WEBVTT 1 00:00:00.000 --> 00:00:04.800 I'm going to sell three massive business problems that can take you from 10 to 100 million dollars. 2 00:00:04.800 --> 00:00:08.160 And at the end, I'm going to walk you through the framework so that you can apply this to your 3 00:00:08.160 --> 00:00:12.880 business, your work, or your personal brand. I recently spoke an event and had a Q&A section, 4 00:00:12.880 --> 00:00:16.400 and there were three different business owners that presented with different problems. 5 00:00:16.400 --> 00:00:19.840 One was an employment setting business, and they knew how to set appointments and build 6 00:00:19.840 --> 00:00:23.840 app-bound teams for agencies, coaches, consultants, whatever. The second business was a marketing 7 00:00:23.840 --> 00:00:29.120 agency for HVAC business owners. The third was actually a very big influencer with 30 to 40 million 8 00:00:29.120 --> 00:00:33.440 subscribers across all platforms with the objective of making more money. So each of them had very 9 00:00:33.440 --> 00:00:37.600 differently phrased questions, but they were all suffering from the same constraint, and it wasn't 10 00:00:37.600 --> 00:00:41.520 what they thought it was. So the first business that asked a question was an employment setting 11 00:00:41.520 --> 00:00:45.440 business, and he was saying that his problem was that he needed to get more customers, which, 12 00:00:45.440 --> 00:00:48.400 by the way, most of the time, that's not the problem. It's usually because the customers you have 13 00:00:48.400 --> 00:00:53.120 keep leaving, and that's the real problem. And when we look at businesses to invest in at acquisition.com, 14 00:00:53.120 --> 00:00:57.520 we operate off of a singular concept, which is the theory of constraints. A business will grow, 15 00:00:57.520 --> 00:01:01.840 up to its constraint, and then it will grow no longer. Most entrepreneurs continue to work on 16 00:01:01.840 --> 00:01:05.280 the things that they enjoy rather than the things that the business needs, usually because they 17 00:01:05.280 --> 00:01:10.400 haven't actually identified the correct constraint. For example, if you have a three-step sales 18 00:01:10.400 --> 00:01:15.360 process and you get 50% to go through step one, 5% to go through step two, and then 50% to go 19 00:01:15.360 --> 00:01:21.200 through step three, you could improve each of them by 10%, but which of them makes the biggest 20 00:01:21.200 --> 00:01:26.640 difference in your business. Going from 5 to 15 triples the business, whereas the other ones only 21 00:01:26.640 --> 00:01:30.800 incrementally improve it by 20%. He had a very low quality of customers. The vast majority of 22 00:01:30.800 --> 00:01:34.160 customers didn't make enough money, they didn't stay long enough, they didn't have enough skills, 23 00:01:34.160 --> 00:01:39.840 etc. That was what he thought he had to solve. I said, okay, of all of the companies that you've 24 00:01:39.840 --> 00:01:45.120 ever worked with, which of them made the most money off of the appointments that you set, right? 25 00:01:45.120 --> 00:01:49.280 And he had a very specific answer of what type of avatar he did best with. And so there's two 26 00:01:49.280 --> 00:01:53.920 directions for that business. One is you niche down on your service delivery and say these are the 27 00:01:53.920 --> 00:01:57.280 only types of businesses I'm going to take because they're going to be worth more, stay longer, 28 00:01:57.280 --> 00:02:03.120 refer, etc. That is probably the easiest next step for that business. I were going to own this 29 00:02:03.120 --> 00:02:09.280 business and I transplanted my brain and my parents in his body that he could own half of a 50-100 30 00:02:09.280 --> 00:02:14.240 million dollar business that he grows over the next five to 10 years, picking the most valuable 31 00:02:14.240 --> 00:02:18.400 business that he sets appointments for. What would the marketing spend be of a business that's 32 00:02:18.400 --> 00:02:22.880 doing 50 million dollars a year? Realistically, probably somewhere in the neighbor of five to 10 33 00:02:22.880 --> 00:02:28.000 million dollars a year. So he could either partner with that business or spend a year or two learning 34 00:02:28.000 --> 00:02:32.480 how that business works so that then he owns both sides of it. If he partner, you can usually go 35 00:02:32.480 --> 00:02:37.200 faster, but you give up some of the upside because you slice the pie. It's up to you. Because most 36 00:02:37.200 --> 00:02:41.040 business owners, the reason they don't create valuable businesses is because they have to keep 37 00:02:41.040 --> 00:02:45.280 doing the same work over and over again and they don't get credit for it. So basically sentenced 38 00:02:45.840 --> 00:02:50.080 to this terrible atlas-like existence of rolling the boulder up the hill and rolling back down 39 00:02:50.080 --> 00:02:55.360 every month. But if the team that he built was 50 outbound guys this month and then next month he 40 00:02:55.360 --> 00:03:00.240 starts at 50 because it's all within the same company and then does another 50 and then another 50, 41 00:03:00.240 --> 00:03:05.520 six months later he's got 300 outbound guys that are all still working for him, all generating revenue 42 00:03:05.520 --> 00:03:12.160 that he is owning a slice of all of it. Business number two was the HVAC agency. This is a business 43 00:03:12.640 --> 00:03:18.000 markets for HVAC companies. It 50 or so clients in that niche and they're running campaigns across 44 00:03:18.000 --> 00:03:25.200 50 different local markets. If he's able to generate leads and fill up 50 different HVAC services 45 00:03:25.200 --> 00:03:32.240 pipelines because of his marketing prowess, he probably has the marketing skill of a 50 to 100 46 00:03:32.240 --> 00:03:37.600 million dollar HVAC business. If you have a $5 million marketing agency, then it's reasonable that 47 00:03:37.600 --> 00:03:42.240 some of the clients that you serve are making $50 million in revenue off the services you're 48 00:03:42.240 --> 00:03:45.920 generating and you're getting none of that. You're only capturing the service fee. The more steps 49 00:03:45.920 --> 00:03:51.280 you take towards owning the result, the more you're basically just doing the business for them. But at 50 00:03:51.280 --> 00:03:55.680 a certain point you are the business and so it makes sense for you to own the economics of the 51 00:03:55.680 --> 00:04:00.800 business and either you've got to learn the HVAC business or you partner with someone who already 52 00:04:00.800 --> 00:04:05.200 knows it or you could buy one and with your marketing prowess you juice the hell out of it. Most 53 00:04:05.200 --> 00:04:08.800 people will try and buy it but then also try and keep this agency thing going but sometimes you 54 00:04:08.800 --> 00:04:14.000 got to take a half step back so you can take 20 steps forward. The fastest way to build a $10 million 55 00:04:14.000 --> 00:04:18.800 business is often not the fastest way to build a $100 million business. If you wanted to build a 56 00:04:18.800 --> 00:04:23.200 building that was Ken Stories Hall, you would start with a very different foundation. Now imagine 57 00:04:23.200 --> 00:04:27.520 you built a 10 story building and then said okay I want to build a 100 story building using the same 58 00:04:27.520 --> 00:04:31.840 foundation. You wouldn't be able to. That's exactly what most entrepreneurs do when they're trying 59 00:04:31.840 --> 00:04:35.440 to scale and they wonder why they're stuck is because they built it wrong to begin with because they 60 00:04:35.440 --> 00:04:39.760 were in the wrong opportunity vehicle. One of the big things that took me too long to learn is it's 61 00:04:39.760 --> 00:04:44.960 the size of the slice of the pie that matters not the shape of the slice of the pie. They obsess 62 00:04:44.960 --> 00:04:50.560 about the shape of the slice rather than having a slice that's like this of a much bigger pie. 63 00:04:50.560 --> 00:04:57.040 The average IPO founder when a company IPO owns 12.5% of the company they found it because the more 64 00:04:57.040 --> 00:05:02.960 people you make money the more money you ultimately make. The third business was the big influencer 65 00:05:02.960 --> 00:05:06.800 business. 3040 million subscribers across all platforms and they were focusing all of their 66 00:05:06.800 --> 00:05:11.040 attention on how do we get more high quality videos out and when I asked them what problem you're 67 00:05:11.040 --> 00:05:14.880 trying to solve they said we want to make more money. You're seeing your business as this box of 68 00:05:14.880 --> 00:05:19.440 media and trying to make more better videos which if you wanted to brand and just continue to build 69 00:05:19.440 --> 00:05:23.920 the brand before making an ask that would be the right problem solved but they were at 97 out of 100 70 00:05:23.920 --> 00:05:31.520 and they're at 0.000001% creator. So do we really think that their constraint of their business is 71 00:05:31.520 --> 00:05:36.480 that they aren't good enough at marketing? No, probably not. You guys are trying to take your 97 out 72 00:05:36.480 --> 00:05:42.960 of 100 media company to a 99 out of 100 media company when the objective you said was to make more 73 00:05:42.960 --> 00:05:48.080 money and you have no product that you sell. So all of your monetization relies on sponsorships 74 00:05:48.080 --> 00:05:54.240 and ad revenue which is typically the least efficient way to monetize because anyone who pays 75 00:05:54.240 --> 00:05:59.360 you for a sponsorship is making a huge arbitrage on your brand and your value. Given the amount 76 00:05:59.360 --> 00:06:03.840 of questions that these guys were getting which when they don't make videos we're getting 100 77 00:06:03.840 --> 00:06:09.440 million views a month when they don't post anything now. That kind of thing is a company that's 78 00:06:09.440 --> 00:06:14.960 100 million plus in revenue. They have the marketing department but what they don't have is a sales 79 00:06:14.960 --> 00:06:18.320 department. They don't have a product department. They don't have customer success. They have 80 00:06:18.320 --> 00:06:22.800 none of these other departments. There's zero out of 100 on all these and so the constraint isn't 81 00:06:22.800 --> 00:06:28.400 going 97 to 99. It's going from zero to 20 on these ones. What are the choices I have here? 82 00:06:28.400 --> 00:06:33.760 Version one is if I've got an advertiser consistently comes to me I may be able to negotiate some 83 00:06:33.760 --> 00:06:37.600 sort of equities. Getting even 10% of a company that's worth a hundred million dollars and then 84 00:06:37.600 --> 00:06:40.880 you put all of your effort behind it and make it a two or three hundred million dollar company. 85 00:06:40.880 --> 00:06:44.000 That's a significantly better outcome for many of them than what they're currently getting paid 86 00:06:44.080 --> 00:06:48.800 just video to paycheck right. The second option is to say okay is there a category of products that 87 00:06:48.800 --> 00:06:53.680 continue to pay me the most out of all the advertisers. Do what Amazon does see what's already selling 88 00:06:53.680 --> 00:06:58.480 and then clone it and make it your own and put your name on it and make your version yours and 89 00:06:58.480 --> 00:07:04.320 better. If you do that then you own the entirety of that thing but in order to do that you probably 90 00:07:04.320 --> 00:07:10.160 if it were me I would go snipe some of the topics that some of those companies say hey you're 91 00:07:10.160 --> 00:07:16.720 currently an executive here would you like to own a slice of my thing I'm happy to own 70% 92 00:07:16.720 --> 00:07:21.840 and get three of the best guys over have them build their boxes behind my thing that's the 93 00:07:21.840 --> 00:07:26.720 fastest and easiest way. The longer maybe bigger money way is if you do it all yourself but that's 94 00:07:26.720 --> 00:07:30.720 always the trade that you have to make as an entrepreneur is how many new skills do I have to have 95 00:07:30.720 --> 00:07:35.280 in order to pursue this new opportunity versus the ones I currently. The third opportunity for them 96 00:07:35.280 --> 00:07:39.280 is probably the least operational risk for accepting the fact that they just like doing media and 97 00:07:39.280 --> 00:07:42.720 that's what they jam on and they don't want to touch either of these other business components 98 00:07:42.720 --> 00:07:48.800 ending themselves as a creative shop that knows how to make viral videos that they can transform 99 00:07:48.800 --> 00:07:53.600 into ads and that's where you go from being a really good creator to being a Madison Avenue 100 00:07:53.600 --> 00:07:59.280 agency that makes ads that crush. Most influencers are getting paid based on the impressions that they 101 00:07:59.280 --> 00:08:04.720 are getting the brand for free based on their audience but where the real money is made is where you 102 00:08:04.720 --> 00:08:09.440 take that TikTok video that YouTube's worth that Instagram video that ever it is and then they put 103 00:08:09.440 --> 00:08:13.840 a million dollars of ads bin behind it when it's already shown as a winner and then it goes from 104 00:08:13.840 --> 00:08:18.480 being shown to five million people in your audience to a hundred million people that it converts from 105 00:08:18.480 --> 00:08:24.880 cold. Ads bin has no limit on reach as long as it's profitable so they can always expand beyond your 106 00:08:24.880 --> 00:08:30.000 existing audience which means that you get to capture all of the upside based on how skilled you are 107 00:08:30.000 --> 00:08:34.400 as an advertiser. So those are the three paths for that particular type of business. It's not like 108 00:08:34.480 --> 00:08:38.080 okay well I'm not one of these three businesses now what I should do but it's actually the framework 109 00:08:38.080 --> 00:08:43.120 that we approach the problem with which is one what problem are we trying to solve. In each of these 110 00:08:43.120 --> 00:08:47.120 businesses they wanted to make more money. The next one is over what time horizon. If you want to make 111 00:08:47.120 --> 00:08:51.200 more money tomorrow the number of things you can do is very limited. If you want to make more money 112 00:08:51.200 --> 00:08:56.000 in 10 years you take a very different play. If the amount of time it might take to build 100 story 113 00:08:56.000 --> 00:09:01.120 buildings foundation might take the same time it takes to build the entirety of a 10 floor building. 114 00:09:01.120 --> 00:09:06.000 Above the surface somebody else building a 10 floor building might happen way faster than you 115 00:09:06.000 --> 00:09:11.200 can say yours is just continuing to build this base before you start building up. The next question 116 00:09:11.200 --> 00:09:15.920 which problem will we prefer solving or which problem we feel like we're more equipped to solve or 117 00:09:15.920 --> 00:09:19.280 which problems easier. Because if you start framing it in terms of the problem that you're going 118 00:09:19.280 --> 00:09:23.760 to have to solve to be successful it actually makes it much more controllable for you. I would say 119 00:09:23.760 --> 00:09:28.080 well which of these do we feel more equipped to do. Now at Accuses.com we are really good at 120 00:09:28.080 --> 00:09:31.280 recruiting which is how we scale all the companies we have as you recruit talent we've already 121 00:09:31.280 --> 00:09:35.520 been there done that. And so we probably say hey we feel really confident that we could recruit 122 00:09:35.520 --> 00:09:40.960 somebody in and put seed capital in to get it going then we'd own the whole pie. So for us that 123 00:09:40.960 --> 00:09:44.880 would be a problem that we feel very confident in solving and gives us the most upside. You have 124 00:09:44.880 --> 00:09:49.280 to answer that for you given your skill set your resources and your experience.