How Elon Musk Makes His "Impossible" Goals POSSIBLE? Feat. Dr. Benjamin Hardy

How many of you know Elon's five step algorithm? Oh, this is good. Okay, so as you probably know, Elon is actually an entrepreneur. He has an impossible goal. Who knows what his impossible goal is? Who hasn't read the book yet? Mars. Right. And so we're going to go into the psychology of how your goal, every one of you, is driven by goals. This is fundamental. It's fundamental to human psychology. Right? We're all driven by goals. Most people are unclear of their goals and their goals are shaping bad psychology and then bad system design. So Elon is a phenomenal system designer and scaler of those systems. That's what he's attempting to do, right. With the United States. So he's an engineer who's applying engineering skills to a system, the United States, and obviously to his businesses to reach an impossible goal, which is Mars. Right. You can't scale a complex system. There's too many things getting in the way right now. So his algorithm is five steps. The first one is question requirements. We'll go into a lot of things here, but for all of you, you have too many false assumptions and false requirements about what it takes to achieve a goal, maybe even to scale your company 10 times or 100 times. You have a lot of false ideas of what that takes. I'll give just one quick example. There's a guy who, and I wrote about him in the book, he's a 22 year old guy and his quote unquote impossible goal is to own a European soccer team. And I said, when are you going to do that? And he said, I'll do that by age 55. So I'm like, okay, I did the math, that's 33 years. And so I said, what if you actually just move the timeline to age 30, right. Why 55? And this is one of the things that you're going to understand as we get further into this conversation is that most of your goals or your timelines are extremely arbitrary. They're based on false assumptions, based on false requirements. And so I just said, what if you just moved the goal to age 30? And he was, all of a sudden he was like, well, there's so many things that I think I need to do before I can get there. Right. And so part of using time as a psychological tool, part of what Elon Musk does, he actually said, if a timeline is long, it's wrong. So part of bringing a deadline to an impossible level is that it strips out all those false requirements. Right? So his steps are false requirements. You got to question all the requirements you think are there for the goal. Most of the things that you think are required to scale or to achieve maximum results fast are false requirements. Number two, he says, is remove steps of the process. Remove steps, remove. You know, think about when he walked into Twitter, right? He's removing components. He said, if you're not regularly adding stuff back in, you're not removing enough. Right. So most systems are overly complex. They're not ready to scale. Most of your businesses have too many parts, too many products, too many concepts. So if you're not removing elements, if you're not removing. If you're not regularly adding stuff back in, he says you're not removing enough. One of his core quotes, which is like a core quote in the book, is that the most common mistake of a smart entrepreneur, of a smart engineer, but I'll also say of a smart entrepreneur, is to optimize something that should not exist. Seriously. He says the most common mistake of a smart engineer, and I would say a smart business owner, is to optimize something that should not exist at all. You're spending a lot of time optimizing something that from a better perspective, from a better frame, it just becomes irrelevant. It becomes noise, not signal. So that's number two. So question requirements. Remove parts or processes. Number three is to simplify and optimize. Right. So you want to simplify your system on a very core component and scale that the final piece is, or the fourth piece is accelerate learning cycles. In psychology, we call this deliberate practice. You want to accelerate your learning on one piece. Right. The core bottleneck in strategy, they call it the crux. And then from there you automate and you systemize. So those are the five steps.

Yeah. You know the Peter Drucker line where there's nothing more useless than doing really well that which need not be done at all.

I would say this is a gut check. You know, majority of things in businesses and life is that, yeah, we're optimizing things that shouldn't exist. Yeah.

And the other Drucker quote I've always gone back to is, you know, the primary purpose of business is to create and keep customers. Marketing and innovation produce results. All other business functions or cost. And there are. He's dismantling a lot of things that from, you know, to understand. To understand Elon and understand Trump. They're not that I fully do. They look at things from an entrepreneurial lens like it's a big Monopoly game and how do you play the game better, more effectively?

Cut out, waste that Sort of stuff.

So how would you. Since I bring up like, Elon, you know, right now there's a lot of people that can't stand Elon. Right.

The system is designed to defend the system. Yeah, right. That's what's going on. That's true psychologically as well. Like you're subconscious, but that's what's going on right now. The system is designed to defend the system. And he is disrupting the system. That's also what Drucker says. He says if the future is not disrupting the present, then you're just perpetuating the past. So that's what he's doing. But yeah, a lot of people are not very happy with him.

I'd almost like to do a survey here, but we won't get into controversial stuff. Well, I get. We don't do controversial stuff.

What's that?

I'll come up there if you want.

Yeah, yeah.

Let's get Jim up here. Hey, Jim, critique me, man. Throw the rocks, baby.

Let's talk about this from. Because how do you cut out all the fake work?

So there's a book.

I talked to the author years ago. He wrote a book called Fake Work. And I don't even know what year that book was written, but I remember him saying that if you were to. And this was like in the early days of Facebook and social media, where he said, if you were to monitor what your employees are doing online, you would say, see, half of what they're doing has absolutely nothing to do in most companies with the actual what you hired them for. They'd be looking at doing personal stuff. Right. So he called it fake work. And this whole notion of confusing activity with accomplishment. So for scaling, how do you view cutting out waste versus the big goal and the vision, which we're going to.

Talk about all this for sure.

Since we're talking about, like, how Elon looks at decision making and compresses time. How do you view a bloated organization? How do you view a bunch of people? Because again, I know I mentioned Drucker. He said, if you've got more people that are needed for the job, that needs to be done. They spend more time interacting than working. And he also said, you're either working or you're in meetings. And Peter Diamandis, who knows Elon quite well, he was telling me that the way that he communicates with Elon is through X direct messaging on X. And he says Elon doesn't even have an assistant. He's like, it's crazy. He doesn't even have an assistant. And I was like, okay. But he has obviously thousands of people that support what he does.

Right.

So, yeah, how do you view waste and how do you view getting your organization to not be just spending a bunch of time in processes that aren't doing anything?

So there's actually a Boston Consulting Group study that said that only 10% of what goes on in most companies is actually efficient, like ineffective. And so most stuff is focused on the wrong thing or doing it ineffectively. I actually am just going to show a few pictures just to kind of make a point if I can. This is just a McKinsey study that says grow fast or die slow. This basically just means that if you're not actually scaling quickly, and we'll get into the mechanics of it later, but essentially if you're not growing fast, what that means is you're probably making a lot of mistakes. That is, you're compounding errors that are eventually going to stop you from making the decisions that would lead to scale. So just as an example, the 22 year old that I gave at the beginning, if he actually has the 55 age deadline, there's. It's almost 99% that he will never get to that goal. Even if it was 10 years away, he'd probably never get to that goal. If it was five years away, his chances are much, much, much higher. But I'm just going to share with you, and probably some of you guys have seen this before, but it goes straight to Joe's question about waste. And I'll get into some of the deeper psychology behind why in a minute. But that's just a picture that shows a bunch of lines, but the lines represent data and pathways. And so basically there's infinite data going on even in this room, which you're not aware of. Right. Obviously you're focusing on me right now, but there's infinite data going on, internal, external, and the thing that determines which data you see is your frame. And what a lot of the research in neuroscience and psychology shows now is that your frame is fundamentally based on your goals. Right? Your goals determine what you see. Dan obviously has the beautiful line. Your eyes can only see, your ears can only hear what your brain is looking for. In psychology, that's called selective attention and pathways thinking. So we're always looking for pathways to a goal. And so the thing that determines which data you see, what signal versus what's noise, is your frame. And your frame is based on your goals. And so your future is the thing that shapes primarily everything that's relevant in your present. And so how you frame your future determines. That's literally the first step. So John Doerr, the billionaire, he said that a goal properly set is halfway reached. So the first step to actually clarifying waste is to determine the right goal. And one of the people who read this book, his name is Robert C. Gay, Bob Gay, he was one of the founders of Bain Capital. So he's one of the people who is one of the fathers of private equity. He's been a part of scaling. Bain Capital is one of the biggest private equity firms in the world. He did blurb the book, which I'm grateful for. But he said that one of the biggest challenges that an entrepreneur or a leader faces is actually choosing the right goal. Because if you choose the wrong goal, you're gonna scale the wrong thing. I've already told you that. The goal shapes your psychology. It shapes what you see, but it also shapes the systems you create, which is your business. And so one of the things that Bob taught me was he was talking about Steve Ballmer. So Steve Ballmer, while he was the CEO of Microsoft, he had a goal of improving basically the, like, the profits for the shareholders. And so he scaled that, he achieved that. But it also cost Microsoft probably trillions and trillions of dollars because he chose the wrong goal. So he chose. He chose the wrong thing. So basically, the easiest way to identify waste is to move your goal so high and your deadline so close. This is what you could do. Obviously, this kind of relates somewhat to 10x thinking, but you also want to make your deadline so, so close, seemingly impossible that it forces out. It forces out all bad thinking, right? So just as an example, say that your company is doing 5 million in here, right? If you want to actually go for 10x, you'd want to do that in less than three years, right? So you want to go for 50 million in three years or less. Why? Because it's going to get rid of all the bad thinking, what we could call stuff below the floor, right? So from that, what we would call frame or goal, all of a sudden, most of the stuff in your business becomes optimizing stuff that shouldn't exist. Because now you can see it from the right perspective, right? Most things don't work for that big of a goal and that urgent of a goal, but you really want to use time as a tool. So that's really how you can start to identify the waste, is what are all the things we're doing that are based on what we were doing before, based on Some cost bias or based on just this is how we've been doing it. When you. And you wanna use it as a tool, this is one of the things that happens to people, is that when they actually set a big goal and create an urgent timeline, they then think that they're failures if they don't hit it. You really just wanna use it as a tool for filtering. That's really what it's for. And so if you have a massive goal, a true scale goal, which what I have found is most companies don't have them. Most companies don't actually have a true scale goal or a true timeline. And so if you give yourself a very urgent timeline, you'll then be able to see that almost everything you're doing is waste. We call it. It goes below the floor. Michael Porter, the strategy expert at Harvard, said that strategy is primarily what you don't do. And so once you actually have the massive goal, you raise the floor. You become really honest with yourself that the majority of what you're doing is below the floor, that it's not scalable. Then you can actually focus. You can actually create a scalable model and a scalable path. That's what Elon Musk is talking about in terms of accelerate on the thing that can scale. And so you really need the right future to start filtering out the stuff that shouldn't be there.

Hey, I hope you're enjoying this video. And I want to let you know that I have a new book that's come out and if you'd like to get it absolutely free, there's a link below in the description. Or you can wait till the end of this video or you can Simply go to joe'sfreebook.com and you can get a copy there. Let me ask you, I think people fetishize scaling.

Sure. It's very buzzy right now.

Yeah, exactly. Which is good. I mean, you're writing a book about it because it's a big pursuit. But who shouldn't scale? What are things where you're like, because you don't want to scale cancer.

Right.

Because if something is not good, why try to blow it up?

Right.

It could actually make things worse. And my friend Keith Cunningham, who you know also, he has this line where just as many businesses die from indigestion as they do starvation. Right. So you can, in the process of scaling, if you do not have your shit together, you can really hurt yourself.

It'll mess you up.

Yeah. So I wanted to ask you, like, what does scaling actually mean to you?

Yeah. I think that you really most. I would say that I don't know how many of the people in the room here actually should or shouldn't. I do think it would lead to better decisions. It's kind of like some of the stuff we've talked about with, like, if you set up your business to sell, you're probably going to set up a better business. If you actually set up your business to truly scale and you're scaling the thing that's the right thing, which takes work. It takes work to actually choose a thing that's worthy to scale, that if you actually systemize and actually do it, it's going to do something beautiful in the world. But also, I think you just have to be honest with yourself. Why are you in business? Why are you doing this? What's the why? What's your goal? And so it really comes down to what do you want to accomplish in your life and what do you want to accomplish in the next three years, 10 years, 20 years, and the impact you want to have? My view is that if you think about America right now, we do need to scale. I believe hundreds of thousands, if not millions of companies need to start doing better work. And so going for the goal that high is going to force you to get better. It's going to force mastery and specificity. And so for me, I think I just use it as a tool for defining who I am. We know who Mark Young is. So how many of you know who Mark Young is? Mark Young is beautiful. I just love that man. He's actually. His story is in the book, because he read the book, like literally six weeks ago. And he's got a great advertising agency, right? Jekyll and Hyde Advertising, and took him 30 years. His business is doing 20 million in revenue. And when he read the book, he realized he hadn't actually had a true scale goal for a really long time. And so he said, I'm going to go for 100 million in three years or less. Right? Using time as a tool. And he became very aware that his business had become diluted. He started saying yes to many, many things that were absolutely distracting him, distracting his customers, confusing people. And so the beauty of having a scale goal, having a massive and an urgent goal, is that it forces you to start being really honest with yourself about all the things you're doing, but it also forces you to define yourself. Mark had realized he had stopped defining himself. People become too afraid to actually say, this is who we are, this is what we do. This is why we do it. This is who we do it for. Instead, you're doing 50 things for 50 people. And so he had realized that's what happened to him. And so I think choosing to scale something forces you to get conviction and clarity, and it forces you to raise your floor and to start being honest that the majority of what you're doing right now is holding you back and it's costing you a lot. So I just. I think it's beautiful because it forces you to start to get convictions, it forces you to start to get clarity and then to start to have good process.

Yeah, no, that's very good. And use Mark as an example. Those of you who don't know Mark, is. Is he 67 now or is he still 60?

I think he's in his late 50s, but he looks.

No, no, he's. No, he's.

Okay. There you go.

He holds the world record for the oldest rookie. Weird name. Rookie, professional race car.

Okay, so that surprises me even more. I thought he was like in his late 50s, looking like he's in his 30s.

No, he might be 67 now, but. So Mark is a dear friend. He's actually a genius network member. Those of you remember not last year, but the year before he was interview that I did for the annual event. And we've been doing a lot of podcasts together.

He's awesome. I've learned a lot from him.

Yes.

And this is a guy who sold billions of dollars worth of stuff for other people. Now, he does very well. I mean, he owns lots of real estate. I mean, you know, he's a smart dude, but he's also a psychologist and he understands. His book is called Hypnotizing. But the point is, like, at his age, it's the scaling and the 10 times vision that actually gives him the enthusiasm. Because until you get there, you kind of just can coast along and you can do your business and you put up. You tolerate a bunch of shit. But now when you have a big goal and a big vision and a big dream, and it doesn't necessarily need to be big. That's why I asked you the question, because I think a lot of times there's so many people trying to convince.

Everyone you can scale all the way down too, and just focus on a few.

Yeah, yeah. Now, from the context of this book, I think the people that will probably buy the book and read the book are people that really want to get to some big, ambitious goal. So what do you do when your team or your friends or your circle does not share your ambition and let Me say it. From the framework of Elon Musk. So I've had two private meetings with Elon Musk in small groups at point some SpaceX that Peter organized, and they were several years ago, and one person asked him a question, you know, why do you think you've been so successful? And he said, and Elon's a very interesting dude. He's like, I can tolerate more pain than anyone that I know. That's what he said. So he's like. His whole view of is like, I can tolerate a lot of pain. And so. And he can. I mean, that guy, like, he, you know, if you've ever read the book on him, I mean, he's the Walter Isaacson one. I mean, the guy had a horrible childhood and, you know, violent, a lot of crazy shit. So the atmospheric conditions. So a lot of people, though, are not. He has to continuously deal with the pain of people that believe he's full of shit. And there's no way this is going to be possible. So when he says, I want to do something, there's an army of people saying, we can't do it, we can't do it. And he trudges through anyway. A lot of people aren't built for that. So how do you. But you can build yourself up, right? Because what is, you know, Dan's line, make it up and make it real, right? So if you're going to make up this, you know, I want. I'm at 5 million right now. I want to be at 50 million, I'm at 10 million. I want to be at 100 million. And everyone around you is like, there's no way in hell this is going to happen. What do you do with that?

I liked the quote, the image yesterday of the jar getting bigger, by the way. And I think that that is very true. So I've taken many people through this at this point, and so this is to be expected is the idea. One of the companies I consulted for a while was a franchise company. They're like a flooring franchise company. The CEO actually heard me speak at the big EOS conference a couple years ago, and so they hired me as a consultant. He said they were doing 200 million a year. And he's like, we want to get to a billion in seven years. I said, let's go for it in three, because 7 million is allowing you to stay below your floor. It took him six months to actually realize that half of his leadership team didn't want to do that. Like, the majority of them were sabotaging that. And so he was like saying, we're going to a billion. We got to raise the floor. And for them, that meant, like, with their franchisees, the ones who aren't willing to grow, we've got to, like, get them to sell back their franchise. We got to bring in new ones that have bigger goals and stuff. But for six months, the team wouldn't do it. And so they stalled. And he started to get upset. And so then he was like, okay, I need to actually hold this system more accountable. And accountability is like a crucial element of any system. And a lot of people don't want to be accountable, right? A lot of you, I would surmise, don't want to be accountable to a level that it would be required to scale because you guys are all the leader. You like holding other people accountable. But when was the last time you had to be held accountable? Right. One of the people that I interviewed for this book is someone who goes into countries and designs economic systems for countries. And so I basically asked him, because he's a systematic thinker, he creates systems for economies. And I said, what's the difference between a third world country and a first world country in terms of what's just the main difference that leads to these two things? And he said, there's only one word. It's accountability, right? There's accountability in the system, right? So with Argentina, they're trying to peg the peso to the dollar because there's more accountability to the dollar than the peso, right? And so, like, you need a system that has accountability to, like, a goal and then to certain. To certain culture. Culture and accountability are kind of the same thing. And so to raise that, you're gonna have to make certain people uncomfortable. Some people don't want that. And they're not wrong for not wanting that. They're just not aligned now on the goal. And so at some point, it's just better to have honest conversations and to hold that higher standard to what you want to choose and to just say, this is what we're about and what we're going for. And a lot of people are going to eventually say, I'm good. They're not going to want that. And then you can find people very, very aligned people who are super excited about it, who want to do that. I think if you looked at any of your guys, businesses, you could see that there were certain people that helped you get to a certain level, and then at a certain point, they were no longer aligned on where you were trying to go. And that's Just part of the process. But I don't think it has to be a sad part of the process.

Well, in the beginning, I think what is most difficult is when people are sabotaging you or you're sabotaging yourself. I think you made a really important statement about how us as entrepreneurs are often not ready to be accountable. Right. But we see other people.

It's a higher bar. It's a high bar of accountability.

Well, so almost everyone in a company thinks they want to help the company grow. Even when people are sabotaging it, they're not consciously aware of seeing that their frame, their comfort zone, it's not there. And there are times where every one of us has to walk ourselves or other people through. You know, it's like that song, if you're going through hell, keep on going. You know, where you just have to go through that purgatory. Right. Where you're just like, man, you know, I'm enthusiastic, but I look at it as who's putting wind behind my sails? Not who's putting wind in front of my sails. Right. What's creating the resistance? And the hardest is when you're doing it to yourself. And you don't, you know, you're just picking things because your fear or whatever. Because I think so much of this is like, you know, your last book on future self, Define future self. Because I think this ties in so much to the image and the identity and the vision of scaling.

Yeah, it's huge. I'm just going to show just a picture. If I can go back to the slides for a second. This is. So there's basically two models of time psychologically. Oh, there's a quote. I'm just going to skip ahead. So this is the.

By the way, I've not seen any of these slides. This is not a. Like, he saw none of the questions I'm asking him, and I didn't see anything.

I just knew that I would want to show some of these pictures. So this is what we would call linear time. This is the idea that the past shapes the present and the present shapes the future. A part of linear time is that the past and present or, sorry, the past and future are external. When we're talking about psychology, time is internal. And so this is the view that the past is outside of you. You can't change it. It's just, boom, the future's up in the head, can't know it. And so this is how most people view their future self, is they let their past self, present self, be the creation of the future self. And so the future self then looks like the past and present self. And that's a lot of research on that, right? That most people's future self is simply a reflection of their current self. This is more what I would call holistic time, and this is more accurate to psychology that your future shapes what you see and do in the present. Obviously, if you have trauma and things like that, that's going to deeply impact your present. But it's you in the present that are continuously creating that frame, right? So psychologically, the present is what shapes the meaning of the past. We're just continuing to create the same past over and over in terms of how we frame it. But the responsibility of the past is in the present, and the responsibility of the present is in the future. The future. And there's a lot of research on this now in neuroscience and psychology, I would say that the future probably holds 10x the weight of the past. Obviously, one of the problems, and I'm not going to go too deep into the traumas, is that the trauma just unless you deal with it in the present, it's going to just destroy your future. And that's really, in my opinion, the worst part about it is it crushes hope in the things that we've talked about. And when you have a hopeless future, what do you think that's going to do to your present? But the main point about future self is that your future self is the view you have of your future self should be created, should be chosen, and that that view of your future self can. And when you get more connected to that future self, as we already talked about in conversations today or yesterday, the more connected you get to that view of your future self, the better you act, the better you operate in the present, the better you filter in the present, too. And so it's just important for you to know that whatever view you have of your future, that's the primary force shaping how you filter and see things. And so that's why we really want to operate from the bigger goal, right? The seemingly impossible. Because then that completely alters what you see in the present. It completely alters the pathways you see, the options. You have one just simple example, and I'll share with you guys, but there's a lot of research on these impossible goals, like literally, and I reference it all in the book. But the thing that I would have, you know, just as a quick example, one of the people who I walked this through and I wrote about her in the book, she is someone who has an awesome technology, right? She created software, she's in the credit industry. She's been in the credit industry for 20 years. Her name's Alicia. Just a lovely woman, a beautiful woman.

It's Alicia.

Yeah, Alicia. Alicia.

I thought it was Alicia.

So good thing it's Alicia. So she's just a beautiful woman. I just love this lady. But she's been in the credit industry for like 20 years. Been a one on one coach, really knows it. And she's just a super learner. And so what happened was five years ago she had a technology created. She felt it would disrupt the industry, honestly, because in the credit industry there's not like a useful tool for me. If I want to accomplish some goal, say I want to get my first house, right? There's not really a clear technology or tool in place except for she's now invented it. Where I say my goal, I provide my situation, I get a credit score and then it gives me a specific tailored path based on where I'm at and what I'm trying to accomplish. So she created the software to do that. And involved in that software, it provides links to like good sources, good safe credit cards and stuff to build credit. And it gives you a path to do that. She invented that, it's called level up score. And so she made that five years ago. But she was busy in her current business and she didn't scale this thing that was very scalable. Her current business, one on one coaching, no scale there. And so she never did this thing. And so last year she's like, she started to get convicted toward that future, right towards that goal. And so what she did was she started to just essentially cold call credit repair companies. There's 50,000 credit repair companies in the United States. They sort of help, they're very expensive, but these are the kind of people who people go to to start building their credit. And so she started cold calling them and explaining her software. And every time she would talk to someone there, they fell in love with it. And so they start, they created like a Rev Share partnership and they would start using it with their clients. Maybe like $3. The person goes through it, gets their credit score, starts to get a path, so these companies then begin using it. So it takes her 90 days to have 10 of these calls. And so she has 10 clients, right? Then just going back to that picture, like the bigger future shapes the pathways, right? This is a really important point is pathways. Everything you're doing is a pathway toward a goal, right? You want to get much better at finding Better pathways. So for her, I said, you want to set a seemingly impossible goal and use that to create a more scalable path. So she said, okay, I'll 10x it in 90 days. I'll have 100 people using the software in 90 days. And ultimately that goal wasn't big enough, using Drucker's words, to disrupt her presence. So she just thought, in 90 days, I'll just make up 90 more of these calls. I get 100% conversion rate. And so I just said, that's not how it works. You want a goal that's so big that it stops you from most of what you're doing. And it helps you realize that most of what you're doing is optimizing what shouldn't exist and helps you find a more scalable path, build a more scalable model. And so she said, okay, I'm going to go for a thousand of these companies using my software in 90 days. No clue how to do it. Here was. What's really cool, though, is when you start to actually meditate from the goal. It actually only took her a few hours. She's a very prayerful person. So she sat for like three hours and just thought from the future. She had a lot of bad ideas in terms of pathways to that goal, but one of them was just simply. And she'd never been filtering for this or never been thinking about it. It dawned on her very after she said that same day that there are dozens of very awesome software companies already in that space that serve thousands, some of them tens of thousands of these credit repair companies. And she just thought, what if I just partner with one of these software companies that already serves thousands, if not tens of thousands of these people? I could just partner with them. And so that's what she did. Literally less than a week later, she got on the phone with a guy who owns a company called Credit Repair Junkies. He fell in love with the technology. He had 8,000 clients that were these same companies. He white labeled her technology. She created a Rev Share deal and she went from 10 people using the software to 8,000 in a week. But that's a different pathway, right? And her, who, if you want to use that language, became different rather than going straight to the soft to the companies, right? She went to like a distribution partner, right? She went to a software company that already had it create a win win, and now she got their distribution. So one of the most, I would say there's two forms of pathways. One is very filtered distribution. These software companies had the perfect client base that she wanted. So filtered and leveraged distribution. Right. The other one is that you just bring on some super capability that then changes your company and makes distribution a lot easier. Right. So I would say that. Just saying. That's probably what happened with me and Dan. He brought on my skill set and boom, you know, a lot of people was able to join through Strategic Coaches because first off, I brought skill set, but I also brought distribution to those books. Right. And so you bring on a super skill set. Even Bill Gates said that the average software writer is worth not like he said an excellent software writer isn't worth 100 times an average one. An excellent software writer, and you could use that for anything, is worth 10,000x if you get a really good, really, really, really good super skill talent, which you can get if you're filtering for, they're worth 10,000x a normal client or a normal employee.

So your latest book, Mastering The Rockefeller Habits 2.0, scaling how a Few Companies make it and why the Rest Don't. What's this book about? Because I would recommend people get all your books and even all your Gazelle coaches. I mean, I've been to your events, you guys do amazing stuff and you.

Have literally impacted, I mean, truthfully, with.

Your creation with eo, there are millions of people that have been impacted by the seeds that you planted.

So this is your latest work.

Who's it for? What's it about? What will people get out of it?

Yeah, well, you know, a lot of companies start up and there's this craze about startups and accelerators and incubators and that kind of stuff, but very few scale up. And it's the scale ups, Joe, that really move economies, really drive innovation. And the problem is because they're not young, they're not cute, they're older, more established companies, they don't get any attention. And so we wrote the book for them. Those that have been kind of toiling away for five or 50 years and have finally figured out what they need to do and are going to take this thing from 10 million to a billion. And what are the key things that are necessary to scale up the company?

Gotcha. Well, I was having a conversation with Dan Sullivan. As you know, he's one of my dear friends and he founded a company, Strategic Coach, and he was, we were having this conversation because we have a friend, I won't mention his name, we all know him, who puts a lot of emphasis on trying to help startup entrepreneurs and putting together programs for them. Dan just made this Funny comment, because, I mean, I want to help anyone that really wants to grow and learn. I mean, that's why I put out my free podcast. It's like this interview. I mean, we're putting it out to the world for free just so it'll help people that come across it. And dad made this comment. He goes, you know, there's all this emphasis on flow funding startups.

He's like, you know, if you really.

Want to make an impact fund, people.

Who'Ve, like, literally had to borrow the.

Money, had to go into debt on credit cards, no one was there to help him. He goes, that's what weeds out the ones that can make it and ones that don't. I mean, if you just hand over money to someone that's a startup just because you should give them a reward because they want to start a business, he goes, the ones that are really successful, they've gone through the crap. They've gone through the hell that they've had to. And I just thought it was kind of funny.

No, he's right on. It's one of, I think, the problem with the incubators. They baby him too much, and then when they finally set him free, they didn't get some of the basic learnings from failing that are necessary to take the venture to the next level. And then what happens is, when they do fail, it's at such a bigger level that it's devastating to their families, to their own net worth. It's a mess. And so I think you got to be careful helping folks too much in the beginning.

Yeah, yeah. I mean, I heard this line, and I say this speaking from ignorance because I'm not a parent. The quote was, don't handicap your children by making their lives too easy.

Yeah, for sure.

Although I think that applies to anyone. I mean, you can really baby someone trying to start a business, and you can rob them of the learning that comes from it.

Absolutely.

Well, you've created a lot of tools. What is the Buckminster Fuller quote that you gave today? I'd love that quote.

Yeah, I know. I'm a mechanical engineer by training. Got a worthless MBA on top of that. And Bucky had this notion that you can't really change the way people think. All you can do is give them a tool, the use of which will change your thinking. And, I mean, think about what the phone has done to change our behaviors more than any other change management seminar that you might be able to go through. And so we're tool builders, and we wanted to build some tools that Help people make those changes.

Well, I got a lap full of.

Stuff here that I've books and everything here.

So there's a bunch of growth tools.

That you, you have and you're known for the one page strategic plan. Talk about what that is and where people can get it. Because I want the people that are watching this and listening this to not just have some business insight, but I'd like to send them off to where they can get access to some of the things that you have literally done with thousands of companies and have created that will make a big impact for them, that will allow them to think more strategically, more creatively. Talk about some of the tools you've created, specifically the onepage plan.

Yeah, it's the thing that we're probably best known for. Today, about 40,000 companies are using this tool. And it was a very simple idea. Everyone sits around and says, man, how do I get everybody on the same page? Well, you got to have the page first for everyone to get on. And we use the analogy of jazz bands. You know, I love jazz because you can bring these players in from all over the world, never played together. But there's got to be a few things that have in common. And one of them is we're playing the same song. And so we thought, hey, how can we put on a single sheet of paper a way for people to get down from their core values all the way to what is the thing we need to focus on the next quarter in a simple format that they can communicate that to everybody else in the organization. And it's this common set of music that people can all play together. So that's what it does.

So where do people get this? Because I know you make it available online. I'll put a link to all the different places that I put this interview.

So go to scalingup.com or gazelles.com, but scalingup.com and they'll see a thing that says the onepage tools. And we've got them in multiple languages from Russian to Spanish to French to English, obviously. And so it's there for people to use free of charge. We've had them up there for decades.

Great. So what are some other tools that you've created that have been really helpful to yourself, to other business owners that.

You'Ve done well, you know, it's a challenge. This whole life side and business side, everyone's talking about the balance. We see it more as a blend. And so we created a one page personal plan to go along with the one page strategic plan. So that if you can kind of as the entrepreneur get down and the executives, the company, what is I need to do on the personal side and then look at that in relation to what I've got to do on the business side and mesh those up. We find people who are much more successful in both aspects of their business. We mirrored the same people, strategy, execution and cash. But we said, look, let's look at the relationships, let's look at the achievements, let's take a look at those rituals that we do on a daily basis, our exercise and other things. And then obviously there's the wealth component that we have to pay attention to. And so that's become a tool that started to really catch hold around the world as well. And then we're known for this Rockefeller habits checklist. What are these 10 habits, these routines, ones that John D. Rockefeller had in place over 100 years ago that made him the wealthiest guy on the planet, wealthier than any of the guys that we have here today, except maybe Putin. And these are things that you can put in place in any company from startup all the way to the largest companies in the world.

Well, let's talk about cash. We were talking about it before we started recording. I think a lot of people really poo poo the whole concept of how important money is and what it does for good. So what are your thoughts on money? Why do people do business? To me it's like, well, they could say, I think it's freedom, but you need cash in order to have freedom, in my opinion. But talk about cash. What does cash mean? What's the pursuit of it?

Yeah, well, I think what's interesting is cash is the way we measure and keep score. I mean, it wouldn't be any fun to watch any sporting event if there wasn't a score. We were talking about going to the Olympics and let's just watch people run or let's watch people swim. We go because there's a finish line. We know that at the end of the day, the packers have won. You know, one of my favorite teams, you know, the Monday Night Football game. And so cash is simply a way for us to measure quantitatively, measure and compare the value that you're delivering. And if you're not delivering value, then nobody's going to eventually pay you in order to do that. In terms of me exchanging my labor for your labor and bartering just was a mess. And so we created this thing called coinage to kind of keep track of the representation of that value. So for me it's purely A scorecard. The funny part is I don't think entrepreneurs pay enough attention to it. They're obsessed about profit, getting their P and L once a month, skipping, looking at all the numbers, but the bottom line. And we know a lot of companies that they're profitable, but they absolutely run out of cash, and it's game over. And that happened to me, as we talked about today, in 2001. So I literally get my cash reported to me every single day, and it moving in the right direction is my best indication that somehow or another, the world's telling me that we're doing the right things.

How do you get it reported to you? I mean, it may seem like a basic question, but what? Text, emails? There are some criteria that you have.

Yeah, I get it two ways. So, one, literally, my bank, Wells Fargo, has set it up to where they can alert me to what my bank activity has been every single day. And that comes to me in an email, and I can take a look at it in turn. Our cfo, Kathleen, does a mini cash statement and sends it to me every day. And it tells me what came in over the last 24 hours, what went out, and it projects over the next few months, what that looks like. And I want that projection to constantly be heading north instead of south. And it's a good early indicator that you're having problems when it's not going the right direction.

Well, I think a lot of people come to. You come to gazelles when they're in a situation where they need to get their ass in gear or they're done.

Yes.

You know, not all the time, of course. Some people are very like, we're doing well. We just want to.

Yeah, we want to go 10x that. Exactly.

What could you say in terms of. Because the statement, a lot of people go out of business or whatever is. I mean, there are people that are dying on the vine because they're just not paying attention to stuff. For everything you've learned, what are the things that people just. If they paid attention to these things, it would give them an advantage that most business owners don't have.

Yeah, well, you know, we talked about my favorite book of all time, and it's Eli Goldrath's book, the Goal. You know, it's a very simple parable that he wrote, but it really got us focused on the fact that we all have limited time. Steve Jobs had a lot less time than he thought. Limited funds, limited resources, limited cash. And what we've got to do is make sure that we are always focusing it on the constraint, that thing that is most in our way next in moving up the business. And so what happens with business folks is they get distracted. They got a list of 100 things to do and they can get 90 of them done. But if they miss that one, that matters. If Mark Zuckerberg had not done gotten Facebook mobile back just before he about the time he went public, we wouldn't be talking about him today. They'd be in the same kind of trouble that Yahoo's in. And Yahoo would be dead if Jerry Yang, who co founded the company, hadn't made that one great decision to invest in Alibaba. There's three or four of these kind of decisions that absolutely send you left or right. And you need to have had the learning, the think time, the immersion in the marketplace to get these handful of decisions right. And if you miss it, it's tough. It makes a tougher role.

Well, you've got your book here, the Greatest business decisions of All Time. So which one, in your opinion is the greatest?

Yeah, we did. We actually identified 18. We decided not to put them in order except to name the number one. And it was Henry Ford. And by the way, this decision not only changed the company, changed the industry, but we think is the reason why the United States became the wealthiest country in the world. That's that butterfly chaos effect that we think this decision made. And that was in 1915. Henry Ford deciding, man, I can't get enough labor. I don't have enough people who can afford to get our cars. He's having both the demand and, and a supply chain problem. And so he came in one day and doubled the wages of his employees from $2.50 to $5 and the rest is history. That allowed them. Tens of thousands of people came to Detroit, wanted the jobs. Now that they're getting paid more, they can afford then to buy the cars. And it changed people's view of labor from just being this input into a manufacturing process to to being something that you really invest in. Let's speed forward. We were talking about today, the Container Store. Here's a company named one of the best places to work every year. We've had the list at Fortune magazine and Kip Tyndall, whose book Uncontainable everyone's got to read. Here's a guy that's figured out we're all talking about $15 an hour wage. Like he's been paying 20 bucks or more for decades, twice what the industry's paid. Yet he's getting three times the productivity because the amount of training that he's doing for folks. And this is a company selling empty boxes. You know, it's hardly Google or Facebook. And that's why I want this book, everyone to read who are just us mere mortals, you know, trying to build decent companies. And so that single decision Henry Ford made was so powerful for many reasons, and one that we ought to be thinking about more today.

I agree. I agree. Which leads me to think of having decades past, you can look and see the ripple effect, positive or negative, of certain decisions.

Hey, I hope you're enjoying this video. And I want to let you know that I have a new book that's come out and if you'd like to get it absolutely free, there's a link below in the description. Or you can wait till the end of this video or you can simply go to Joe's free book and you can get a copy there.

What is a recent entrepreneurial, be it decision or what someone is doing that you're looking at saying this is a total game changer. Is there anything that is the most recent business decision that you've seen someone do that you think is just maybe is comparable to that?

It is. It's crowdsourcing.

Crowdsourcing.

Yeah.

We talked about what, you know, we have these unicorns. How did Mark Zuckerberg do in 11 years that normally takes companies 100 and all of these, and they all have Amazon. All of them have one thing in common. And as they figured out how to get the most people on their bus behind their business model, you know, let's look at Facebook. You know, the valuation is tied to the number of Facebook pages that are up there. And what's brilliant is none of his employees are having to do that heavy lifting.

Right.

It's a billion. Three of us that are doing are working literally for Facebook free of charge. And those of you out there that have got employees, they're probably working harder for Facebook than they're working for your own company. You know, the value of Amazon isn't the fact that they got a website that lists a bunch of products. I mean, how many of those exist on the planet? It's the fact that they convinced millions of folks to take the time to give feedback and stars and rating. So it becomes the preferred place for us to go to see what the crowd is saying about my book, this product. My wife won't book a trip, won't book a hotel, until we go to Trip Advisor to get specific feedback based on whether you're a family couple, alone one, a romantic one an adventure. They've done that heavy lifting to tech, even Google. Let's look at Google. You know, we are all just here to solve the customer's problem. And our problem is I'm searching for an answer and they give it to me in nanoseconds. Now, the old way is I'd have some geniuses typing fast, you know, well, that's kind of Encyclopedia Britannica, Wikipedia. Kind of figured out a different business model. And that's all Google's done. They figured out a way to tap into the collective intelligence of everybody on the planet that's been on the Internet and deliver us an answer. But I told you my favorite story. The father son team in Australia. If you want me to share that to me, because there you've got mere mortals, and to me it's the story of 2015. So this father and son beekeeper team taps into a big wave and we think you ought to go with the trends in the market. And one of those is that we're all getting really fed up with our food being poisoned by some companies we could name or not name here on this video. We're all wanting to get closer to our food source. These guys said, you know, one of those is honey. But it's like a pain to kind of keep bees and you know, you get stung and they get disturbed. So they Invented this little 3D printed $600 product called the Flow. And like any entrepreneurs in Australia, hey, how can we figure out to pre sell a few, you know, thousand of them to raise the 60 grand or 70 grand we need to get this thing going? You know, last century we'd go around and find our friends and our family and fools to, you know, kind of help us out. But instead they took advantage of these cool technologies. We have Indiegogo being a case. And by the way, it's not crowdfunding. Everyone calls these crowdfunding sites. These are pre sale sites. You know, we're getting customers to pre buy our products and services. And so they launch in February and in three hours they hit a million in revenue, which by the way, what it takes to get into EO in 14 hours. 11 hours later, they hit 2 million. They doubled their revenue in another 11 hours. And when the campaign was done 60 days later, they had sold over $12 million of a $600 product to over 36,000 people around the world. Here's a father son team in the bowels of Australia whose global over 10 million in revenue in 60 days.

Where would that ever happen?

That's Right. But what the backstory is, is they did the heavy lifting leading up to that campaign and identified about 3 million through all the kind of database work that you can do. 3 million who they thought would be potential buyers of that. So that when they were ready to launch, they got that word out, and that's why they had such success.

Yeah.

Which is key because everyone that I've ever spoken. Spoken with that has done a very successful crowdfunding, crowd source campaign, they always say it is a marketing game. You have to be able to reach people. You got to know how to get the message out there. Which of course is what makes that so key.

Well, by the way, that's why we talk about in scaling up, the fundamental functional weakness that literally constrains scale ups is marketing. And it's not. And where people miss is you don't need marketing only to get new customers. You need it for investors, attract advisors, and most importantly, to attract talent.

Yes.

Which right now is the universal constraint for most companies around the world.

Right, right.

Okay, so let me talk about that. Because one thing. You live in Barcelona.

Yes.

I mean, you've had all kinds of roller coasters, I'm sure, in your career.

And you live very far away.

You have a routine. You said earlier that routines create freedom. And your emphasis is so much about getting the right person. I remember a conversation I had with Richard Branson on Necker Island. I've done six trips to Necker island and I was in his kitchen with him, and I just said to him, I go, when's the last time you went to a grocery store, Richard? And he's like, I don't think I've ever went to a grocery store. And I'm like, what do you mean? You bought beer for Sid Vicious or Johnny Rotten or something? He's like, I don't think I've ever been in a grocery store. And I'm sitting there like, how is that possible? He's lying. There's like, no way. And so I said, I go, when's the last time you did your laundry? And he looks up and he's like, really thinking. He goes, I've never done laundry. I'm like, what about when you were a kid? He goes, no, my mom did my laundry. He goes, joe, you don't do those things. You hire other people to do it. Then he went on to say, he goes, one hire, one great hire will save you thousands of hours in your life. And of course, Richard doesn't do a very good job explaining what he does and how he does it. I've interviewed him a lot. But that one piece of advice about hiring other people was huge. Now, most entrepreneurs don't get the importance of that, but you are constantly instilling, finding, putting the right people on the bus. Your buddies with Jim Collins, I mean, you really understand this talk about that and then how you actually run a company, living in Barcelona and some of your routines. But I think it's so key to get into the minds of people. How critical of a decision, getting other people that are talented and skilled to assist you in whatever your enterprise or business or career is.

Yeah, well, and you just pointed out what is the other key constraint to entrepreneurs, startups being able to scale up. The reality is 76% of the companies in the United States are home based. 96% never get to a million in revenue. And the fundamental reason is the entrepreneur knows they're the best at doing things and doing everything. And it is impossible for many of them to let go and trust that somebody else can do even a piece of that as well as they can. What's even worse is they try to get somebody else to do something for them and they didn't choose that person correctly and that person screws it up and now they've been burnt. And once you've been burnt, you don't want to go back again. And so you're stuck having to do everything. And you only have 168 hours in a week. We don't get any more. And so, you know, Jim Collins said you got to get the right buts and the right set seats. But we thought we ought to put together a list of seats. And so we built a tool called our face tool, the function accountability chart. And it lists what are all the functions that have to exist in any business. You know, who's going to run it? Sales, marketing, operations, accounting. And you know, when you're a startup, it's your name next to all. It's me, me, me, me, me, me, me, me, me. And all growing a company is is figuring out which box you can delegate next. And it's this ability to delegate that none of us were taught how to do. I didn't take a course in my MBA called delegation. And there's a real art and science to doing that correctly. And most people think delegation is here, you do that, but that's called abdication delegation. My best analogy is that thermostat I got start in the H VAC business and we got this complex air conditioning system in here. But if you didn't have that thermostat Joe right over there on the wall that was constantly monitoring what's going on here and giving feedback to that system. We'd either be freezing to death or burning up here in Phoenix, Arizona, on a day it's 102 outside. So you've got to put in thermostats within the organization to make sure that you close that loop on the activities that you've got people working on. And then, like Richard said, you've got to then say, all right, what are the things? And Marcus Buckingham helped us here. Marcus, he helped me more than almost any thought leader when he said when he properly defined what is a strength and what is a weakness. Because let me tell you what gets entrepreneurs in trouble. They're too good at too many darn things. That's what got them into business, because they are wicked talent, talented. But that becomes their weakness. And when Marcus said, look, a strength is not just because you're good at it, but it gives you strength. It gives you energy. A weakness, even if you're good at it, is a weakness if it makes you tired. And for me, I know how to run a company. I know how to do all the stuff that we do, but it wears me out. And I had to decide that, you know what? I love teaching. I don't love to do any of this other stuff. I need to find people who love what it is that makes me tired. Be more specific. I've put PowerPoints together for my presentations. It absolutely wears me out. And so I went out to a crowd sourcing site. 99 designers. I've never met her. She's worked now with me for seven years. I found this woman, Jun Yee. She's part Korean, so highly creative, part German. So it gets delivered now, and I just send her, I need a slide that shows a bus that has a bunch of people coming on it, and I send her the idea, and magically in my in basket, within hours, it shows back up. And so that's what entrepreneurs have to do, is get a piece of paper out, make a list. And you know what, if you like to shop, and I know guys who do, it's almost a meditation, relaxation thing, then keep doing it. But if that wears you out, if that makes you tired, find somebody else to do it. And just continue to keep removing. There's this key word again. Constraints. Constraints, yeah, that are draining the life and energy out of you. And make sure that you spend your time on the stuff that gives you energy, and then you're going to be Jazzed.

I mean, so much of performance and happiness and results. Creation is just literally the proper allocation of your energy in the right places.

That's correct.

I was talking to Dan Sullivan a while back and he says that there's no such thing as bad work in the world. There's this bad work for certain people. People someone can look at someone like a gardener and say, I would never want to do that or I would never want to be a janitor. And the reality is that's great work for people that get energy from it and are really skilled at it and love it. So part of it is just realizing what makes you tick doesn't make the rest of the world tick. And there's tons of people that you can hire that have enormous skills.

But I think we need to come back to when you get down to the nitty gritty, what entrepreneurs and most people know how to do is how do I source those people? You know, we're very clear. If you need to hire someone to do something, you need to get at least 20 high quality applicants. It's a pure numbers game versus just hiring. The first person comes along and fogs the mirror. And then once you've got those applicants, how do you choose the right person? And the feel good interview is actually terrible. You'd be better off letting a dart choose than us doing the standard interview most of us fall trapped to. And so, you know, we're big fans of top grading. It's the only formal mechanism, methodology that guarantees at least 90% plus if you do it right, you've chosen the right person. And if you choose the right person, your life is golden. You choose the wrong person in your life is miserable. And so that's what we detail in the book, is how you do those two things well.

And see.

So what I want to point out again, for people that don't know who you are, have never been introduced to your work, this will be their first introduction. What are all of the things that scaling up teaches and what are all the things that gazelles does that helps? I mean, because I want you to actually talk about the resources that you have. Because it's one thing for someone to hear this. What I hope is that when someone watches one of my interviews or listens to it and I'm talking to a bright person and the person actually can help solve problems, help them get to their bigger future where they want to go, that they have some pain. Because usually if they don't feel some pain and some hurt, they're not going to do shit about it.

I mean, there has to be either.

Some great inspiration or there has to be some frustration and annoyance. And you're like, I'm kind of sick of it. You know, Dan Sullivan has this line where he says, irritated oysters make pearls. And you know, I want people to be in a pissed off state, state, but also not just letting them know, what do you do with it? Okay, yeah, I don't know what to do. But you have literally created just so much solutions for entrepreneurs. So what are some of the things that people will get out of scaling up? And also, what does gazelles really offer people?

Yeah, well, and what we wanted to focus on, what Geoffrey Moore says is provide a hundred percent solution. There's so many parts and pieces out there that's frustrating for business owners to kind of pull it all together. So we thought, look, let's give business owners a hundred percent solution. Let's get them the coaching support, let's get him the education. Let's get them the technology tools, literally tools we've got in the cloud that you can run on your mobile devices so that we can help them kind of automate these components that are necessary to manage the chaos that comes with trying to scale up the business. Now, we do that in how we started the interview in these four areas. And let me give you the test. First thing, why would you look at the people side of the business? Well, there it's purely your gut feel about, are you happy? Because our happiness is really tied to the people we work with. And I can tell you when you're not happy is you're having an issue with your partner. You've got a salesperson who's mucking up the attitudes of the rest of the salespeople. You got a customer who's got too big a piece of. You got a supplier, supplier that has you constrained. You've got a bank that is in your way of being able to scale up. You got issues at home, you've got a sick child, and challenges with your spouse if you don't get or you just can't hire enough talent to keep up with the growth that you're able to handle. If you got one of those, you better focus your energy on getting that fixed. And we built tools, whether it's your personal plan, your face tool, the processes in the organization, we help you source employees, how do you manage them, how do you retain them? These are all the nitty gritty things around people. Now, if generally you're happy with the relationships in the business, then we look at strategy. And strategy is very simple. Are you growing top line and gross revenue dollars as fast as you would like? And by the way, you can grow too fast. As Andy Grove said, more companies die from indigestion than starvation. But for a lot of companies, that's not a problem. I mean, you're not growing fast enough. That tells me your strategy is wrong. You don't have enough of what people want that they literally are beating your door down and standing 10 million in line on a Monday to want to buy your phone. So then we have tools to help you really figure out this industry dominating competition crushing strategy that allows you to have a monopoly because that's what businesses want. Government doesn't want you to have it, businesses want it. And there's the essential tension of capitalism. So we help you figure that out. Now if revenue's growing as fast as you'd like, then we look at your profitability and how much just raw time you're having to put in the business. Let me tell you what's sad, Joe. I've had so many friends like double, triple the size of their company over 2, 3, 4, 5 years, yet the bottom line didn't come with it. They're actually making less money, absolute money, let alone a percentage, and working more hours. And at some point you wake up and say, what am I doing all of this for? And most of them rightfully so fire everybody, get rid of their fancy offices and go back when it was them and assistant working out of a spare bedroom and they were having more fun and making more money. And that usually is because they're sloppy in execution. And I gotta say, most entrepreneur companies are sloppy. And by the way, we know one simple metric, revenue per employee. It's crazy predictive. But I ask people today, how many employees do you have? Multiply it times 100,000 and you pretty well have guessed the revenue. Large companies, these big bloated bureaucratic machines that we make fun of, generate two and a half times more revenue per employee than most of us mere mortals do. And that's simply because we have sloppy process within the organization. And if you come back then to what frustrates people you hire is they join your company and they have to both work with idiots. You didn't hire the other people, right? Or I got stupid process things are frustrating. We can't even get an invoice out the door. We can't even get our product or service out the door without us having to work 18 hours, days, eight days a week to make up for this slop that's around here. And so we really help companies tighten up that execution. And then look, you can get by with decent people, decent strategy, decent execution, but not a day without cash. And we're not talking about making payroll. That's important. But do you have the kind of financial muscle necessary to do some of the stuff we talked about today? You need to lock up that constraint. You need to get, you know, you need to buy one of your key suppliers. There are a couple of key acquisitions you need to make. You've got the cash to bring on that chief marketing officer. That's necessary if you're constrained by those cash resources to do what you absolutely need to do. Man, you age so much faster. And so we look at those four areas, we got tools in every one of those areas. They minimize the pain that entrepreneurs feel when they're trying to scale up.

Awesome.

Awesome. Well, I remember the first time I interviewed you, which I don't know how many years ago it was, it might have been a decade ago, I asked you about deadlines and you said that there's this misnomer that entrepreneurs work well under pressure, but under pressure they just work. Do you still believe that to be the case? I mean, do you have any thoughts? Because a lot of, a lot of entrepreneurs put themselves on the firing line way more than they need to because they don't prepare in their just. And look, I'm speaking from a guy who has gone through enormous amounts of add, distractible shiny object pursuits taking on. I've become better than I ever have been. I think meditation has done more to help me than many things. But what are your thoughts on about the behavior of these crazed entrepreneurs that are driven like crazy, but their drivenness is causing them enormous pain, broken relationships, poor health, all that sort of stuff.

You know, my thoughts are just what you said and it's recognizing that this is both the source of our strength and the thing that gets in our way that the entrepreneur has to sort out. And Joe, we don't have enough time in this interview to unpack all of that kind of stuff that we just described. But I want to come back to this thing on the deadline. Let's take this big, hairy, audacious goal, this 10 year goal. Jim never meant for that to have a deadline. You don't have to get it done in 10 years. It's just like a North Star that you've put out there that you head towards. And a lot of entrepreneurs beat the deadline and others take longer. It's just the fact that you know what the finish line is. And some folks run the hundred meter, you know, sub nine seconds, and some take a little bit longer, right? But hey, we got at least get across the finish line, and that's why you got to set those, those finish lines. And so a couple of ideas that.

I think are most applicable for us in this room.

First is really to get out of.

Your head what you pay people. We do these schedules, comparative studies. I just spoke in front of 2,000 IT service companies last Friday, and they're all out doing their studies so that we can compete with other folks in our space. Look, I think you have a very simple decision. Would you rather have less people paid more and be smarter, or would you rather have a whole lot more lower paid stupid people? I really think it's the fundamental decision we make. And if you're familiar with the Container Store, they've always believed that one good, great employee replaces three good. Steve Jobs always thought the ratio was 20 to 1, 50 to 1. Bill Gates always saw it as 10,000 to 1. One great programmer can replace 10,000. And so I think a key number, if you're achieving what Brook was able to achieve in terms of revenue or gross margin or profit per employee, when you're at her numbers with 20 employees.

You can take what off the table?

Compensation. And so our partner, Andy Bailey, telecom stories, it's not Facebook or Google, but when he started with our habits in 2004, he was averaging about 75,000 gross margin dollars per employee. We think that's the key number. By focusing on that, he was able to quadruple it four times his industry. When you've got that, guess what, you can compensate your people a lot more and still take more to the bottom line. And so what we're seeing is that it's fairness, not sameness. I think that is the most unequal thing. And if you look at sports teams, let's just take one position on a sports team, and they might have five or six that play in that position. Does everybody that plays right tackle make the same amount of money they that plays quarterback in any one of those? No.

And if you look at the delta.

Between first string and second string or third string, if you look at the violinist there in the orchestra, the delta is tremendous. And so rule number one is, what's the first thing? If you've got any kind of number of employees, people come into and ask.

I would like a career path.

What is that code for? How do I make more money?

But here's your issue.

You don't have places for them to move up to. Brooke doesn't. And we don't want to be putting those layers in. The large companies are stripping them out. And so the first thing is you've got to have super wide pay bands. People have got to be able to make two to three times where they started in their same position but with key metrics that are driving that. So I want to take in my buddy John Summers in Allied Printing. Look, this isn't Facebook or Google. This is commercial printing. But his customer service reps who start at 48,000 can progress through a series of. And by the way, we think you ought to give people titles that start from beginner to wizard to maestro. Seven ways that they can get promoted in their position. They start at 48, they can finish at 96. Folks managing print projects come in at 68 and can make up to 140 salespeople start at 60 and can make up to 600 a 10x. And so first you have super wide pay bands. And is it clear what are the things they need to achieve in order.

To be able to accomplish that?

So you take the pressure off people saying hey, I need a career path. Then we think it's critical to gamify games. I just want to share a story. So we get. I think it's the casino industry that understand the psychology of humans better than all of us combined. They have figured out how ways to get humans to sit in front of computer screens where we're just trying to get them to come back from break. I mean, have you been to a casino? Folks don't even want to pee. If they could pee right there, they would, right? They want to be served up food. And by the way, you're having trouble having people work all night. It's not an issue at casinos in which way is the compensation moving. And so I'm like, what is that industry figured out? So we get called into HSN and they're call centers. We're just trying to get folks to upsell. They've got this whole pile of money they can't give away. And so what we did is rather than give money, we said let's give people chances to get movie tickets, dinners for two flat screen TVs.

We had enough money.

We parked a car out in front of the call centers and the result, if we'd promised it, we never got the contract upselling increase. Not 16, not 60, but 260% as a result, just by gamifying the results. And last then I think it comes back full circle to sharing. So I just want to share one quick idea that again we got from John Sommer and it comes back to bonuses. And so first of all, I don't think bonuses ought to be paid out any more than once every year. Sometime way after the end of the year, if you pay it out quarterly, it feels like what part of the regular compensation. And so it starts to become like an entitlement. But here's what John does because he already pays people fairly and they can make twice as much and they know how to do that within their existing position. His retention in that industry is crazy. And when you're making twice what everyone averages in the industry, you've got it right and out of sight. So John's got the base and all of that figured out. So what he does with the bonus is he only pays out 50% sometime after the end of the year and then the other 50% vests over the next five years, 10% in each of those buckets. So as people stay, what's happening to that future buckets? They're getting bigger. And so now we play to Robert Cialdini's psychology. People do more to avoid a loss than to get a gain. And so I've got to think twice, am I going to leave and leave five years of increasing buckets of money, which by the way, you're doing employees a favor. First two reasons people also leave. You make me work with stupid people and you make me do stupid stuff. And what we want as a company is if we have great people, I want you to retain them. You lose a good person, it's hurting everybody around. And number two, a lot of your folks don't have savings. That's one of the real tough things. Even those that are high paid now, they've got five buckets of money that are building out to maybe pay for college, pay for that down payment on a home or whatever. And a company is going to have to offer a huge signing bonus to make up for five years of vesting bonuses out to the future.

My name is Ryan, CEO of DigitalMarketer.com and exactly. I want to talk to you about how to transform from a personal brand from a guru brand into a profitable scalable and if you want to, sellable brand, brand. Now obviously you don't have to do this if you don't want to, but if you want to, it's kind of a cool thing to know how to do. So that's what we're going to talk about. Now there's A big problem. And I guess this is the reason that I want to talk about this today. It's a disease that I see infecting so many of my friends in the entrepreneurial world today. And I call it Guru Itis. And it's literally every single CEO I know wants to be the next Tony. Now, there's nothing wrong with this. If this is what you want, that's fine. But in my experience, what so many people don't realize, the big challenge with Guruitis is while very often you look really successful on the outside, inside you're stressed beyond belief because you're thinking, like, how do I maintain this facade? I gotta look like I got my stuff together, right? And really, I'm kind of screwed up like everybody else, right? You're also exhausted because you're the one doing all the work, right? You're out there doing everything. There's only so much that you can have other people do. And the worst thing is you're trapped, right? You're trapped. You're trapped because you are the business. Worse, you're trapped because you are the product. My business partner, Roland Frazier, who you saw up here earlier today, he calls that refers to that having a dancing bear business, right? You're the dancing bear. And when the bear stops dancing, the bear stops getting paid. All right? So my goal, my hope, is to at least give you a path, give you an option to de gurufying your business again if you want to. I know many of you would actually, though you don't like to admit it, would much rather be famous than rich. And that's cool. That's cool. But if you're like me and you're mostly in it for the money, then I want to show you how you can build a business transition away from a pure guru and into a business that's maybe a little bit more sellable. Now, where I came from, definitely I've been doing this since 1999, made my first sale online in 99, and have kind of started out in the guru space. I mean, I was running stupid ads like this, talking about, look at me, I'll build your funnel. So I went from doing jackassy kind of stuff like that to, with the help from a lot of smart people, launching the helping to launch the brand digitalmarketer.com, which thankfully is relatively well known by enough people to keep my family fed. And it's now a real company and everything. And it's a company that thankfully has value outside of me. It's a company that if tomorrow we Wanted to sell it, my partners and I would make probably more money than we needed for a while, right? Not Roland. If you know Roland, he spends all his money on way too expensive wines. He'd be done in like a month or two. But Perry and I'd pretty much be fine. And so, again, this is what we've been able to roll out and do. So I just want to talk to you about kind of the process of what we went through. If you want to follow a similar path, step number one is you need to materialize your genius. You need to productize your genius. You need to take the voodoo that you do so well, and you need to somehow extract it from your brain, from your general awesomeness, and you need to put it over here. It needs to kind of become separate from you. In other words, you need to not do what a lot of people talk about doing, which is black boxing. Everything that you know. And I see this done, I see this talked. Like, if you want to be the expert, you're the guru on the top of the mountain. Don't tell anybody how you do what you do, because then they won't need you anymore. You want them coming up to you. The problem with that is, is if you're the one they want, you never really get a day off. You can't really take a vacation. And what you got really isn't sellable. Now maybe you're thinking, that's fine, I'll write a book. I've written a book. I love books. I think books are great. I think just about everybody in this room should have a book. If you don't have one, they're good for business. It's a good marketing tool. But this is not what I'm referring to.

Hey, I hope you're enjoying this video. And I want to let you know that I have a new book that's come out. And if you like to get it absolutely free, there's a link below in the description. Or you can wait till the end of this video, or you can Simply go to joe'sfreebook.com and you can get a copy there.

Primarily because no one in the history of the world has actually finished a book. Do you realize that, like, nobody's actually ever read a book? People buy books and they put them up on shelves and they look really nice. But in general, sadly, human beings don't read and finish books. So if we want to get our knowledge out of our head, we want to put it somewhere where it can be transferred. Then I'm not talking About a book. I'm not talking about writing the bible of your industry. I'm really talking about what's your ten commandments? Okay, what is your ten commandments? I came across this accidentally. I remember I was at a really low point in my business career, and I kind of scribbled down on a napkin one day. Here's generally what I know to be true about how my business works. I know that I want to bring some leads in and somebody will buy something small, and then I'll upsell them something a little bit bigger. This napkin that I wrote, which now is framed and in my office, I now refer to as the million dollar napkin. It's a super corny name, but this napkin is actually what was planted the seeds of digital marketer. We first started teaching and talking about this idea of the napkin model. Go from a lead magnet to a tripwire to a core offer to a profit maximizer. This five step funnel concept, has anybody else heard of this? Yeah, that's where it started. It was an accident, but it was the first time I took something that I had and I said, you know what? I'm gonna place it over here. I'm gonna let it stand separate from me. That was when things started to take off. People started to adopt it as their own. The napkin became customer value optimization. Now it's a flowchart. Now I'm beginning to see people print these out. They're turning them, they're making posters out of them, putting them up on their wall, and then eventually became an actual tool that people could use to figure out what's the process of turning strangers into friends, into customers, into raving fans. And that's the customer value journey. Now. You know you've nailed it. You know you've got it right. You know that people are really beginning to adopt your framework when they're doing stuff like this. When they are taking your framework, when they're taking your concept, they're printing them out, they're turning them into posters. That is when you have it. That is when this genius that is yours can now be consumed by someone else. They feel like it can be theirs. Now, the important thing I want you to keep in mind, to pull this off, you must fully transfer your genius onto the artifact. Okay? You must fully transfer your genius on to the artifact. It must hold the power or you will remain trapped. So when people say, oh, you're so smart, you're so great, no, no, I just do what I talk about on that napkin thing. It's not about me. It's about that you have to learn to redirect the attention away from you and onto the artifact if you want to be free. Does that make sense? It can't be about you. This would be the hardest thing in the world to do. But if you want it to, if you want to be free, it's got to be about the thing that can be transferred and your brain ain't that. So my first question for you, I'm going to have three Question number one, what's your ten Commandments? What's your napkin? How do you materialize? How do you productize your genius? That's step one. Step two, we need to profitize your message. That's not a word. Made it up. What do I mean by prophetize? Well, I don't mean prophet pro F, I mean P R O, P H. And the question I have for you is, are you a prophet or are you a God? Are you a prophet or are you the God of your brand? How have you positioned yourself in your business with your brand? I want to kind of take you back, and I want to show you some. Some of the homepages for DigitalMarketer.com and I want to see if you notice any themes. So this is kind of where Digital Marketer started. Not bad looking. Then for some reason, we got worse. Not really sure how that happened. Then we got a little bit better, right? And then we decided, oh, maybe we should capture some leads. So we did that. And this is kind of where we sit today, right now, throughout all the different changes, one thing has remained consistent. This jackass has not graced the top of the homepage. Right? My face hasn't been at the top of the homepage. And I would submit to you that if your mug is at the top of your homepage, you are likely positioning yourself as the God of your brand and not a prophet for your brand. Now, this is where I want to kind of pause for a little bit and let's talk about what's the role? Right? What should your role be? Let's think about the Ten Commandments, Moses coming down from Mount Sinai. Even if you haven't read the book, you've probably seen the movie, right? Charlton Heston, long beard. So up here at the top of the mountain, that's God, okay? That's not you. Now, I know that's gonna be hard news for some of you to swallow, all right? That's not you. And the reality is you don't want that to be you because God doesn't get a day off, right? God doesn't get to take a vacation. Who are you? You're the messenger. You're the prophet. You are the guide. You're the one coming down with the tablets, which is your message saying, I have the good news. You are the messenger, bringing that to your customers. So the question that I have for you, that I want you to ponder, this is question 2 of 3. Are you currently positioned as the prophet for your brand or the God of your brand? Prophet for your brand or God of your brand, how are you positioned? Step three, we need to deputize other true believers. So we've crafted our message. We've separated it from us. We've begun to be the prophet of our brand. Now it is time to gather others to the cause. It is time to make disciples of all nations. Right? So we need to deputize other true believers for us. At Digital Marketer, we did this formally with our certified partner program. We said, let's certify agencies and consultants to teach our stuff. Most people would never do this. Have somebody else teach my content. That's my content. They'll never do it as well as I can. Some do it not as well, some do it better. Recently, one of our certified partners pitched our stuff into Southwest Airlines. I don't know anybody from Southwest Airlines. They did, right? We have them taking it into other nations in different languages that I don't speak because I'm only kind of good at one of them. Alright? So that's one of the ways that we did it. Another way that we did it is at our event, Traffic and Conversion Summit. I remember Traffic and Conversion Summit one. I was on the stage all three days, even when I wasn't speaking. I was terrified that somebody was going to say something that went against something that I said. So I made sure I was on the stage, like monitoring them, like sitting there in a stool just judging them.

Right?

The most recent Traffic and Conversion Summit. The most recent driving Conversion Summit. Three talks, which is about three more than I actually wanted to do instead. I wanted to make room for our customers. I want to make room for our members. I wanted to make room for our certified partners. I want to make room for our customers and all the other folks over there, our team, our employees. I want to make room for them to come up there for those messengers. Now, I know what you're saying. Yeah, but if I make room and all these people come up, what if they leave? What if I make messengers of people, I make gurus of other people and they leave. I want to show you One other picture. This is me on stage hugging a banana. The man in the banana suit is Russ Henneberry. The rest of the team there is Lindsey, Susie, and you can see the top of Molly's head at this event. These four people who are critical team members to Digital Marketer all spoke and were featured prominently on our stage today. None of them work for us anymore. They've all gone on to do other things. They've all gone on to do other things. They left the right way, love them to death, miss them terribly. But the brand goes on. The company goes on. The messengers have changed, but the message remains the same. The messengers have changed, but the message remains the same. So I want you to write this down. When you let go, you make room for others to take hold. If you grasp onto everything that's yours and you claim it as your own and you don't let anybody else have anything to do with it, you know what? There's not room for them to get hold. When you let go, you create room for others to take hold. And you know it's working when people start sticking your logo on their stuff. I'm proud of the fact that I've walked into coffee shops all over the world and I've seen people with our logo on their computer. That's crazy to me. But it's because we let go and let them take hold. So the final question I have for you is, who do you know who could help spread your message? Who on your team could be spreading your message? Which customers could you certify to let them talk about your stuff? Who could share in spreading your message, knowing they won't do it as well as you, but knowing that they'll get the message out to more. So just to review, materialize your genius, separate it from you, have it be something that's transferable, that's passable, prophetize your role, deputize other messengers. And the final action item that I would have for you, I would ask you to mentally shift your role from guru to the world's best spokesperson for your brand. Mentally shift your role from guru to the world's best spokesperson for your brand. Will any of you in the room do this? Yeah. If you will please repeat after me. I am not my company. My company does not own me. I own my company. Say it again. You own the company. The company doesn't own you. That's what I wanted you to hear. Thank you.

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