman in the red dress, right? She is the distraction

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and if you don't know what I'm talking about in the matrix, there's a moment where Morpheus is

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training Neo. They're walking through a busy city. Then all of a sudden a woman in red dress

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walked by Morpheus is talking. Neo looks back and then Morpheus says, were you listening to me,

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were you looking at the woman in the red dress and he looks back at him and he says, look again.

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He looks again. There's a gun pointed at him and he says, freeze. He said, this whole point,

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this training is to teach you one thing which is that if you're not one of us, you're one of them.

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The one of us is if it's not the core business, it is the distraction from the core business

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because every one of these other things, every one of these other people in the street,

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every one of these other opportunities can look attractive because you don't know the

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shit on the other side. It's the grass is greener because it's on the other side of the fence and

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if you got close to it, you'd see the manure that you had to sit in in order to get it to grow.

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The craziest part about all this is that you can be just about everyone if you can stick with

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something for a few years. And real quick, if you're not sure what level of business you're at right

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now, I spent 200 hours this year just making this one project for you, which is the $100 million

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scaling roadmap. And I broke up the stages of business in the 10 stages and you can identify

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where you're at by simply just putting in your business information. You could act as a knock on

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forward slash roadmap and it'll spit out this custom report that tells you what the constraints

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are at that current level and what you need to do to graduate and get to the next level.

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This is our gift to you, absolutely free. And if you're like, I'm not sure what the big

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area problem is or I'm not sure what business I'm really on. On the thank you page, you can

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book a call with our team and we'd love to help you figure that out and ideally get past it.

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Let me conquer a big belief that is common among entrepreneurs. One of the biggest reasons that

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people will switch from their current business to the next business, there's two big ones.

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One is a fancy way of saying it's hard. This is the like, I don't think my business is that scalable.

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And I'm like, remember cities, middle of the ocean, rocket chips and space, cars that drive

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themselves robots that are smarter than humans. Really? You think it's not scalable or you don't know

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how to scale it. Remember, let's flip it into a question. I don't know how. I don't know how to

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scale it. How do I scale a business like mine? So one is a difficulties thing. The other one that they

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do is that they will say, I don't think this business can get to the size that I want for myself.

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Now, I will put a big disclaimer here, which is that if you want to be the richest person in the

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world, yes, you're going to probably have to do some sort of technology that has mass global

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appeal. And it can't look like any of the technology businesses that already exist because

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those already exist. So it has to be a true denovo idea. And I'll tell you something else.

373
00:29:39.360 --> 00:29:43.520
If your goal is to become a trilliner, you probably won't. And the reason for that is because

374
00:29:43.520 --> 00:29:48.080
the people who are the absolute richest in the world are missionaries, not mercenaries.

375
00:29:48.080 --> 00:29:52.160
They do it because they genuinely believe that this solution deserves to exist in the world.

376
00:29:52.160 --> 00:29:58.160
And they're willing to eat glass for a very long time. Now, in your mind, and I say this as

377
00:29:58.160 --> 00:30:03.040
also an entrepreneur who has money goals, in your mind, a trillion dollars, it's just like you just

378
00:30:03.040 --> 00:30:06.800
see that as winning because that means that you're the richest person in the world. But like, can you

379
00:30:06.800 --> 00:30:12.560
name the richest person in the world 30 years ago? You can't. That guy was number one. Can't name

380
00:30:13.200 --> 00:30:17.360
and wasn't Bill Gates. Do you know what Paul Getty was for just man in the world? 100 years ago.

381
00:30:17.440 --> 00:30:23.920
30 years used rich man in the world. You can't name him. So this idea that you think of becoming

382
00:30:23.920 --> 00:30:27.200
the richest man in the world is going to somehow make you immune to impermanence that you're going to

383
00:30:27.200 --> 00:30:31.200
that your life is going to now be meaningful because of that it won't be. And I can also tell you

384
00:30:31.200 --> 00:30:36.160
that like a billion dollars is a lot of money. 100 billion dollars a lot of money. If you're not at

385
00:30:36.160 --> 00:30:41.920
that level, like I think having that goal is a bit silly because things will change as resource

386
00:30:42.000 --> 00:30:46.960
change. The map and the pieces and the board change as you develop as an entrepreneur under the

387
00:30:46.960 --> 00:30:51.760
assumption that you have what I would consider to be modest goals of let's say a hundred million

388
00:30:51.760 --> 00:30:57.840
dollars. Let's make that our modest goal. All right. So bear with me here. Every business in my

389
00:30:57.840 --> 00:31:01.440
opinion can get to a hundred million dollar enterprise value. I don't want to be clear here. I'm not

390
00:31:01.440 --> 00:31:04.080
saying every entrepreneur can get to a hundred million dollars. I'm not saying every every

391
00:31:04.080 --> 00:31:07.440
every business is it currently stands and gets a hundred million dollars. I'm saying that there is

392
00:31:07.440 --> 00:31:12.240
a version of every business that's maybe adjacent or one or two steps away that can absolutely

393
00:31:12.240 --> 00:31:16.080
become it. So let me give you an example. I have a restaurant. I don't think it's scalable,

394
00:31:16.080 --> 00:31:21.200
and I don't think that I can be a hundred million. Well, all we'd all we'd have to do is prove

395
00:31:21.200 --> 00:31:25.440
this is say is there anyone who's worth over a hundred million dollars in restaurants?

396
00:31:27.280 --> 00:31:32.080
Turns out there is. There's actually a ton of them. In fact, my neighbor above me is worth a

397
00:31:32.080 --> 00:31:38.960
deck of billion, ten, ten billion, and he owns restaurants. The guy who started Subway,

398
00:31:38.960 --> 00:31:42.880
who's the primary owner of Subway. What is a franchise model? The other is privately held.

399
00:31:43.680 --> 00:31:47.760
Okay. So you wait. So I definitely have to do for it. You can do either of them,

400
00:31:47.760 --> 00:31:51.520
but you have to pick which one you're going to do and you have to go all in for a period of time.

401
00:31:51.520 --> 00:31:56.560
Then you might be like, well, yeah, sure Subway. Well, let's let's play a fun game. How old do you

402
00:31:56.560 --> 00:32:03.120
think Subway is? 59 years old, as of right now, me making this video. How long do you think

403
00:32:04.080 --> 00:32:09.920
Andrew Turner and Peggy Turner of Panda Express have been doing Panda Express? 42 years.

404
00:32:11.120 --> 00:32:17.280
And so you're right. The five years you've been making your restaurant is probably not that close

405
00:32:17.280 --> 00:32:22.320
to the 59 years that Subway has. And you're like, oh, well, maybe I'll be like, check for like 78

406
00:32:22.320 --> 00:32:28.880
years. Can a restaurant business become a billion dollar business as fast as a software

407
00:32:28.880 --> 00:32:35.760
company or technology company? No. But what did we say your goal was? Said a hundred million bucks.

408
00:32:35.760 --> 00:32:40.800
That means you have to get about ten million dollars in profit in the business. Between now and

409
00:32:40.800 --> 00:32:48.160
the time you die, doable. That's not a promise. That's not a guarantee. I'm just saying it's doable.

410
00:32:48.160 --> 00:32:52.640
Even if you're like, okay, why have a dry cleaning business? Okay. Well, we can make that into

411
00:32:52.640 --> 00:32:56.960
a franchise model and then scale that way. We can privately own them and just keep compounding

412
00:32:56.960 --> 00:33:02.000
the business and what is what's the business we really in when we're in dry cleaning? Honest truth,

413
00:33:02.000 --> 00:33:05.120
I don't know. I've never been in it. What I would do is I talk to a bunch of dry cleaning people

414
00:33:05.120 --> 00:33:08.320
about what sucks the most about the business. Maybe talent's not that hard in dry cleaning because

415
00:33:08.320 --> 00:33:12.720
maybe the skills of manning a dry cleaning business are not that tough. Maybe the issue is the

416
00:33:12.720 --> 00:33:16.080
machines break a lot. And you're actually like, actually, I'm in the logistics and, you know,

417
00:33:16.080 --> 00:33:19.360
machining business. I need a lot of tech inside of that business. Okay. Well, that's the business

418
00:33:19.360 --> 00:33:23.200
you're in. Ask people who are in the business with the hardest part of it is. Oftentimes,

419
00:33:23.200 --> 00:33:26.960
they'll give you the big, hairy problem. And then you just get to say, is that the type of problem

420
00:33:26.960 --> 00:33:31.600
that I prefer to solve? And this is a frame that Laila uses a lot that I love when we're helping

421
00:33:31.600 --> 00:33:35.760
you not to try to make a big decision. They'll say, hey, there's these two paths I have in front of me.

422
00:33:35.760 --> 00:33:40.000
And I'm not sure, should I do the franchise? Should I do the private health model? Right? Now,

423
00:33:40.080 --> 00:33:45.680
the big overarching thing that no one seems to mention is we might ask, what's the goal?

424
00:33:45.680 --> 00:33:52.880
But what the subtext underneath of that is in what timeline? Because almost all goals are

425
00:33:52.880 --> 00:33:57.360
accomplishable on a long enough timeline. Now, back to the two paths. Let's say that you're making

426
00:33:57.360 --> 00:34:00.560
that decision. I want to, I want to start a franchise or I want to keep privately held. Okay.

427
00:34:01.200 --> 00:34:08.000
If this is the path what you want to do is you want to adequately be able to know what the

428
00:34:08.000 --> 00:34:11.360
big, hairy problem is in each of those paths, because there's one and they're different.

429
00:34:12.400 --> 00:34:16.640
And then you ask the follow up question, which is which of these problems would I rather have?

430
00:34:18.400 --> 00:34:22.720
Followed to that is which problem do I feel more equipped to solve today? And so that gives you a lot

431
00:34:22.720 --> 00:34:26.560
of insight because a lot of times people want to think about the upside, but the downside mitigation

432
00:34:26.560 --> 00:34:30.880
is what gets you to the upside. Elon has this really great quote that he has from somebody else,

433
00:34:30.880 --> 00:34:35.360
but he says, entrepreneurship is a lot like staring into the abyss and eating glass. The staring

434
00:34:35.360 --> 00:34:39.120
in the best part is because you're constantly facing the uncertainty of the business and

435
00:34:39.120 --> 00:34:43.840
existential risk to the business every single day, feeling like it might not work. On the eating glass

436
00:34:43.840 --> 00:34:48.800
side, it's that entrepreneurship is the most efficient funnel for having nothing but bad news.

437
00:34:49.520 --> 00:34:53.920
So think about it like this. There are problems that are very hard to solve and there are problems

438
00:34:53.920 --> 00:35:00.080
that people don't want to solve. You get to have the best of both as in you get problems that

439
00:35:00.080 --> 00:35:04.240
no one wants to solve and they're really hard, right? Problems that are hard that people want to solve,

440
00:35:04.240 --> 00:35:08.080
they'll still work on them for you. Problems that are easy that people don't want to do,

441
00:35:08.080 --> 00:35:12.560
ah, you can usually pay someone enough, but like it's solvable. But it's the ones that really suck

442
00:35:12.560 --> 00:35:17.280
in no one wants that you get to have. And what happens is this becomes your lens of the world

443
00:35:17.280 --> 00:35:22.000
because you just think all day, every day is problems that absolutely blow and no one wants to do

444
00:35:22.000 --> 00:35:26.480
that. But you have to do it because who else is going to do it? It's your business. Every single

445
00:35:26.480 --> 00:35:31.760
day is just trudging through this muck and you think that somehow another business is going to have

446
00:35:31.760 --> 00:35:38.080
different mechanics, but this is a feature of entrepreneurship, not a bug. Entrepreneurship

447
00:35:38.080 --> 00:35:42.080
is the mechanics of entrepreneurship and ownership, specifically being CEO, being the person who's

448
00:35:42.080 --> 00:35:48.000
calling the shots. That's your life and that's what you get compensated for. And so there's a lot of

449
00:35:48.000 --> 00:35:53.360
romanticism about entrepreneurship, the freedom that entrepreneurship gives you. Well, it depends how

450
00:35:53.360 --> 00:35:59.680
big you want to go because basically the day that you stop eating glass, the day that you you stop

451
00:35:59.760 --> 00:36:04.320
dealing with that is the day that in my opinion, you sacrifice something for potential for comfort.

452
00:36:04.320 --> 00:36:08.480
And I think that's okay. The thing is totally okay. But that's a trade you get to choose to make.

453
00:36:09.600 --> 00:36:13.040
But at the end of the day, I said that there's two big reasons that people say I think I should switch

454
00:36:13.040 --> 00:36:16.400
my business. One is that the business I have is currently not scalable. Hopefully I've popped

455
00:36:16.400 --> 00:36:21.200
that balloon for you. And the other is that I don't think that this thing could become super big.

456
00:36:21.200 --> 00:36:25.200
Well, we have to ask the question, how big and why do you want it to be that big? Is if it's

457
00:36:25.200 --> 00:36:28.720
just for you, you're probably never going to make it because it's too hard and you already have

458
00:36:28.720 --> 00:36:32.800
satisfied your material needs. So the reason that those massive companies exist is because the

459
00:36:32.800 --> 00:36:36.880
people who started them genuinely thought that it's almost like their purpose in life was to do

460
00:36:36.880 --> 00:36:40.240
this service for the world. And as a result, the company continued to grow and they were willing to

461
00:36:40.240 --> 00:36:44.480
deal with all the glass for that entire period of time. When we talk about Jeff Bezos with Amazon,

462
00:36:44.480 --> 00:36:51.600
you know, it's only just been like a chill 30 years, Amazon 35. Like we talk about these fast

463
00:36:51.600 --> 00:36:55.280
growth tech like Facebook's like 20 something years old. At the end of the day, you're going to have

464
00:36:55.280 --> 00:36:59.520
this choice. I want you to know that there is absolutely a version of your business that can become

465
00:36:59.520 --> 00:37:05.520
$100 million. I really, like I have a very hard time having someone convince me that there's not a

466
00:37:05.520 --> 00:37:11.440
version of just about any business because there's because because of this. No matter how small the

467
00:37:11.440 --> 00:37:16.000
niche is, there's eight billion people in the world. And so with online, we can now access them.

468
00:37:16.000 --> 00:37:22.880
This might not have been true 30 years ago. But today, kind of is anything brick and mortar,

469
00:37:22.880 --> 00:37:26.720
you can scale nationally. Now, if you're like, well, I'm in a country that only has seven people.

470
00:37:26.720 --> 00:37:31.440
Okay. Well, then guess what? You become international. But are you saying it's impossible or difficult?

471
00:37:31.440 --> 00:37:35.520
I want to make sure we're clear here. I don't know how to go to international. Do you think

472
00:37:35.520 --> 00:37:39.200
no one else has gone international for? Oh, people have done it. Therefore, it is possible. Therefore,

473
00:37:39.200 --> 00:37:42.800
I can learn it. I think about these big, hairy problems because this is what hopefully the entire

474
00:37:42.800 --> 00:37:46.000
point of this video is figuring out the business you're really in and being able to confront the

475
00:37:46.000 --> 00:37:50.480
problem ahead of you so that you don't switch paths. And you actually solve the thing that you

476
00:37:50.720 --> 00:37:54.480
do the next level. While you're going through this, I think that there's this personal experience

477
00:37:54.480 --> 00:37:59.360
that you have to learn the difference between, which is what's good, hard, and what's bad, hard.

478
00:37:59.360 --> 00:38:03.440
And this actually ladders up to a very classic entrepreneur question of, do I push or do I pivot?

479
00:38:04.080 --> 00:38:07.280
And you're like, wait a second. I thought you said that I shouldn't switch new things.

480
00:38:08.080 --> 00:38:12.320
It's different. The good kind of hard is when you have underlying assumptions that you believe to

481
00:38:12.320 --> 00:38:17.280
be true from first principles and just have to push through via iteration. That sounded like

482
00:38:17.280 --> 00:38:20.880
a bunch of words. So let me just give you an example. So if I want to start running TikTok ads

483
00:38:20.880 --> 00:38:24.240
for one of our companies, because we decide, like, you know what, one of the things the big hairy

484
00:38:24.240 --> 00:38:26.880
problem here is that we don't know how to advertise on paid. And that's what's, that's what it's

485
00:38:26.880 --> 00:38:31.440
going to take for us to unlock. Okay. Well, if I sell two accounts, right, I would say, okay,

486
00:38:31.440 --> 00:38:35.680
are there accounts in its own TikTok? And the answer would be yes. And so it's like, okay,

487
00:38:35.680 --> 00:38:39.200
well, is there a way that we can run ads profitably to get our messaging in front of those people?

488
00:38:39.200 --> 00:38:42.080
If the answer is yes, then I fundamentally believe that there's a profitable way to turn

489
00:38:42.160 --> 00:38:47.040
those eyeballs into customers. Period. Now, you might have run a TikTok ad to get accounts and not

490
00:38:47.040 --> 00:38:51.040
got them, but it doesn't mean that getting accountants on TikTok is impossible. It's just, you

491
00:38:51.040 --> 00:38:56.720
don't know how to do it. Again, solvable. And you might be like, ah, but that's going to be hard.

492
00:38:56.720 --> 00:39:00.640
Remember, there's going to be a big dollar sign, a big price tag associated with solving that

493
00:39:00.640 --> 00:39:05.520
problem. Let's say if we start running ads and we don't immediately see ROI, that's the good kind

494
00:39:05.520 --> 00:39:09.280
of hard because we can iterate. Remember I said, good kind is you iterate, right? Do we get enough

495
00:39:09.280 --> 00:39:13.440
clicks? Do we get enough opt-ins? Are they the people opt-in or the right type of people?

496
00:39:13.440 --> 00:39:16.720
If not, maybe we need to change the message and change the targeting, right? All these are just

497
00:39:16.720 --> 00:39:20.560
iterative, but it's not that it's impossible. It's just, it takes work. This is iterative hard.

498
00:39:20.560 --> 00:39:24.800
That's good hard. To be clear, I don't see losing money on ads is losing money. I see it as investing

499
00:39:24.800 --> 00:39:28.160
in something that's going to increase the enterprise value by creating another acquisition channel

500
00:39:28.160 --> 00:39:33.440
and simultaneously diversifying how we get customers. And so having multiple acquisition channels

501
00:39:33.440 --> 00:39:38.080
meaningfully increases enterprise value without even having additional profit because it decreases the

502
00:39:38.080 --> 00:39:42.160
risk for the in-acquire as in the person who's going to buy the company. Right? If I have two ways

503
00:39:42.160 --> 00:39:45.440
of getting customers, I feel way better. If I had six ways of getting customers, I feel even better

504
00:39:45.440 --> 00:39:49.040
than that. But not only that, each of the six ways also brings more customers. So it also grows

505
00:39:49.040 --> 00:39:51.920
the business and decreases the risk. It's one of the most valuable things you can do in a business.

506
00:39:52.560 --> 00:39:55.680
And so it would make sense that the reason it's such a valuable thing to do in the business is

507
00:39:55.680 --> 00:39:59.760
because it's hard. It's hard. It's why most people don't do it, which is why it is valuable and it is

508
00:39:59.760 --> 00:40:05.040
rare. I can't say that I want this really rare outcome. And then at the same breaths say I'm not

509
00:40:05.040 --> 00:40:10.480
willing to do very rare levels of work. So let's let's do a hypothetical. So if a business is worth

510
00:40:10.480 --> 00:40:15.920
$10 million, okay, and I can add a second acquisition channel that doubles the revenue and diversifies

511
00:40:15.920 --> 00:40:22.400
the risk, that might add $15 million to the enterprise value. So if I lose $100,000 figuring out

512
00:40:22.400 --> 00:40:27.680
TikTok ads over six months, but I get a $10 million return on it, would I do it?

513
00:40:28.000 --> 00:40:36.080
Absolutely. But the thing is is I say this and people not their heads are listening and they're like,

514
00:40:36.080 --> 00:40:43.120
yeah, I believe that. But you have to see these as investments in the business. Like I'm going to

515
00:40:43.120 --> 00:40:49.360
invest this time and this money and I'm willing to not see success for this period of time before

516
00:40:49.360 --> 00:40:54.160
deciding to truly call it. And honestly, though, when you decide to truly call it, it's just your

517
00:40:54.160 --> 00:40:58.160
ability to do with pain. So there's something about human behavior around this, which comes down

518
00:40:58.160 --> 00:41:04.240
to frustration tolerance. So the basic behavior is how many times you try something again before you

519
00:41:04.240 --> 00:41:09.840
quit. And this typically has to do with your history of being reinforced after multiple attempts.

520
00:41:09.840 --> 00:41:15.440
So I'll give you a very simple example. If you say, hey, I'm not going to buy something from you.

521
00:41:15.440 --> 00:41:19.680
And the salesman says, well, like have you thought about it like this or have you thought about

522
00:41:20.160 --> 00:41:24.480
the amount of times that that salesman is willing to follow up and ask again on the call is

523
00:41:24.480 --> 00:41:29.440
directly proportional to the amount of times in his past or her past that after asking a second,

524
00:41:29.440 --> 00:41:34.480
third, fourth, fifth time, they were rewarded for doing so. And so if someone gets rewarded,

525
00:41:34.480 --> 00:41:37.680
again, intermittent reinforcement doesn't mean they have to get reinforced every time they ask

526
00:41:37.680 --> 00:41:42.080
five times. If they get reinforced enough times that they ask five times, they will ask five

527
00:41:42.080 --> 00:41:48.080
times every time. So if you have a dog and they come to the table and you give them food because

528
00:41:48.080 --> 00:41:52.400
they beg, right? Then what do you do? You reinforce begging. So they come back and they beg.

529
00:41:52.400 --> 00:41:56.960
Now, if they come back and then you don't give it to them because you execute your well power

530
00:41:56.960 --> 00:42:01.520
and they sit there and they you still don't give them food, fine, what do they do tomorrow? They come

531
00:42:01.520 --> 00:42:07.040
back again. And what do you do tomorrow? You don't give it to them. What do they do the next day?

532
00:42:07.040 --> 00:42:12.000
They come back again. Okay, they come back again. And here's the crazy part. Let's say that,

533
00:42:12.000 --> 00:42:16.800
let's say that they come back five, six times. If on the sixth time you give it to them again,

534
00:42:16.800 --> 00:42:21.200
you've just taught them that they have to wait for extended periods of time. You have rewarded

535
00:42:21.200 --> 00:42:26.720
them trying again and again and again and again. Entrepreneurs, we are like this too. And if you're

536
00:42:26.720 --> 00:42:32.560
newer to the game, then I would encourage you to increase your frustration tolerance. I can't

537
00:42:32.560 --> 00:42:37.600
manufacture the win that you're going to have. But this is why I try to make these videos is that

538
00:42:37.600 --> 00:42:42.720
the amount of times that it has taken me a hundred iterations to get an ad campaign to work

539
00:42:43.280 --> 00:42:47.600
is a lot. And so now I just have a fundamental belief. I'm like, if we keep working on this,

540
00:42:47.600 --> 00:42:51.840
we will make this work because down to fundamentals, there are eyeballs here and we can pay to

541
00:42:51.840 --> 00:42:56.080
to reach them. And there's no reason physically why we can't get them to take a click and then

542
00:42:56.080 --> 00:43:00.400
ultimately buy our thing. We just aren't good enough. And so we just have to look, are there people

543
00:43:00.400 --> 00:43:03.040
who could buy my stuff from this platform? Is there a way to reach them? And can I do this

544
00:43:03.040 --> 00:43:08.000
properly? Yes, great. And we will make money on a long enough time horizon. And so the only thing we

545
00:43:08.000 --> 00:43:12.560
have to do is just not run out of money while we try. That's it. But here's the, let's say that,

546
00:43:12.560 --> 00:43:16.720
and I said, I said that this is what this looks like in reality. You make this decision to make this

547
00:43:16.720 --> 00:43:20.320
investment because you see the big price tag on the other side, right? And you say it would be

548
00:43:20.320 --> 00:43:24.080
reasonable for me to spend a hundred thousand dollars, a million dollars, whatever the number is for

549
00:43:24.080 --> 00:43:28.960
you in six months to get this thing that's going to double our acquisition, right? Of course,

550
00:43:28.960 --> 00:43:32.240
you would make that investment. But the first month, you spend a hundred grand and then you don't

551
00:43:32.240 --> 00:43:35.040
make money back. People throw their hands up and they're like, ah, it doesn't work for me. Of

552
00:43:35.040 --> 00:43:40.080
course, it didn't work the first time. This is why you get paid to solve big problems. The types

553
00:43:40.080 --> 00:43:44.240
of problems that occur in entrepreneurship is they're all one of a kind. And you're like, wait a

554
00:43:44.240 --> 00:43:48.240
second. I thought business behaving patterns. Absolutely. So I think there's this great, you know,

555
00:43:48.240 --> 00:43:52.160
like history doesn't repeat itself, but it rhymes. It's the same thing in business. Like,

556
00:43:53.280 --> 00:43:57.760
if I knew every single thing that I was going to do with every business that I started up,

557
00:43:57.760 --> 00:44:02.640
then it would be instant, right? You'd be instantly, instantly bigger. But no, there's similarities.

558
00:44:02.640 --> 00:44:06.320
There's patterns that you recognize. Be like, okay, we're going to have to turn on paid ads,

559
00:44:06.320 --> 00:44:11.840
but we've never done this for B2B on TikTok. So we're going to have to learn that little nuance

560
00:44:11.840 --> 00:44:16.080
in this setting. Then even if you don't B2B on TikTok, maybe you haven't done B2B on TikTok

561
00:44:16.080 --> 00:44:21.200
for accounting, but you did it for marketing agencies, right? So like, okay, fine, we did that.

562
00:44:21.200 --> 00:44:24.800
All right. Well, like, there's always going to be more nuance because I can always say, cool,

563
00:44:24.800 --> 00:44:30.080
you did that a year ago, but what about today? So the idea that you're going to know the solution

564
00:44:30.880 --> 00:44:36.960
is a false belief that will make entrepreneurship significantly harder for you, or at least more

565
00:44:36.960 --> 00:44:41.840
painful for you. I said earlier in this little diatribe that I just went on, there's good kind of hard

566
00:44:41.840 --> 00:44:47.280
and there's back on hard. So what's back on hard? Back on hard is when your underlying assumptions

567
00:44:47.280 --> 00:44:52.640
are proven incorrect. So this is the classic pusher pivot, right? So if you've pivoted several times,

568
00:44:52.640 --> 00:44:57.440
but I've pushed a lot more. So you pivot when your underlying assumptions are proven incorrect,

569
00:44:57.440 --> 00:45:01.840
meaning. So let's say, for example, if a report came out saying TikTok had banned accounts

570
00:45:01.840 --> 00:45:06.960
from the platform, then I would say we don't push on TikTok. The underlying assumption was,

571
00:45:06.960 --> 00:45:10.400
there are people here we can reach them profitably. Well, the underlying assumptions are wrong.

572
00:45:10.400 --> 00:45:15.120
That's not true. So at that point, we have to pivot to a different platform or different advertising

573
00:45:15.120 --> 00:45:19.840
with it. And so I just use this a clear test of when I'm being stubborn versus when I'm being

574
00:45:19.840 --> 00:45:24.800
intelligent. And so before making a big investment, I like to identify what I call the need to

575
00:45:24.800 --> 00:45:29.200
believe, right? Or the assumptions that I believe to be true or must believe to be true in order

576
00:45:29.200 --> 00:45:34.640
for the remainder to follow as desired, right? So as long as those assumptions are true, we keep

577
00:45:34.640 --> 00:45:39.280
pushing. And if one of those assumptions is proven wrong with supporting data, then you change.

578
00:45:39.840 --> 00:45:44.640
And so fundamentally, that's the ignored tax we all pay is that sometimes you have these

579
00:45:44.640 --> 00:45:48.160
assumptions because you can't know everything. You're not God. Can't know everything. Sometimes

580
00:45:48.160 --> 00:45:52.320
you got to find out on your own and you find out that assumption that I had is not true. And that

581
00:45:52.320 --> 00:45:57.040
was kind of like the whole thing this was predicated on. And so then you pivot. You find something else

582
00:45:57.040 --> 00:46:00.400
out that is true that you didn't know was true before and then you make your change.

583
00:46:01.040 --> 00:46:07.040
I tell the story in my $100 million offers book, a good friend of mine who had a technology

584
00:46:07.040 --> 00:46:11.600
business. You think, oh, technology is just something that obviously it's going to be cutting edge.

585
00:46:12.240 --> 00:46:17.360
But what he chose to do was try and turn around a dying industry. So he tried to turn around

586
00:46:17.440 --> 00:46:22.160
newspapers. So he said, Hey, I'm going to take you into the digital age. And we're going to have

587
00:46:22.160 --> 00:46:27.040
an ad product for you that'll take all your print ads and turn them into online ads on your site.

588
00:46:27.040 --> 00:46:30.400
And it's just, you know, you can use our software to do it. It's one click, whatever it's very easy.

589
00:46:30.400 --> 00:46:34.240
With that, you think, Okay, that business makes sense. You're going to transition these guys over.

590
00:46:34.240 --> 00:46:39.920
It gives them a whole another thing that they can sell. Cool. Groovy. Now, what was the problem with

591
00:46:39.920 --> 00:46:44.000
the business? What do the need to believes in that business? The need to believe is that

592
00:46:44.880 --> 00:46:49.520
newspapers with their inherent business model are going to continue to exist in order for that

593
00:46:49.520 --> 00:46:53.200
business to be viable. Now, at the onset, you might get into that business thinking, well, yeah,

594
00:46:53.200 --> 00:46:57.600
I'm going to help them convert that makes sense. But if those businesses cease to exist,

595
00:46:57.600 --> 00:47:01.680
there is no one left to convert because all of people have just switched their consumption

596
00:47:01.680 --> 00:47:08.080
to other platforms. And so in that instance, that's what I consider bad hard. That's like the

597
00:47:08.080 --> 00:47:12.800
underlying assumption of this business is no longer true. It's proven incorrect. We thought that

598
00:47:12.880 --> 00:47:15.920
they would continue to exist. We could flip them over and they'd generate the same revenues

599
00:47:15.920 --> 00:47:19.920
they were before. And so then we'd have this massive market to go after. But in reality,

600
00:47:19.920 --> 00:47:22.960
many of them just went out of business. And so there's really no one to go after. The few that did

601
00:47:22.960 --> 00:47:28.400
that you could go after continue to shrink over time. Not a good market to go after. That is a bad

602
00:47:28.400 --> 00:47:33.200
hard. It's the kind of hard that you can't fix. In that setting, you have to pivot. He would then have

603
00:47:33.200 --> 00:47:39.920
to ask the question, Okay, what other businesses could I add? Digital ads too. And then at that

604
00:47:39.920 --> 00:47:44.400
point, you'd have to say, Okay, maybe I could take blogs and make ads make it make a network of

605
00:47:44.400 --> 00:47:49.840
blogs. And that's kind of more new age traffic and help them either cross sell across each

606
00:47:49.840 --> 00:47:54.320
other's and basically create this network of traffic. Like that would be an interesting business.

607
00:47:54.320 --> 00:47:58.000
Again, there'd be need to believe around that as well. At that point, you'd have to have a real

608
00:47:58.000 --> 00:48:00.800
existential question of like, Who do we want to be when we grow up? Because who we thought we

609
00:48:00.800 --> 00:48:06.480
wanted to be ain't going to work out. Then a little subtext here. It's very rare in what I would

610
00:48:06.480 --> 00:48:10.560
consider traditional businesses to have a need to believe that's actually not true.

611
00:48:11.520 --> 00:48:17.040
If you're an accountant, you're in lawn care. You're in your plumbing business. You're,

612
00:48:17.600 --> 00:48:24.400
you'd sell, you know, website design. Notwithstanding AI for the time being and robots taking over.

613
00:48:24.400 --> 00:48:29.120
Notwithstanding those two things. For the last however many years, 50, 60, 80 years,

614
00:48:29.120 --> 00:48:34.960
those businesses, more or less, you not being able to scale them was a you problem. It's fundamentally

615
00:48:34.960 --> 00:48:39.280
you didn't know how. That was it. There wasn't anything wrong with the market. There's nothing

616
00:48:39.280 --> 00:48:41.520
wrong with HVAC. There's nothing wrong with plumbing. There's nothing wrong with lawn care. All

617
00:48:41.520 --> 00:48:45.040
these things are going to be to do exist. And so if you were limited in what any kind of business

618
00:48:45.040 --> 00:48:48.480
that I would consider a normal business, just know that there's nothing to do with the

619
00:48:48.480 --> 00:48:54.160
scalability of your business. It's your ability to scale. That is the problem yours. And so at the

620
00:48:54.160 --> 00:48:57.280
end of the day, a lot of entrepreneurs get into this for some sort of freedom or some sort of

621
00:48:57.280 --> 00:49:01.520
monetary goal or because they want to solve a problem or a combination of all three. But we fundamentally

622
00:49:01.520 --> 00:49:07.360
get paid to solve big, hairy problems. And the bigger and hairier the problem in general,

623
00:49:07.360 --> 00:49:11.040
the bigger and hairier the payoff. Paul Graham said this quote on Twitter the other day and

624
00:49:11.040 --> 00:49:15.440
I really liked it. He said, if you want to make a million dollars, you must endure a million

625
00:49:15.440 --> 00:49:19.520
dollars of pain. I like to consider how much enterprise value I'll get on the other side of this

626
00:49:19.520 --> 00:49:23.840
concrete wall that I've bashed my head into. If the number is big enough and I've got a strong

627
00:49:23.840 --> 00:49:28.320
enough helmet, I will keep bashing into it so I can get to the other side. And that's what keeps

628
00:49:28.320 --> 00:49:32.480
motivating me. So as long as I'm solving the right kinds of problems, the ones where I can

629
00:49:32.480 --> 00:49:36.800
reason the first principles that there is a solution and that solution will make money. Then I

630
00:49:36.800 --> 00:49:41.280
keep going. And if I get to the bottom of it and I find out that my underlying assumptions wrong,

631
00:49:41.280 --> 00:49:44.720
I have to change and that's just as hard. For the entrepreneurs who are starting to listen to

632
00:49:44.720 --> 00:49:48.480
this, we're watching this. Identify the business that you're really in. Confront the big, hairy

633
00:49:48.480 --> 00:49:53.440
problem in front of you. Don't jump ship thinking that some reason the grass is greater or that the

634
00:49:53.440 --> 00:49:56.880
woman in the red dress is somehow different and not crazy from the woman that you're married to

635
00:49:56.960 --> 00:50:01.440
right now. She just has a different kind of craze and you'll discover that in time. So you might as

636
00:50:01.440 --> 00:50:05.360
we'll be happy with when you got because you know what you need to do to make this person happy

637
00:50:05.360 --> 00:50:09.600
and you keep forging. And then you decide whether or not you want to push or you want to pivot

638
00:50:09.600 --> 00:50:14.640
based on the underlying assumptions. And if you push focus on making progress and breaking through

639
00:50:14.640 --> 00:50:18.640
that wall because the payoff is on the other side and that's what makes entrepreneurship worthwhile.

640
00:50:19.200 --> 00:50:23.520
Now this was all very theoretical because you know obviously it applies to a lot of different

641
00:50:23.520 --> 00:50:27.280
businesses. If you want to see me apply these same concepts of how do I actually push

642
00:50:27.280 --> 00:50:31.760
through the walls for business to get it to break through to the next level. I have a video here

643
00:50:31.760 --> 00:50:34.720
that you're absolutely going to love of me breaking down a real business and helping me scale.

644
00:50:36.240 --> 00:50:42.240
Real quick guys, I have a special special gift for you for being loyal listeners of the podcast.

645
00:50:42.880 --> 00:50:48.800
Layla and I spent probably an entire quarter putting together our scaling roadmap. It's

646
00:50:48.800 --> 00:50:54.320
breaking scaling into 10 stages and across all eight functions of the business. So you've got

647
00:50:54.320 --> 00:50:58.000
marketing, you've got sales, you've got product, you've got customer success, you've got IT,

648
00:50:58.000 --> 00:51:01.760
you've got recruiting, you've got HR, you've got finance. And we show the problems that

649
00:51:01.760 --> 00:51:06.560
emerge at every level of scale and how to graduate to the next level. It's all free and you can get

650
00:51:06.560 --> 00:51:11.600
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651
00:51:11.600 --> 00:51:17.040
it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours

652
00:51:17.040 --> 00:51:20.720
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653
00:51:20.720 --> 00:51:24.320
which will probably be about 90 minutes. And so if that's at all interesting, you can go to

654
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acquisition.com forward slash roadmap, R-O-A-D-Map, roadmap.