WEBVTT 1 00:00:00.000 --> 00:00:03.840 do you know the business that you're really in? I spent the vast majority of my time 2 00:00:03.840 --> 00:00:08.080 founding a company, getting really excited about it. And then once I actually get into it, 3 00:00:08.080 --> 00:00:12.800 once things actually get rolling, I think the problem that I was going to have to solve 4 00:00:12.800 --> 00:00:17.840 is actually not the problem that I end up having to solve. And every time I get into one, 5 00:00:17.840 --> 00:00:20.960 I think, oh, this one will be easier than the last one because I'll know how to solve this 6 00:00:20.960 --> 00:00:25.760 key problem. But that's because that business has an entirely different set of problems. 7 00:00:25.760 --> 00:00:30.320 And once I realize that, I realize, oh, this is where my work begins. This is the business 8 00:00:30.320 --> 00:00:34.400 that I'm actually in. If you don't know me, welcome to the show. This is the game where we talk 9 00:00:34.400 --> 00:00:38.560 about making more money, scaling companies, and business stuffs. My name is Lakshima, 10 00:00:38.560 --> 00:00:43.360 as you'll be your host on this magic carpet ride of a day. I promise you that if you were in a 11 00:00:43.360 --> 00:00:47.280 business and you're trying to scale and trying to make generational wealth with it, this one will 12 00:00:47.280 --> 00:00:52.160 be worth it. I had over the weekend had a handful of kind of topics I want to talk about today. 13 00:00:52.960 --> 00:00:59.120 But I will go up this morning with one on my heart. And I think I think I think you guys will 14 00:00:59.120 --> 00:01:05.360 dig it. And if you don't dig it, it may still make you money regardless. And so what I want to 15 00:01:05.360 --> 00:01:11.440 title this kind of like live podcast is, do you know what business you're really in? And I think 16 00:01:11.440 --> 00:01:16.560 this is super important because I have made the mistake in almost every business that I've been in 17 00:01:16.560 --> 00:01:20.320 in thinking I was getting into one business. When in reality, I was getting into a very different 18 00:01:20.320 --> 00:01:26.800 business. And discovering the real business that you're actually in is what will unlock the 19 00:01:26.800 --> 00:01:31.280 amount of growth and money making that you really want to get into. It's usually the second and 20 00:01:31.280 --> 00:01:35.920 third level of entrepreneurship within whatever opportunity you're pursuing. So let me give you 21 00:01:35.920 --> 00:01:41.920 example to kind of make this real. So when I got into the gym business, I liked fitness. And so I 22 00:01:41.920 --> 00:01:49.040 thought that the business was going to be about like macros and results and workouts and all of that. 23 00:01:49.040 --> 00:01:53.440 That's what I thought the business was going to be about. But once I got into the business, 24 00:01:53.440 --> 00:01:58.480 I realized it was actually just about marketing and sales. That specific businesses about marketing 25 00:01:58.480 --> 00:02:04.400 and sales overall. Now, when I make these generalizations, all businesses are like cars. Like if you 26 00:02:04.400 --> 00:02:07.280 don't have wheels, the cars not going to move, if you don't gas the cars not going to move, if you don't 27 00:02:07.280 --> 00:02:10.720 have an engine, the cars not going to move. But the question is, what is the biggest limiter? What's 28 00:02:10.720 --> 00:02:16.080 the biggest thing that gives you the most return in that specific vehicle or that specific business? 29 00:02:16.080 --> 00:02:20.320 And so I'm going to walk you through four or five different businesses that I've been what I 30 00:02:20.320 --> 00:02:24.720 thought it was versus what it really was. And then I'll turn it back to you and thinking about how 31 00:02:24.720 --> 00:02:28.880 you can apply that same methodology. And I'll bet you many of you, and I get this because I have 32 00:02:28.880 --> 00:02:32.560 a lot of conversations with Business Center today. They don't know what business they're really in. 33 00:02:32.560 --> 00:02:37.120 All right. So I thought it was about fitness, but it was actually about sales and marketing. If you 34 00:02:37.120 --> 00:02:41.680 look at the biggest fitness companies in the world, like especially in the gym space, their acquisition 35 00:02:41.680 --> 00:02:48.080 machines, that's what they are very, very good at. The actual fitness component of it is 36 00:02:48.080 --> 00:02:52.640 actually pretty minor, right? And I mean, I'll tell you this from talking to the franchise or 37 00:02:52.640 --> 00:02:57.440 assume many, many locations or privately owned ones have thousand plus locations that the fitness 38 00:02:57.440 --> 00:03:01.520 stuff is almost an afterthought. They're like, yeah, yeah, get people to sweat, move around, whatever. 39 00:03:01.520 --> 00:03:05.440 Because the reality is that within fitness, for example, the biggest problem is that people 40 00:03:05.440 --> 00:03:10.400 don't show up because of other reasons. And so you have to always go get more customers. The good 41 00:03:10.400 --> 00:03:14.640 news is is that everyone's trying to lose weight three times a year. And so there are plenty of 42 00:03:14.640 --> 00:03:18.400 people. So that was the first business that I misunderstood what business I was really in. 43 00:03:18.400 --> 00:03:21.920 Now, thankfully, quickly, I learned that and then that became the skill set that I, you know, 44 00:03:21.920 --> 00:03:26.960 doubled down on. Now, with that, I then was like, okay, well, I'm going to start a self-encoder, 45 00:03:26.960 --> 00:03:31.840 which which which prestige labs. Now, again, I thought that business was going to be all about 46 00:03:32.480 --> 00:03:37.120 the product. I thought it was all going to be about the stuff that's inside of it. And so I got 47 00:03:37.120 --> 00:03:40.400 to Dr. Cashy, my good friend, who's bio, he's a PhD biochemist, one of the smartest 48 00:03:40.400 --> 00:03:44.160 human beings on earth. And I said, Hey, man, can you make the best products? I said, make a sandwich 49 00:03:44.160 --> 00:03:48.960 you would actually because he made all these things for Olympians. And he would put together these 50 00:03:48.960 --> 00:03:53.200 trash bags full of like specific ingredients and specific compounds. And he's like, dude, 51 00:03:53.200 --> 00:03:56.480 these are going to be way too expensive. Like, it's not going to be commercially viable based on 52 00:03:56.480 --> 00:03:59.680 the quality of the ingredients. And I was like, dude, just make the best product off of your 53 00:03:59.680 --> 00:04:05.600 how to sell it. And so that's that was the focus that I had in prestige labs. But guess what? 54 00:04:05.600 --> 00:04:10.240 Once I got into that business, I realized that it actually had very little to do with what was 55 00:04:10.240 --> 00:04:16.080 in the bottle because basically anything, anything that's in a bottle that you don't taste, 56 00:04:16.800 --> 00:04:21.120 the inside the vast majority of products that are out there benefit off of placebo and no 57 00:04:21.120 --> 00:04:24.400 SIBO effect. Basically, people taking something and then they feel better because it takes something. 58 00:04:24.400 --> 00:04:28.720 And I want to be clear, placebo effects are real effects. So like, I'm about the effect, 59 00:04:28.720 --> 00:04:32.720 whatever works for you works for you. And that's not really the point of this talk. But more so, 60 00:04:32.720 --> 00:04:36.240 that I got into the business thinking that what was inside the bottle was the thing that mattered. 61 00:04:36.240 --> 00:04:39.280 But the reality was what was on the outside of the thing the bottle and the thing that the bottle 62 00:04:39.280 --> 00:04:44.400 was next to, meaning it became what I realized almost too late was that it's a business that's 63 00:04:44.400 --> 00:04:49.840 based on brand. It's based on branding and it's based on media in terms of having tons and tons 64 00:04:49.840 --> 00:04:54.000 of traffic. And so I thought I was building a product based company that was going to be based 65 00:04:54.000 --> 00:04:58.480 on what's inside the bottle when everything that was limiting the business, what was on the outside 66 00:04:58.480 --> 00:05:00.800 of the bottle. And I saw the guys who are the biggest in the space. And this is the little 67 00:05:00.880 --> 00:05:04.640 telltale sign, by the way, if you want to hack this, is you look at the people with the biggest 68 00:05:04.640 --> 00:05:08.800 in your space. So take your model, take it to a national extreme and look. And I think there's a lot 69 00:05:08.800 --> 00:05:12.400 of wisdom that can be found from that and try and reverse engineer like, what are the things that 70 00:05:12.400 --> 00:05:16.320 make this different? Now, you might be like, and here's, this is what I used to do. Alright, so like, 71 00:05:16.320 --> 00:05:19.760 don't make this a sick. When I was in the gym industry, I would look like when I started, I was like, 72 00:05:19.760 --> 00:05:23.440 oh my god, I can make way better workouts than those guys. That's because those guys don't give a 73 00:05:23.440 --> 00:05:26.880 shit about their workouts because that's not the main thing in the business. I got into the 74 00:05:26.880 --> 00:05:31.200 sub-business like, oh my god, like these guys are making hundreds of millions of dollars on this 75 00:05:31.200 --> 00:05:35.120 product. There's just mediocre like the thing is, is that most of the customers that are buying it 76 00:05:35.120 --> 00:05:40.080 don't even know the difference anyways, which means that your differentiator isn't actually 77 00:05:40.080 --> 00:05:43.600 making it different. You're the only one who knows your differentiator, which is not good. Your 78 00:05:43.600 --> 00:05:48.560 customer has to realize what the differentiator is. And so the thing is, is that for most supplements, 79 00:05:48.560 --> 00:05:54.720 the differentiator is LeBron takes it or so and so takes it or I think this is cool or my friend 80 00:05:54.720 --> 00:06:00.000 Sally likes it, right? Or, and I'll be clear, on a consumables perspective, if it has a flavor, 81 00:06:00.000 --> 00:06:03.680 then the flavor becomes very important in the long run in terms of how good it tastes because most 82 00:06:03.680 --> 00:06:07.200 people take AG1 because they think it tastes good and because they feel good about it, not because 83 00:06:07.200 --> 00:06:10.400 it's inside of it. Alright, so just to be clear, I got into the gym business and I thought it was 84 00:06:10.400 --> 00:06:14.400 about fitness, but it was really about marketing sales. I got into prestige labs to sub-business 85 00:06:14.400 --> 00:06:18.160 and I thought it was about the stuff inside the bottle and really about brand and building a big 86 00:06:18.160 --> 00:06:21.920 media traffic machine. And then I was like, okay, I think I'm getting the hang of this. I've just 87 00:06:21.920 --> 00:06:26.960 making mistakes over and over again. So then I got into the software business and I was like, okay, 88 00:06:26.960 --> 00:06:30.640 I get it. Everything's about marketing sales. I'll be able to sell the shit out of this and 89 00:06:30.640 --> 00:06:35.280 guess what? We sure as hell could because I knew how to market and sell. And so then I got into the 90 00:06:35.280 --> 00:06:39.440 software company, the software business and I realized by the way, side note, software tends to 91 00:06:39.440 --> 00:06:43.280 sell itself. You know why? Because if you can't have technology to say, hey, there's that thing 92 00:06:43.280 --> 00:06:48.240 that you're doing that this will do automatically, not a very hard pitch, but the problem with software 93 00:06:48.400 --> 00:06:54.400 is actually delivering on the promise. And so it actually is a very product driven business because 94 00:06:54.400 --> 00:06:58.560 anyone can sell it. The constraint like software is not that difficult to sell. At least this isn't 95 00:06:58.560 --> 00:07:02.720 my experience with this. All right. So take that with my big Himalayan size grain of salt. 96 00:07:02.720 --> 00:07:06.080 For me, that's when I realized that product is the main thing and guess what I don't want to 97 00:07:06.080 --> 00:07:11.040 start it out? I outsource the product. I had an outsource dev team make the product for me, 98 00:07:11.040 --> 00:07:14.320 which I then realized was the core part of the business. It's like starting a sub company 99 00:07:14.320 --> 00:07:18.080 then trying to have an agency build your something come before you. If you're in the sub business 100 00:07:18.080 --> 00:07:23.600 or you're in the consumer product goods business outsourcing acquisition outsourcing brand outsourcing 101 00:07:23.600 --> 00:07:30.000 media is like it's that's the business. Like that's the business you're in. It's not the stuff inside 102 00:07:30.000 --> 00:07:37.760 the bottle. All right. So give me another one. So I had a gym owner from a mine from many, 103 00:07:37.760 --> 00:07:43.520 many years ago. He was in he became a Glamour. He was a licensee awesome guy and he started. 104 00:07:44.720 --> 00:07:48.400 He had a couple locations and his wife started a cleaning business because they got into Airbnb 105 00:07:48.400 --> 00:07:50.960 because he started making money in the gym. So he started investing and he realized he actually 106 00:07:50.960 --> 00:07:55.760 liked real estate better than like the gym, which is awesome. Great. And so they started a cleaning 107 00:07:55.760 --> 00:08:01.280 company to clean houses for the Airbnb's. But then they realized they got in the Airbnb community 108 00:08:01.280 --> 00:08:04.800 and they also got in just like that area. And they're like, you know, we could probably just sell 109 00:08:04.800 --> 00:08:08.880 cleaning to other people. And so this was interesting. I had dinner with him. And he was saying, 110 00:08:08.880 --> 00:08:13.280 I was like, so what's your else even a cat? He's like, Oh, do cats like $25 and I was like, what? 111 00:08:13.600 --> 00:08:17.920 He's like, Oh, getting customers in cleaning, not a problem. And this is and he was like, 112 00:08:17.920 --> 00:08:22.160 this is so different from the gym business because the gym business getting the customers getting 113 00:08:22.160 --> 00:08:26.720 to arm wrestle Suzy for an hour to get her to say, yes, she's going to stop eating crap and start 114 00:08:26.720 --> 00:08:30.080 coming to the gym three times a week. But if you just say, Hey, I'm going to clean your stuff and 115 00:08:30.080 --> 00:08:34.400 you don't have to do anything, not a very hard sale. And so you said the real problem that I'm 116 00:08:34.400 --> 00:08:39.840 having right now is actually getting people to do the cleaning, right? He's actually getting hot, 117 00:08:39.840 --> 00:08:43.840 you know, people who speak English, who don't steal, who show up on time and do all that and like, 118 00:08:43.840 --> 00:08:48.000 do a good job consistently means that the problem, that's actually the problem of the business. 119 00:08:48.000 --> 00:08:52.080 And so I had this, it was a great moment for me because I love seeing, finding out, finding out 120 00:08:52.080 --> 00:08:56.320 what is the real business behind the business. And so if you're in the cleaning business, 121 00:08:56.320 --> 00:09:01.280 you're not in the cleaning business, you're in the recruiting and training business. You have to 122 00:09:01.280 --> 00:09:09.840 learn how to get low skill labor in high volume to show up for you consistently, which is a cultural 123 00:09:09.840 --> 00:09:13.920 thing. It's a training thing. And part of that has to do with brand, but a lot of it is just 124 00:09:13.920 --> 00:09:19.120 having the incentive system structured such that that type of person can still succeed. 125 00:09:19.120 --> 00:09:23.600 And he had a cool little thing that he did. He did it. He had a setup where they got paid not 126 00:09:23.600 --> 00:09:28.880 by hour, but by clean. And so they were actually incentivized. And so basically, and this, by the way, 127 00:09:28.880 --> 00:09:35.200 big pro tip on business is you want to have paired incentives. So it's like having quality and speed. 128 00:09:35.200 --> 00:09:38.800 And so it's like if you have a customer support team, you want to measure them not just on like 129 00:09:38.800 --> 00:09:42.800 percentage of tickets that are absolutely resolved. You also want to have speed of completion. 130 00:09:42.800 --> 00:09:46.880 If you only have one, then you have lots of people responding as quickly as possible, but not getting 131 00:09:46.880 --> 00:09:50.720 it done. And on the flip side, if you just do on whether the ticket is completely resolved, people 132 00:09:50.960 --> 00:09:56.720 won't move fast enough. And so it's having paired metrics. Andy Grove talks about this in high 133 00:09:56.720 --> 00:10:01.280 output management, really good book. If you ever like want to learn more about ops, pretty high level, 134 00:10:01.280 --> 00:10:05.200 though, just to be really honest with you, but it's a great book. Anywho. And so the paired 135 00:10:05.200 --> 00:10:11.280 mixture for him was you get you can clean as many houses you can in a day and I pay you per clean. 136 00:10:11.280 --> 00:10:18.320 And so that drove down his costs, right? Sorry, drove up his productivity per employee. And so the 137 00:10:18.320 --> 00:10:23.040 paired metric was that if you don't do a good job, you have to go back and do it again in no cost. 138 00:10:23.840 --> 00:10:26.960 And so that was the deal. And that was also part of his offer for the cleaning thing. And it 139 00:10:26.960 --> 00:10:30.080 worked really great. And so like if you don't think we do a good job, we'll come back and clean your 140 00:10:30.080 --> 00:10:34.320 whole house again and we'll do it for free. And so that was the paired metric again. So he thought 141 00:10:34.320 --> 00:10:37.200 he was getting the acquisition businesses like dude, I can get customers all day long in this 142 00:10:37.200 --> 00:10:41.520 business. And he came from the general and expected it to be the same. And so I've noticed this 143 00:10:41.520 --> 00:10:45.680 is this continued thing is that what I think I'm getting into is actually not the real 144 00:10:45.680 --> 00:10:49.680 constraint of the business. And I'm going to I don't want to leap frog ahead here, but like this 145 00:10:49.680 --> 00:10:53.040 is a little bit of foreshadowing for the woman in the red dress. All right. So I'll just I'll just leave 146 00:10:53.040 --> 00:10:57.680 that there. All right. So I'll give you one for the anybody who's in like the consulting space or 147 00:10:57.680 --> 00:11:02.240 professional services space. If you sell to businesses, you sell how to market how to I mean even 148 00:11:02.240 --> 00:11:07.360 accounting, you sell lawyer stuff, you do consulting in general, any of that stuff, you think that you're 149 00:11:07.360 --> 00:11:11.280 in the marketing sales business because that's what people will tell you, right? But if you really want 150 00:11:11.280 --> 00:11:16.240 to play this game at a high level, now again, it's a car. If you have no marketing sales, you're 151 00:11:16.240 --> 00:11:20.960 not going to have a business, right? But which is the things is the thing that unlocks the biggest 152 00:11:20.960 --> 00:11:25.280 level of growth is actually again, look at the biggest companies in the space. You look at EY 153 00:11:25.280 --> 00:11:30.640 Ernst & Young, you look at KPMG, you look at you look at McKinsey, you look at Bane, you look at BCG 154 00:11:30.640 --> 00:11:35.920 seem these big public massive firms, multi-billion dollar, hundred billion dollar companies. What is 155 00:11:36.400 --> 00:11:40.720 the thing? What is the business they're really in? They're in the recruiting business as well. 156 00:11:40.720 --> 00:11:46.000 And specifically the talent management business because different than the cleaning business, 157 00:11:46.000 --> 00:11:51.360 now structurally it's recruiting for sure. But it's at a completely different level. They're trying 158 00:11:51.360 --> 00:11:58.160 to skim the cream of the crop because how do you scale expertise? They're intelligence on demand. 159 00:11:58.160 --> 00:12:02.640 If you go to the bet, you go to Pulsanale, you go to some big, big law firm, right? In Manhattan, 160 00:12:02.640 --> 00:12:06.480 right? Some big law firm in the Manhattan address, they have to attract the absolute best and 161 00:12:06.480 --> 00:12:10.960 brightest people. Otherwise, the brand will degrade over time. But how do you attract the best 162 00:12:10.960 --> 00:12:14.640 and brightest people? Well, that's why a lot of these professional services businesses are based 163 00:12:14.640 --> 00:12:18.640 on partnerships. They're limited partnerships. They're LLPs. All right? And so that's because 164 00:12:18.640 --> 00:12:22.960 anybody they have a track for eventually becoming an owner in the business. And most service-based 165 00:12:22.960 --> 00:12:29.280 businesses that rely on expertise have tracks for people to have small slices of ownership. 166 00:12:29.280 --> 00:12:33.280 And they're willing to have a small slice of a $200 billion pie rather than start out on their 167 00:12:33.280 --> 00:12:37.360 own. And they also have sub-specialties underneath of that. You're an IP lawyer. You're a 168 00:12:37.360 --> 00:12:41.920 defense lawyer, whatever. They've all these different, you know, subtracts underneath of that. 169 00:12:41.920 --> 00:12:46.000 And so again, you get into the consulting business and people say, hey, it's about marketing and 170 00:12:46.000 --> 00:12:50.480 sales. But really, if you want to scale, and again, this is the thing, if you want to scale, 171 00:12:50.480 --> 00:12:54.000 if you just want to make money, then sure, just market and sell and you can make a buck, 172 00:12:54.000 --> 00:12:58.000 right? That's not the problem. But if you want to get big, you want to build an asset, 173 00:12:58.000 --> 00:13:02.960 the business you get in there is on talent. And how do you retain talent? And how do you 174 00:13:02.960 --> 00:13:07.600 improve the value of that talent and make them look? Because otherwise, what do you do? What happens 175 00:13:07.600 --> 00:13:11.200 if you do a great job with talent in that business, but you don't retain them? They take off, 176 00:13:11.200 --> 00:13:13.760 they take your customers and they leave. They start their own shop. They hang their own 177 00:13:13.760 --> 00:13:18.400 chandelup. That's the game there, right? So the gig, the figure, what you have to figure out, 178 00:13:18.400 --> 00:13:24.880 this is the big billion dollar problem is what you have to do. All right? Now, I'll leave it at that 179 00:13:24.960 --> 00:13:29.440 because I think I made the point. Now, here, here's why this is important is that if you know the 180 00:13:29.440 --> 00:13:34.560 business that you're really in, you actually can get paid to solve the right problem. All right? 181 00:13:34.560 --> 00:13:38.240 Now, the way that I like to think about this is that like, as entrepreneurs, we get paid to 182 00:13:38.240 --> 00:13:42.080 solve problems and the bigger the problem, the bigger the payoff. And so I like to imagine like, 183 00:13:42.080 --> 00:13:46.000 I've got, I've got this big, massive wall in front of me. And the thing is, I see the wall, 184 00:13:46.000 --> 00:13:49.680 but I don't know how thick it is, but I, but I have an idea that it's pretty thick, 185 00:13:49.680 --> 00:13:53.040 right? Because I'm like, shoot, I don't know how I'm going to get through this wall. But I like to 186 00:13:53.040 --> 00:13:57.040 mentally envision myself that there's this big pile of money on the other side. And I remember 187 00:13:57.040 --> 00:14:00.560 having this conversation with the portfolio company, we're like, hey, we think that we need to build 188 00:14:00.560 --> 00:14:04.960 software into this business and actually transform this business from a media company into a software 189 00:14:04.960 --> 00:14:09.440 company. And it's like, this is a big strategic bet. Like, a lot of resources, a lot of time, 190 00:14:09.440 --> 00:14:14.160 basically a lot of, like, lost growth, like, instead of us gassing it on this side, we're actually 191 00:14:14.160 --> 00:14:18.080 going to basically maintain here and then deploy a lot of resources into growing software. 192 00:14:18.800 --> 00:14:24.160 And so I was talking to a founder and he was like, this is really hard. This is going to be really, 193 00:14:24.160 --> 00:14:28.400 really hard for us to do. And I was like, yeah, yeah, it's going to be really hard. And I said, 194 00:14:28.400 --> 00:14:36.640 but if we solve it, we get an extra $250 million. So does that feel worth it? And he was like, 195 00:14:36.640 --> 00:14:41.840 well, when you say like that. And I was like, right. So for 250 million bucks, when I solve it, 196 00:14:41.840 --> 00:14:47.280 yeah, it feels, it feels a lot more approachable or at least it feels worth it. And so I'd encourage you 197 00:14:47.280 --> 00:14:51.920 to think like, what is the ultimate price tag of me solving this problem worth? And then all of a 198 00:14:51.920 --> 00:14:56.880 sudden, you're like, okay, then you can actually appropriately allocate your personal resources to 199 00:14:56.880 --> 00:15:04.400 solving the problem because it really will make you a lot of money. Now, a lot of times we need to 200 00:15:04.400 --> 00:15:10.480 frame the problem for what we get by solving it. Otherwise, we avoid solving it. And so knowing the 201 00:15:10.480 --> 00:15:15.520 business that you're really in isn't really what you think it is. It's often the second or third 202 00:15:15.520 --> 00:15:21.840 order effect. And that's the big wall. And so you come in like my friend did, he starts acquiring 203 00:15:21.840 --> 00:15:25.520 customers like, I'm going to make so much money here. And he's like, Oh, shoot, I got to hire and 204 00:15:25.520 --> 00:15:31.440 staff people. Boom, he sees this big wall. And he's like, Oh, I'm not equipped to solve this problem. 205 00:15:31.440 --> 00:15:35.840 And this here it is. This is the meat. This is the part that I've been waiting to get you and 206 00:15:35.840 --> 00:15:41.040 hammer you guys on is, hey, if you have entrepreneur friends or you have employees or you have teammates 207 00:15:41.040 --> 00:15:46.640 and you think that they need to hear this. Don't be lame. Share the game. That's how this podcast 208 00:15:46.640 --> 00:15:51.840 grows. It's how we can get this knowledge out there and improve the world by making private 209 00:15:51.840 --> 00:15:55.120 enterprise better and better because I believe that entrepreneurs, the only people are going to fix 210 00:15:55.120 --> 00:16:00.480 this world. And we need to help each other out. Don't be lame. Share the game. Oh, and if you screenshot 211 00:16:00.480 --> 00:16:04.960 this and tag me on Instagram, I will definitely like it and probably respond back. But I'm also sharing 212 00:16:04.960 --> 00:16:11.840 as many of them as I possible can. The woman in the red dress appears now. As soon as you 213 00:16:11.840 --> 00:16:17.280 realize the business you're really in and you also realize that you're not equipped to solve it 214 00:16:17.280 --> 00:16:21.760 because you don't know what the hell you're doing and you don't know what you got into to begin with. 215 00:16:21.760 --> 00:16:25.520 That is when the woman in the red dress appears. Now, if you're not familiar with my stuff, 216 00:16:25.520 --> 00:16:30.240 the one in the red dress is any shiny object. It's the distraction. And the interesting thing about 217 00:16:30.240 --> 00:16:33.840 the one in the red dress is that the better you get to the business, the hotter she is. And so like, 218 00:16:33.840 --> 00:16:38.320 you think you can learn to say no to a two out of 10. Yeah, because you've got some crackhead 219 00:16:38.320 --> 00:16:42.000 lady on the side of the street. It's like, okay, she's like, hey, let's go. I'm good. I'd rather 220 00:16:42.000 --> 00:16:48.240 just not get climidious slash whatever you've got, right? And so I'm feeling that a Z pack is not 221 00:16:48.240 --> 00:16:52.320 going to fix this weekend. Anyways, point is that you're like, okay, you learn how to say no there. 222 00:16:52.320 --> 00:16:57.120 When you make $10,000 a month saying no to a $1,000 month opportunity is not that hard. But saying no 223 00:16:57.120 --> 00:17:03.200 to another $10,000 opportunity much harder. But that never changes. At $100,000, you start seeing 224 00:17:03.200 --> 00:17:07.440 $100,000 a month opportunities, seven out of 10, you know, women in the red dress. When you're 225 00:17:07.440 --> 00:17:11.840 in a million a month, you see an eight out of 10. And then at, you know, 10 million a month, you see 226 00:17:11.840 --> 00:17:16.240 a nine out of 10. The woman in the red dress always become more attractive because your skill continues 227 00:17:16.240 --> 00:17:21.040 to improve. But here's the thing. And this is why so many entrepreneurs get stuck. And this is why 228 00:17:21.040 --> 00:17:27.440 we're really want to make this video. And I woke up with it on my mind is that entrepreneurs will 229 00:17:27.440 --> 00:17:32.960 solve the problems over and over again that they know how to solve. And so they will build a million 230 00:17:32.960 --> 00:17:37.840 dollar business knowing how to market and sell and then confronting a new thick wall. Some big 231 00:17:37.840 --> 00:17:42.800 problem. They don't know how to solve. And then what will happen? They then say, oh, I see a shiny 232 00:17:42.800 --> 00:17:47.600 woman in red dress. And guess what she promises you? Hey, if you do the same thing you're doing 233 00:17:47.600 --> 00:17:52.080 right there, but over here, you're going to make even more money than we are currently doing. But what 234 00:17:52.080 --> 00:17:58.560 she doesn't tell you is that she has other crazy problems. And so you go from having your gym 235 00:17:58.640 --> 00:18:03.520 being like, okay, well, I learned how to market and sell. Man, if I just market and sold for cleaning, 236 00:18:03.520 --> 00:18:08.320 I'm going to clean up because it's going to be so easy. And so this other business doesn't have 237 00:18:08.320 --> 00:18:12.800 the constraint of the current business you're in. But then when you get into that business, you're like, 238 00:18:12.800 --> 00:18:17.840 oh, there's another big wall, another big problem I have to solve. And so this is why entrepreneurs 239 00:18:17.840 --> 00:18:23.680 jump from thing to thing to thing. It's because they're unwilling to figure out the new way to solve 240 00:18:23.680 --> 00:18:28.240 the problem or rather an old way to solve a new problem. Whatever way you want to say that. 241 00:18:28.240 --> 00:18:32.640 But the point is is that they are not willing to confront the work that has to be done. And 242 00:18:33.280 --> 00:18:38.400 big part of the work is realizing that you don't know what you're doing and still being willing to 243 00:18:39.680 --> 00:18:47.040 try rather than get distracted by something else and then lose steam and split yourself in two 244 00:18:47.040 --> 00:18:51.120 or split yourself in three. I tell the story of the time, but I had I had nine businesses at one 245 00:18:51.120 --> 00:18:55.520 point. I was CEO of nine companies, right? Sounded really good on dates, sounded really bad in 246 00:18:55.520 --> 00:19:00.400 reality, which is that I couldn't do anything because I kept I kept trying to all I knew how to do 247 00:19:00.400 --> 00:19:04.400 was was sell was all I knew how to do. And so I just kept trying to go into businesses and as soon as 248 00:19:04.400 --> 00:19:07.680 I find out that there was another thing that I didn't know how to do, I'd be like, maybe this 249 00:19:07.680 --> 00:19:11.760 business I can just sell my way out of. But the reality is that none of them could because the car 250 00:19:11.760 --> 00:19:15.920 needed all the parts, I needed wheels, I needed a hubs, you know, I needed gas, I needed an engine, 251 00:19:15.920 --> 00:19:21.040 I needed a chassis, I needed seats, I needed all those things. And I just kept jumping from 252 00:19:21.040 --> 00:19:24.800 thing to thing thing. And it's because when I got into these businesses, I didn't realize the 253 00:19:24.800 --> 00:19:28.720 business I was actually getting into. All right, but the thing is, most of the times you don't know 254 00:19:28.720 --> 00:19:33.280 what business you're getting into until you get into it. And so sometimes you just got to deal with 255 00:19:33.280 --> 00:19:37.920 the fact that this is business is that you learn when you get into it. And so this is why people 256 00:19:37.920 --> 00:19:42.320 stay the same size. This is why people ask themselves whether this is the right opportunity vehicle 257 00:19:42.320 --> 00:19:45.440 because they see the woman in the right dress on the side and she promises that, hey, if you just 258 00:19:45.440 --> 00:19:49.760 know how to market and sell over here, I'll make 10 times more. But sure, but that's because in the 259 00:19:49.760 --> 00:19:54.640 gym business, getting talent's not hard. People, people will literally work for you as a trainer at the 260 00:19:54.640 --> 00:20:02.400 gym for free because they love fitness. Like recruiting talent, not that hard in that business. 261 00:20:02.400 --> 00:20:07.040 Recruiting talent for cleaning people are like, man, I just can't wait to clean all day. Not not 262 00:20:07.040 --> 00:20:12.160 as I mean, I'm sure there's some people, but most people don't. And so it becomes different, right? 263 00:20:12.160 --> 00:20:18.640 And every business has shit. That was for my CFO, Suzanne Shifflett, MLA formatting. That was a 264 00:20:18.640 --> 00:20:23.440 cool form. She said every, every business has shit. She's southern. She's like every business has 265 00:20:23.440 --> 00:20:28.160 shit. Every business has shit, right? And the thing is is that you just when you get into it, you just 266 00:20:28.160 --> 00:20:33.600 don't, you don't know what shit you're getting into. And so people just keep beating the same levels 267 00:20:33.600 --> 00:20:38.400 in the same bosses. They already know how to beat rather than actually sticking with the one thing 268 00:20:38.400 --> 00:20:42.640 and realizing that when you see that big, thick wall, you just have to start taking your 269 00:20:42.640 --> 00:20:46.960 sledgehammer to it. And the way that you get through it is realizing how much value am I going to 270 00:20:46.960 --> 00:20:51.680 create in this business by actually solving this problem. And that's what gets me to stick with it. 271 00:20:51.680 --> 00:20:58.240 Now, the reality, and this is what I want to drive home and I'll wrap this because I think this 272 00:20:58.240 --> 00:21:04.080 is the big point is that you have already paid down a tremendous amount of ignorance tax by 273 00:21:04.080 --> 00:21:07.200 being in whatever business you're in. If you've been in the business you're in for a year, 274 00:21:07.200 --> 00:21:11.760 two years, five years, you already have five years in. And the amount of times that I see people 275 00:21:11.760 --> 00:21:15.840 do this right is right is they're starting to make money. They're like, hey, now I can switch. 276 00:21:15.840 --> 00:21:18.960 But the route is you actually finally figured out how to solve one of the key problems of your 277 00:21:18.960 --> 00:21:23.040 business is you're making money. And then you see another opportunity and you think, oh, 278 00:21:23.040 --> 00:21:26.400 well, now that I know how to solve this, if I just solved it over here, I'll make 10 times more. 279 00:21:26.400 --> 00:21:31.600 But that's not always the case. And oftentimes it's not the case at all. And so this is what I want 280 00:21:31.600 --> 00:21:35.360 you to do as a thought exercise. And this is a really fun one that I do, honestly, a lot with 281 00:21:35.360 --> 00:21:40.960 business owners that I talked to is that explain to me why this can't be a billion dollar company. 282 00:21:41.840 --> 00:21:47.600 Tell me why lawn care, the thing that you're in can't be a billion dollar company. Tell me why you 283 00:21:47.600 --> 00:21:51.840 want to switch from being a restaurant to something else because you don't think it can be a billion 284 00:21:51.840 --> 00:21:57.760 dollar company. The reality is that it's just on what timeline and the vast majority of the 285 00:21:57.760 --> 00:22:01.360 switching comes from in patients. It comes to the fact that you think that something else is going 286 00:22:01.360 --> 00:22:06.000 to happen faster when in reality, it won't because you just don't know enough yet. You're actually 287 00:22:06.000 --> 00:22:10.640 jumping into it as an uninformed optimist. And then as soon as you realize that you find the wall, 288 00:22:10.640 --> 00:22:13.840 which is not the one you expected, which is not the one that you were equipped to solve, 289 00:22:13.840 --> 00:22:19.040 and then you're like, oh crap, now what? All businesses have shit. They all have shit. They all 290 00:22:19.040 --> 00:22:24.320 have a big brick wall that you have to come in contact with. And guess what? That's why you get paid 291 00:22:24.320 --> 00:22:29.440 to solve the fucking problem. That's why you make outsized returns is because you have to be willing 292 00:22:29.440 --> 00:22:34.400 to confront with the sledgehammer in hand, not knowing how thick the wall is going to be and 293 00:22:34.400 --> 00:22:39.520 start hammering away at it with the hope that when you get to the other side, it will have been worth 294 00:22:39.520 --> 00:22:45.120 it. And often it is. Now, I want to drive this point home. So if you have a roofing business, 295 00:22:45.120 --> 00:22:49.920 if you have a restaurant business, if you have a dry cleaning business, all you have to do is look 296 00:22:49.920 --> 00:22:54.000 at the world and see, is there any version of this business that is a billion dollar company, 297 00:22:54.000 --> 00:22:57.920 or even a hundred billion dollar company, whatever your goals are. And most times you'll find that 298 00:22:58.160 --> 00:23:02.080 there is that. But you'll also find that it just takes time to get there because the other times I 299 00:23:02.080 --> 00:23:08.640 have, let's say small business, it actually happens a lot, right? Is, hey, I've got a roofing 300 00:23:08.640 --> 00:23:12.320 contracting business. Okay, cool. And they say, hey, should I jump into a different opportunity? 301 00:23:12.320 --> 00:23:15.840 And I'm like, well, okay, what are you doing? I'm doing a top line. I'm doing a million bucks 302 00:23:15.840 --> 00:23:21.680 in bottom line. I'm okay. Okay. Well, why don't you just 10X the size of your company? 303 00:23:22.240 --> 00:23:27.120 Ah, and then they say, well, I've got this big concrete wall in front of me, right? What they 304 00:23:27.120 --> 00:23:32.880 described next is the real problem of that business, the business that they're really in that they 305 00:23:32.880 --> 00:23:37.120 didn't know they were getting into. And I want to be clear, this only happens at scale. Alright, 306 00:23:37.120 --> 00:23:41.200 so once like all businesses, like if you're, if you're, if you're new to entrepreneurship, you got 307 00:23:41.200 --> 00:23:44.800 to figure out the basics of everything. You got to figure out that a wheel is round. You got to 308 00:23:44.800 --> 00:23:47.680 make sure the gasoline is combustible. You got to make sure that there's some sort of engine. 309 00:23:47.680 --> 00:23:50.800 It might be a sewing machine in the beginning that's, that's powering your car. It might be a 310 00:23:50.800 --> 00:23:55.280 remote control car that they can only go to, you know, 10 miles an hour. But like, there's got to be 311 00:23:55.280 --> 00:23:58.400 some engine. Otherwise, you're not going to get any movement, right? But when you start really 312 00:23:58.400 --> 00:24:02.560 want to achieve scale, there's going to be a big, hairy problem. There's going to be a big 313 00:24:02.560 --> 00:24:09.040 concrete wall in front of you that you don't know how thick it is. And that is the work. That is 314 00:24:09.040 --> 00:24:13.600 where the enterprise values are locked. And the vast majority of the time when we're investing 315 00:24:13.600 --> 00:24:18.320 in a company or we take over a company, we are just comfortable with the fact that there's 316 00:24:18.320 --> 00:24:22.160 a concrete wall and we're just going to chip away at it. And so a lot of the work that I do is 317 00:24:22.160 --> 00:24:25.840 actually expectation management with the team is saying, yeah, this is going to take two years. 318 00:24:25.840 --> 00:24:29.440 Yeah, this will take three years. And they're like, wait, three years? I'm like, yeah, 319 00:24:29.440 --> 00:24:34.320 well, I'm in this for like, I mean, let me put it this way. If in five years, we had a hundred 320 00:24:34.320 --> 00:24:37.120 million dollars enterprise to this business, is it worth it? They're like, well, yeah, I'm like, 321 00:24:37.120 --> 00:24:41.520 do you think we can solve it in five years? I'm like, well, yeah. But then guess what they don't do? 322 00:24:41.920 --> 00:24:46.560 Be willing to wait five years. And so the thing is is that sometimes it takes somebody from the 323 00:24:46.560 --> 00:24:49.280 outside as they like, dude, let's zoom all the way out. If you solve this for a hundred million 324 00:24:49.280 --> 00:24:55.200 bucks is worth it? Yeah. Okay. Well, it's going to take that long. Oh, huh. And then things start 325 00:24:55.200 --> 00:24:59.680 to settle. And then you get this, you get less frenetic energy. The amount of wasted effort 326 00:24:59.680 --> 00:25:05.200 for entrepreneurs that goes into this ideation of what else they could be doing with their time 327 00:25:05.360 --> 00:25:10.560 or with their skill sets. Honestly, it's, it's like, oh, great. And I'll do it. It's like, 328 00:25:10.560 --> 00:25:15.680 it's like being single versus being married. All right, hear me out. Is that when you're single, 329 00:25:15.680 --> 00:25:21.600 at least for me, when I was a guy, I would say 30% of my time was being genuine, maybe 40% of my time 330 00:25:21.600 --> 00:25:25.920 might have been higher. Anyway, I'm not going to answer was allocated to like the idea of chasing 331 00:25:25.920 --> 00:25:29.840 tail. So it was like, man, what if, what if that worked out? What if that worked out? And I'm, 332 00:25:29.840 --> 00:25:33.680 I'm, I'm, I'm, I'm, I'm, I'm, I'm doing lead nurture, right? I'm working the pipeline. I'm 333 00:25:33.680 --> 00:25:38.800 planning seeds. I'm, I'm making a equipped comment. I'm responding to a story, whatever. And so, 334 00:25:38.800 --> 00:25:45.120 I'm working leads. And so as I was doing this, right? All my attention was going to possibility 335 00:25:45.120 --> 00:25:50.960 was to potential was to what if, right? As soon as I got married, the thing, the biggest gift 336 00:25:50.960 --> 00:25:56.160 that marriage got me was it got me 30 to 40% of my time back was I didn't have to think about 337 00:25:56.160 --> 00:26:01.280 this. Like this part of my life was not done, but like, solved as in like, I'm going to be with 338 00:26:01.280 --> 00:26:08.800 Laila. Cool. Great. Now all the extra attention that used to go to like possibility in terms of what 339 00:26:08.800 --> 00:26:13.840 who, of who else could be goes back into the main thing, which for me was business. Now within 340 00:26:13.840 --> 00:26:18.320 the business, it works the same way is that I think most of you guys are dating your business, 341 00:26:18.320 --> 00:26:22.000 but you need to get married to your business. You guys are trying to have friends with benefits 342 00:26:22.000 --> 00:26:25.680 with your business, trying to go on dates, maybe date a couple of the business on the side, 343 00:26:25.680 --> 00:26:29.520 have some side checks. And then you're wondering why your relationship with your businesses in that 344 00:26:29.600 --> 00:26:34.880 healthy. If you go all in on the business, the business will go all in on you. And I promise you, 345 00:26:34.880 --> 00:26:40.080 it's just that the guy who's beating you right now, he's just committed. He's just married. He's 346 00:26:40.080 --> 00:26:43.280 just married to the business. He's like, I'm, I mean, if it takes me five years, it takes me five 347 00:26:43.280 --> 00:26:48.160 years, but like, where am I going? Like I'm in this. I'm in it for the long haul. And he sees with 348 00:26:48.160 --> 00:26:53.200 the value of a 30 year marriage would be or a 50 year marriage would be with his business. 349 00:26:54.160 --> 00:27:00.240 And so if you know the business you're really in, which you usually find out a couple years 350 00:27:00.240 --> 00:27:03.920 into the business, which is once you solve the basics of business, you realize, oh, this is the 351 00:27:03.920 --> 00:27:08.080 big Harry problem. And then you don't know how long it will last, but I promise you that someone 352 00:27:08.080 --> 00:27:11.920 else has solved it. And I promise you that they weren't super geniuses. They just were willing to 353 00:27:11.920 --> 00:27:17.680 commit. They were willing to swing the hammer at the wall for a very long period of time and 354 00:27:17.680 --> 00:27:22.160 willing to zoom out and say, I can think in five year increments. And do I think that if I put 355 00:27:22.160 --> 00:27:26.800 everything I have and not get distracted with the woman in the red dress, not have the side 356 00:27:26.800 --> 00:27:31.440 chick, not have these, these other businesses I'm flirting with that I'm keeping warm on the side. 357 00:27:31.440 --> 00:27:35.200 These networking lunches for this guy, it might do a partnership with even though it has nothing 358 00:27:35.200 --> 00:27:38.560 to do with this business because he says, hey, you're good at this. I'm good at this. We could do 359 00:27:38.560 --> 00:27:43.440 this thing together. None of that. And just being like, no, I'm just, I'm just going to keep slamming 360 00:27:43.440 --> 00:27:48.880 at this wall because if, if I just get this one thing right, if I just break through this wall, 361 00:27:48.880 --> 00:27:53.600 I won't unlock all of the wealth that I've ever wanted. But there is a big, thick, 362 00:27:53.600 --> 00:27:58.720 massive, gray, boring wall between there and where you want to go. And it's just who's willing to 363 00:27:58.720 --> 00:28:01.760 keep swinging the hammer for a long period of time without getting distracted and without 364 00:28:01.760 --> 00:28:05.120 thinking they're smarter than they are. I hope this podcast helped you do two things. One, 365 00:28:05.120 --> 00:28:09.760 is avoid the woman in the red dress because she makes you believe that she will have a different 366 00:28:09.760 --> 00:28:14.480 set of problems that she makes you believe that she doesn't have the problems that your current 367 00:28:14.480 --> 00:28:17.840 wife does. When the reality, she's going to have an entirely different set of crazy problems 368 00:28:17.840 --> 00:28:21.680 you're going to have to do with and you're still going to have to solve them. All businesses 369 00:28:21.680 --> 00:28:26.240 have shit. And number two is that I hope that this makes you go all in on the business you have, 370 00:28:26.240 --> 00:28:30.400 confront the big wall of concrete and realize that there is a big payday on the other side and 371 00:28:30.400 --> 00:28:31.680 you just have to start shipping away.