In this interview, Eric Siu and Neil Patel discuss the essential principles for building a generational, multi‑billion‑dollar company. They outline eight recurring traits observed in long‑lasting firms such as Walmart, Hermès, and Raising Cane’s. The conversation emphasizes the need for an exceptional, expert team; targeting a large total addressable market (TAM) and choosing a pricing model (high‑volume low‑price vs. low‑volume high‑price); a culture of “killing your own baby” – continuously innovating and cannibalizing your own products; rigorous frugality and cost discipline; a slow‑and‑steady, patient growth mindset that avoids over‑aggressive expansion; a maniacal focus on a single core offering; prioritizing customer retention over acquisition; and finally, embracing the long‑term journey with resilience, especially in uncertain economic times. The dialogue also includes a brief promotional plug for the B2B ABM platform karrot.ai. The overall message is that mastering these traits increases the likelihood of creating a business that endures for decades.
Chapters
It's really hard to do one thing really well for a very long time. That's why most people don't do it. If we're talking about building a multi-billion dollar company like a Walmart or something like that for the long term, or like Hermès or something, the very first thing that I think needs to happen is you have to build an exceptional team. And that gets said so much, but when you look at the teams like Renaissance Technologies, for example, their team, everybody was, everyone's like expert mathematician, right? This was like a, this was like Like an investment firm.
Um, he passed away, right?
I, I, I'm not sure if he passed away or not.
Yeah. What's his name?
Oh, I think you're right. I think you're right. He did pass away. But point is, that's one of the first principles of building a generational business.
Jim Simmons. Yeah, he passed away. It was sad.
All right, you go. What's, what's another one? All right.
Um, I would say the next one is, is if you want generational business, you gotta go after a big TAM. There's only so much money to be made from things like best man speeches. Reason it comes top of mind, because someone tried selling me a best man speech business a long time ago, and now it would exist today with AI. But, um, you, you gotta pick a big TAM. You use Walmart as an example. Walmart sells food, they sell clothing, they sell stuff that you need. AI may disrupt the food industry, but AI is not going to disrupt the fact that you as a human still need food in your body and you need to get it from somewhere. Um, So you need to go after a big TAM. If you don't go after a big TAM, I think you're just not going to do well.
And actually the third one related to that, you can either sell something cheap to a lot of people or you can sell something really expensive to fewer people. That's when we talk about TAM, we are talking about more of it from a revenue standpoint. Yeah.
Uh, the fourth one would be you're, you have to have a culture of willing to kill your own baby, not real baby, but your business. If you're not willing to kill the business, Um, by innovating, you're eventually going to get disrupted by someone else and they're going to crush you. Just like Facebook crushed MySpace and MySpace should have been where Facebook is today, but that's not the case. You need to really be willing to kill off your business. If you kill off your business by doing something that's more innovative, you'll keep surviving in the long haul.
Now, this is the next, the next one is when I look at all these biographies or all these founders that I've studied, They are all extremely frugal when it comes to their business. They watch their costs like a hawk. Neil's a great example of this. He's pulling up his Amex statements all the time. He's looking at every, every little thing. You have to do that in your business cuz nobody's going to care as much because at the end of the day, the cost structure is, is, it is the thing.
Yeah. Uh, the other thing, if you want to build a generational business, you got to think slow and steady. Too many entrepreneurs want everything right now. The Bill Gates quote, right? Everyone underestimates, or people underestimate what they can do in a year. I mean, people overestimate what they can do in a year, but they underestimate what they can do in 5 or 10 years. But you need to go slow and steady. A great example of this is we've been doing acquisitions at NP Digital. I want to make sure the business is solid in a bad economy. I'm not going to go buy 5 companies this year, even though financially I could, because then I may struggle next year when things go bad and I don't have enough dry powder. So you gotta be, um, patient and you gotta make sure that you're doing the right things for long-term growth. You gotta be aggressive, but not foolishly over-aggressive where you're not prepared for, uh, downturns.
By the way, you, you actually shared this story. Remember you, you talked to this, uh, billionaire heiress, right? But when we talk about building, we're talking about something generational. We're talking like 30+ years.
Yeah.
That's what we're really talking about. The last thing I'll say from my side is you have, and I learned this the hard way. You, you learned this the hard way too, but you have to be maniacally focused. When you look at Raising Cane's, all they do is chicken fingers, right? When you look at, when you look at Hermès, it's, it's, it's luxury goods, right? Or like LVMH, luxury goods. That's all they do. You look at Costco, what is it at the end of the day? It's discounts. Buying, buying in bulk at discounts, right? Mm-hmm. So they're all known for one thing. It's really hard to do one thing really well for a very long time. That's why most people don't do it.
Yeah, they don't have the— they're not willing to just keep going. And they're not— I would say a lot of people don't do it long enough because they're also not passionate. But if I had to go with the last one, when it comes to building a generational business, is you got to figure out how to retain customers. Too many businesses focus on continually getting new customers. Big businesses are built from the same customers spending over and over again. They're not built by focusing purely on retaining or going after new customers. It is much more expensive. I had the stat in one of my presentations, it was like 7 times more expensive to get a new customer than it is to get an existing customer to keep spending more. So focus on getting your existing customers to keep spending money. It not only grows your revenue faster, but it helps you generate way more profit. Yep.
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Totally agree.
Yeah. Um, can I, let, let me just talk, we, we, before we started recording here, I got the conference ratings back from the, the, the Global Marketing Summit that I helped with. And, um, it's really fascinating to me. Anyway, that's it for today, guys. We'll see you tomorrow.
