How To Get To $10M In The Next 36 Months | Four Rooms Mastermind Keynote

Most of us got into this game as entrepreneurs because we wanted a different life. We grew up with very little and we wanted to have a better life for ourselves. Nobody really taught us how to do this. We just kind of stumbled in and figured some things out and duct taped some things together and money came out the other end and we said we should do more of that. What I hope to help you see is that the thing that we are sitting on are skill sets. Our talents, our abilities, our relationships are worth much more than just the cash flow that we try to pull out of our business in the short term.

I'm fascinated by this idea that we, as entrepreneurs, we are in charge of creating a bigger and brighter future for ourselves. And yet most of us, if we were honest, are scared shitless. Half the time we're totally scared that the rug is going to be pulled from under us. We love to think about what's going to happen in the economy or what the real story is behind the scenes. We love to go down those dark rabbit holes because secretly we're also afraid that it's all going to fall apart. Nobody has our back, it's all on our shoulders and we have to project that we have it all together, while secretly we see all the problems and the cracks that are going on in our business. Or maybe it's just me.

I feel it all the time. Most of us feel it all the time. And I'm fascinated by that juxtaposition that we entrepreneurs need to be the optimistic ones because we're the ones who are casting a bigger and brighter future. Yet at the same time, we are often paralyzed by fear. As entrepreneurs, we must assume that capitalism creates an ever expanding universe. That every day there are seven people who wake up and ask the question, how do I make my economic situation better? How do I make my life better? And as a result, we collectively are constantly expanding. That capitalism actually necessitates that we are constantly expanding. Now, I don't know if you know this, but capitalism, contrary to popular media, is a new idea. It's only been around for about 200 years. And back then, ideas didn't spread as fast. It was much harder to go viral on TikTok in 1820. Today, ideas spread much faster. So capitalism and idea has only been ingrained into our culture for a few generations. And if we look at what has happened in those few generations, there has been abundance of expansion. If we just look at the S&P 500 since our parents were alive, 1950s and 60s, this is a graph that shows the expansion of the S&P 500 since 1950. In 1950, the S&P 500 was 20. Today it's almost 6,000. Now, you could say inflation, you could say government policy, you could say manipulation. I say, in spite of questionable government policy, in spite of questionable financial policy, in spite of possible manipulation, capitalism continues to expand. Now, when I first saw this graph, I looked at it and I thought, what was going on in that flat line for 30 years? What were they doing? I mean, like 30 years of nothing. And then boom, those losers had nothing going on for those 30 years. So I zoomed in on the graph, and this is what the graph is from 1950 to 1985, right when the chart changes, looks very similar. And I went, oh my goodness, what if the idea that when things go up, they must come down, what if that was a fallacy? What if it's actually that what I think is an exponential curve right now will look like a flat line in 30 years? What if the boom that I've perceived in my lifetime or over the last 20 years, what if the thing that I fear is not sustainable, what if that growth actually looks like a flat line in the future? That's what history would suggest. I mean, if we just look at from 2008 until today, we've gone from no Facebook ads existing to being $150 billion a year, no Amazon FBA, to having 10 million Amazon sellers. There was no TikTok. And if you listened to Eddie's presentation yesterday, you're really bullish on TikTok right now. It's the fastest growing social media network in history. We've gone from Instagram not existing to you all checking it twice since I've been on this stage.

There was no such thing as a social media influencer. Now it's ingrained into our business culture. There was no ChatGPT, there was no Bitcoin, and now it's worth $2 trillion. Now, if we look at just the last eight years. So let's take one president you statistically are likely to favor and one president that statistically you probably do not like. And let's combine them together and just look at the last eight years. Just in the last eight years, the S&P 500 is up almost exactly 3x, GDP is up over 50%. Bitcoin's gone from 500 to now $90,000. We've had two recessions. They're both the shortest in history, and we've added a half a billion people to the planet. This is just in the last eight years. So despite what you might think is questionable policy, or despite the fact that we've had a pandemic, despite the fact that we've had division, we have continued to expand because capitalism creates an ever expanding universe. Despite our flaws, despite where we disagree, capitalism continues to expand. And that means that valuations expand and they will continue to expand. In March of this year, Liquid Death raised a capital round valuing them at $1.4 billion. That is a company that was started in 2017 and they sell water.

I don't know if you're aware, water is a saturated market.

It is slightly difficult to diversify and differentiate water.

And in seven years they're worth $1.4 billion.

Ghost, which was a well run company in the sports nutrition world, then launched an energy drink. They were bought a few months ago by Dr. Pepper for over a billion dollars.

A billion dollars. They're an eight year old company, they sell energy drinks. Energy drinks, another saturated market. There was not a lack of energy drinks in the market. We didn't have a big consumer demand for this gaping hole in the marketplace. A lack of energy drinks did not exist. What's the difference? It was brand, it was who they targeted, it was who they served. And as a result, both of them became billion dollar businesses just in the last year. If we look at this graph of Netflix, that red line points to what Blockbuster's peak valuation was at its peak. Not when it went bankrupt, but at its peak valuation. Isn't that wild to think about?

So valuations expand, markets expand.

Wealth expands. In fact, is anyone here old enough to remember when a trillion dollars was a lot of money?

This is a real photo of a very handsome kid at 7 years old. I remember telling my dad that I wanted to make all the money in the world. And he said something that I didn't realize was accurate until 25 years later. He said, well, Ryan, all the money in the world, that's a trillion dollars.

He was actually right. In 1990, all the money in circulation was a trillion dollars. That's not all the wealth in the world. But that was all the money that was in circulation. It was literally all of the physical money that existed in the world was a trillion dollars. So something happened in my brain when it wasn't when Apple became worth a trillion dollars. Like, that was cool. That was a cool moment. But that took 30, 40 years. It was when two years later, it became worth $2 trillion. And someone in my brain googled that and said, that is a lot of money. In fact, in two years, Apple made all the money in the world.

And then they did it again. Over the next two years, they made all the money in the world again.

This is interesting. Makes you ask the question, where does all the money come from? Ooh, conspiracy theorists just went, ding, ding, ding. This is my moment. I have been waiting for this.

Now you can make an argument about, again, government printing, economic stimulus, but that money has to go somewhere. Where does that money go in order to create new wealth? Where does new wealth come from? It comes from the creation of new assets.

What we consider market caps, what we consider net worth is just a perceived value of what other people are willing to pay for assets. And as money is created or as assets expand.

Wealth goes up. That means that we as entrepreneurs and we as capitalists are literally creating new wealth that did not exist. That is how money expands. That's how wealth expands. Not how money is printed, but how wealth is created out of thin air. It comes from the creation of new assets. So I submit to you that what we call money is, is actually three very different things. There's cash flow. We all know what that is. There will not be a presentation here about what cash flow is. If that is. If you are unsure, you are in the wrong room.

There's cash flow that we keep at the end of the month or the year. But then there is wealth. That's the total net worth from the long term. Investments that you don't need to work for, that you don't need to earn. But then there's enterprise value. And enterprise value is the value of your business if you were to sell it. And most entrepreneurs only ever optimize for cash flow. This is what we obsess about. This is what we think pays for our life. This is what we perceive our livelihood to depend on. We obsess over cash flow. So I would submit to you that we can do it in reverse order. Instead of saying, I will make my cash flow and invest it, and then one day I will build the business that matters, I would suggest that we think about doing this in the opposite order. First, we build a business with enterprise value. Then we invest for wealth and passive income, because we can borrow against an asset that has enterprise value, or we can sell that business and invest it, and then we will never have to worry about cash flow ever again.

Now.

The thing that is so interesting is that we as entrepreneurs, especially as scrappy entrepreneurs, get into this game and are so good at generating short term cash flow. And most of us are still dealing with that fear of what happens if it all goes away. And so we double down on more and more cash flow and it never makes us feel secure.

It never satisfies that fear. But if you are able.

If you are able to just think about enterprise value even for a minute, if we can put other things aside and think about how do we generate and create enterprise value, you will play business at a much higher level.

You will start to make the decisions and think about things that can completely change generations.

And so we're going to go through a few ways to do that. But the reason why that matters for this room is most of you already have cash flow businesses. And if you take the skill set, the relationships, the experience that you have and you apply it to something that can be scaled and possibly sold, your financial future gets a lot rosier and it also gets a lot more fun.

Now, I think I'm biased because I've done it, help people do it. But I happen to think for people in this room, for most marketers and entrepreneurs, the simplest, the most predictable, sellable type of a business is a physical products brand. That is my opinion, that is my bias. I just happen to think for most of the people in this room, that is a very predictable way to create an asset that has enterprise value, that doesn't distract from your primary business, that doesn't sop up the cash flow of what you are currently doing and that you can infuse all of your knowledge into and create enterprise value that can be scaled and sold. And if we look at e commerce and physical product brands over the last 10 years, the market has 5x. The total size of the marketplace of e commerce transactions is up 500% from when I got into the game, which is in 2013. That first blue line. That's the total amount of e commerce sales in the US in 2013, which is when I sold my first physical product online. And you know what people told me in 2013? It's too saturated now. Everybody is in the game now. It was wide open before 2013, but now, no, now it's saturated. The market has continued to expand year after year because in capitalism we assume that we live in an ever expanding universe. In fact, if you need more evidence for the fact that the market continues to expand, just look at the recent news of the relationship between Amazon, TikTok and Pinterest. For the first time ever.

The marketplace leaders are getting together to make it easier for sellers. This has never happened before. This is huge. TikTok shop is less than 2 years old and they're a leader in E commerce. And now you partner that with with Amazon and Pinterest and it's almost like E commerce sales are going to continue to go up for at least a few more years. Because capitalism assumes that we live in an ever expanding universe. In fact, if we look at the sales of Walmart.com Walmart.com's annual sales are now over $80 billion, which is a fun number for me because that was the total number of transactions on Amazon in 2013, the year that I got in. Which means that Walmart.com is now the size that Amazon was when I entered into this game, when everybody was saying it was saturated. But looking back you think, wow, this was a wide open west and this thing was growing exponentially. Walmart is now that today, it is now that size. And so when you look at the growth of the sector, you look at the partnerships that are happening and you realize that new platforms are continuing to expand. You realize that capitalism assumes that we live in an ever expanding universe. Now why does all of this matter for this room? Because most e commerce entrepreneurs are terrible marketers and you will crush them.

Unless you're Aaron, that guy is so smart. Yesterday he's talking about the old school marketing and sales tactics that they use. I'm like, man, I should have thought of that. That guy is so smart, he's so cool. And he crushed it. Most e commerce entrepreneurs are terrible marketers. In fact, when I got, when I bought back a company that I had previously sold and I was a little bit worried that it was going to be harder the second time around because I'd been out of the game for a while. But I soon discovered that, my goodness, people don't even have to be good anymore.

You don't even have to know how to write copy. They just throw it into ChatGPT and the copy's terrible. But they're like good enough.

They don't even try to build relationships with customers anymore. They try to automate everything.

Very few people think about partnerships that are not just being a total asshole. Asking and asking and asking and extracting from the relationship.

People don't even have to be good anymore. So if you're reasonably good, which everyone in this room is at least reasonably good, that means that you can crush almost everybody else who is going into the sector. So the sector is expanding, but the entrepreneurs in the sector, my opinion, are actually getting worse. It's my opinion that the automation tools are not going to put people out of business. It's going to make the entrepreneur lazy.

And that means that if you are skilled, and skilled means, do you have the attention span to go read the old school copywriting books and practice and apply, you can very easily be in the top 1% of copywriters if you study the things that most of us have forgotten about that we thought don't work anymore. They actually work better than ever. I'm still stunned to this day at how few e commerce brands do absolutely no email marketing at all. And yet that is so ingrained into the expectations of how most of us built our businesses. And so if you apply this to a brand where your only purpose is to build enterprise value, you crush everyone who is trying to compete with you. So this matters for this room because you have a skill set that if you apply to a business or a brand for the sole purpose of building enterprise value, you will stand out among a very noisy crowd in a booming industry and create enterprise value that is possibly bigger than you can foresee right now. Most of you already have your cash flow businesses, so you can leverage that, you can leverage your relationships, you can leverage the experience, the talents or your audiences to launch other businesses that only exist for enterprise value. So let me give you an example of what that looks like. A few years ago, we acquired a business for $250,000. It was a food brand. And with some blood, sweat and tears, we grew that to a run rate of about $1.5 million. So if we just exited that today at a 1x revenue, what is the enterprise value of that business?

$1.5 million. This was not a trick question. I know math is hard.

One times revenue, 1.5 million. Anyway, we've created $1.5 million in enterprise value.

Well, what we did then is we went out and created a partnership with an influencer who was just perfect for the brand. I mean, just perfect. He liked the product line, great on camera, huge audience, about 4 million engaged followers. And we gave them a small amount of equity.

Now, the minute that that relationship is on the cap table, we now have distribution for additional products. Would you agree? We now have.

An additional area of growth and it looks really good to potential investors. We can now very easily raise capital at at least twice the valuation. Probably much more, but at least twice the valuation. So how much enterprise value have we created?

1.5 times? 2? 3. Very good. $3 million. And we would grow the revenue of that brand with that relationship, would you agree? And we would continue to launch more products and we would use that audience in order to get new exposure well, at that point, if we took some of the profits and instead of treating it like a cash flow business, if we went out and we hired a CEO from a competitor and we gave them a percentage of the business, and as a result, we're able to raise capital at a $10 million valuation in total. How does this all play out? Well, we now have retained 70% of the company. It's a $10 million enterprise value. We raised 10%. We've now created $7 million in equity in enterprise value. We have a million dollars in cash that we can invest in the business. This is how we build enterprise value. Notice that when we bring relationships to the table, we build the enterprise value. Now, poor man's math will just take revenue or they will take profit and they will times it by a multiple and say, this is what something is worth.

I think that's missing the big picture. You can build much more enterprise value with other things that contribute to the overall value of the business. And it starts with relationships and audiences and distribution. The way that we think about this, we call this the owner's model. We have three areas that we bring together in order to create a brand that can be scaled and sold. We've got product, audience, and sales channels. Now, most of us, most of you specialize in one of these three areas. You're really good at product or you're really good at building audiences, or you're obsessed with a specific platform.

But when you take that and partner it with other people who specialize in the other areas, we can collectively build a brand that can be scaled and sold. So in product, we don't try to launch the product that appeals to a mass market. We look for the product that appeals to 5% of an audience that they will go bananas for. And we build audience in the same way that most of you do it to promote your businesses or that influencers and content creators are building their exposure. And the sales channels that have a compounding effect like Amazon or Clickbank or TikTok shop. If we combine the exponential growth that they have with the audience growth that, that most of you know how to do, and one person who obsesses over product, and I partner with one person in each of these areas, you can sit in the owner's seat. Rather than operate or extract as much cash flow from each of these, from each of these centers, we combine them into creating something that creates enterprise value. One of the best examples of this, I think, is the brand Truvani. I so admire what Derek did because he had the Biggest business podcast in the world. And he walked away from it because he realized, I don't want to live this life. I don't want to be just an influencer who talks about business. I want to build a brand that has real enterprise value. And he partnered with an influencer, the food babe. And together he had the marketing background, she had the knowledge of what makes a great product and she had the distribution. Together they came together, launched the brand and as a result it's the fastest growing plant based protein powder in history. I don't know what it's worth, but I'm pretty sure he's going to be fine. It's a nine figure valuation and he walked away from having a top business podcast and being an influencer to build the brands around the influencers that had real enterprise value. In 2017, I sold a company for $16 million. This is the press release that went out. I didn't get all that money because I had money that I held back in the deal. And a couple years later this is the press release of them bankrupting the company. And what I learned in this process was that what we have as skill sets and experiences is more effective than what the big boys have. I always thought that the private equity groups and the big pocketed VC firms knew what the hell they were doing. Turns out that us scrappy entrepreneurs who know how to sell product and create real businesses that serve our customers, we get to be the hot girl at the dance that everybody wants to dance with.

So it's my opinion, if nothing else, I hope to persuade you that we as scrappy marketers and entrepreneurs, we have this beautiful window to build eight and nine figure businesses. And what's standing in most people's way is this addiction to the short term result. Because we are obsessed with just the cash flow that we think will make us feel safe. And the minute that we can switch over into a long term, and long term meaning like 36 months and we think about enterprise value over cash flow, the results that we create are like nothing that has ever been possible in history. Now, I don't have a crystal ball. I haven't been very good at predicting what happens in the economy. But I think we can make some predictions over the next 15 years. I think we can assume that 2 billion people who don't have access to the Internet are probably going to get it. We can assume that about a billion people will be born. We can assume that AI is probably going to be a thing.

We can assume that governments will expand, we can assume that people will still wish for the good old days and we can assume that Robert Kiyosaki will still be calling for the next crash.

So, my friends.

If we look ahead to the next 15 years and we think about how much progress we've made since 2008 and the platforms that did not exist, the things that were not possible.

In recent memory that are now just a normal part of our businesses, and if we think about the fact that capitalism continues to expand and the opportunities that continue to become possible, and if for a second we can punch the short term result and think a few years ahead and plan for enterprise value instead of just the short term cash flow, we will not only make more money, but we relax into the service of the people who are trusting us with their credit cards. Because we don't need that many people, we don't need that many projects, we don't need that much time, we don't even need to be that good in order to create something that is better than what most people have ever created up until this point in history. You are sitting on something more powerful than just what will add to your short term profit and loss statement. You are sitting on a skill set, a book of relationships and the trust of the thousands or millions of people who follow your content or read your emails. Those are assets that have huge leverage looking ahead into the next chapter of what our community will create. Thank you for having me, everybody.

And now a quick word from Dr. Travis Zigler, one of our members from the capitalism.com community.

I'm Dr. Travis Zigler and along with my wife, Dr. Jenna Zigler, we started a brand called Ilove. We had our exit in June of 2021. So that was a huge milestone for us both from making us financially free to getting us out of debt, student loan debt that we've had since we became doctors in optometry school. And when we sold, we were doing close to 450,000amonth. I started with capitalism.com back in 2017, 2016, around that time, and I joined the tribe first, which was the equivalent to the incubator. Now the biggest thing, and I think this is the fear that brings us all back, is they're afraid of investing and getting that return on your money. And so my fear of investing in myself, I'd never done anything like that up to that point. And my wife wasn't there and I joined without consulting her, which was, I don't recommend doing that, but it was probably one of the best decisions we've ever made. Because it's just amazing what an investment in yourself with capitalism.com has done for us. Nothing changes after like an exit or a financially freeing exit or an anything like that. But how is our life different from joining capitalism.com.

It'S our therapy. Ryan is known as the entrepreneur's therapist for a reason, and it's because when you talk to him, he gets you out of your own head. But if you join, this is a proven system. I mean, people have gone through this and they've come out the other side better. If you join this and you don't get results, it's up here. It's not. It has nothing to do with the course, has nothing to do with the people that are in capitalism.com it has to do with you. You need to look in the mirror because you can get the exact same course as the person sitting right next to you and you guys will both have two different results. And it's all because the mentality that you take into the course, if you go into it, or joining the networking or the mastermind, if you go into it with a negative attitude that this isn't going to work, it's not going to work for you, so don't join it. But if you go in ready to go, it's going to work. It worked for me. It's going to work for you, too. It's just you got to steer or jump over the mental hurdles because believe me, you will hit roadblocks like you wouldn't believe, both in your personal life and in your business life. And that's what this is here for. It's here to help you get through those.

If you found value in this podcast and you're ready to go Deeper, here are three resources where we can help you. One, you can grab my book 12 months to 1 million on Audible or Amazon. It has over a thousand reviews and it's the playbook to building a seven figure business. Second, you can join our community of entrepreneurs who are following a plan to build a 1% net worth by building businesses and investing the profits you can get plugged in@capitalism.com 1. And third, if you're looking to go deeper and build a seven figure business that you can sell, you can work closely with us inside the capitalism incubator and you can get on the waiting list and find out what we do over at capitalism. Com Inc. That's capitalism. Com Inc.