Billion Dollar Bullseye with Jonathan Cronstedt

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This is Business Lunch with Roland Frazier and Ryan Dice. Welcome to another episode of Business Lunch and today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com www.businesslunchpodcast.com and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

And for our next person who is going to share with you, I'm going to introduce, I'm going to ask if we can get some really amazing rock star walk up music for him picked up back there. So I'm going to talk for a minute to give you a minute to find that but I want to like really, really powerful rock star music. Okay, so this, I think he might tell the story of how we met so I won't tell that but I'll just tell you a little bit about this guy. When I met him he was an affiliate manager for, for someone who I did a product launch for and it was the first product launch that I ever did. I met him, we ended up becoming friends and have been friends for quite some time now. And I watched him go from affiliate manager to a kind of a consulting business that he did for himself to then working with some of the biggest names across the certainly the information business into a role at a company that he then worked to build which he exited at. Well, he's still involved, he's still on the board. He's not the co CEO anymore, a company called Kajabi that got a $2 billion valuation from Tiger and a bunch of other people. So you've got somebody that has truly done something amazing. And to Chris's comment, John still has that same thing he's still like. Because he'll joke about my 12 point double unicorn plan, which he's actually going to share with you as to how you do that. But he's like, sometimes I don't know how I did that. I mean, I know how I did it if I go back and broke it down. But he ultimately went and is creating a book about how he did it and how one can do that, because he got that question so many times. And I'm not going to take any of the thunder away, but I just want you to know that I have not met anyone who is more sincere in their desire to help people, who's more generous in their willingness to work with you and talk with you at any level. You don't have to be intimidated to talk to John because, you know, oh, this Guy did a $2 billion company and my company's just a million right now. I suck.

Right?

You don't. Don't be me in that room full of awards that the guy had. Right. Know that everybody that's here is here to share with you and expects and welcomes your questions and really wants to help you get to wherever you want to get. And wherever you are, there is somebody that has already been there. So we try to bring those people to connect you with them. But John is presenting for the first time. He's sharing with us about the book that he's writing about that process. And let's give him a big hand with some good walk up music from the back. Jonathan Cronstadt, also known as J. Cran.

Thank you. Thank you so much. All right, all right. Gosh. With. With an intro like that, pretty much half my presentation is already done. So that is thrilling. Hi, everybody. Just so I know by show of hands, how many of you have heard me speak at any event, Roland's or otherwise, before? Okay, very cool. The reason I ask that is because everything you're about to see is your fault. And I want to tell you why. Because after this whole experience of starting from where Roland and I met to now, the question that I keep getting after this amazing event brought on by Tiger Global and others is, how did you do it? How did you do it? How did you do it? And up until now, my answer has been, I don't know, ask me a question I can answer. And then all of a sudden, after plenty of time of people asking you a question, eventually your brain forces you to answer it. And that answer is what you're going to experience today. So when Roland and I met, I was an affiliate manager for a company called Traffic Geyser. I had just come out of my fabulous bankruptcy from the mortgage business. It was a spectacular downfall. I was the exact cartoon character. If you've seen the movie, the Big Short, the guys in Florida, that was me. Except I was probably a little worse, according to my w. So after that, leading into this world of digital marketing, I happen to be an affiliate manager. I get an email from a gentleman who says, hey, I'm thinking about promoting a product launch. Would you help me? I'm like, yeah, of course. Sure. So we go through this product launch and we're doing really, really well. It was called Main Street Marketing Machines. It was put on in conjunction with a guy named Andy Jenkins. And we see this leaderboard in the office, and this mms, Inc. Just keeps going up and up and up and up the leaderboard. I'm the affiliate manager. So everyone's like, who is mms? I'm like, I have no idea. But they're doing really well. So we then have the live event. Roland Frazier walks in, graciously walks up to me, and at a live event with, you know, thousand or so people, a lot of people asking to meet me, Roland walks up like, hi, you know, I'm Roland Frazier. I'm like, hi, Jake, great to meet you. And I, you know, go on to whatever I have to do. And then he's like, oh, you know, VR Frazier. And I'm like, mms. Oh, my God, you're mms? He's like, yeah, that's me. It's great to finally meet you. You know, I. This was really fun. My wife and I were over in Europe. We got stranded due to the volcanic eruption. Our flights got canceled. So I just did this product launch thing in my hotel room just to see how it went. And I was like, wait a second. So you got a laptop, you, stranded in a hotel room, you've never done this before, and you just trounced a whole bunch of names that I have been catering to for the last year, desperately hoping they would promote this thing. And you just shot the lights out. He goes, yeah, it was really fun. I was like, okay, this is a guy I'm going to pay attention to. He goes, you know, next time you do this, I'd really like to, like, do it on purpose. Like, let's. Let's make it a thing. I was like, okay, yeah, sure, buddy. Let's go. So six months later, Main Street Marketing Machines 2 rolls around, and Roland says, I'm going to go. After that, I Watched him sell more as an affiliate just from his promotion than most companies make in product launches in their entirety. He blows everybody out of the water by a insurmountable margin. And afterwards, something happened that completely shocked me. Now I've been a part of hundreds of millions of dollars of product launches. This actually has never, ever happened. He reached out to me after the launch was over, which was my first area of concern because we were done. I was worried that something went wrong. And he says, hey, I wanted to say thank you. I fell out of my chair. He then invites me to the Grand Del Mar, now the Fairmont Del Mar, and takes my wife and I out to Addison, the Michelin star restaurant in San Diego. Puts us up for the night in the hotel. And to this day, he is the only affiliate partner that has ever said thank you in any tangible fashion after a launch. So what I can tell you, after having known Roland for 12 years, you will find that the longer you are around him, you can't help but suck up what he is talking about, what he is presenting on what he is doing in his business life. And the longer you're around, the better it's going to be. And that holds true back then. It's held true the entire time, and it certainly holds true now. So, very excited to dive into what I lovingly call my seven point almost never feral double unicorn strategy, the billion dollar Bullseye. Now, the reason I titled it that is because every time someone would ask me, how did you do it? I would respond with, well, I don't know. It's not like I have my 7 point never fail double unicorn strategy. Now I think I have it almost and we're going to dive into that today. So the question I want to start with is why? Why are we here? Why is Roland putting on this event? Why are you all here looking to improve either your existing businesses, acquiring other businesses, doing a roll up, exiting. Why are we doing this? The answer is simple. It starts with purpose. Purpose is why we are here in every category. And you're going to find that where this sits foundationally is both meant to be instructive, it's meant to be multiplicative, but it's also meant to give you some foundational principles that for me, I have held onto in a season that for the last 18 months has been really, really confusing. So before we get into the billion dollar Bullseye, let me tell you what life has been like after the billion dollar Bullseye. You see, the Harvard Business Review wrote an article and it said, as the Title Congratulations, you've sold your company. Now be prepared for depression. Not exactly the title that you would think. However, I can tell you that it is actually more accurate than you can possibly fathom. So let's talk a little bit about the journey of Kajabi that I participated in and how we got to today. So I joined Kajabi approximately six and a half years ago as partner and president. Company was founded by Kenny Reader. Six years prior to that I joined and we were at about $6 million in ARR and about 25 team members now ARR for those of you that don't know SaaS annual recurring revenue essentially point in time forward looking $6 million company now I had known Kenny since the founding of the company. They actually hired me as a consultant for six months. Fired me to work with Frank Kern because he was shinier. Took me to a coffee shop, said hey, small company, we got to reallocate the resources. I said that's fine, let's stay close, we're great friends. So we continued hanging out. They hired me back two years later as VP of Business development. I quit two weeks after they hired me back at the same coffee shop because I got the offer to be CEO of Digital Marketer. We were even after that because they fired me. Then I quit. Slate was clean. We stayed friends. On goes my career. Had the chance to work with Digital Marketer. Had the chance to work with Success magazine. Had the chance to do a whole lot of fun things, all the while renting an office from Kajabi. When Success magazine said the job is only available in Dallas, I said I'm not moving. They said okay, sorry, I'm sitting in the office on Monday morning, Kenny walks in, how was your weekend? I got to figure out what I'm going to do. I'm not moving to Dallas. He said, well we should probably talk because it's easier than moving your shit out of the office. So we end up coming to an agreement of where we believe the company can go. We end up coming to a very CFE style agreement of what my role would look like and how I would participate in the cap table and we got really busy. So we took that 6 million in ARR and 25 employees and over the next six years we built it to north of 100 million in ARR. 400 team members. A beautiful 55,000 square foot office space next to the Irvine Spectrum that is a wonderful exhibit of never used office furniture that our team will no longer ever come back to. We went into Covid with 80 employees, we exited at over 400. It's been a wild season, and during that season it was bootstrapped and profitable. To first private equity experience with our partners at Spectrum Equity. To second private equity experience in 2021, led by Tiger Global with four other firms. And we ended up at a $2 billion valuation, raising $550 million. It's been wild. And so, as you can imagine, that journey taught me a lot. But what it didn't teach me how to do is what do you do after that journey? And I wish that's the part that I had known going into it because I probably would have structured a couple of things differently. It's sort of like any of you in here. You probably got into business because you want to get out of business. Whether that means you exit, whether that means you systemize it and keep sending you checks. I can tell you that what that really looks like is you're basically a dog chasing a car. And when you catch it, you're still a dog and it's still a car. And now it's, what do I do now? Well, what I learned very quickly is you cannot escape the responsibility of tomorrow by evading it today. So I did what any of you would assume. Somebody like me, you know, hard driving, extremely successful, very good looking and intelligent. How would I address a problem like this? Well, drinking and thinking more of the former than the latter, but there was some of the latter involved. And you heard Roland talking about today the value of creating these frameworks around your experience, the value of being able to codify that knowledge so that it becomes a future lens, a future mental model that hopefully shortcuts your processes or allows you to generate results more powerfully. I would love to tell you that that immediately came to me, but it really didn't. It literally was speaking at this event multiple times, having people ask me, me being frustrated that I didn't have an answer, me sitting at home, me drinking some more. And all of a sudden it then, I don't even know when it happened, but it all happened at once. It wasn't like, okay, I'm going to start with this model and something's going to come up. And then iterate, iterate, iterate, literally all at once beamed into my brain. This is how it showed up. And so this is the way that I'm going to roll with it. So bottom line is it is going to start with purpose, but it's probably not going to start with purpose the way that you're going to be thinking about it and and the disclaimer about this framework is, what I'm going to share with you will make you undeniably rich. But be forewarned, it is going to make you rich enough to have an existential crisis. Now, I know everyone in here. Even though I'm warning you that it will create an existential crisis, I am positive that every single one of you are still going to want to experience that crisis for yourselves. So I can tell you, it's not the answer. But just like Jim Carrey says, I wish everyone could get rich and famous so they would find out it doesn't solve any of their problems. Doesn't mean anybody doesn't want to try it. So let's talk about scoring darts. So the way that I think about business is in a dart game, if I was able to make my target larger than anybody else's, I'm always going to win. If I can make my target bigger and easier to hit, I'm going to beat anyone I come up with. So I really started thinking about how Kajabi, a company that literally popularized an entire industry that, when it was started, barely existed. How did Kajabi continue to make the target large enough that even when we weren't throwing well, even when we didn't have the best darts, even when we weren't the most skilled, our target continued to get bigger and bigger and allow us to create outsized results? That's where this framework comes from. So as you're aiming at a larger target, the great news is you're going to find out that you're the one in control of the target. Now, here are some hard truths about you being in control of that target. Not all targets are created equal. All of the targets you have in your business, you're going to find some of them are really important. Some of them are massive needle movers. Some of them amplify profits. Some of them amplify attention, amplify audience. Some of them are just drudgery that really have nothing to do with anything. But the real question is, how do you figure that out? The unbalanced performance often isn't realized until you've already tried them. So when I look back on our experience, I placed way too much of a burden on people, on sales and on marketing, to support, supplement, or surrogate the real work. And for everybody in here, I promise you that the moment you realize how often you do this, it will not only inform you, but it will shock you. We as entrepreneurs love the things we enjoy working on, but it oftentimes prompts us to miss the areas that actually drive the real value and bring billion dollar potential to a business. So for the business to change, the formula and the focus had to change. And that's where we started on this path for our billion dollar bullseye. And these are seven areas to relentlessly focus on in your business. Purpose, profit, product. By the way, don't worry, please don't try and write all this down. You're going to get all the slides. Deanna has the link. Prestige, promotion, persuasion and people. And the most controversial element of this is why people is the last of the P's that you're going to focus on in your business. But we'll get to that. So let's talk about purpose first. John D. Rockefeller said that signal of purpose is one of the chief essentials for success in life, no matter what may be one's aim. So when we look at purpose, there are two key areas that you're going to want to focus on, the first of which is your internal purpose. Now this is one where you're probably expecting me to give you some flowery, beautiful pros on if you start with why that your company will magically align, that your employees will be magically engaged, that they will all be intrinsically motivated, you will all take on the world together and everything will work really, really, really well. How many of you have ever tried this exercise, tried mission, vision, values or tried any of these why alignment exercises only to realize that none of your team members give a shit. Anybody? Anybody? Okay. Me too. Did it multiple times. This internal purpose doesn't need to be that. This is just for you. This is why you are doing what you're doing. And this why for you may be Toms maybe I want to make sure everybody else gets a pair of shoes whenever we sell one. Everyone gets a pair of glasses whenever we sell one. Over at Warby Parker, it might be that core to who you are. It might be that exciting of a purpose for you. You also might be Frank Ofelia who sold Kinkos. And in my interview with him, he basically said the business was for sale the day that he opened it. That there was no love of copies, there was no desire to innovate. It was just there's a lot of copies being made. I can make a bunch of money. I'm going to make sure I'm selling the shit out of those copies. This internal purpose is your driver. It is why you are going to do what you're going to do. The second piece is your external purpose. Now this external purpose is not for your team. This is for your customers. This is the part of why does the business exist for them? And you'll notice that it is fairly absent from the team perspective. So again, your internal purpose of why you do what you do, your external purpose of why you do what you do, for whom you do it for. Now, at Kajabi, I was very fortunate. This was something that we had nailed out of the gate both internal purpose and external purpose. The internal purpose was that Kenny wanted to build a kid's sprinkler toy, but he didn't want to be in manufacturing. So he decided to create a materials list, to go to Home Depot, some video tutorials, and let everybody build their own sprinkler toy. That was his why. And as an engineer, there was no platform that he could cobble together or connect to make that happen. There was the idea, there was the impetus. He knew why he was doing what he was doing. When I joined six years later, my internal driver was I wanted to take something to the moon, plain and simple. I wasn't sitting here thinking necessarily that digital education products was something that really would take me there. My desire was to find something that I knew I could massively impact and have a hell of a lot of fun doing it. Now, what I found is over that time, my purpose expanded massively and the external purpose actually drove even more of my internal purpose. Seeing the transformative power of entrepreneurship in the lives of the people that we had at Kajabi that were impacted by it. And it wasn't even the stories of, yeah, I made a million dollars last year. It was, I was homeschooling five children and I loved my music and I couldn't go on tour because I was homeschooling my kids. But I learned how to do Facebook ads to sell my music, and I made enough money that I didn't need to go on tour. And I figured other musicians would like to know that. So I launched a business, made $740,000 on launch, retired my husband, who was a long haul truck driver, and our first big purchase was a dining room that could seat 12 people because we had never had a table big enough for my five kids and any other family members. All of a sudden, that purpose got a lot more real for me on the external side, but it wasn't where I started. So the reason I talk about this value of internal and external purpose is purpose is a necessity. You're going to find that the first three areas we talk about, purpose, profit, and product, these are foundational without these concepts, the business will never, ever, ever go anywhere. Everything else that comes after that only serves as an amplifier. And you'll find that if you use any of the amplifiers as a surrogate for these core three, your business is not going to scale and it's not going to work. So you may be asking. Great J Cron, that's wonderful. You've now challenged my beliefs on motivating the team or my internal, my external purpose. How do I build a company around these concepts? Where do I start to have this purpose become real? What's my first step? The first step is build in public. So I was talking with Adam from retention.com last week and he was talking about how when he met me at War Room two years ago, he asked me how do I recruit, how do I get my company culture right? What do I do? And I said, well the majority of the ways that companies go about this is wrong. This push strategy of mission, vision, values or why we do what we do has one of two paths that always go poorly. Path number one is it's a top down decision. The team doesn't care about it anyway and they ignore it and management doesn't understand why they're not excited. Option number two is you then build it internally, you co create it and now what you have is something that's so diluted based on every employee's buy in to necessarily buy off on this. It's not effective and doesn't serve its purpose anymore. I don't think anybody in here knows of any company that doesn't have mission, vision values, that doesn't have a why of some kind, but yet they're not successful. Building in public allows you to move it from a push strategy to a pull strategy. It allows you to show the world what you're doing, why you're doing it and whom you're doing it for. And it becomes a methodology of attraction rather than a push strategy of you need to take this because you work here. This is something that is the most transformative way that you will find to articulate, improve and optimize both your internal and external purpose in business. And I promise you this will be the biggest trend of entrepreneurship in the coming decade, surpassing all others. It answers your content questions, it answers your culture questions, and it answers how do you scale internally with systems that people are excited about. So let's move on to the second area of our bullseye that we looking to expand. So one of my favorite authors wrote the book how to Get Rich. Felix Dennis said expansion, it's vanity. Profit is sanity. Overhead begs to walk on two legs. He's a poet who also built a billion dollar fortune. And this quote for me reminds me that profit is absolutely essential in your business. That if you do not have profit in your business, you don't control your destiny, you don't control any aspect of your company. And we're now learning today, especially in technology, that there were people that had business models that were essentially, can I sell $100 bills for $20 because the financing is available? And the answer is yes, you can. As long as the financing available, it's no longer available. So you're going to see a whole lot of these companies literally crash and burn. That had bad economics to start with and nobody should have given the money based on those economics to begin with. But we live and we learn. So the way that I would explain this is, if you know your numbers, you're going to know your business. If you have no numbers, you have no business. So let's talk about what we learned at Kajabi and how we handled this. Up until partnering with Spectrum, Kenny and I had an extremely sophisticated financial model. It was Kenny and I in QuickBooks. And as you can imagine, a company of our size at that stage typically has huge financial controls. Looking back on it, I wish we had that earlier because it's something that will teach you more about your business than you ever have before. So for all of you in here, the businesses that you have or the businesses that you're partnering with, how many of them would you say have excellent financial controls? 1, 2, 3, 4. Cool. The biggest thing about excellent financial controls is do they really show you what you need to know to make intelligent decisions? So a lot of people can tell me what their top line is, A lot of people can tell me what their bottom line is. I mean, even fewer people that can tell me what fringe up compensation is or who can tell me what a fully loaded set of numbers are with allocations. Now, what that means is as you look at how your business scales, do you know what a new customer costs you to get? Do you know what a new customer costs you to serve? Do you know what a new customer costs you in the allocations of all of the departments that they're going to touch in the business? Because if you're not looking at a fully baked set of numbers, you might think that you're doing well making it up in volume, only to find out that the bottom line is less, the top line is more. And now you've got a whole set of headaches you weren't prepared for. So at Kajabi, what really served us well here, comparative to the rest of our set of competitors in the world of technology, was being bootstrapped. Bootstrapped and profitable. Keeps you honest. Institutional capital typically makes you dumb. You heard Roland talk about his friend who won't invest in companies that have new laptops everywhere. All MacBooks, all the newest models. It's entirely true. And you'll find that in the investor conversations that you have going back to Gretchen's point about what happens if I identify as an investor and somebody thinks that I'm just bringing a checkbook. What you're about to find out is anyone who's dumb enough to think that because you call yourself an investor, your checkbook's immediately open. It means they're probably not sophisticated enough to deserve investment, because even the funds that have more money than God don't walk in with an open checkbook. We didn't sit down to lunch with Spectrum and get a term sheet. They look at every aspect of your business. They look at if it's even worth investing in before there's ever a discussion of how much money they're going to put forth. So it's very much something that by identifying as an investor, even as a giant private equity fund, or in my case, a family office, it doesn't mean you're bringing a checkbook. It means that the conversation's open. And often it means that if you need money, they're probably going to help you find the money, maybe not even necessarily have it be all of their own. So it was very much something for us that being profitable was a necessity because it allowed us to retain control of our vision. It allowed us to bet the long term. It allowed us to be able to remove the temporary aberrations of the market from our business plan because we believed in the industry we were in and we knew if we were in it long enough, we were going to win. That's what profit allowed us to do. So the takeaway from the profit section is know your numbers. Don't treat them like an afterthought. Ask yourself, truly, when's the last time you looked at them? How often are you reviewing them? Who is holding them accountable? And more importantly, who has the power of the purse strings in any company that you're either partnering with or that you're operating yourself? If you're not signing the checks, I promise you, checks are going out that shouldn't be signed. So this is an area that you cannot overestimate its importance. It is why it is an absolute essential in your business. So let's talk about Bullseye expansion number three. Brian Chesky, Airbnb Build something a thousand people love, not something a million people kind of like we're talking about product. This is definitely a lens on your business that is probably the one that most entrepreneurs avoid the most because nobody want wants to hear that your baby's ugly or that your baby is poorly behaved or is causing trouble at school. This is the area that everyone will focus on anything imaginable to never ever, ever look at this again. And that's why this is the single biggest lever that you can possibly find. This is the thing that everyone goes to every conference imaginable looking for the ultimate Facebook ad hack or the next sales funnel or the super cool whiz bang AI connecting to the API that goes to machine learning that builds your business for you. Whatever it is that you're looking for, odds are it's because you don't want to look at the product with an objective set of eyes and ask if it really is doing what it is meant to do. And we're going to talk a little bit about this from the SaaS lens and the idea of product effectiveness. And we're going to talk about some individuals that have literally been the David to industry goliaths and how they won with a purely product strategy. So MJ DeMarco, one of my favorite authors, wrote the Millionaire Fast Lane talks about this as Whereas a meritocracy pulls power to the skilled, a product democracy pulls money to the value creators, businesses who grow organically through peer recommendations and repeat customers. Compelled by a distinguished product and service not readily offered elsewhere, your product contagiously sells itself. So let's talk about how we did this at Kajabi Kajabi, we had a network effect that was so unbelievably spectacular. Born out of how the company was originally launched and carried through how the company grew in its category. This was an area where, if you remember, Kajabi actually was coded over the course of a year with no customers, wasn't even publicly available. Then Kajabi went out to three industry icons that were going to be doing product launches and said, hey, we'll handle it for you for free. We'll do everything. All that we ask is you do it on the platform and we get a little Powered by Kajabi icon on the page with you so that we can sign up a wait list. The wait list of interested people not knowing what it was grew and grew and grew. It very much created the sent with Hotmail effect for those of you that have followed those network effects that Hotmail was able to create. And when Kajabi launched on day one, it was a $1 million ARR company when it was publicly available the first day. Very, very rare in software, very rare in any business to be profitable on a recurring basis on day one. But it was that network effect that created that within the product. It had an element of a snowball where anyone who was teaching a course, everyone being taught that course, are probably asking, what could I teach? What course could I offer? So simply by being exposed to the product, it meant other people were going to be thinking about using the product. That was our virtuous cycle within our product dynamics. And it's why product is an absolute necessity. So let's talk about how powerful this can be when you look at it through the lens of what's called net dollar retention. How many of you have heard of Figma? Anyone? Okay, a couple of people. So Figma is a super cool design tool that essentially ate Adobe's lunch. And they ate Adobe's lunch so well that Adobe had no choice but to buy them for the biggest nosebleed multiple ever offered in one of the worst technology environments ever created. And they didn't do it because they're dumb. They did it because they understand basic math. So if you look at the way that Figma operated, they knew that with every dollar that they got in year one, it was worth a $30 in year two and is worth $1.69 in year three. So you see something that compounds exponentially and before you know it, Photoshop is irrelevant. So Adobe did what any company in their position would do. They bought them to go away. So what net dollar retention means is what degree of confidence do you have in your business that the dollar you get today is worth a dollar plus something tomorrow? The thought exercise for net dollar retention is, and it's normally something again that scares the shit out of a lot of people. If I told you tomorrow morning we are going to turn off all sales and marketing in your business, what happens to your business? Guys? Anybody else? Anybody have a better answer? Doesn't die. There you go, Stagnant flat. You ask somebody what happens if I pull away your marketing and your sales? They freak out because it's like, well, that's my business. Well, no, it's your business today. But if you're hoping to hit something much, much bigger, it can't be your business because those areas Are amplifiers, they're not essential. So let's talk about how we continue to expand. Our Bullseye says Walt Disney, do what you do so well that they will want to see it again and bring their friends. This is an area in the amplifier that is going to assist you in achieving with your product what you're hoping to achieve. And that is the area of prestige. How prestigious is your customer experience? So Maya Angelou said, I've learned that people will forget what you said, they'll forget what you did, but they will never forget how you made them feel. Now the reason that that prestigious experience is so critical is in the early stages of your business, you are going to use prestige to supplement areas that are meant to be product led. The reason you're going to do that is because product LED is expensive, it's hard, it's elegant, it can't be forced. It needs to be co created with your user base. So the way that you're going to co create that your users in the beginning, without sacrificing what the product needs to do is that prestigious customer experience. This for us at Kajabi was a gigantic unlock in our universe. Because as everyone in our industry was asking, how can we do less, how can we serve less, how can we be less hassled? We kept asking how can we do more, how can we serve more? And how can we show up where nobody else is? So when everybody else was going to knowledge bases, we offered support tickets. When everybody else decided they probably should offer support tickets, we offered live chat. When everybody else started to offer live chat, we decided we're going to offer 24, 7 live chat, 365 days a year at every single level. We asked how can we make their choice of purchasing and partnering with Kajabi a prestigious experience, Something that advances and excites their status, their momentum in their business. This was an amplifier that for us truly change the game in the business. In an industry that our success was based on the success of our users. And without that prestigious customer experience, we would not have been able to continue iterating on the product and rounding out those rough edges that always exist in products. If we didn't have a prestigious customer experience for people to enjoy along the way. So the takeaway, what do I do next? It's pretty simple. I want you to experience the experience. So when's the last time any of you, for any companies you either are considering purchasing or own, actually experienced your own customer experience? Be honest. Yeah, nobody does it. I rarely did it either. But now I know how important it is because now, as a board member, I'm mystery shopping the company all of the time. Mainly because all the problems I uncover are no longer my problems, but I now understand the value in what this is. Do you know that when Disney creates an audits and experience, it doesn't start at the ride. It doesn't even start at the line to the ride. It starts when you're pulling into the parking lot with the parking lot attendant. And if you even want to take it a step further, they even sit on the city boards in Anaheim and in Orlando to design the road and traffic flow that goes into the park. They audit every single touch point, even the touch points that you're not thinking of, that you're not noticing, and they're asking at every single touch point, does this enhance the experience? Does this add more prestige? Or is this a prestige detracting element and we need to work on it? This is an area that if you do this, the amount of, I guess I would call it compounding gains in your business that you will find cannot be overstated. So we're now outside of our first amplifier, Prestige, and we're now going to move into the next one, promotion. So Steve Jobs said, master the topic, the message and the delivery, and that is promotion. Promotion is going to be anything related to marketing, not sales. This is only the world of marketing. And what you're always going to be doing is promoting the promise. What is the promise of what you offer? What is the promise of the business that you acquire? And how well is it being promoted? Right now, Elon Musk talks about it, that brand is just a perception, and perception will match reality over time. So if you do this consistently enough, the world can't help but catch up with how your marketing is positioning your brand. So at Kajabi, where we really learned this was understanding what truly drove results in our business. So we tried multiple times to perfect the paid media scaling. We tried to perfect the sales process. But it wasn't until we unlocked two core areas that we watched our promotion completely take off. And those were areas about revenue and about recognition. So we created the Kajabi Hero program. And the Kajabi Hero program was designed to give people an opportunity to feel involved in something bigger than themselves. Online entrepreneurship is very lonely. Tremendous amount of screens, tremendous amount of time telling your family that you're actually doing something, and they're like, whatever, Nobody makes money online. It's a scam. It's definitely a weird, weird, weird world. The way that we show up for those people is with a hat, is with a T shirt. Whenever they experience revenue in their business, we were sending them something in the mail asking them to post about it. And it originally started with a T shirt. It now has moved to a multifaceted, multi tiered recognition program that follows people all the way into multiple seven figures of their business. It comes with different bespoke communities. It now has a full customized shipping box experience that opens up, creates a whole bunch of theater. It's super, super fun. It didn't start there, but conceptually that's where it began. And I want to talk about that too, because then it moved into our perpetual promotion machine where when we recognize somebody with a growing business going back to our network effects created in product, we would then encourage that person, after we recognize them, to join our partner program. So congratulations, you're experiencing success. You're teaching people in the world via this platform. I bet all the people that are being taught through this platform would probably love to know what platform you use. Why don't you use this affiliate link? And we'd love to also send you some money. We watched this flywheel go faster and faster and faster and faster. The more partners that we got, the more heroes were created. The more heroes were created, the more partners we got. And it just keeps going to this very day. It is still the most effective organic channel we have. And it all stems from Napoleon Bonaparte. My life as a general changed when I realized men would die for a blue ribbon. If you are not incorporating recognition into your revenue strategies, I'm telling you, you're missing it. If you're not incorporating recognition into your employee culture, you're missing it. This is one of those unlocks that I cannot overstate. Now, the other one is a quote that I actually believe in so strongly enough. It's going to take four slides. So how many of you actually have the attention span to stick with me for four slides? Awesome. Some, you'd be surprised. Some people are going to be honest, like, no, man, I'm out. So I see that guy right there. He's taking off, but he's recording. It's cool. So the way that this quote goes is it is from a very obscure book that when it used to be available, I believe boardroom was charging $800 for it to get a hold of this book. Anyone know the book I'm talking about? Thank you, Breakthrough Advertising. Eugene Swartz. So let's go ahead and let's do some reading, everybody. So let's get to the Heart of the matter. The power, the force, the overwhelming urge to own that makes advertising work comes from the market itself and not the copy. Copy cannot create desire for a product. It can only take the hopes, dreams, fears and desires that already exist in the hearts of millions of people and focus those already existing desires on a particular product. This is the copywriter's task, not to create the mass desire, but to channel it, to direct it. Actually, it would be impossible for anyone advertiser to spend enough money to actually create this mass desire. He can only exploit it and he dies when he tries to run against it. So how many of you understand what he just said? Awesome. Who wants to tell me what it means in real life? Raise your hand. You first. Stand up. See, you raised your hand is like a bit of a habit. That was really fast. All right, if I screw this up, See, I went too high because I was nervous. I went too low. So the liability behind you was less than liability in front of you. No problem. Always mitigating risk. Hi, TC here. Basically what he's trying to say is that the product is the most important thing. All the copywriter's job is to elevate what a product is. It identifies what the challenges and the.

Issues that potential customers out there have.

And just highlights it and says, hey, I have a product here. It can fix it. Thank you so much. What TC is talking about. And it's something that, again, going back to what I said in my own life, of the areas in my business that I would regularly ignore and look for something to supplement or surrogate them. Promotion was my crack. That was where I would always go if the product wasn't doing exactly what I wanted, get a better campaign if the product feature I wanted wasn't out yet, hype the shit out of what we have. Anyway. It was the area that I see almost every business owner focus on to the detriment of the business. Because the belief is, well, if I just had the right marketing guy or if I just got a better agency, or if I just fixed this onboarding or acquisition strategy, then I would win. But really, what all of those are saying is, my product's bad and I'm sad about it and I don't want to look at it and I don't want to improve it. So you keep going down this rabbit hole of, well, how do I market this thing better? And the reality of it is you can polish a turd, but it's still a turd. And this is an area that I see so many people get so lost in business and misallocate resources, misallocate team and misallocate intelligence because they're unaware of what they're really avoiding by focusing in this area. So the take home for this is pretty simple. Use the Facebook ad library and browse your competition. This is something that is so effortless, so easy that every ad that is available and is being run, you can find it there. If you see the ad appearing more often over a consistent period of time, it's because you know know it's working. And if you're not sure that it's working, it probably means they're a dumb competitor and you shouldn't follow what they're doing anyway. But this is really going to introduce you to the fact that you don't need to spend all of your cycles on the marketing of a thing if you have the right thing. And that marketing very quickly for the right product becomes formulaic and becomes almost easy because at that stage marketing is no longer trying to overhype something, it's simply just sharing what your product already does for the users you already have. So this is an area that hopefully if I can reorient you on how you can continue to grow your target by reframing how you think about promotion, that's my goal with this one. So let's continue growing our bullseye. If you want to make money, you got to help somebody else make money. And the way that we showcase that is persuasion. So persuasion is going to be the way that I talk about sales. Now, sales is something that most people confuse the worlds of marketing and sales and the people that confuse them the most are the marketers and the salespeople because normally all they want is it to be somebody else's fault. So when I think about sales, persuasion again is another amplifier. We've got our three core. We've now on our third amplifier to the core of our business. The persuasion strategy is going to be something that is meant to pick up where marketing needs to leave off. It is not meant to do marketing's job. In addition, marketing is not meant to do sales job unless that's your business. If marketing and sales are synonymous, as they were with Kajabi, we're going to talk about that. But understanding the clarity of the roles and what they need to be doing and how you're measuring it is going to be very important. So when you look at the framework I look at for the ultimate persuasion, it goes to Blair Warren. People will do anything for those who encourage their dreams, justify their failures Allay their fears, confirm their suspicions and help them throw rocks at their enemies. If you read this and you look at your entire sales process through that lens, you cannot help but have the absolute perfected sales process. If your sales process does each of these key areas, it's going to be ethical, it's going to be integrous, you're going to quoting Dan Sullivan getting people intellectually engaged in a future result that is good for them and getting them emotionally charged to take action on that next step. So at Kajabi, this for us was a unique process. Like many software companies, we didn't have a sales arm because our process was more of a self selection. So marketing and sales was entirely combined. We needed to have a marketing process that essentially and the salesperson and built that salesperson into every presentation that we were giving through a marketing funnel. The way that we did that was being very, very clear about where the marketing aspect started and where the sales process started. And for us, the sales process began in the showcasing of customer stories. Marketing was getting the click, marketing was getting the interest, marketing was getting them enrolled in exploring further. And the sales process began when we started being able to showcase this is what the app is capable of doing. Now in your business, sales may be a very different amplifier for you. Persuasion may live in a very different role. And so this is where I want you to be very clear that if all you get here is the clarity and the difference between the roles, it's going to be very impactful for your business. Are you asking salespeople to play the role of marketing? Are you asking marketing to play the role of sales? Is sales something that is going to be fed by a business development representative generating leads and you have an account executive that is only accountable for pipeline management or is that salesperson accountable for both leads and sales? Clarifying these KPIs, understanding what you're managing to and understanding the businesses that you're looking at investing in and how they are managing these KPIs is a critical foundational component of how persuasion will work as you look to increase your billion dollar bullseye. Now the final area of the bullseye is going to be people. And the reason that this is at the outside of the bullseye is something that I strongly, strongly believe it. But it's not very popular because the majority of authors out there are always going to peddle books. I mean how many of you have read some form of just hire a players or it's all about the people or if you just get great people, great Things happen or insert any other stupid quotable that never helped anybody. That's where the people strategy normally lives and dies. So Patty McCord, the only person that in my opinion said it honestly is true and abiding. Happiness and work comes from being deeply engaged in solving a problem with talented people. You also know are solving a difficult are deeply engaged in solving it and knowing that the customer loves the product or service you have worked so hard to make. What that means is talent strategy can be boiled down to something very simple. All A players want is to work with a players and not be hassled. That's it. A players are probably going to be excited and drawn in by your vision, assuming you're building in public and putting it on display. But they're not going to necessarily stay for that, even if they're drawn in by it. This is the area that if you as a business owner are expecting to hire talented people to fix your dumpster fires, it will never, ever happen. Because talented people know how to assess a dumpster fire very quickly and know how to leave the business very quickly. They're not going to come in and fix your problems. So this is another area. If we go all the way back to the very beginning of my concepts, I said there were some areas here that I grossly underestimated the needs and I put burdens on other departments to fix the needs. People, for me was another one of my areas of crack. I fell down that rabbit hole of just, well, man, if we just hire the right people, they'll fix this. Not true. Because the right people are always looking at a business and asking, what are their systems like? Do they have purpose? Do they have profit? Is their product in alignment? Have they figured out the prestigious experience? Have they nailed promotion? Have they nailed persuasion? If you haven't nailed any of these, and I'm an A player and I'm looking at your company, I'm not coming because I don't want to fix something. I want to show up and stand on the shoulders of giants and recognize that no matter how good I am as an A player, I know I will only be as good as the stage you put me on. And that is something that I didn't realize until it was far too late. I thought I could fix my people strategy by just getting better people. And what I realized is every person I hired looked way better if I put them into a system that actually was a good system. So this is something where, if you look at why my people thing lives at the furthest end of Expanding your bullseye. It's because it's the hardest to systemize. It's because if you're depending on it and just trying to hire a people, you're going to be extremely frustrated because you're also going to find that there are just not that many a players out there to try and get all of them all of the time. But the reality of it is you can turn people into a players by actually being proactive in your systems. And that's why people drive systems. So if you think about the business through the lens of systems and how your systems inform your people strategy, this is where at Kajabi we really learned a lot by fixing the systems rather than fixing the people. And this is also an area that we learned much, much, much later in our journey. So it's like if we learned it later, how did we survive and succeed in spite of not knowing it? And the answer is because we had nailed purpose, product and profit. And that gave us a lot of room. Those three foundational elements. By nailing that, we were able to have the time and the space to figure the rest out because the rest of those areas were much harder and took much more time. So people are an amplifier. So J Cron, what do I do? I now believe you that I need to focus more on my systems than I do on my people. What do I do now? Super insightful. Higher, slow, fire, fast. The longest period in any manager's life is the time between when he knows someone needs to go and when he actually fires the person. And it is always longer than it should be. It is always longer than everybody wants it to be, including the person you're probably going to fire because they know they're doing a bad job too. This is one of those areas where I can't tell you how many times we missed the mark and not being willing to give people an exit. And so kudos to Netflix for coining the term. But at Kajabi, this for us became what we called our good goodbye. A good goodbye wasn't disciplinary, wasn't, hey, let's get you a pip and have you be so depressed in three months that you quit so we don't have to fire you. This was our way of saying the business has grown in a different direction and has different needs. So we're going to give you a respectable send off. We're going to provide you enough of a severance so that you're not afraid, that you're not going to be able to eat, and we're going to wish you the best. And it was something that initially it was so hard because the severance was like, oh, this is expensive. Do we really want to do it? Only to then find out that equipping people to move into their next season was the cheapest force multiplier we could have ever purchased in the company. So it sounds a little bit counterintuitive, but man, was it a win for us. So as you've expanded your target, with a target like this, it's almost impossible not to hit your billion dollar bullseye. But I do have a piece of advice. You're going to plan this. You're going to dive into this world, you're going to experience success, you're going to stick close to Roland. You're going to acquire companies. Some are going to work, some aren't. Some are going to succeed beyond your wildest expectations. And at some point, I promise you, if you want it badly enough and you pursue it hard enough, you are going to make enough that you're going to have an existential crisis. It it's only a matter of time. And when you do, hopefully the internal purpose that you crafted brings you back to that true north and gives you an opportunity to spend 18 months trying to figure out how to finally create a framework that may finally be of value, that you may finally end up in a room like this and be able to talk your way through your imposter syndrome in front of an audience to find out how it all lands with everybody. So with that, I'll open it up for questions. Mr. Dustin. I'll just tell mine real quick. By all means. What, what does it mean to build in public? What, what do you. What do you so building.

You guys heard. He said, what does it mean to build in public? Got to hold that microphone, by the way.

Hi, everybody at home. This is what you guys. I'm glad you don't have this angle of me, but, you know, it's nice to see you guys. Building in public is very simple. Be transparent, put it out there on all of your channels, and whatever you do, don't try and window dress it because authenticity is very much a new currency. People want to know what you're doing right. They want to know what you're doing wrong. They want to know how you can, they support you, how they can help you win. This was an area that we learned in Kajabi that whenever the app would have a problem, it wasn't more than 30 minutes before our entire universe was pitchforks and torches in front of my house ready to Burn it down. And it was something that being willing to walk into that and to say hey this is why it happened, this is what we did, this is what we're doing in the future. But we're in this with you. Being willing to build in public and engage in that way had so many follow on benefits to the business because all people want to know is that they're in business with people. If you're in business it's not a question of if you'll screw up, it's a question of when. So everyone knows you're going to screw up and they're not going to judge you on if you screwed up, they're going to judge you on how you handle it when you do. So this building in public thing is meant to be an amplifier of when it's going well. It's meant to be a pacifier when it's going wrong. And it's meant to be something that continues to build this community and this engagement around your purposes both for you internally and your customers externally. That grows over time and becomes a very monetizable, very exciting, very directable asset of owned media.

Can you think of anybody that's doing that right now? That yeah.

If you guys want to follow a fellow war rumor, fellow friend of roland's, check out retention.com Adam Deanna he was in war room Adam Robertson starts with an R. Used to be get emails I was just on his podcast look up retention.com he is actually doing building in public so masterfully and he's even it's pretty amazing he's even going to take it to the next level because right now we're building public lives is it's primarily LinkedIn and Twitter. You know hey let me give you the snippets of today or let me give you the weekly update. Adam is actually going to be doing a video show live of elements of the company as he's going through it. And for those of you that don't know one of the most unbelievable e commerce scale ups I believe they're currently at 10 million ARR with a goal of going to 100 million ARR and beyond. It is a very exciting story to watch and it's a guy that just like myself 10 year overnight success. Nobody cared about the first 10 years but they're real excited to watch right now. But he would be one that I would say perfect example of building in public and doing so masterfully. Adam Robinson retention.com Yep, I knew I was close.

Who here was looking for.

There you go. Okay. Wow. Even with your offhand, you know. Yeah.

Hi, Ryan Coburn.

Hi, Ryan.

Just question on the higher slow, fire fast. So we've got a, and this is a real world example that I'm dealing with right now. I've got a consultant who's got some serious talent, but is now kind of slowly trending downward in the, you know, and how he's doing. When you said you don't put them on a PI, on a pit plan, you just, when you see that downward trend, do you just let them go or do you coach them to find their, their rhythm, their greatness, you know, and then, or, and then fire em later if they don't succeed?

Well, so my first question would be when did the, I guess when did the delivery of said talent begin to degrade? Because it certainly sounds like it's been going on long enough for you to be like, well, what do I do with them now?

Yeah, we started to see it about a year ago.

Okay. So, dear God, way too long. The moment that you see somebody not hitting your goal is to coach them up or coach them out as quickly as possible. And the reason that I talk about hire slow and fire fast is not just from the pivy encapsulation of hire slowly and fire quickly. You hire slowly because if you look at the billion dollar bullseye before you hire anybody, you're going to be looking at every single area of that bullseye and asking, did I optimize all of these areas before I try to fix it with another body? Because if I haven't, guess what? That next body is only going to amplify the challenges within the business. You've now brought somebody in that has hopes, dreams, family, friends. They're going to fight for their own existence within your organization. And if you've not given them a clear path and clear systems, just watch the chaos and needless work that they will create to supplement their lack of systems in order to justify why they're in your business. So that's where the higher slow aspect comes from, is don't just go higher until you know that what you're hiring into, you've already optimized it in every way, shape or form. And the only way to fix it is with person. Yeah, got it. Thanks. Sure. My man. All suited up.

Hey, everybody. Jerome Myers. So I'm going to take it to a place where I'm really interested because.

I find that's a very enticing setup. I'm not really sure where this is going.

You ready? Because it's coming so you joked and he was like drinking and thinking and you mentioned the word crisis. And like, there's a whole lot of stuff that comes behind that was it. How'd you know you were in crisis and then how'd you find yourself out of it?

Well, just like any extremely self aware, very introspective and intelligent individual like myself, my wife told me, I remember I was going, I probably was on the phone with Roland when it happened, but Nicole literally said, like, so I'd really like in and out for lunch and you should pick up a job application. I was like, really? And then I'm like, well, gosh, I wonder how that interview would go. Like, well, sir, you know, the drive through is really intense. There's a lot of pressure and like, oh, yeah, I don't know if I could really handle the drive through. I mean, but it was very much one of those things that. What my wife pointed out is, she said, I can tell the physiological difference in how you walk around the house, how you interact with me. I can tell when you have had a business stimulating conversation that day for your brain and the days that you haven't, because the days that you have, that's the guy I married that's like, hey, bang bang, super fun. And the other day is you're like sad panda moping around like either trying to find another watch to buy or trying to make up some home project to fix that you're going to hire out for anyway because you can't do any of the shit. That was basically it. So that was, that was the indicator. The indicator was like, I'm not me anymore and I didn't feel like me for a while. But I also thought I was hiding it a lot better than I was.

So how'd you get out and was it worth it?

How did I get out of feeling that way? Yeah, I'll let you know when I do. So for me and going back to the imposter syndrome thing like you were talking about, what does it mean if I present myself as an investor? How many of you, if you had taken a company through two private equity rounds, gotten a $2 billion valuation and had been unemployed on sabbatical for the last 18 months, just buying things that you always thought would be fun to buy, how many of you would believe that that lifestyle would probably answer your imposter syndrome? Okay, good. The rest of you are really smart because it doesn't, totally doesn't. It's called the Dunning Kruger effect. And what the Dunning Kruger effect basically says Is that the better that you are at whatever you do, or the more that you know about what you do, the less likely you are to ever assume that you have value or know what you're doing. So the people that are entirely cocksure confident probably don't know it at all. And the people are like, I don't really know if I should write a book. I don't know if I have any frameworks. Don't want to have another lunch with Roland where he asks me what I've done and the answer is nothing. So I will definitely let you know when I'm out of it. But what I will tell you has brought me back to it, is that purpose, because I got into Kajabi because I wanted something that I could take to the moon and achieve the financial goals that I had set for myself. Because I didn't come from a family that had any money. I grew up in the northwest suburbs of Chicago, very, very middle class family. I mean, where I grew up in S Class, Mercedes was a spaceship. When I moved out here, I found out it was a Newport Beach Honda Accord. Like, I didn't have that. So I was like, I gotta get that. And I went after it with everything I had. But what happened over that time is the greater joy came from watching entrepreneurs get empowered with superpowers that our software platform would give them. And that's what drove me. So when you finally arrive at a point where the hedonic adaptation has taken place that you know that you've experienced enough levels of, well, when I can get the Breitling, I'll be happy. Well, but really what I wanted was the Rolex. And then I'll be happy. Well, actually what I really wanted was an ap and then I'll be happy. And then, you know, actually the Patek was, was really what I was going for. By the way, these references mean nothing to any of you. And that's okay. But it's very much something where you've experienced enough of those of I'll be happy when that you recognize that the next when probably isn't going to do it. So for me, the next iteration of my journey is trying to figure out how to mine my experiences for what would be valuable for others. Trying to codify it into a framework and trying to find a way to give it back to everybody in a way that's exciting for me, in a way that's exciting for them. Because I like business, I don't have any hobbies. Like everyone's like, well, do you golf? I'D be like, I'd be the asshole by 9th hole trying to sell everyone shit. Because I'm like, I can't believe people do this. So that, for me, is the next iteration of my journey. And it pretty much is just sort of starting because, you know, everybody told me, after you sell your company, like, oh, take a year off. Worst advice for me ever. Like, if you have hobbies, take a year off and explore them. For me. My wife even told me. She's like, yeah, you know, there's about two weeks after the exit where I was wondering if you're going to become this doting, dedicated father and, you know, whatever. And then she's like, oh, no, you're still you. So, you know, find a businessy thing. So that's the journey. Sorry it's not a bit more clear or succinct.

Well, I just thought you were further.

Along in the process.

That's good, though. I just.

I'm glad you did because that's what I'm presenting today.

Yeah, the authenticity, though, like, we're laughing, but, I mean, it's. It's terrifying.

Well, it's also one of those things that no one will ever talk to you about it because, I mean, the reason is, and. And rightfully so. No one feels bad for you. Like, I mean, you know, yeah, great, John. It's a problem. I don't feel bad for you still, you know, kind of a dick. Like, I mean, no one ever is like, oh, I'm so sorry you can't find yourself right now. Like, it's just. It's just not the way that goes. And it's the reason why nobody talks about it because it makes you sound tone deaf. And let me be clear, it's not a problem. It's an exploration. It's a season. It's something that I get to lean into with a lot of messy, uncomfortable stuff internally and figure out. But it is most definitely not a problem in the way that problems are truly defined. So I don't want to mischaracterize it as that. It's not that. Who's next? And you did deliver. You said, I didn't know where you were taking me, and you were right.

While we're getting that over to the. To the next person, one thing that is nice about what you guys are focused on is that there isn't an end. That the event of an exit is not the end of what you're doing because you ideally are doing multiple things. And so the engine that you're creating that creates Deal flow for you will provide you with companies that you will not be on the org chart for. Hopefully you will get amazing partners like John came into Kajabi or you will find great operators. But in my hope for you is that you aren't the operator or you are the operator in that business, but you have other businesses as well and therefore you'll always have a continuity of purpose if what you enjoy is doing this. Because I love, love business also and if I wasn't able to do it, I would be miserable. There's no travel or golf or anything like that. That is going to be as much of a hobby and passion to me as business will. And I think that's okay. And a lot of people who aren't entrepreneurial don't get that. That's okay. The hobby has to be non business related. The hobby actually can be business. If you love it, then why would you go try to find something else when you've already found the thing that you love? The thing that I have witnessed time and time again with John and at, you know, in the place that I live is that the people who have exited lose their purpose and they are told because that's what they sell you, that you need to take time off and you know, find yourself and do all those things. But that's, that isn't fulfilling. There's nothing that can fulfill the whole of serving people that you can serve with business. So you're going to avoid that problem by having or that issue or that challenge by having multiple businesses that you're working at any given time in a portfolio of companies. And so that's what I'm trying to every time we have lunch, work John into. And I think I'm getting there slowly. I've had him a couple times say I'm in. I've decided to do this but he hasn't taken the leap yet. So when I keep feeding him people saying work with these guys. So we'll see what happens with that. But, but do think about that because I think that's a bill of goods that were sold that you, that you can't have business as your hobby because you can't.

Yeah, no. And it's very much one of those things. I've watched Roland embody that since I've known him because even back when I met Roland he was not on an org chart. So Roland has experienced exits but he's not exited. And that's a very different distinction by, by continuing to have a portfolio of things that you love, things that you Enjoy working on is definitely what I'm hoping to create in the near future. As soon as I tell Roland I'm willing to. And I won't do that in front of all you guys because I won't let it be right.

And it won't. It. It won't come from continuing to be involved in the business after you exit it. I'd love if you would share with them what we talked about because after he left as the CEO, he kept. He went to the business, but weren't really welcome.

No, no, it's. So what you'll find is when you exit a business and then move to a board position, there's actually a very technical term for it and it's called entrepreneurial purgatory. So what you end up with is a guy that gets to point, that gets to cheerlead, that gets to dance and shine, and nothing happens. So you end up in a situation where you have people that used to report to you, you have areas that you used to control, and. And now all you can do is influence. So it is very much something where it used to be do this. How did it go? Next do this. And now it's do this. Great call out. J. Cron and I have three months of frustration until the next opportunity to bring it up again and see if it actually happened or see if it got slotted somewhere else. So no doubt about it, that aspect of losing the ability to impact the machine probably has amplified my. My angst. Yeah. Hey, guys. Hello, Hello. Farouk Shroff here from Puerto Rico.

And my question, there's a awesome, awesome presentation, by the way. So much. Ahas.

Thank you. Thank you. Well, like I. Like I said in the beginning, it was all everyone's fault. Everyone kept asking me. I didn't have a good answer.

Yeah, definitely, definitely re energizing in terms of putting this in play in a systematic approach. There's a gap in it for me.

And I'm looking at this as an ascension kind of.

You have your core, you have your.

Amplifiers, and where is the retention piece? Can you speak a little bit more about that?

Because you go through promotion, persuasion, get them on board. How did you guys make sure.

And maybe that goes back to the.

Product of like obsessing over keeping those customers a lifetime value, you know, making them advocates and so and so forth.

Great point. So retention is going to have two functions. It's going to have a financial function and it's going to have a product function. So the financial function is going to be where it shows up in your P and L and how it looks as the business scales over time, that's going to live in that product bucket of do I have recurring revenue to match my recurring expenses, and am I keeping that recurring revenue long enough to potentially invest in acquisition costs or expenses outside of that to get that revenue stream? So it'll live partially in product or, sorry, partially in profit, then it's going to live partially in product. So the product element is going to be how am I ensuring that this product is delivering on the promise and keeping those people around again, amplified by prestige? Because you might have a product that has an amazing promise, but the iteration today delivers on half of it. So how are you supplementing that with the prestigious customer experience to deliver the other half while the product catches up? Does that make sense? So that's where it would live. So if you think about when I talked about net dollar retention in the product, that is the holy grail. That is the element where if you have the ability to see a business scaling, no matter how hard you try to stop it, like if you have a referral engine that you literally cannot stop people from buying from you, that's how you know you've nailed net dollar retention and you're going to see a business scale geometrically. Thank you. Yep. No, thank you. And, and by the way, I loved that he said there's a gap for me in this because new framework. So if you're not beating it up, I only like you half as much up front here.

Great presentation. Thanks for the value you're sharing.

My question is, tell us who you are first.

Demetrius. Demetrius Walker. I'm a real estate developer and I kind of like been trained to. If I'm going to sell, like, let's just say a property, I already know what the next play is going to be, which is normally a bigger play. So my question for you is, when you guys exited, did you have like an amount, a dollar amount that you said you were not going to sell until it reaches this point? And then my second question is, your team. You spent time building the team and structuring your team. Was there anyone in your team that was not going to stay in the business that you're going to take it to the next venture that you're building?

Great questions. So let's talk about the inflection points of raising capital and how to make that decision. So first inflection point with Spectrum Equity was two things. Number one, it was called the tacos and tequila test. And number two, it was not born out of A financial need, but an intellectual capital need. We realized that the business was growing beyond proficiencies that Kenny and I had or had experienced. And we wanted to look at a group of people that already had experienced it and could help us understand what does it look like going from bootstrapped, profitable, excited about what we're doing, but now all of a sudden, it's global. The industry is changing in ways we hadn't anticipated. How do we build for that? So we decided that we wanted smarter people around us at that moment. And that's where the tacos and tequila test comes in. So we had so much inbound interest of banks asking us to take money that we came up with this idea that we would meet with them. However, if we wouldn't have tacos and tequila with this group, even if we didn't do business together, like literally, hey guys, it's Friday, no plans. Tacos and tequila, if the answer wasn't yes, were out. And that test literally killed four groups that were desperate to give us term sheets. But it was just like, man, I don't want to finish this lunch, much less have another one. So the inflection point for Spectrum Equity was intellectual capital. And did they fit the values of our organization? And the most unique moment there, which is unheard of in private equity, is we were doing a user summit and we had already told them no. And they showed up, bought tickets, which of course anyone who buys tickets, rather than begging you for free tickets, already a winner in my book. But you know, they showed up, bought a ticket and in the lobby just shot us a selfie. Just like, hey guys, hanging out with your users. And I was like, oh my gosh, these guys actually care. Like they came down to our event. That's amazing. So that was how we selected them. Then the second inflection point was motivated very differently. Tiger Global was basically reached out one day, said, hey, we'd like to have a call. They're Tiger Global. So we're going to take the call and hop on the phone with them and they proceed to give us a presentation that Bain had designed. Because for those of you that don't know, Tiger Global, very disruptive force in the finance world, pretty much outsourced all of their diligence to Bain. The only company I'm aware of that was managing $130 billion with 13 full time employees, which is unheard of, but they presented us averaging an acquisition a week, I think.

Yeah, that sign, like at high, high.

High volume with 13 people.

Yeah.

So they put this Bain deck in front of us. And we hung up. And we're like, these guys know our business better than we do. How did they find out all of this stuff? So when they came calling, it was more the industry was changing. It wasn't our needs, it was more the industry needs. So at that point, hotmart had acquired Teachable. Think if it had just gone public on Uncle Jim's Stock Shack. What's the exchange in Canada? We're going to go with Uncle Jim's Stock Shack. So think if it goes public in Canada on an extremely venerable and respected exchange, whatever it's called. And we were asking, okay, two big competitors, two major shifts in their model, two indications of where they're going to want to go. By the way, if any of you are Canadian, I'm sorry, I didn't mean anything by it. And then we asked, how do we make sure that this doesn't become the Braintree to our stripe? And what I mean by the braintree to our stripe is for those of you that haven't watched the story, Braintree was first in this developer led processing world. Braintree was eating the world. Braintree raised a little bit of money and then I think ebay bought them and then spun them back out. Stripe raised a gajillion dollars and then proceeded to eat Braintree and everybody's lunch. So there is an element in technology especially that as you're looking at the way industries are operating and evolving, if you want to play a bigger game, you can't afford to not pay attention to how the game is being played. If your goal is to just simply stay small and continue to get better, you can pretty much ignore the vast majority of what's going on in your industry because your goal is just to get better. In our case, we wanted to make sure that when the book is written about how digital education products were democratized globally, we are the subject of it, not a footnote of it. So that's what prompted the second race. Now, the third question, which you didn't ask, but you're probably wondering, is if we were that excited about it, why are Kenny and I now not operating and only on the board? Because clearly I still love the shit out of that company. The reason is because In July of 21, right after we had completed the raise with Tiger, Kenny's wife had battled breast cancer five years prior. That was supposed to be everything's fine, cancer came back. Kenny calls me, says, hey, what are we going to do? I'm stepping down. And I was like, well, if you're stepping down, I don't know what we're going to do. So board comes to me, says hey CEO. And I said, what's next for us? And they said, oh, ipo. Publicly traded. And I was like, like I think I'm done too. And it was a moment of self reflection for me that I still stand by today that Kenny was my best friend and getting to build a company with him, it was sort of like I didn't know what the company would look like after that. But I also knew what life as a publicly traded CEO looks like. And I was positive. I didn't want that. Because when it's more politics than it is profit, you can guess that a blunt object like me is not going to do well. So I was like, hey, I'll go to the board with Kenny. And that was what prompted the third iteration and then my 18 months in the desert as it were.

One more question while I have the mic now being outside looking in, what area of the business would you say you really need? You would need to spend a lot of time or money into or even talent to 2x or forex the company.

Great question. So what he asked is of all the areas of the business, what do I believe now from the outside looking in, would I be resourcing differently, focusing effort on? It would definitely be product that I think that today and largely brought on by what institutional capital does to businesses, which I have a lot of stories about, that it's very much something where the product vision oftentimes has a forcing function placed on it that isn't beneficial. And that forcing function is how do we find these giant magical unlocks? And sometimes the answer is there aren't giant magical unlocks. It's just continuing to be better at what you do and letting the maturation of the industry come to you rather than trying to force it prematurely. So why is pets.com the biggest flame out ever of the dot com crash of the 2000s? But Chewy.com is the largest E Commerce acquisition in the history of E Commerce timing. Same business, same product, same delivery, same everything, just timing. So for me, as I look at the product area of Kajabi, I would be advocating, and as recently as yesterday was advocating that we continue to very much focus on the core drivers that we know drive success for our users. But those core areas of the app are not always the sexiest. They're not the chatgpt. So it's one of those things where that's where I would be saying, you know, look, there's a blocking and tackling element of this that will bring those results. But for those results to come, we need to let the industry grow. Because right now, if I go to a cocktail party, 9 out of 10 people still don't know that Kajabi is a business. You know, Kajabi right now powers $2 billion in transactions a year for our user base. It's a thing. But still nobody knows it's a thing, which is why I'm so excited.

Thank you.

Sure. Gentleman behind you. And by the way, Deanna Roland. I don't know how long I have.

Make that the last one.

Okay.

Great presentation. My name is X and I. I'm a strategy guy. And you said take a dig, so I'm gonna be so bold.

I want you to know when you said that, by the way, I immediately went to like, x, don't give it to you. So like, I, I was, I was hoping you were gonna give me an intro like that. But.

But I think there may be an eighth P. I think as an entrepreneur, we oftentimes know our craft and what we want to do and build, and we make certain assumptions that the market wants that. And if you're going to be product driven or it's an essential thing, understanding your customer seems like one of the core things to obsess on. Because how do you build a great product if you're not obsessed with your customer or even with the prestige and giving unforgettable experience? Do you really know your customer and experience thereafter or what they really want? And I think the accessibility of the model, having a P that really focuses on that, the patron or the prospect or the purchaser becomes the conduit to being able to build that better product and to have that prestigious experience and to do Those other amplifying Ps, it's almost embedded and you spoke about it of not tracing like the unlock, but really understanding your customer. But I think for the everyday entrepreneur, the obsession with your customer, not assuming, you know, becomes one of those, like, blueprint things that allow you to take this to the next level.

I very much appreciate the feedback. So let me ask you a question.

Yeah.

If you don't know your customer customer and you don't know your market, are you able to execute on any of the piece? No.

No, you won't. The explicit kind of saying, and this probably is in the book, so it's a bullet point of like, dude, that's a good point.

If you don't focus on the foundational element of leading into this, you better know this. So I very much appreciate it.

Yeah.

Thank you very much, Mr. X.

Let's give John a big hand.

Thank you so much. Thanks everybody. Oh, are there any. Anything online? Say again?

Okay, we'll go. What is your acquisition criteria?

Wow. Okay, put me on the spot. Software as a service. Bootstrapped and profitable with product market fit and a desire to scale to at least nine figures in revenue.

So I have one of those. They're doing, they're profitable. They made $10 last year on a hundred thousand dollars of total sales. ARR is $18,000. Would that fit?

I'm more than happy to put it into diligence, but it doesn't sound like.

It'S going to happen. So. So we're, we're still working. It's. It's a work in process. This.

Thank you for your patience. Thanks everybody.

Okay.

Did you guys learn some stuff today?

Yeah.

Okay. It's good stuff. You want more of that?

Yeah.

Okay, good. So we're going to break for lunch. What I want you to do so that I can be sure that you get the most out of what you have gotten so far is to take a piece of paper or an iPad or something and have three columns on that. I would like one of the columns to be headed Takeaways and breakthroughs. It's really easy for great stuff to slip through your fingers and your mind when you have a lot of things going on. When you go to lunch, you're going to have lots of cool people to talk to before you leave, before you get up and leave the table. If you can say these are the major takeaways and breakthroughs that I've had from the beginning of this event so far, then that will help you to reflect on those and to not lose them because they will slip away. That's the column that has takeaways and breakthroughs. The next column I want you to have is for actions and applications. So based on the takeaways and breakthroughs that you've had, how are you going to apply that to what you're doing now to your business or whatever businesses that you might acquire going forward? And what actions will you take to deploy these breakaways and take throughs? And then in the last column on the right at the top, I would like you to put the date by which you will take the action or deploy the application. Okay. So takeaways and breakthroughs take a minute before you get up and run. If you get up and run. When we say that we're taking a break. If it's not to the bathroom. You're making a huge mistake because you're not taking the time to do this. You really should be methodical and intentional about everything that you do at this event and in your business. So those are the three things that are your homework before you get up and break to lunch. When we break for lunch, we're going to go, Deanna, outside, right Outside to the left. Right. Outside to the left. And then we're going to come back and start again at 2:00'. Clock. And Adam, do you have anything? Thanks.

Yeah, just.

Just a quick one for everybody. Do me a favor.

Raise your applications and actions.

Raise your hand if you're in Epic Board. Raise your hand, everybody. I'd like you to have a look around at the people with their hands raised. These are the people that are in deals with us, like we're actively doing deals. If you did not raise your hand, I'm going to highly recommend that you go to lunch with at least one person in Epic board where you can talk about the actual deals they're doing. Because for some of you, this is only a two day event. But for the people in Epic board, we're going to stay behind and we're going to have our own company meetings and we're going to talk about where those deals are, what steps they have to do to move forward. And I think this is going to be a really valuable opportunity for you guys in Epic Board. I didn't check in with you on this first. I just want to check. Are you guys okay with that?

Let me just hear that.

Perfect. So everybody make sure you sit down with at least somebody in Epic Board.

It's about half of them are okay with talking to you guys. That's what I heard.

Everyone that isn't, we know who you are.

Cool.

All right, guys, Sound good? Let's hear it for Roland Frazier and everybody.

And everybody.

Yeah.

Thank you.

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