WEBVTT

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This one equation will make you rich. I recently spoke in

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ad world. If you stayed at the very end, you'll understand how you can use the

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equation to sell lots of stuff for lots of money and make yourself

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unreasonably wealthy. Keep being awesome and enjoy.

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A big picture, there's two things I don't want to talk about. One is how do you

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create and sell valuable things, right? You probably hear people say, hey,

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like, provide more value, give value away. Like, it's all about value value value, but

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like, no one defines what is value. What does that even mean, right? What are the

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components that create a more or less valuable product or service? The second

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part is one of the four different things that you can do to enhance value.

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Once you have a valuable thing, you can enhance it by adding scarcity.

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You can enhance it by adding urgency. You can enhance it by adding bonuses.

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You can enhance it by adding guarantees. You can also, as a fifth half bonus for you guys,

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you can enhance the value by simply naming it in a way that resonates more with your

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avatar or the type of person you want to sell to. If those are the five things that can

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enhance the value of the thing that you're selling, if you have all five and you do

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them well, you will sell more than you would if you didn't have them.

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Now, I won't have time to get into all five. I'm just going to talk about one of them,

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which is guarantees. It's a big picture. We're going to talk about how to create and

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destroy value in the things that we sell. And we'll talk about how to reverse risk

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through guarantees to make the things that we are selling more compelling to them,

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because now they won't fear that they're not going to get the outcome that we promised.

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Cool. Awesome. I spent a very long time trying to figure out what value

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meant. And it's because we worked with a lot of portfolio companies and we want to think

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about how we can create new product offerings that are going to sell for lots of money

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with big margins and make us all rich, right? I wanted to come up with an equation that would

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encapsulate this so that we could basically formulate or formulaically approach the problem.

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So it's like if we check these boxes, we're going to get something valuable and we can just do

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this over and over and over again. And I had to do it that way because I can't be the person

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who's making the products in every one of these companies at this point. So I have to create

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a process around it. Okay. The four variables are as follows. So if you're taking notes or you have

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something on your side screen, this is the these are the writer downers. Number one is the dream outcome.

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Is the thing that we are promising something that people actually want? All right. And I'm going

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to dive in each of these four in a second, but I want to just give you the four and then we'll double

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click. All right. So that's number one. And when you're writing these down, write it down like a

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fraction. So draw a line right in the middle of your paper or whatever and you'll have two on the

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top and two on the bottom. So number one is your dream outcome. Number two is the perceived

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likelihood of achievement. How likely to someone believe that if they purchase your thing,

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they're going to achieve the outcome that we are promising. A lot of words, hopefully a simple

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concept. Number three is the time component. In essence, how quickly are they going to get the

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thing after they pay? The fourth is the dual-sided coin of effort and sacrifice. What is someone

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have to start doing that they don't want to do as a result of this purchase? And then what are the

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things that they have to stop doing that they would like to keep doing that they cannot no longer do

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as a result as purchase? All right. So those are the four things. And what I'd like you to do in

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thinking through this as we break it down is think about your own products and services that you

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have and think about how they stack up in using this equation. All right. I'm going to give you a big

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picture back and forth example and then I'm going to dive into each of them in more detail.

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If we were to think about an ideal outcome, all right, so let's use weight loss because it's an

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example that most people can understand. All right. So why is it that let's say you have some things

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that you can sell for weight loss like $50,000 surgeries for a liposuction? And on the other hand,

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you've got a $5 ebook that promises a skinny tummy. If they make the same promise,

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all right, which is the dream outcome number one. How does these two things are so different in price,

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right? Well, it's the other three variables, right? Because the dream outcome people want to lose weight,

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right? And so that's unit number one. Now, the reason that that is number one of the four is that

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if I were to say, hey, I can make you a million dollars versus losing weight, most people,

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many men, especially, would probably value making money more than they would value losing weight,

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not always, but oftentimes. As a category, investment things, franchise opportunities,

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business opportunities tend to sell for a higher price, which is the kind of the component of B2B,

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business to business versus business to consumer. By and large, when you have two different things,

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like that, we use the dream outcome to differentiate entire industries or categories of products

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as being more or less expensive. Now, once we have the same dream outcome like weight loss being

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delivered, then we move on to the other three parts of the equation. Let's go on to perceive

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likely of achievement. If I have two people who are selling the same exact thing, let's use a doctor

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in that we lost example, like the liposuction guy. And let's say that liposuction guy A,

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doctor, has done 10,000 surgeries of liposuction. And let's say doctor B has done one, same surgery,

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same dream outcome. It's going to take same amount of time, same amount of effort for you. This guy

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might even spend more time on you than this guy because he's not as experienced. Which one

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are you going to go with? Probably the 10,000 guy. Why? Because of the perceived likelihood of

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achievement. We have lower risk associated with making this purchase because we believe that if we

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give this money, we're going to have the outcome that we desire. And so if you think through this in

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terms of your own products, you're like, are I am I doing a good job before the purchase

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of increasing someone's perceived likelihood of achievement because in a very real way, that

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confers itself or it translates into higher prices. This guy, even though it probably takes him,

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takes him less time to do the surgery, he actually can charge more than this guy. And that wild,

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so we've got the dream outcome. Is the thing something people actually want? What's the perceived

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likelihood of achievement? Now, if we stop there between making big promises and making people

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believe that it's actually going to happen for them, that is what the majority of young and

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new entrepreneurs spend their time on. Most people, myself included, spent the first half,

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two thirds of my career trying to beef up the top side. I would promise bigger and I would

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show more testimonials, more results. Promise bigger, more testimonials, more results, right? More

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third party edification, more celebrity endorsements, etc. Right? But I believe now, now I've done this

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a little bit that the actual fortunes rely on the bottom side of the equation. Okay? So remember,

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this is the top side that creates value. The bottom side of this fraction are the things that

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destroy value. Our goal is to increase the top side and decrease the bottom side. So with time,

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there's two components of time. We have the time delay between when you buy and when you get,

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and then the amount of time to immediately start seeing any kind of outcome. So it's like the

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experience along with it. So for example, if I signed up for a gym membership, using this weight loss

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example, I might know that I'm not going to lose the weight for a year, but if I start seeing value

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from the community, I start feeling more upbeat, etc. I'm going to start experiencing benefits that

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might not be my big goal, but I'm going to have other things along the way that are going to still

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deliver value quickly. The whole component of time here is how quickly between when I buy and when

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I get, I'll give you a B2B example and a B2B example. Let's see you on a marketing firm. So this is

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ad rules. I'm sure they'll audit this. We'll resonate with one of you guys. If you have two agencies

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that are side by side, and they both say, hey, I'm going to do some marketing for you and I'm going

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to get your phone to ring. One way or another, marketing agency A says, okay, now that we're doing this,

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you're going to have to start recording lots of ads for us, and we're going to be meeting three

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times a week, an hour each time, and you're probably going to take four hours a week to record these

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these ads for us. And it's going to take us 60 days to get this stuff done. At day 60, your phone

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starts ringing from the ads that they do, okay? Marketing agency number two. You sign the paper,

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and as soon as you sign the paper and they process your credit card, your phone rings and it's a lead

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within seconds. Same product, time collapse. And so one of the easiest things I had a mentor,

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we want to say this, he said, one of the easiest ways to figure out what product to sell is look at

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the products everyone else is selling and deliver the same thing in half the time. And so when we think

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about the products that we sell, is there a way that we can condense TTV, which is time to value?

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And so one of the key, one of the huge ways that we focus on when we bring a portfolio company in

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acquisition.com is we say, how can we look at this service delivery and see if we can do it faster?

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Now, before the people who are in the room were like, well, my business is different. We have a

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company that publishes books for God's sake. So a very long process. But what we were trying to figure

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out because they had the same situation where it's like, it just takes time for someone to like,

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write a book, like, how can we deliver this value faster? And so the thing is, is it just like that

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gym example, but I said, it's not that you necessarily have to deliver the longest result first,

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but you want to deliver a result first. You want to have a tangible outcome that someone can

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experience literally holding their hands. And so one of the things that they did was created a little

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seven day kind of mini book boot camp. And when they did that, people at the end of seven days

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could have an actual mini book published and live. Now they make it clear. This is not the book that's

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going to make you a millionaire. But what it was was to break the belief and approve the concept that

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they could really do it. And then they got the bind and really built the, you know, the real book that

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was going to end up making the money, et cetera. Right. And so the idea here is that if you are

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creative, and if you are a loser, then don't think this way. But if you are a winner, there's always

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the question, which is, how can I make this work for me? All right. And so you have to think, if you're

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real estate, you're like, well, it takes 90 days to sell house, how can I give someone an outcome before

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that? It's like, well, what else happens? They have to clean the house. They have to inspect the house.

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They have to, they want to know about ways to make new more value. There's lawn care. There's fixed.

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There's a million things that have to happen. Is there other things that I can do along this journey

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that I can provide more value to this person earlier so they can get better experience? In a B2C

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example, let's say I'm on the internet and I'm trying to buy something for weight loss, right?

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And I click the button that says six minute abs. And then six minutes later, I have abs.

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How, like literally I look at my shirt and I'm like, holy shit, how valuable would whatever that

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thing be? If in six minutes I would have abs, probably infinitely valuable. And so when we can find

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ways to deliver the outcomes to our customer sooner or faster, they will value it a lot more.

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Not just a little bit more, a lot more. Speed is one of the best all-time competitive advantages.

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And so the last one is effort and sacrifice. So I said it's two sides at the same point because

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when you take on a new customer, you have to have that they have to start doing things that they

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weren't doing before, right? That's effort. They didn't, and they probably don't want to do it because

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they weren't doing it before, which is why they don't want to do it, right? And on the flip side,

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they've got stuff that they stopped doing that they do want to do, right? And that's why they're

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two sides at the same point. In that market example, I just gave with the agency, right? Let's say

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marketing agency A and B, and I said, A had, you know, you have to three meetings a week, and you've

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got four hours to deliver us copy and creative and whatever, right? Versus the other agency,

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it's like, oh, we've already tested all the stuff for your industry, and we've got

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videographers and whatnot who can already just start running the stuff. You just pass, and it's

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taken care of. How much more valuable is the guy who takes none of your effort and sacrifice?

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Takes no effort on your part to make this outcome occur. So if you're thinking about this within

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your own business, the way that we like to think about these four variables, right? When we have

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the effort and sacrifice, the goal just like time is to decrease it. And if we're repeating the same

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activities with every one of our customers, how can we streamline that? How can we predict what is

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going to happen? And how can we make, you know, three onboarding calls into one? And how can we make

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one onboarding call into a checklist? So how can we streamline this process such that it's seamless

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and effortless and ideally immediate for them to achieve the result, all right? And so I said,

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there's four four variables in the value equation. You've got a big dream outcome that people want

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to experience. They believe that the likely that they're going to experience it is very high.

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The time that they have to wait between when they buy and when they get is as little as possible.

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And then the effort and sacrifice is zero. And when you put those four things together, you have

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a very valuable product. And so when I said that the bottom half of the equation is the more valuable

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thing that I as I've learned is that a lot, it's very easy to make bigger promises and, you know,

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throw testimonials and things like that. It's much harder to actually have the operational

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effectiveness to drive results faster and decrease the amount of effort that a customer has to put

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forth. And so the competitive modes that exist in the big businesses are on the bottom side of

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the equation. Netflix took over boxbuster because they made consumption of movies and TV shows

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immediate and your effort and sacrifice of you didn't have to get up in your car, drive around

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the corner, 15 minutes, walk around, grab the thing. And then not to mention return it three days

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later, which is zero value add to you, right? Without getting your late fee, they just got rid of

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all of that. So you could just take your phone and start watching. But the actual dream outcome

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and perceive likely on both of those occasions that people thought they were going to watch a movie

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or watch a TV show. And they were very certain they wanted to do it, right? So like the top side

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was the same. The bottom side of the equation is where they killed everyone. If you look at Amazon,

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they made the purchasing process seamless on two angles. If I can click with one button and it

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comes tomorrow, they made the effort and sacrifice virtually nothing in terms of the purchasing.

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And then the time to light is virtually nothing in terms of getting the thing and they continue

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to shrink that time gap. They sell the same products as everyone else. Literally. But what did they do?

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They increased the perceived likelihood of achievement by adding all the reviews. So people

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believe that when they buy the thing, they're going to get the outcome they really want. The

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job they hired the product to solve, they believe they have when they have that because of the reviews

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that Amazon leaves, right? The time because they get it immediately and they can buy it quickly

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and the same thing with the effort and sacrifice, right? And so that's ultimately how Amazon is

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able to beat because they provide value, right? This is making sense. This is cool. You guys

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digging this? Okay. I'll give you one cool benefit of that four part stack and then I'll

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segue into the guarantees portion. All right. So I gave you four variables. Guess what those four

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variables also equate to? They equate two headlines and copy. So if I want to promise something to

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a prospect, what am I going to say? Here's the dream outcome. Here's a number that is related to

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the amount of people who have helped achieve this thing. Here's how long it took them to achieve

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that thing. And then here are stipulations around that claim. And if you have data from your

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customer success department, which hopefully you do, right? Which is percentage of customers who

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may believe a five star review or percentage of customers who achieve X outcome by X date under

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this condition. Now you have claims that you can use that are very compelling in your marketing

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and your copy. These can be headlines and emails. They can be headlines and ads. They can be on

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your sales pages. They can be hooks in your videos and creative content. And so when you think through

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these four variables, they are the consistent variables of claims in general. So when you want to

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communicate to a chiropractor that you can help market for his facility, you're going to say 70%

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of our chiropractors that we work with achieve over a hundred patients in their first 30 days without

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having to make an ad effort and sacrifice. And so when you do something like that, you use those

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parts of the equation that is also reverse engineers copy because they should be related because

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value is what people want to buy. And so your abilities persuade and your ability to understand and

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communicate value should be married. When you're thinking about your products and services and you

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have these four variables, you're like, okay, how do I do this? Right? So the way that we think through

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this is that we create a big list of problems, right? Which is I like to think about in sequence,

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which is what is every single mini micro step as chunked down as humanly possible that someone has

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to go through to experience this result. So if you're in the physical products business,

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then you're going to, that's why Amazon spent so much time on the actual purchasing because there's

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not a ton that they have to do. But once the person receives the product with their first impression

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of the box, the unpackaging, the directions that they get in order to use it, what the using it

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experience looks like the first time, the second time, etc. How can we streamline that process for them?

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How can we give them different ways that they can use the same thing, right? In the services side,

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there's probably a lot more micro steps that somebody's going to have to take in order to achieve the

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outcome, right? And so the idea is we want to write down every single problem they could possibly

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encounter throughout their entire journey with us. And then we want to write out what the solution

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of that would look like. Now we're just putting, we're in, we're in fictitious world here. We're saying,

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you know, blue ocean, what would we do to solve every one of these problems, right? And we get this

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huge list. A lot of guys who go through the book have 100 plus different little mini micro problems

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and mini micro solutions that they have. Now once you have this huge thing, this is a fun activity

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to do with your team is how can we make the thing we sell more valuable, right? And once you have

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that list, you then do something I call the Truman stack, which is you look at that list and you say

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which of these is the most valuable them, which is the ones they suffer the most from that is most

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valuable them. That's category number one. Then next to those, which of these would cost us virtually

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nothing to build or implement after we have a first time experience, right? So it's like if you have

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to build out like a grocery calculator, it's going to take you time one time, but then every time after

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that, it's done, right? What's the incremental cost of each of these, of each of these solutions?

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And so then you order those in terms of you, I just would go low medium high. It's very simple.

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And so then for me, what we do with the companies we have is we look at the things that are high value

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and cost us very little to provide on increment and we cut everything else out. And then we have something

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that's extremely valuable and costs us very low. And that's how you have a very high value, very high

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margin, product or service that you sell. That is ultimately how we recreate value in a business.

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And we like to think about is like what are all the capacities of the business? What are all the

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problems they could potentially solve? And then which ones will we choose to solve? And then once we're

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very ruthlessly clear on the problems that we choose to solve, we cut out everything else and say

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that's just not a problem which you solve. We know we could solve it, but just based on the economics

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of that solution or that problem, we don't want to be the ones to go. And then we say ruthlessly

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focused on things that we do we do more of. Okay, now most people think that they're selling against

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their competition. I disagree. What you're really selling against is inaction. You're selling against

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doubt. You're selling against the biggest obstacle which is risk. The comfort of not doing the thing

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or not buying the product is so high we have to help decrease their action threshold. We have to

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lower that barge so they can just step right over it because up here they don't want to take action

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because it's too comfortable. We have to lower it so much so there's so little friction for them to

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take action with us that they buy. I think one of the more compelling things that a business can do

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is offer guarantees. Guarantees are you assuming a certain percentage of the risk from the buyer?

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Whenever there's an exchange between two parties, there's a certain amount of risk that both parties

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incur. And so if you have these two parties and there's a certain amount of risk that's shared,

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you can shift the risk in your favor because you have more knowledge about the fulfillment than the

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client does. Why? Because you've done this a hundred times before and this is their first time.

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And so it would make sense that we shift some of that risk in our favor and we do that in the form

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of a guarantee rather than like insurance but you can think about guarantees as purchase

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insurance for the buyer. And so there are four ways that I think through guarantees and creating

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instruction creative guarantees. The four types are unconditional guarantees which means it doesn't

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matter what you do if you just want your money back to give it back to you. That is the strongest

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type of guarantee. Now it depends on the type of business. If you can offer it, I think you should

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because if you do the math on if I reverse the risk and I get 20% more sales because of this

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unconditional guarantee and I get five percent more refunds and not even five percent more on

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an increment. Let's just say you get five you go from one percent refunds to five percent refunds

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which would be a massive increase in refunds. You still added 15% to your sales and it was still

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worth it mathematically. That is why having the guarantee is just a math equation. It's not like you

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can't let your emotions be like well we got our we got more refunds sounds like yeah we also got

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20% more sales. So you just have to think about it like that just be a business person and not

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emotional about it. Number two is a conditional guarantee which is we will give you X if if X

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happens Y if this happens this is what we will do right if Y the next very simple if you provide

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us content for our marketing agency always buy noon on Fridays before the ad campaign start for

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the first eight weeks and if you don't make it least twice what you paid us over that first

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eight week period we will give you your money back right you can also say we will work with you

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until you get your money back. The third is an anti-guarantee which if you don't have a guarantee

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which there are there are situations where that that makes sense you want to lean into the fact

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that you don't have a guarantee you don't want to like not talk about it because it's a normal

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part of the buying process like well what are my assurances like how do I know this is going to happen

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you're making these promises how should I believe you right and that's where you lean in you say oh

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no we don't have guarantees and if you're the type person that really needs a guarantee this is not

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the program for you because there's too much work that's on your on your part we can guide you but

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the vast majority of the success is going to be in your hands we will guide you but it's going to be

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on you and if that doesn't feel good for you then there's a hundred other guys or you have some

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sort of proprietary thing it's like once I give you this super secret sauce you're going to know it

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forever and so I can't I can't give you a refund because the day after you learn a secret it's not

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valuable to you right and so for that reason we can't we can't do any kind of guarantees. The fourth

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is what I call implied guarantees so anything that's a performance related offer you know what

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increase your revenue by X and we get 20% of the increase that is that is an implied guarantee

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to the buyer. Rev shares, profit shares, performance bonuses, kickers, doing things off of the

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strike pricing going up all of those things are implied guarantees based on performance. Those are

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the four different things that you can do in terms of guarantees. Now the advanced version of this

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is that you can stack guarantees so I can say I will give you a 30-day unconditional guarantee

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and I will give you a 90-day conditional guarantee which means that for whatever reason you're like

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hey I'm not sure then you say listen the only way for you to be for you to be sure is for you to

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be inside of the program because I just want you to make an informed decision you can't make an

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informed decision until you've actually experienced the product. I'm just going to give you a 30-day

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unconditional guarantee so you can get in there experience the benefits and then make the decision

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for yourself. It makes it a very easy sale because then the sale becomes essentially a trial. Now

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you're going to close a lot more deals but you're also going to get more refunds but the net net is

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you're going to make more sales and so you do the unconditional guarantee and you say but on top of

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that and this is where you get clever is you look at the customers who've made the most money

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if you're B2B if you're B2C you look at the ones who've gotten the result that you promise the best

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results and then you look at the client journey that they had what are the things they did who

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did they talk to what was their experience and so then what we do is we reverse engineer their

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experience the key milestones of their experience and we make those part of the guarantee so for example

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if I were selling internet marketing whatever then I would say as long as you get your domain

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purchased and you set up a website and you spend at least one dollar in advertising or a hundred

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dollars in advertising if you don't get an ROI from this program by day 90 I will give you your money

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back and so we make two or three stipulations that seem very straightforward but the stipulations are

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the ones that we know are the ones that drive client success and so doing we basically guarantee that

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they will succeed which is the point of the guarantee and so we say listen if you're trying to lose

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weight I will give you two times what you paid me by the end of this 90 days if you show up to

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everyone of the workouts and you send me a picture of all your meals that's it you do that at the

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end of the 90 days a guarantee that you're going to lose you lose the weight that I promise you're

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going to lose and so you just look at what are the things in common that the people who had the

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biggest successes did and you just look at the fewest common variables because the more stipulations

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you add the weaker the the guarantee is going to be I'll tell you a fun one if you just want to

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get weird if for some reason you have any kind of like coaching or any kind of business that's

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like that the compliance of opening a Google Doc and writing what you're going to do that day

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and at the end of the day just saying what you did over I think it's it's like six weeks

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is like 1% or 2% compliance like people just can't do it it's so simple if you want you could

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just say hey here's my guarantee if you just say what you're going to do and at the end of the day

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you say what you did for six weeks and you don't get the results then I'll give you the money back

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and you automatically know that 99% of people are not going to do that anyways so anyways fun one

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for you guys one of the things that people suck at with guarantees is that they say they make the

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guarantee amorphous they say results guarantee what you don't want to do is say that because it's

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like banner blindness everyone's heard that before and it means something different everybody what we

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want to do is spell out exactly what our guarantee is and we don't even need to use the word guarantee

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we can just say if you don't get very specific outcome if you don't lose six inches from your

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waist by this time period and you asked I will write you a check for the difference between what you

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gave me and what you think it was worth you want to spell it out in common language so they

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understand what you're actually saying rather than saying results guarantee