Scalable Success: Secrets for Scaling a Business with Ryan Deiss

In the early days of your business, guess what? Your business isn't very valuable. It doesn't mean that it's not eventually going to be valuable. It doesn't mean that it's a bad idea. I'm not saying any of that. I'm just saying most businesses in the early days aren't very valuable. They're just not because they haven't done anything yet. The problem is that mentality, like that startup founder mentality that is absolutely essential in the early days of a business is the very thing that will hold you back.

Hey, I'm Joe Fear and welcome to the Hustle and Flowchart podcast. This is where we talk all about building businesses so they give you the freedom and fuel for your life. I'm not here to help you build a billion dollar business, but I am here to help you create a business with systems that work for you so you can make more money than you need just by working part time. You know, I was a chronic Hustle mode kind of guy and I want to share my experiences and mentors I've met along the way to help you reframe things to be the most effective as an entrepreneur. I wish I had this guidance and insight when I was younger, so that's what I'm doing here for you. Please share and enjoy.

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So it's great to have you back, man. Five years it's been since you've last been on the show here.

Yeah, I figured every five years is. Is, you know, is nice. Like. So I guess I'll see you again in like 2029.

Oh, yeah, yeah. The stars align. Something. Yeah, no, we're. We're making it happen before that. And dude, props to you. At the time of this recording, just days away from TNC. 2024. You're doing that in Vegas. What Richard Branson headline.

Yeah, yeah. Gotten Richard Branson back. I'm excited. I feel like this is the first, like, you know, Traffic Conversion Summit had its biggest year ever in and for those who don't know, it's a. It's a large marketing event that my business partners and I started back in 2009, I think, and ran that event for about a decade and then sold the event in 2019 to a group that was a large, you know, big, massive, like, events acquisition company. And we were like, this is great. They can help us scale it. And then obviously, I think we all know what happened in 2020. And then so we're like, okay, 2021, we're coming back. And then that was right when sort of like Delta spiked up again. And then, you know, 2022 is like, you know, so it's been kind of a slow build, but I feel like this is going to be the year when it, you know, firmly does real re establish itself as the. Just the best freaking marketing event in North America.

I'm stoked for it. I mean, I'm unfortunately not attending this year. I just had a baby, so it's like, things are good. Excuse. Yeah, it is. I swear it's true. But yeah, man, I mean, TNC was always that. That event every single year. And I know Matt and I previous co host, business partner, started all the way from Austin days. And I remember when it was tiny. I forget the hotel out there. I can visualize it in the bar and everything where everybody was at at night. But good times, man. I'm happy it's still going.

Me too. Me too. Don't own it anymore, but we still actively participate because I still love the event and believe in the community. So for sure, it's great.

I guess in the last five years.

You'Ve released some books. I mean, a whole bunch of stuff has happened, but, like, maybe catch up tldr, if it's even possible. What's changed in the last, I guess, handful of years here? And then where do you think it's setting things up to go along with your book, which we'll talk about as well?

Yeah, I mean, so I'm a marketer. That's my brand. That's what I've generally been known for. The dirty little secret is that for the past five to seven years, I pretty much just played a marketer on tv. I haven't really been the one in the trenches doing the marketing. And so we have Traffic and Conversion Summit, digitalmarketer.com, which we still own and I am still the face of, is still one of our significant portfolio company holdings. But the truth is, I've always been an entrepreneur. So I identify as a marketer because I've always done marketing, but really I'm an entrepreneur. I learned marketing so I could scale the businesses that I created. And I've always had entrepreneurial adhd, so I've always been in the business of owning multiple businesses at any given time. We've always had a holding company model, a portfolio company model, something again, I know that Roland has almost certainly talked about here, but my kind of my brand, my world, everything I talked about was around, you know, was around marketing. And really kind of the big shift that I've made is shifting to talking less about growth and more about scale because I learned, and I've had to learn in many cases the hard way, those are not the same. And it's exciting because I'm back. I'm talking about the kind of stuff that I'm doing, you know, which is fun and it's great because now our entire business model is we want to engage with entrepreneurs, we want to share with them, we want to give them all of our best stuff. But at the end of the day, we're just hoping to do acquisition deals and private equity. Everything I do right now is basically just a front. It's just a front for private equity.

It's a trapdoor. And then. Yeah, no, it's a great one, man. And I love what you're doing. You have the new book Get Scalable, which is epic. I mean, the thing's a playbook and it's a user manual for people. Exactly what you're talking about. I would imagine it's a smart trapdoor because you're getting smart business owners in there who want to scale, which I do want to hear the difference between growth and scale in Your terms. And then I want to dive into some of the struggles maybe of that transition that you faced and some common challenges people face too.

In terms of the difference between growth and scale, I mean, growth is the increase of a particular metric, right? And so we could talk about growing traffic or growing leads, the number of leads we're getting. Typically when we talk about growth, we think about it in terms of growing revenue, growing sales, and that's obviously an important aspect of business. We want growth. The difference, though, between growth and scale is scale is actually increasing capacity. And very often business owners get stuck, entrepreneurs get stuck, because we're trying to grow at a point where the business itself is no longer allowing for that growth. We have bumped up against the ceiling that is the business today. We are now, you know, we are expanding within the jar that we have, and we can't go anymore. And this is when companies start to lock down. This when business owners get frustrated, this is when burnout happens. And it is just a fundamentally different set of skills to grow a business than it is to scale a business because one is increasing existing metrics and the other is increasing overall capacity. And yeah, that's a hard earned lesson that I've had to learn over the years.

I was going to say the last five years, five to seven, like you said. Sounds like it was that happening, right? Like you had this glass jar, probably a bunch of glass jars. Walk me through some of the challenges you might have faced during this whole transition. Then I wanted to start diving into some of the principles of it all.

Well, the turning point for me happened at the end of 2016, because in 2016, my business partners and I had three different companies simultaneously on the Inc. 500 and 5000 lists. So three of our portfolio companies had made this list. And that sounds really cool. And even now, when I go and speak at events, I'll be introduced as like a Multiple Inc. 500 founder. It sounds really cool. Here's the backstory.

Within about three months of appearing on that list, one of those companies had completely flatlined and was struggling mightily. Another company was in an absolute tailspin. And we had to walk into a building and lay off 180 people, you know, a couple weeks before Christmas. And that business ultimately wound up crashing and burning and failing. And that's where I said, like, okay, I need to learn the difference between growth and scale. Because obviously growth wasn't enough. Growth clearly wasn't enough. And I've since come across this study. Do you know what percentage of Inc. 5,000 businesses fail within five years.

Oh, man. I think I read it in your book, but I already forgot the percentage. But it's high. I know that might.

Yeah, it's with the five year failure rate of an Inc. 5000 company. This is not like just me making this stuff up. This is the Kaufman Research Institute in coordination with Inc. Magazine. Okay, so Inc Magazine, like, gave their data, which to me is completely crazy because the failure rate is 2/3, 67% of them fail. Now you may be thinking, oh, but that's okay, because don't most businesses fail? No. What people don't realize is that the actual five year failure rate of a normal business is 48%. People think, oh, 90% of small businesses fail. That's true. After 10 years, you've got a 20% failure rate in year one and then is a steady 10% failure rate each year after that. Right. I mean, so that's just kind of the numbers and how it works out. So Inc. 5000 companies actually fail at a higher rate. And so if that doesn't prove that growth isn't enough, you know, I don't know what is. And for me, that wasn't just academic. Like, I lived that statistic. Three companies, one of them succeeded mightily, two of them failed. You know, one of them was sold disadvantageously a couple of years ago and the other one absolutely crashed and burned.

And so, wow, is that, Is that pretty? And obviously it's common with the Inc. 500, like right on par. But that's crazy. They would publish a stat for one. And it's interesting. It makes me think, like, are these companies, were they out for just massive growth to get that notoriety, like some, some other thing happening to get on that list?

It's the Inc. 500 fastest growing companies in America list. It says they're the fastest growing. It doesn't say anything about are they profitable. It doesn't say anything about are they, well, systemized. It doesn't say anything about are they building scalability within their infrastructure? It doesn't say any of that stuff. It doesn't frankly even say, are they doing it from a bootstrap perspective or do they raise money?

Right. I was gonna ask that.

It has nothing to do with the actual quality of a business. I mean, if you want to distill down in its purest form.

What would speak to a business truly being like a quality business that somebody would want to own comes down to one metric. And that one metric is distributable cash. Distributable cash. Like, do we have Cash available for distribution. Now, you could choose to reinvest it. Okay, that's fine. But, like, is there actually cash falling out of the bottom of the business? And a lot of people like, oh, no, we're investing. It's like, yeah, but if it's all just expenses, that's not a reinvestment, right? A reinvestment is. No, we actually generated a profit and we're going to put it into more growth. We're going to put it in, you know, additional channels. We're going to put it in new product launches, you know, line expansion. Like, there's all these different place you could put it that'd be reinvestment. Or we're going to put it in our freaking pockets, which to me is the most beautiful thing. It's supposedly why most of us got into business in the first place, but it doesn't ask anything about distributable cash or profit or EBITDA or any of that stuff. It's just, did you grow?

It's like a vanity metric and not knocking it. It's impressive, obviously, but yeah, it's not the full picture. And I think maybe that's hindrance to a lot of entrepreneurs who are getting started or maybe looking for growth or scale. Maybe scale is really what it is. And. And yeah, you've lived it and obviously now that you've transitioned more to. You're operating at this whole scalable kind of mindset here, obviously boots on the ground, but also kind of in the. In the clouds at the same time, I would imagine. And as a single person doing business alone, like, this is what I think about all the time. There's so many of us that are just kind of in our own little bubble, you know, either even if we have a remote team or not, it's tough to almost like, think of that scale outside of us. You know, we get stuck in that trap. And I know you call that what the Founder's curse is, that a little bit more responsibilities get stacked on our plate as business owners and things start to happen in the business and they're not always great.

Yeah. So the Founder's curse states that the more valuable you are to your business, the less valuable your business is.

That's probably hitting people right in the middle of the forehead right now.

And this is very hard for entrepreneurs because we want to be valuable. And in the beginning, when it is just us, we are the most valuable person in our business, period. End of story. Right. And in the beginning, that's how it's got to be.

Right.

But in the early days of your business, guess what, your business isn't very valuable. It doesn't mean that it's not eventually going to be valuable. Doesn't mean that it's a bad idea. I'm not saying any of that. I'm just saying most businesses in the early days aren't very valuable. They're just not because they haven't done anything yet. The problem is that mentality, like that startup founder mentality that is absolutely essential in the early days of a business is the very thing that will hold you back when it comes time to scale. So in the beginning, I mean, I want to make sure that I'm very, very clear on something between basically zero and a million dollars. The only thing you should focus on is growth and you should try to grow from zero to a million dollars as quickly as you possibly can. And until you get to about a million dollars in revenue, there's probably no point in thinking about most of the things that I write about in my book. It's probably not. I mean, if you want to buy the book so that it's there when you need it, fine. But if you're just getting started, don't read my book. It's not what you need, it's what you need to scale, not what you need to grow. But the problem is, is that if you apply the same standards and the same tools, the same maps that allowed you to grow in the early stages, at the later stages, it absolutely is going to flatline. And what we talk about is it's the difference between, well, most businesses, all businesses have an operating system. The issue is that in the early days they're running on what we call a U operating system. That's because the operating system is you and you are the operating system. You are the business, you are doing everything. And in the beginning, that is exactly how it is supposed to be. But as that business grows, as that business scales, as it becomes more powerful, a UOS is not a powerful enough operating system to continue to grow this business. It's like trying to run like the most modern high level video graphics games on Windows 3.0. If you try to do that, it's not going to boot up, it's just going to crash. You're going to have a blue screen of death if you're old enough out there to remember that. And that's what happens to a lot of businesses. They literally crash because the operating system is out of date. And so that's a big part of what I'm trying to help business owners do is to come to the realization that the more valuable you are to your business, the less valuable your business is. And that's a good thing. That means that you've done what you were supposed to do. You did your first job, you grew the company. Now you got a new job. And that is to scale the company. But it's a fundamentally different job. It is not the same job done bigger and more. It is a different job.

And that's where that whole perspective shift. And I like that you gave a metric of a million dollars, and obviously that's. That's a pretty good, probably average metric that we can at least look at and see how well are we growing our company as the UoS and probably not saying that, hey, we don't have an assistant to help us out or something. But yeah, in terms of now scaling past uos uoperating system to more of like the scalable os, obviously it's fundamental mental changes, structural changes, team changes. Like what's that? It's got to be friction right there and then. Like most people, I guess, probably don't even understand when to make that shift, if ever. Like, what do you see during that point? Like the breaking point? What are some signs that people that are pretty obvious, maybe not the revenue side, but hey, you got to make that shift to now a scalable os.

If. Yeah, that's a great. There's a couple things. If you find that you're just completely burned out and overwhelmed and you're having to jump in, put out all the fires, then you might need to upgrade your operating system. If you find that the more that you're hiring people and they're actually. You're actually as a company getting less done with more people than you were before, then you probably need an upgraded operating system. If you find that you're hiring people and everybody that you hire is just a miserable failure. They seem smart and they seem nice during the interview process, but then you get them in and now all of a sudden they seem really stupid and ineffective. Probably you've got an operating system issue, not a people issue and not even a hiring issue. If you find that as your company scales, as your sales grow, you are personally taking home less money, you probably have an operating system issue. So all of these things factor in, and it's because you're just in the swamp of scale. You're in that messy middle. You're in that too big, you know, too small to be big, too big to be small kind of stage. And every business hits it and the reason that I say a million is because most entrepreneurs can grow a business to a million dollars and never have this issue. You can grow a business to a million dollars, have a couple of employees, be for the most part self employed. And I would draw a distinction between being a business owner and being self employed. And I don't mean to disparage being self employed, but if you're self employed, you, you're the business and the business is you, you don't have an asset that is sellable separately from you. So you don't really, you have a business entity perhaps, but you don't have a business that is separate from you. That's a really important distinction. But if you just want to have that, I mean, you can go and make a million bucks, probably drop 750 to the bottom line, 800,000 to the bottom line.

That's a great lifestyle, lifestyle business, right?

Yeah, exactly. It's a great boutique, it's a great lifestyle business. It's not going to be a sellable business and it's not going to be something you ever get true freedom from. You will always be working in that business. You will never have true freedom from that business. It will never pay you dividends, it will only ever pay you a salary. And so I think that's a really important distinction. So for those people who want to grow and build a business that's separately separate from them, really we found it's between like 2 and 6 million just across the board. Between 2 and 6 million. That is when you are full blown in the swamp of scale. You know, you probably have, you know, 10 to 15 team members. Nobody really knows what the heck is going on. You don't know, nobody knows what the numbers are. You've got a lot of people trying and so they're flailing around trying to 100 different things but nothing's actually getting done because nobody's talking to one another and just becomes a giant, giant mess.

And that's where I'm imagining, yeah, profits are dwindling. You know, we're spending more on people, on maybe random tools or processes that are ineffective, not being used. Whatever the case, we're developing things like SOPs. Like, I know you talk about this and I've definitely been down this route back in the day with Matt as business partners is like, hey, let's map everything out in the business from start to finish. And we're all going to look at that manual, that pretty Google Doc that we made with all the library of goods and hell no that doesn't happen. It's a great theory. And yeah, the distinction is great because it reminds me of Roland as well when he talks about the dancing bear analogy. And I think it's exactly what you're saying. It's kind of like this lifestyle business, the uos. It's very much dependent on you dancing to bring that cash in.

Yeah. And bears are big, bears are powerful, bears can be very intimidating. But at the end of the day, if the bear stops dancing, the bear doesn't get fed. I love it.

And so it's the difference between, you know, being the racehorse and owning the racehorse. Right. And I think that that's an important distinction that, you know, people are going to cheer for the racehorse and they're going to cheer for the jockey, but at the end of the day, it's the owner up in the box that takes home the trophy. It's the owner up in the box that takes home the prize money. And that's why you want to be an owner. You don't simply want to be the operating system.

So let's break this down. I want to break down the components of what the scalable OS looks like. I know it's what, six parter, and maybe we can focus on like the first couple, just to kind of get the wheels. Wheels going.

Yeah. The first thing, if somebody, if you want to begin to operationalize your business, if you want to build out a scalable OS transition from the UoS, is you've got to just answer the question of how do we capture and create value? Like, a simple way to put that is just answer the question, like, what do we do here? And that sounds so basic. But if I were to ask most entrepreneurs, how do customers happen? How do clients happen?

I would not get a straightforward answer. They might be like, oh, well, I mean, you know, we run ads over here and we do some event sponsorship and, you know, people fill out this form and then our salespeople follow up with them and, you know, we sell them some things and, you know, that's kind of generally how it happens. So they might be able to tell me how it happens, but they can't show me how it happens. Similarly, if I were to say, how do you deliver value? Like, once a sale is made, how do you serve that customer? How do you serve that client? They could be like, oh, well, I mean, we've got all this amazing stuff that we do and we've got this extensive product line and this proprietary resource, like, okay, great, but how does it happen? And because they haven't taken the time to pause and answer those two questions. How do we sell new customers and clients? How do we serve them once we have them? Then they don't actually know how their business creates value. And this is the first and most important question that every business owner must answer. And if they want to have an operating system, how the heck do we create value? And this is where I think every other operating system gets it wrong right Now I don't mean to like disparage other, you know, but I think like, let me, let me throw out a couple of names. The book Traction by Gino Wickman is a phenomenal book. Gino is an amazing person. I think it's a great book and I think so many of the ideas in that are powerful and important. But I think where it gets it wrong is from a sequencing perspective. Because step one is to basically do a bunch of goal setting. And I found if you do goal setting without first answering the question of how the heck do we create, capture and create marketplace value, you're. I mean, at best it's a guess, at worst it's kind of arrogant, right? So goal setting is the first step. Then you've got books like E. Myth, which I know you've had Michael Gerber on. I love Michael. I think that is a. That book changed my life. I think it's amazing. But it starts with like let's create SOPs for everything. And as you pointed out, pausing to build standard operating procedures and checklists for each and everything that your company does. Number one, practically, you don't have time. Your team members don't have time. If you ask your team members to do that, it's gonna freak em out and piss em off. Here's how I know I read the E. Myth. This is about a decade or so ago, probably like 15 years ago at this point. I remember reading the E. Myth on a vacation. I came back from the trip and I saunter into my office and I'm like, everybody gather round. Which by the way, anytime you do this after a vacation just, or a, you know, mastermind, you just know whatever the words that are about to come out of your mouth are probably a giant mistake. So there's a message there. So I'm like, alright, everybody gather round. Here's what we're going to do. Effective immediately, I'm not going to approve any more hires, we're not going to green light any new projects, we're not going to do anything new until absolutely everybody in this company has documented everything that they do it's like, it's going to be great. And first thing, everybody freaked out because they're like, I guess we're all getting fired. So I had to come back and be like, no, no, no, it's because I want to make you more efficient. Then they just get pissed off because they're like, so in addition to my work, you want me to take time out to document everything that I do, even though I already know how to do it? Yeah, once we got through that, it took about a month, but everybody did pretty much do it. And then, yeah, I printed out all of these checklists and all these spreadsheets and I put them in a three ring binder with tabs based on the department. And I remember looking at it being like, oh, we did it. And I put that binder on a bookshelf and literally never looked at it again. When we moved offices after Covid, I found it, it was literally covered in dust. So step, step one is not to do goal setting. Step one is not to document every process or sop. Step one also is not to hire an operator. It's another big mistake that people make. They're like, oh, I know I need to hire an operator so I don't.

Have to do it right? So I can just go.

He's like, oh, now I don't have to do any of this stuff. Now the reality is, if you have any team at all, you don't have to do most of it, but you kind of do need to be a part of it because we have to extract your brain and put that into this operating system. So if you're not a part of this process, then what you're gonna have if you bring in an outside operator is one of two things. Either, number one, they're going to implement their own operating system and it's not going to be your operating system. It's not going to be the thing that makes your company great. And it's either not going to work and you're going to fire them, or you're going to be frustrated that they're not doing it, quote unquote, your way and you're going to undermine them and they're going to quit, or they're going to be ineffective and you're eventually going to fire them. Or they don't even attempt to implement their own operating system. They just sit around waiting for you to tell them what to do. And now you basically have a six figure, glorified executive assistant.

So we don't want to do any of those Things, Any of those things. The first step is to just sit down and you go through this process that we call value engine mapping or business process mapping that. It sounds really complicated. It's the simplest thing in the world.

I love this, by the way.

All you got to say is, like, there's two things we do. We sell stuff. We serve our customers, and clients we sell and we serve. Those are the two things we sell and we serve. The combination of those two things is how value is created. That's what every business does. You sell people stuff, you give them the stuff you sold.

Business, business.

Congrats, business. So let's start with how do we sell them? Let's start with growth. And what you do, step one is you say, well, what is the first step? How do people find out that we exist? And for most businesses, it's fairly simple because most businesses really don't have all that much diversification in terms of how they get customers or clients. It's like, well, it all comes through referrals, or it all comes through a couple of trade shows, or it all comes through Facebook, Instagram ads, or it all comes through this one list source that we give to our sales reps right now. If you've got a bunch of ways that you create that awareness happens, what's the one that if you were to lose it tomorrow, you would not want to go to work the next morning.

And I'm sure most businesses have like, what's that one? It just stands out.

Yep. Yeah, you got it. And so what I want you to do is to get a stack of post notes, and I want you just to write that one thing on a single post it note. Okay? Just set that aside. Now when you say, okay, what's the last thing? So we know the first thing, the first thing is Facebook ads or it's trade show or whatever. Now what's the last thing? The last thing is really simple. This is when they give you the money. Okay. The deal is closed and they actually gave you the money. A prospect has truly become a customer. Client. I get it. Once somebody's bought something, they might buy more stuff down the road. Let's constrain it to just that window. Great. So we've got the beginning and we've got the end. Now once you go back to the beginning and say, okay, we've got this first step, then what happens? Right, so somebody clicks on a Facebook or Instagram ad, then what happens? Well, then they go to this landing page.

Great.

Then what happens? And each time you answer it Just write a new post it, note, stick it on the whiteboard, and just after a while, you can kind of connect the dots. What you will have by the time you're done is a visual picture of how customers happen. Congratulations. You now visualize the customer acquisition process. Then go and do it with the fulfillment side, with the serving side. Now the good news is step one of the fulfillment piece is the last step of the growth piece. So you already got that much down. Now the last step, let's assume for right now, it's just this is when you're going to ask for a testimonial or a referral.

That's going to be the last step in the fulfillment process. Because again, for many people, if you've got clients, you're like, I don't want this to ever end. But let's just say that the last step is that point at which you know you've delivered enough value that you're prepared to ask for a referral. That's going to be your last step. Go back to the beginning. Then what? Then what? Then what? You're going to have a visual picture of how this whole thing works.

I love the concept, man, because this is something most people, including myself, for many, many a times or when starting a project and visualizing it is like, okay, yeah, what's the journey look like? And then the key words are then what, then what, then what? It's like that. It's like a magic phrase that you're mapping out the journey from start to finish. Hey, I just want to pause this episode really fast and shout out a podcast that's Also on the HubSpot podcast network, the audio destination for business professionals. This one's a podcast that's hosted by someone I followed for years. Name is Donald Miller, is the whole story, brand, book and all the different stuff online. He hosts the podcast called Business Made Simple. The premise is to basically take the mystery out of growing your business. And he recently had on. One of the other guys I follow is Alex Hermosi. And right at the beginning of the year, they're talking about facing uncertainty in your business. And Alex and Donald, they talk about different ways, four different ways to basically shore up your business to. To ride the uncertain times that inherently are the ones that we're living in in 2024. So make sure to go check that out. Go listen to Business Made simple, that episode with Alex Hormozi, but also the other ones. Wherever you get your podcast, if you're looking to unlock more income and freedom, then I Want to tell you about Kartra. It's the ultimate all in one business platform for online success. Now, with Kartra, you can create stunning pages, funnels, automate your marketing, and even launch online courses. There's a ton more. It's all in one place and it's one affordable price. So Kartra has every tool you need to scale. It's very simple to use. Now, right now, you can get started for a free 30 day trial. Plus you can take off 20% off your first payment when you go and visit www.hustleandflight flowchart.com Kartra Again, that is hustleandflowchart.com K A R T R A I would like to highlight as well, because I know I've been guilty of this and I'm sure most are on the fulfillment side. On that second journey that you just mapped out. You know, you have a digital product or something, you ship it and then you just think, we're good. You're like that. That was it right there. And you said, now the ending point. Let's make that a testimonial referral. Because now we have the cojones to actually ask for that referral or testimonial, which most of us don't do. You know, proactively at least.

Yeah. And so as you're going through this process, let's say you're doing this by yourself. So you're hearing this and you're like, all right, this is a good idea, I'm going to do this. But you're a little nervous to do this with your team. So you're going to do it by yourself. You're going to go through this and there might be a point in the process where you don't actually know. You're going to say, okay, well, then what happens? Gosh, I'm not sure.

If you're the entrepreneur, the CEO, don't feel any shame.

When you say I'm not sure, because what that actually is, is that means your team is doing something without you. That's a good thing. Remember the Founder's curse? The more valuable you are to your business, the less valuable your business is. That's a point of value. So I want you, if you come across and you don't know, write a question mark on a sticky note and put it there anyway, that's going to be a little prize that you get to unwrap later when you go through this with your team and you say, what did I miss?

That's good, right?

What did I miss. And you're going to see, you're going to find that there are lots of things that they're doing that you didn't know about. You're going to find that there are so many people in your company who are like, I didn't know that. That's how they did. That's how we did this. So that's step one. Now, believe it or not, once you've done that, the rest of the operating system becomes really simple. Step two is go back through and do an audit of those business process maps or those value engines, what we call them. Go stage by stage, post it note by post it note and say, okay, which of these do we really want to not screw up? Like, which of these, if we mess up, it's like really bad. Which of these is like, we better get this one right. This is kind of a do or die. Those are what we refer to as your power stages. For those, write an sop. For those, create an audit. For those, document the snot out of it. Now, what this means is probably for most of the businesses that we work with, either as clients or in our portfolio company, the number of actual SOPs, the number of standard operating procedures that you actually need as a company, this is when you're sub like $30 million in revenue is usually 10, 15 tops.

Okay.

Yeah, tops. Because you don't need to create an SOP around. How do we request time off? People will figure that out. Okay, you don't need to request and build SOPs around, you know, our hiring process. You can do that if you want to. But realistically, how many people are you hiring? Is it a critical component of the value creation process? If not, leave it for later. Yeah, okay, leave it for later. Let's just capture those playbooks, is what we call them, those SOPs and those checklists based on the things that truly matter. So in general now what you could say when you're going through this with your team is, okay, what are the ones we don't mess up? This one. Okay, who does this right now? Charlie, that's you. Cool. The next time you do this, will you just write up a playbook? Because number one, we got to create some duplication around this. We got to create some documentation around it. We may need to get you some help, but that's kind of big. So that's step two. Step three, I'm going to go through these really quickly because it's simple. Go back, same audit, but instead of saying, how do we do each of these things, we can create playbooks around them. Ask the question, who does these? Who or whom in the team is uniquely accountable for making sure this is done? Well, now what we have is we have a spreadsheet. We call it our high output team canvas. It has every single team member listed by department. And then when we go to one of these little sticky notes, we say, who's responsible for this one? That's Bob. Okay, I'm gonna go and write a little statement, what we call an accountability bullet for that next to Bob. And you go through each and every one of these, and you start assigning these accountability bullets to different people based on who does what. And you go through this process, and you're gonna see a couple things. You're going to see. Number one, there are some people who do who are responsible for basically all the value creation of the company. And if you've got a small company, what you're probably going to see, who does this one? Me. What about this one? Me. What about this one? Me. Me again. Me again. Me again. Now you get to ask yourself, which one of these sticky notes do I want to hand over first? And so it actually begins to build out a hiring plan, because you're not like, hiring for some amorphous role. You're saying, who would do this particular sticky note right here? Right. What does this person look like? Who does that? And maybe that person's already in your company. I mean, I know we've done this. I remember going through this process with one of our clients, and they had all of this stuff under their name, and I was looking at all these other names of human beings that they were paying salary to, and it's like, why aren't these people doing anything? It's like, oh, yeah, I guess I haven't handed this over yet. They had hired teams full of people, but not actually handed over any of the work.

So now we're able to say, okay, Jan, you now do this one. You're responsible and accountable for this. And guess what? Here's the playbook for how to do.

It and the fact that you're structuring it this way rather than, you know, hey, let's build all these systems prior to actually figuring out what's actually truly important to scale this company from, let's say, a million up or whatever the target is. Yeah, yeah.

So just to finish off. So that was step three. Step four, go back to the value engine. Remember, the questions we've asked so far is, how do we do it? That's where you create your playbooks. Then you say who does it? That's where you assign out the critical accountability bullets. The next step, we're gonna say, how do we know it's working? What are the metrics that we need to track to know that people are flowing through this process? This is now how we begin to build out our scorecards. And so we have a company scorecard that each one of those little post it notes is going to have maybe a metric, maybe two associated with it. And so I've got a scorecard where I can start at the top and that's going to be that initial point of awareness, go all the way to the bottom until the last one is always how many new testimonials or referrals.

Did we get the end result? Yep.

And I can now see I've got a scorecard that's not vanity metrics. Every single one of those metrics I know ties back to a critical aspect of the value creation process. Step five is just how often do we need to meet to discuss these, you know, and who often is doing so? That's your meeting rhythm. And typically we're going to meet once a week. But my rule is no scorecard, no meeting. So if we're not going to meet to discuss data and numbers, unless it's like a specialized like planning type deal which happens, then we're not going to have a standing meeting. So we're going to meet to talk about the scorecards. That's kind of step five is what's that meeting rhythm? And then step six, the last piece gets into actual goal setting, right? Gets into the things around like what's the company purpose. Gets into things like our values, gets into things like what are our strategic anchors, meaning those critical things that, those competitive advantages that we have that those strengths that we want to play to. So all the stuff that everybody does in terms of mission, vision and values, it's important and you should do it. You just need to do it last. You don't need to first do it last. Get clear on how you create value, then start talking about your values.

Because at this point, if you're doing this whole structure here, you should be creating a lot of value for at least enough people to get a force you to scale past yourself from potential burnout, spinning in circles, being in your own little bubble there. Now you have very clear metrics that you can build out. And I love the scorecard concept. Rather than putting vanity metrics, what are my YouTube subscribers views or all these things that a lot of people will check in I see them with some teams that I consult with and that's the standard kind of way of reporting.

Based on department or any of that stuff. Do it based on the actual customer journey, the flow of journey from, you know, from that value creation. If other teams want to track other things, fine, but I don't need to look at that. And so we'll have some people say, oh, I need to look at this right up. Great, you track that, you track that. But this is all I want to see. And so for me, you know, now I've got a bunch of different companies, but each one of those companies has a singular scorecard that tells me a story about our value creation process. You know, in a given quarter, we might select a couple of metrics that we're really going to look to optimize. Those get pulled up at the top. That's our North Star metric. So I can just look at those. You know, they're manual scorecards. And so people are manually saying red, yellow or green. If I see a bunch of green, I know it's good. If I see some red.

Where is the bottleneck within this particular.

Within this particular value engine? How can I help to fix that?

I love it. Yeah. So I could see this cutting down a ton of meetings. It's focus meetings with the right people, right intentions, and you're not planning next steps until that's super clear. Obviously, even prior to the meeting happening, knowing why we're even meeting in the first place, it all makes sense. So sequencing at the end of the day. Yeah, the git scalable system. It seems like sequencing is really the key to everything. And I would imagine with the sequencing you're getting more completion of people actually doing this system rather than burning out, probably mapping everything out over planning or maybe thinking about the mission vision, wherever they're going with the North Star, until they have some concrete vision of how stuff's actually working right now and where it can expand to.

Yeah, we find when we work with clients in our portfolio companies, they're so thrilled that people who have gone through this other kind of processes a number of times, they're really happy when we don't start with goal setting and we don't start with like, what's your company vision? Because I think entrepreneurs who are actually in the trenches realize that a lot of that just kind of just becomes arts and crafts. You know, it's like, let's build motivational posters and vision boards and all this other stuff. And I'm not saying that it doesn't have A purpose and a place. But that's never actually made anybody any money because it doesn't create any real value. Right. You and your team going through this like masturbatory action of deciding like who we are and what we're going to be all like. This navel gazing garbage creates no value whatsoever for your customer.

What?

Pretty tight customer. Yeah. Is when you get them number one. And then when you serve them, when you sell and you serve, value is created. So let's start there and what we found. That's so cool. And you know, listeners, if you actually go through this exercise, you will fall in love with your business all over again. Because you go, oh yeah, that's what we do. And you'll have people in your company and they'll be like, well, but what about this other thing over here that I do? You go, well, how's that going to fit in? Show me that.

Where?

If I write that on a post it note, where does it connect into the value creation process? I guess it doesn't. Okay, well we don't have to do that anymore then. Or we need to get it connected because right now you're doing work that isn't driving value in the company, which means you're not being set up for success. So like let's get it integrated or let's find something for you to do that does create value. And so the level of clarity that it creates, the simplification that that tends to occur. Because as businesses scale, we try lots of things. Some of the things work, a lot of things don't, but we keep doing everything. And so it just strips it down to the how do we create value? And once you understand and ask that, once you answer that question, the next steps become clearer, which is good because most of us just don't know what the heck we're supposed to do next.

Yeah. Especially when we're by ourselves. But when we have a team around us and a lot of voices and ideas getting thrown around, it gets even more dangerous, more expensive, distributable. Cash goes, you know, a lot less. That's for sure. Yeah. Well, hey, so get Scalable is the book. And where can people get this book? Let's say if you are qualified, you can obviously get it. If you're not as well, keep it. Keep it for when you're ready. Where do they go? Grab that, Ryan.

Yeah, I mean just go on Amazon, Amazon.com.

Grab the book there. That'd be my recommendation. If you go to getscalable.com, we're looking at putting up a free offer, like a free plus shipping kind of thing as well. So you can kind of take your. Take your pick. But I'll tell you, we don't just in the book, I don't just say, like, here's how to go and do this stuff and describe it. I actually give you all the same tools that we use. So all of our tools, the, like, all of the different spreadsheets I talked about, the high output team canvas, we give you that, you know, our, our scorecard templates, all of those are included as well. And in the past, like, this was all stuff that we had sold in a $3,000 course.

I was going to say, I've seen some of this stuff. I was like, whoa, all right, cool.

And we literally, we shut down our $3,000. We no longer sell any of this as a course. I just put it all. Everything that was in the course is now in the book. So what you would have before had to pay $3,000 to get access to is now, what, 20, 30 bucks if you get the hardback. And the reason is, is because, number one, I know this will help businesses. I just do. It sounds cliche, but it's the book I wish I would have had back in 20 so I didn't make the mistakes of 2016. I wish I hadn't had to spend five to seven years figuring this stuff out.

So I genuinely and sincerely want to help entrepreneurs, but also I believe that if people read this book, they're going to say, this is cool. Maybe they want our help actually implementing it, and maybe we wind up doing a deal. That's my goal. Like I said, it's all. The sneaky little backdoor secret is this is all just kind of a front for private equity. So that's the deal.

I love that you're up front. It's an ethical mousetrap, you know, getting the right people in and everyone's happy. It's okay. And what I love about this, Ryan, too, is that it's. It speaks to the ethos of why I have this show, which is to speak to entrepreneurs. I know a lot of entrepreneurs do live in the bubble, and even if they work with a team, like we talked about earlier, but they might not be communicating, you know, the. All the stuff that's in their mind that maybe they only understand. And I see this time and time again lead to burnout or maybe, you know, like we talked about business relationships not working out for whatever reason, the vision goes away, it splits, you know, and then I mean, I dealt with that. I know you've dealt with that with previous business partners. And it can get, it can get hairy for a lot of entrepreneurs. And that's why I like to bring up things like this. What you have is literally an antidote to that. If people choose to see where they're at right now with their business and know that you can get clarity, I feel like it can prevent burnout. It shows. Heck, you don't need to work your ass off forever and think that it's all on your back.

It can and it should get more fun as your business scales.

Yeah, that's the reality.

It doesn't have to stop being fun and it doesn't have to get harder. It might for a bit as things change. You know, look, this is the journey, right? I'm never going to pretend like this is, this stuff is easy, but it doesn't have to get hard and it doesn't have to be less fun. I'm having more fun today than when my business was small and it was just a couple of us sitting around a coffee table. But what I'm able to do today, that I'm not able to do, wasn't able to do then, is literally take a 30 day vacation every single year. And that's what I want for every entrepreneur. And I want it for them because they probably need it. I want it for them because they're gonna come back from that vacation so rested and renewed with so many ideas, their business is just gonna absolutely skyrocket. And, and I want it because it's the ultimate test that your operating system is where it needs to be. So it's no longer that uos. So yeah, if you think that business has to become less fun and less entrepreneurial as it scales, I'm here to tell you it's not true. Like, we really are on a mission to eradicate founder burnout. We're on a mission to eradicate entrepreneurial imposter syndrome. We want these things to go away and we don't want businesses to get in this cycle of growing up to a point where they can no longer do it and then blowing the thing up and starting over again. And I just see this happen again and again and again. And that cycle needs to stop. There are too many businesses creating too much value in the world, too many entrepreneurs who are too under rewarded. And both of those things need to change now. We're on a mission to do both of those things.

Love it, man. Well, same mission here, brother. I appreciate you doing that. And Right before we wrap. And I know you're leading right into tnc and you're always the one that does. I think you would probably still do this, but like the trends or the latest things for everybody to notice. Can you hint at anything that you are. I promise this won't release before TNC happens. Like anything top of mind that you think is just like too good not to share.

Well, so I mean, obviously there's the AI ification of marketing and everything that's so everybody knows that. It's a bit like going up there and saying there's this new trend where water is wet. So I'm not going to pretend like that's that big a deal. What we are seeing though, that I. That I think is an interesting trend is the gutting of the middle in terms of content. And so most marketing today is built around some, some aspect of content. You're generating awareness. You know, you're either creating your own content, like you're doing right now with this show, for example, or people are advertising on that content. And so what we've seen is this massive emergence of short form content. You know, the short form video TikTok, it's been around for a while in the form of a tweet, you know, and, and then there's always been like longer form content. Whether it's a show like this one that goes, you know, 30, 40 minutes an hour, right? What we are seeing right now and what more of our clients are seeing is short form is doing really well, long form is doing really well. The stuff in the middle is not doing well. And so like the 10 minute YouTube video, the 20 minute, like what kind of used to be the sweet spot for the YouTube video, not doing as well, you know, anymore. Even the print content, like really short form kind of blurbs and then longer 3,000 word pieces, but the stuff in the middle isn't really there. And I think what we're seeing is consumers, businesses, we're using short form content to graze. But then once we found somebody who's our source, we want to go all in and binge everything, right? We want to like Netflix binge this thing like the entire season in a night.

And so what we're seeing is people very casually dating with our content and then wanting to go all in. And so if you don't have the long form, you're gonna miss the binge. If you don't have the short form, I think you're never gonna attract. You're gonna have a really hard time attracting consumers. Today, new audiences. And if you're just living in that middle, I think you're dead. So just. That is kind of one of the big things that I will hint at.

I love it. It's perfectly right. What I've been kind of preaching without those words, but saying, hey, podcasting, if you do it right, you can capture that long form, but then chop it up into all the pieces. It could be the hub of your marketing. I'm seeing it. Yeah. YouTube's helping out on that front to push all those different formats like you just mentioned. Long, short form, all that fun stuff. So cool. Well, I'm going to keep that close to me until.

You share that on Monday, but. All right, get Scalable. That's the book. Go grab it. Amazon. Ryan, is there anywhere else people should go follow you or grab something else that. That you got out for them?

Feel free to follow me on Twitter. I'm twitter.com ryandice and. Or I guess X. I don't know. I'm still calling him Twitter.

I don't care.

That's me. You know, that's me talking. I don't have anybody tweeting for me. And if you want help implementing any of this stuff, Scalable Co. Scalable Co is the company. And like I said, we're in the business of just giving people all the tools and resources they need to do it themselves, because we know that some will say, can you just do that thing for me? And maybe. And we'll go, yep. And in the process of doing it for them, we're essentially getting paid to diligence. A company is really what it is, and so smart. At some point, we may say, hey, you want a business partner, you want an investor? And so that's kind of. That's the game that we are in. So if you wind up buying the book, if you wind up hiring us to help you implement the stuff, don't be surprised if you get a little tap, a digital tap on the shoulder, seeing if maybe you want to partner up together.

That's cool. All right, go get it, y'. All. Ryan, I appreciate you and what everyone's doing over there in the Scalable team, and it's gonna make waves, man. So have fun at TNC and we'll chat before the next five years or whatever it is. All right, let's make it. Let's make it.

Let's make that happen. I appreciate you, buddy. Thanks for having me.

Thanks, man. All right. All right. That's what I got for you today. And remember, it's not all about living to work. It's all about working to live if you need to do the work. But you know, work can be fun and it should be fueling for your life. So if you enjoyed what you just heard, if you got some nuggets of wisdom that you want to share or you're just noodling on right now, please go tell others. The way that people find this show and how you can help others get their aha moments is through word of mouth. So if it is telling your friend, telling your family, send an email to your list writing a review or whatever it might be. Everything helps. So thank you so much for listening to the Hustle and Flowchart podcast, and I will say see you next time.