13 Years of No BS Business Advice in 79 Mins

I've been in business 13 years. I've sold 9 companies. My last company sold for $46.2 million. My current portfolio at Acquisition.com is over $17 million a month, and I'm going to compress 13 years of business advice into this one video. Number 1, have something extremely expensive to sell that you never even plan on selling. I learned about this anchoring tactic from a friend of mine, and he said, listen, man, you can just put something on your menu of items or services that you sell that's 10 or 100 times more expensive. And just by having it there, it'll anchor everything else on your menu or the rest of the prices that you have. And just make it something that if someone actually bought it, you'd be stoked that they did. But what ends up happening is that, one, you'll sell more people on your core offer because they have this big price anchor. Second, it allows you to nudge up your main offer's price because related to the big one, it looks like almost nothing. I was talking to a different friend of mine and I said, hey, you know, you should consider just adding one of these things in. And he had a weight loss business, a very generic online weight loss business. And so he added a 6 times higher price version of his offer. And then the craziest thing happened. People started buying that more than his core offer. And when he did that, he tripled his profit overnight. And so the thing is, is that It also breaks you, especially if you're starting in business, out of this fear of raising prices by just saying, hey, there's no way anyone's gonna buy this. I'm gonna make this so expensive no one's gonna buy it, and that's okay. So you give yourself permission to just fly it out there. But what you will find is that 10% of customers just wanna buy the most expensive thing. These are the whales. And the only thing worse than making a $1,000 offer to somebody with a $100 budget is making a $100 offer to someone with a $1,000 budget. Because in the first scenario, you lose $100. In the second scenario, you lose $900 of the money that you should have made but didn't. Number 2, no one knows you exist. Advertise more. And so to give you context on this, when I walk through the streets, I usually get stopped 4 or 5 times on like a 60-minute walk. And when I was launching my book last year, I had 500,000+ people who were registered. It was this massive event, broke the internet, whatever. But during the month leading up to it, we're advertising on all channels, we're running ads, we've got affiliates that are pumping it, I'm making content all over the place. And over the 4 weeks of people that stopped me, only 1 person knew that I had a book coming out. And so every time I'd see somebody like, hey, you gonna be at the book launch? And they're like, oh, you have a book? And I was like, how can you not know that I have a book? There's a story from Henry Ford that I love, which is that he was walking by, the CMO of Ford was right next to his office, and every day he'd walk by and he'd see the marketing campaign, he'd see the marketing campaign day after day after day, and so 3 months into seeing the same campaign, he knocked on the CMO's door and he's like, hey, when are we gonna stop running this thing? He's like, I'm getting exhausted of seeing it. And the guy just looked at him and he's like, we haven't started running it yet. And so the thing is, is that we get so sick of our advertising so much before our customers or potential customers even remember our names. And so the extent of advertising that you have to do, there are so many people in the world and people's attention is so spread thin and so, they're so distracted that in the off chance you actually do get an advertisement of some sort in front of them, the likelihood that they remember that it was even you and the core message of that advertising is even lower. And so many of us have this big fear that we're harassing our audience. By repeating ourselves over and over and over again. But the vast majority of the time, no one even A, knows you exist, or B, specifically knows the message that you're trying to let them know. And so I like to tell my team and remind myself that we need to be reminded more than we need to be taught. And so your audience needs to be reminded more than they need to be taught. And I don't know about you, but I follow plenty of accounts where like they have the same 4 or 5 messages more or less that they put out there. And the reason I follow them is because I like the reminder. I like to be reminded to be patient. I like to be reminded to, to not think, take things too seriously. I like to be reminded that I have to think long. Like, those are the things that I like to be reminded of. And so imagine if that account's like, I already said be patient once. I don't want to say it again. They've already heard that from me. It's like, no, people have messages that they want to continue to get fed into. And every time you feed that same message that they liked before back into them, they'll have another positive experience with you. The amount of novelty that's required in content is significantly less than you think as a creator. Think about it like you're going after a girl. And she's with somebody right now. All right, so you're like, okay, well, I'm gonna ease off, but I'm just gonna just let 'em know, I'm just gonna throw these little flares out there that I'm interested, I'm here, I'm not being disrespectful, but I'm available, right? And then what happens is as soon as she gets out of that relationship or whatever, then she's receptive to your message. And so the thing is, same way it works with customers, is that they might not be looking for a marketing solution, they may not be looking for a plumbing solution, they might not be looking for, an IT services provider for 3 months, 6 months, 9 months, but they might like to hear your stuff, but the moment they are in the market, you're the first one they think of because you continued to repeat the messages that resonated with them to begin with. The big thing is the 4x4, all right, which is especially when you're starting out, 4 hours a day doing the core 4. And so the core 4 means you're reaching out to people you know one-on-one, reaching out to strangers one-on-one, making content, one-to-many, or running ads, one-to-many. And so those are the 4 ways, the only things one person can do to let other people know about their stuff. And so I use the rule of 100 as my guide there, which means you either make 100 minutes of content, you do 100 outreaches, so either cold or warm, or, or and, if you wanna get really spicy, or at least $100 a day of advertising. Now obviously the $100 a day you can scale as much as you want, but as a baseline for anybody who's starting a business, Those are 3 ways that you can just say, okay, what do I have to do to let more people know about my stuff? If you're not making 100 minutes of content, you're not doing 100 outreaches a day, or you're not spending $100 a day on ads, no one's going to know you exist. And that is the biggest threat to your business. The reason it's so important as a founder to do this in the business is that you have to be able to make it rain. And so every business at the most basic level has to advertise before it can have money, right? So like, if you want to make money, people cannot give you money until they know you exist. And so it is a prerequisite for making money in business is that you advertise first and then you have a product that you can deliver on. And that's the most basic form that you have to have. If you just have the product and no one finds out, you will continue to not make money. Which leads me to number 3: until you're at $100,000 a month, advertising is all of your focus. And the main reason for that is If you don't have enough people coming in, you're not gonna have enough iterations of the product to get feedback to know if your stuff's good or not and what you need to do to make it better. Now the thing is, is that up to $100,000 a month, at that point it's all advertising, but at some point in order to continue to scale, you need to fix the product. You need to make sure that people are recurring. You need to make sure people are happy, that they're referring other people, that they're staying month after month or they're repurchasing month after month after month. And so if you're not solving that, then you've got a leaky bucket and that's gonna be a problem that you're gonna deal with later. And so the smart move is to fix that stuff now so that you can grow a really big business. And this is one of the biggest mistakes that I made so many times in my early career is that you start advertising, you start understanding how to sell and acquire customers, and you say, oh, that worked, I'll do more of it. And you should do more of it, but within this current context of you have to make sure that you're delivering. And so my recommendation is get to $1 million, so get to $100,000 a month-ish, then put all of your focus on filling all the holes in the bucket so that, and the thing is is that when you do that, you're actually gonna keep growing, 'cause if you keep the same activities and then you fix the holes, you're still gonna keep growing steadily month after month after month even with the same level of advertising effort. Then once you fix the holes, then you go back to the front end and say, how do I 10x this? And that is how you can stair-step even though your actual revenue growth will still look flat because when you fix the holes you'll make more money, but the doingness of the business will shift. Now if you do the alternative of that, which is you just advertise more and more and more, there's gonna get to a point it's an asymptote. So basically you start growing and you start platoeing like this because then your infrastructure's too big and there's too many moving pieces to fix the thing that you should have fixed earlier. But then you're in a rock and a hard place scenario because then you can't dial back the advertising 'cause you've got all these people that you've hired, but the more you sell, the more your reputation goes in the tank 'cause the stuff's not good, and so you get in a really hard scenario. And so fixing it first, fixing it early sets you up to build a much bigger business later. Number 4. Under $1 million a year, it's one channel, one avatar, one product. I see way too many small business owners saying, hey, I've got two businesses, or I have seven products, or I have two different avatars, or blah, blah, blah, blah, right? No. Focus on one specific type of customer. And if you just say yes to everyone with money, you're basically saying no to your business because you're never going to be able to focus and make something really good. You can't serve six customers and then make a good product only doing $100,000 a month. It just doesn't— like, it's too small volume. Like, you don't get enough reps. And so you need to do one very specific thing, which means you have to say no to people who aren't that type of person. You serve one problem, which means you have one product for that specific avatar, and you get better and better at templatizing that, at productizing the service or product, whatever the product is itself, making iterations on it. And you advertise through one channel, meaning you just know how to make cold email convert, or you just know how to make cold calls convert, or you just know how to make TikTok ads convert, or you just know how to make YouTube videos that convert. Whatever your channel is, you just stick with that channel because as soon as you're like, "Oh, I'm gonna do two different things," it's like, that's not the objective of this stage. You just need to get it reliable so that you can then keep tweaking the product so that then you can 10x the existing channel you're on. Once you get to about a million a month is when I recommend starting to think about second and tertiary channels of getting customers. And part of the reason I recommend that is that when you start a second channel, it's gonna cost you money and it's gonna cost you time. And so, The reason that you keep that one channel and keep doing it longer than you think is because you need to be able to get it working at the same level or higher with not you doing it so that you can have the secondary channel. If you're the one who's gassing this first channel and then you move to the second, well now you have this second one that's not gonna be working out nearly as efficiently as the first one, especially in the beginning, the first 3 months, 6 months, it's not gonna be cranking like the first one is. But the first one's also gonna go down 'cause you're not there. And so you spend the extra time there, You put the right people in place. You make sure the training is such that they actually can meet or exceed what you were doing on your own. And then when you start the second channel, you can pour resources into it because you still have cash flow from your main thing. And that little switch is where most people get lost and they just crush their businesses. So don't do that. So to give you guys some context, I didn't open up a second channel of acquisition until we were at $4 million a month. Now mind you, I started with paid ads 'cause I was good at paid ads. And I learned how to run paid ads in my local business, which then when I went national, I knew I had to do the same skillset. But after $4 million a month, I was like, okay, I need to get this second channel going. And so I started increasing that channel via cold email, cold call, cold DMs with an outbound team. But I say that because a lot of people are like, shouldn't I do this? I try to delay that as long as I possibly can because I know it's gonna cost a huge amount of time, a huge amount of money, and it might not work for 6 to 12 months. And to give you context, it took me 12 months for outbound to be responsible for half of my revenue. So it's not gonna happen overnight. Number 5, always start for free, always. And I know, and I don't usually use explicit 100% black and white language, but I have yet to see a time where starting for free has not made me more money. So let me explain. So when I started my Fitness business way back when, I started with free. I wanted to get people results and I said, I don't have any experience, so please let me just train you for free. And because of that, I have lower stakes because they didn't pay me money. They're still paying in other ways. They're still paying time, they're paying inconvenience, all the other things that a customer has to do. Those costs are still there. By the way, those hidden costs are the things that you wanna decrease as much as you can in your product so that you can charge more money because you'll find over time, that the most expensive thing about your product often isn't the price. It's everything else you require a customer to do as a result of the purchase, which is what things do they have to give up that they like doing as a result of the purchase, and what are the things that they have to start doing that they hate doing as a result of the purchase? And this happens with everything. And when I say like and hate, I use those as extremes, but fundamentally there's some sort of friction, there's some sort of inconvenience. Like when I buy a car, I have to now get gas. That is now an inconvenience in my life. Now compared to all other cars, maybe all cars that have that inconvenience until they have an electric car and all of a sudden that inconvenience has been removed because I can plug the car in at night. So I'm a co-owner of Skool.com and I talk to beginner entrepreneurs a lot. And so I see this happening more often than not, which is that they say, hey, no one wants to buy my thing. And I say, okay, well, where's your— where are your testimonials? Where are the people that you've, used before this that you've helped get the result? And they're like, well, I don't have any. I'm like, well, why would I believe you? They're like, well, I have this amazing offer, and I'm gonna talk about this in number 6 at length. But if you don't start for free, why should anyone believe you? And if you are doing this for the first time, why would you wanna take money for something that you don't even know if it's good yet? And so this can both give you the conviction and give you the confidence to get going because you actually have some results that you can go off of, You can use those results to market to get more customers. I do this at every level of business. And so everything that I do, I always start with free, no matter what it is. And whether it's a new product line in a massive company, one of our portfolio companies, we built out a software product for the existing service base. And so we said, hey, we can now have a DIY version of our services that you can use with this software product. And what did we do? We started for free. We took our top 100 customers and said, hey, why don't you try it out? Let us know, get us feedback. And they just kept giving us feedback. And honestly, in the beginning, the fact that some people wanna charge for this is insane. It's like they're giving me so much valuable stuff, I'm just happy that they use it, right? And so you go with free and then you go with a small, small amount of money and then you keep raising your prices over time, which I'll get to in a second. And for those of you who are worried about your pocketbook, like I'm fronting all these costs, well yeah, that's why it's called investing in a business. But people who you work with for free can make you money in 3 ways. Number 1 is they can leave you a testimonial. Number 2 is they can refer you other customers via word of mouth. Out that you did a good job. And number 3, they can actually stay on and pay after a certain period of time when you do make it not free and you make it for money. Because if you want to keep surfacing, and this is ideally how it works out, is that you do such a good job that they're like, I don't want this to stop. And then you say, great, now you can do it in exchange for money because I can't do this anymore in exchange for nothing because I have enough demand because I've done a good job that I have these referrals and I have this proof that people do want to pay me for my services. So if you'd like that too, you can get the same price they have. Number 6, and this is a big one, proof over promise. So what a lot of beginners do, and they read, you know, $100 Million Offers, and they're like, I have a grand slam offer, and so because of that, I've got this big thing with all these bonuses and the stack and these guarantees, and I've got a premium price, and yet no one's buying it. So what I wanna do is walk you through a hypothetical. Let's say on one extreme, we've got somebody who has an amazing, crazy, awesome offer for whatever. They promise you the world and beyond. On this extreme, same core product or core service as the first guy, except he has no crazy offer. He just has 1,000 testimonials. Who is going to get the most customers? This guy. And so your proof is going to do more selling than any promise can possibly do, because the promises all function as an approximation of the likelihood that they're going to get a result. And proof is always going to be more compelling. And so when you're starting out, you want to capture as much proof as humanly possible. Now I have a huge amount of stuff on proof because I, I'm obsessed with it, but I'll give you 4 very good things that you can do to make your proof more compelling. Number 1, recent proof is better than delayed proof. So if proof was 5 years old, proof that's from last week is going to be more compelling. Second is you want it to be as visual as possible. So just a bunch of words on a screen is less compelling than a screenshot of someone's bank account after they made money. Or someone saying, "Hey, I lost 20 pounds," is not as compelling as the picture of them losing 20 pounds, which is also less compelling than a video of them weighing in and then a video of them weighing out. The third component for proof that I'll give you is you want high volume. And the nice thing is that most businesses actually have a lot more proof than they know they do. They just never capture it. And so one of the things that I did in our brick and mortar chains that we'd had with all of the gyms, I do it across all our brick and mortars, is if you look at Yelp, you look at Google, you look at Facebook, all of these have reviews for your business. And so for me, and if you're digital, then you have Facebook reviews on your Facebook page and things like that. And so I would go into the stars, you click into it and there's like 100 of them, and then you just screenshot each one of them. So if you have 100 5-star reviews on Yelp, that's like a mediocre Yelp account, right? But if I screenshot 100 of those and then I frame them and I put them on my lobby wall from floor to ceiling, it's overwhelming the amount of proof that is. And so most businesses have way more proof than they think they do. They just don't leverage it. And so one of the easiest things you can do, take the screenshots of all, all review sites across all platforms, show them individually and show them as your new wallpaper. And the fourth element of proof is that you want to capture pain. And so let me explain by this. So I've been able to look at a zillion ads across all companies where they have testimonial ads from customers, or user-generated content, to be fancy, right? The thing is, is the content that begins with pain converts significantly higher. And so this is my theory around this, which is that the pain relates to the customer or prospect where they're currently at. If they start with the promise, it's too far disconnected. But if you start with pain, they relate to the person, and then you can take them through the story of them getting the result. But if you start with the end result, it's too disjointed, it's too far away, it becomes less believable. So if you had to pick between proof or promise, double down on proof. And that's also the reason that I tell everyone to start with giving stuff away for free, because it's the easiest and fastest way to get tons of it. Best time to ask someone for testimonials at the moment of greatest satisfaction. All right, so that's also, by the way, different from the best time to sell, all right? Because you want to sell at the moment of greatest pain. You want to get a testimony at the moment of greatest satisfaction. So think about it this way. If I were to say, hey, you have a steak dinner and you have a steak and you're starving, you're like, oh, this is great, blah, blah, blah, blah. The moment to sell you the steak is right before you've had the steak and then you eat the steak. Now, after you have the steak, is that the moment that I say, would you like another steak? Not really, because you're like, I'm full, I'm good. So that's the point of greatest satisfaction, not the point of greatest deprivation. Now, after I've had the steak, if I say, hey, would you mind like looking in the camera and saying how great the steak was? People are like, oh my God, it was amazing. It was so great. You guys should definitely check this place out. It's awesome. Right? And so point of greatest deprivation is when you make your sale. Point of greatest satisfaction is when you collect your proof. Number 7, raising prices almost always makes you more money, but you hear no more often. And so let me break this down. So I had a sales guy in one of our portfolio companies and we doubled the price of our product. So a lot of people are like really afraid of like 10% or 20% increases. Like I'll test 4x, 5x price. Differences. Pricing in many instances is far more inelastic than you think it is. All right, so elastic versus inelastic pricing, I'm not going to get into that, but basically if you have a $5 sandwich going to $10 sandwich, there's a lot of elasticity with food, meaning people are very responsive to small increases in price. The classic counterexample is if you have life-saving medication, it's not very elastic at all, meaning if you double the price, people still are going to pay for it because they need to live. And so the thing is, is that if you have a very valuable thing, the price is usually a lot more flexible than you think it is in terms of how much you can move it up. And so I like making massive price tests, but the thing that you have to have when you do this is the balls or the stomach to deal with more nos. And so when I walked that sales team through the price increase, I said, hey, we're gonna double the price. I said, you have to understand that we're for sure gonna get less, or fewer yeses. But the question is, will we get half the yeses? So we had a 35% reduction in conversion percentage, but we doubled the price. And so we made more money in multiple ways. So one, we made more absolute revenue. We literally just made more top line. But the magic of this is that let's say the cost of our thing was $500 and we sold the thing for $1,000. Okay, so we have 50% margins. Well, if we double the price, we go from making $500 in profit to $1,500 in profit. So I actually triple the amount of money I make by doubling my price. And so even if I have a 35% reduction or a 1/3 reduction in sales, I tripled how much money I made on the other 2/3 of my sales, which means me doubling the price with a 1/3 reduction in sales still doubled the profit in absolute amounts despite selling 1/3 fewer customers. And one of the nice benefits of having fewer customers is that you have fewer costs associated with delivering on them. So not only is the gross margin per customer higher, your fixed costs that you have to incur to continue to expand your infrastructure go down. And fundamentally, a smaller amount of customers that make more money is an easier business to run than more customers that make you less money. And let me tell you how important this is. I have seen businesses that have not changed their prices for 5, 6, 7 years, right? Because they're afraid to do it, whatever.. But I wanna give you some real hard truth right now. In 2017, if you sold something for $100, that was your only product, and you were running 20% margins as, as a business, if you did not change your price from 2017 until 2024, that $100 now means that your costs in that business have gone up by 20%, which means that your profit is now zero. And so if you feel like your margins continue to compress year after year after year, it's usually because you're not appropriately adjusting your prices. So to give you context, $79 in 2017 is the equivalent of $100 today. And so that would be like you going back in time where you had a 20% margin business and running it at a $79 price point rather than a $100 price point. And so you just like that eliminate all the profit in the business. And so you have to do the reverse of that because inflation is a compounding threat to your business that every year stacks on top of itself. And so if you're not making 3, 6% increases in prices at least annually, you're not even keeping up with inflation. And to give you a little story around this, Warren Buffett, when he bought See's Candies, said that he only wanted to control one thing. And so what that one thing was is that every year he would look at all the prices of all the candies and he would ship them the new pricing. And he has raised prices 50 years in a row, sometimes in a single year as high as 17%. Onto their pricing, and as a result of that, he's cleared himself $1 billion in profit. And so if it was the one thing that he focused so hard on, it might be something worth thinking about. So if you do make a pricing change, there's two components to this. One is new customers, the other is old customers. The easiest thing to do is just change the price and just apply it to everyone who's new. That simple. And if you're in a transactional business, then it's fine. Even because the old customers come back and buy again, right? But if someone's on some sort of recurring service is a little bit trickier. Now, I have some tactics around this, but I'll just give you the high levels, which is you wanna have a price increase letter. You wanna talk about all the things that they're gonna get as a result of the investment that you're now making into the business, and that it's the only way that you'll be able to stay in business given inflationary pressures, et cetera. All right, and so you just wanna say, here's the thing, here's the stuff you're gonna get. I wanna keep my promise to you, which is to keep our thing as good as possible, and only way for me to ethically keep my promise is for us to reflect that in the prices, which are now having to be changed effective this date. But don't worry, I've grandfathered you in to your old price by this time. And that's key, is that the old customers, you say, I've grant— everyone wants to be grandfathered. You say, so I'm grandfathering you in until this date. And that way it's not like it's changing tomorrow. It's delaying the pain and giving them a gift right now as a way of honoring the fact that they've been loyal customers to you. Those are the main bullets of what that price letter would go out and say. And if you are going to raise your prices, you want to be measured about it. You should know what your conversion rates are prior to you making the price change, and you should be able to give a statistically significant sample size of shots on goal with the new price before you make a decision. If you get on the phone and the first 2 people say no, well, we, one, knew more people were gonna say no. We already expected that. And if you have, call it, 40% close rates right now, well, if you make double the price and you go to 30% close rates, then that's still a great deal for you. You might just be getting the first 2 nos out of the 7 nos you already know you're gonna get when you talk to 10 people. And so talking to 2 or 3 people getting nos doesn't mean you need to change your price. It might have just been the nos you were normally gonna get even at your lower price. And so you can't be emotional about this. You have to be calculated, and this, in my opinion, is the reason most people don't raise their prices or can't do it successfully. Number 8, talk to customers to solve all your problems. So Paul Graham said this, and I think it's really good. He said, you can solve just about every business problem by talking to your customers. So if your advertising isn't converting, talk to your customers. If your pages aren't converting, talk to your customers. If the price seems weird, talk to your customers. If the product isn't delivering, talk to your customers. At the end of the day, your customers are the people you serve, and they have all the information you need to make your product better. So especially when you're starting out, even if you have very low prices. So let's say you charge $10 a month for something, all right? And it's— and you want this thing to have thousands and thousands of customers. Okay, fine. But if you don't talk to customers, you're not going to know what's going to drive them to convert, buy, and stay. And so I come from an industry where people meet face-to-face in person to sell $10 a month memberships. And so I don't wanna hear it, all right? I spent the first 4 or 5 years of my career selling $30, $50, $100 things all day long. I don't know a very successful advertising entrepreneur who's a rainmaker, meaning they know how to get customers, who didn't have 4 or 5 years of hardcore sales under their belt that no one knew who they were, right? That's the Rocky cutscene is where you take hundreds and thousands of calls with customers, where you hear the words they use so that when you say, does this suck? But they say it differently. And so then you say that in your advertising. And when you take these sales calls for $10 a month, you're not doing it for the $10 a month. You're doing it so that you can learn more about them and you just so happen to get paid. But you find out the words that get them to move because you might think these are all the selling points to your thing. But when you're talking to them, nothing really happens. Then you say one thing and then boom, Their eyes light up and they're like, "Yeah, that." And then all of a sudden you reorder your sales scripts, you reorder your headlines, you reorder the roadmap on the things that you're gonna improve in the product because these are actually the things that are driving purchases for the first purchase and getting them to stay. And so most entrepreneurs are afraid to talk to customers. I have no idea why that is. They're afraid to talk to random people who have given them money. I don't get it. But one of the easiest ways you can learn more about your business and make more money is pick up the phone, and call people who've given you money and ask them why they did. And just as importantly, maybe more importantly, talk to all the people who didn't buy and ask them why they didn't. Yeah, and if you think you're above this, you're right. You should just keep doing that. But for everybody who wants to beat that guy, just get on the phone with your customers. So inside of school.com, we run a contest every month where the top 10 people who are new to the platform who generate the most revenue in their communities get to fly out to Vegas and spend a day with me and Sam, who's the other owner of Skool. And part of the reason we do this is that, of course, it's a great prize for all the winners, and they get to meet each other, and it's an awesome event. But for us, we get such valuable user feedback from super users. These are the highest, most invested users. And so we're like, hey, do you like this thing? Hey, this is the product roadmap. Hey, would you prioritize this over this? So recently we used the feedback from this group. We said, hey, we have this thing that could be controversial with the rest of the community, 'cause we could see people taking it like this. If we made this change in the product, what would you guys think? And unanimously they're like, oh no, that would make us more money, we're totally in for it. And so we're like, wow. And so months of deliberation of like, oh, do you think they'll like it? I don't know if they'll like it. What if they don't like it? All of that got solved by just asking them. And then we got our answer and then we did it and everyone was happy. And so the beauty of this is that you get certainty around your decisions and so you can make decisions faster. And the entrepreneurs who make faster decisions move faster. And when you do talk to customers, whether it's in person like this school event that I was talking about, or just on the phone, what do you think happens to them? You can take someone from a neutral customer to a superfan in one call. You can tell the story of the business, you can tell them why they started, you show that you care. And guess what? That person might bring you 10 or 50 more people when you think 2 rows down the line of word-of-mouth referrals. And of course, they're probably gonna stay way longer than they would otherwise, because if they do have an issue, guess what they're gonna do? Instead of canceling, they're gonna call you and let you know. A great time to do this that a lot of people don't like is that the moment people ask to cancel. So if you have any kind of recurring membership, or if they ask for a refund if you have one-time transactions, get on the phone with them. And it's not necessarily to try and hard sell them back into it, which by all means you can, but the more valuable thing is to understand what went wrong. And you'd be surprised how many times you just let someone vent, and here's the key, don't minimize what they said, get more angry about the reason they're canceling than they are. 'Cause you're like, that's ridiculous, that should've never happened to you, I can't believe that was your experience, I completely understand why you'd want a refund, I would want a refund 10 times over, I'm surprised you're not trying to put me in jail, I get it, alright? Is there a world that I can make this right? Or what would it take for me, this is the question, what would it take for me to make this right? And so now you get into them solving what it would cost or what it would take for them to stay. And more times than not, It's not as big as you think. You want to talk to all sorts of customers. So you want to talk to the super users, you want to talk to the moderate users, and you want to talk to the low users, but you're going to get different things out of it. Like I don't, I'm not going to prioritize a roadmap or things that I'm going to reinvest in the business based on people who are not that invested in the business. I'm going to, I want to talk to the super users who are getting the most out of it because they're going to have more context. But in terms of what problem do I want to solve for these people? It's like, why didn't this work for you? So this would be stuff that's like friction. So this is going to be way more about getting new customers. Like I'm going to solve new customer problems by finding out why people didn't buy or bought and then left. And then I'm going to figure out how to make my customers more valuable and get them to stay longer by talking to super users and your super fans or the best customers you have about what would make this even better. Number 9, what to say to prospects on the phone when you're just starting to get your first sales. So I use something called the Closer Framework. I'll make it very short, but the call should go something like this. C, so Closer is an acronym. C, clarify why they're there. So what made you hop on the call? What made you take a step? What made you respond to my email? What made you comment on my post? Whatever it is, they took an action to become an engaged lead, and that is your advantage. Because any person that you get on the phone with, with the exception of a true, true cold call first pickup, with the exception of that, everyone has responded to an email, they've commented on a post, they've responded to an ad, they've opted in, whatever. So you ask them why they did that. That clarifies, it gives you also big authority in the frame because They've taken a step towards you and you're just receiving. So you say, hey, why'd you do that? And then they'll tell you what it was. Then you move on to L, which is like, okay, so what I'm hearing is, and this is labeling with a problem, so it sounds like you want this and this is the problem, or you wanna have this outcome and you haven't gotten it yet. Does that sound about right? And they're gonna say yes. And you're like, okay, cool. Then you go to O and you say, you're gonna overview their past experiences. And you're like, okay, so what have you done so far to try and make this happen? Why is this so important to you? What else has happened in the meantime that has cost you from not having this occur, right? And we call this the pain cycle. The reason you do the pain cycle before you sell something is that you want to temporarily increase their deprivation around that outcome. So we want to temporarily, in the state of the conversation, increase how important that outcome is for them. So you've probably heard in politics, whatever the topic is of the debate, it's like, it's the economy. It's education, it's the border, right? Whatever media puts more attention on is what people say is the main reason they vote for candidates. They basically make that the topic of the election, which is the macroeconomic situation or whatever, right? When you're in a micro event like a sales call, you have sometimes 10 minutes, sometimes an hour to basically, in that very small call, elevate the importance of that problem in their life so that you can motivate action. They were kinda hungry when they get on the call,. But as you talk about the food that they could be having and the bad food they've been eating every single day and how crappy it is and how it's not good for them and how tasty and delicious this food is, what are we doing? We're increasing their deprivation. We're making them hungrier so that when we make our offer, they're more likely to take it. Which then goes to S, which is you sell the vacation. And so the reason I say sell the vacation, not the plane flight, is most salespeople, most new entrepreneurs wanna focus on their features. They wanna talk about the flight, they wanna talk about TSA, they wanna talk about check-in, they wanna talk about their bags, they wanna talk about their seat, all of these things that are on the way to Maui, their destination. You wanna just talk about Maui. You wanna talk about the lick-your-fingers good, what it's gonna be like when they have a full stomach and they're feeling great with their family at the restaurant. That's what we wanna talk about. We don't wanna talk about how they're gonna order it. We don't wanna talk about the selection. We don't wanna talk about how many times they're gonna get their drinks refilled. We don't wanna talk about any of that. We wanna talk about Maui. We wanna talk about being on the beach with the wind in their hair, with a Mai Tai in hand. That's what we wanna talk about. Sell the vacation typically is a 3-point pitch, which is, by the way, you can separate anything into 3 points. Now you just chunk up or chunk down based on, hey, what does it take to be successful? It's like you need fitness, nutrition, accountability. You need the leads to be timely, personalized, and qualified. Whatever it is. So it doesn't matter what you're selling, you can come up with 3 points And the people have to say, yeah, if I had all 3 of those things, I would succeed. Now at that point, someone doesn't say yes, you move on to E, which is explain away their concerns, which are what are the specifics they have that are the reasons that they're not buying, which is usually going to be some sort of specifics about the program, something time-related, something money-related, something decision-maker related, meaning they have to give the decision-making authority to somebody else, or finally them just simply avoiding the decision for fear of making a mistake. And so you need to account for all 5 of those and know how to overcome each of them, which I cover in a 4-hour-plus video that you can watch on my channel somewhere else. R is reinforce the decision. So once they have made the decision to buy, you're not done yet. Now the work begins, which is the next 24 hours is crucial to making sure that they feel really wowed and impressed with your business. Most customers will judge a business based on the first 24 hours post-purchase. And so if you say, hey, I'm gonna get you 3 things in the next 24 hours, You're gonna get introduced to this person, she's gonna do this, and this is what's gonna happen next. Then you make those promises and you keep those promises within that timeframe. And ideally you do it even faster than you promised. You want their impression to be like, man, these guys are dialed. The closer framework is simple enough that you can teach it to somebody else. And when I was starting in my gym journey, I had sold every single membership for a year plus. And until I had somebody else come in who had never sold weight loss and have them follow the C-L-O-S-E-R framework in the sales pitch and then saw them close their first sale without me, I actually cried. I was like, oh my God, someone else can sell this. This may actually be a business. And so learning to sell in this framework also makes it duplicatable so that you can give it to somebody else over time. Number 10, and this is big. Before you even think about doing something new, Do 10 times more of what's already working. And so this is like one of the things, as soon as I buy a portfolio company, what I'll do is I go to the head of marketing, I go to the founder and I say, hey, why can't we 10x what we're currently doing? Tell me why we can't. Honestly, 2 times out of 3 they're like, I mean, we could. And I'm like, then why aren't we doing that? And what happens is they have all these other priorities that are not going to 10x the business. And they have this one thing that we already know works that we have nothing that's stopping us from 10x-ing the business. And I say, great, let's do that. Call me in 6 months. Now the thing is, is in the 1 out of 3 times where they say, well, we can't 10x this because of this thing, then I say, guess what the constraint of this business is? Solving that. And if you are doing anything but solving that, then you're not growing the business right as a founder. Rather, you're not growing it as fast as you could be growing it. You are doing outbound. It's like, great, why can't we do 10 times the outbound? Well, I don't have enough leads from lists. Okay, great, so our constraint of 10x in this business is that we need to find more sources for lists, so we need to either scrape more lists, we need to buy more lists or make more lists ourselves. Okay, that's solvable, let's do that. If it's, hey, if we 10x our advertising dollars, like we just need to add more to the budget. Oh, we can't do that because our ads aren't good enough. Okay, great, so we need to have more creative? That's the constraint of the business. If it's content, which is why can't we make 10x content or make our content 10 times better? Or maybe realistically a combination of the two, which is we're gonna put out 2 times the content and we're also gonna try and make it 2 to 3 times better. Great. Then guess what? Now we have a 6x. Can we triple the content and make it 3 times better? Sure. Well, what did we do in the best content that we had that we're not doing in all the other pieces? Great. Can we templatize that and make that the playbook that we use with every piece of content. Great, we're not doing that? Cool, let's do that before we do any of these other ideas that you had. And so a lot of entrepreneurs, because it's boring to them, they figured out how to do this one thing and they think, oh, I should figure out how to do something else. When once you get something to work, the whole goal is to beat the living hell out of it, is to squeeze every last drop from that thing that works. And you do as much as you possibly can, as well as you possibly can, before even thinking about doing something new. So let me walk you through the 5 stages of the traditional entrepreneur for advertising or even for business. They have something that they hear about that they think is cool, so they go into uninformed optimism. They're really optimistic, but they have no idea. Then they jump into this new thing and they become an informed pessimist. And so they find out way more about this thing and then they're like, wow, this is actually kind of hard. And then they go to stage 3, which is the valley of despair where they're like, wow, this isn't working. This isn't what I thought it was going to be. And then what they do is dot, dot, dot. They start over at uninformed optimism because they hear something else is easier, but they miss out on step 4 and 5, which is they become an informed optimist. So they say, okay, I understand how outbound works. I understand how paid ads work. I understand, how organic works and what are the things that it takes to scale and how much work it really is. And then finally get to level 5, which is achievement, which is they actually achieve the goal. But most people just repeat 1, 2, 3, 1, 2, 3— uninformed optimism, informed pessimism, valley of despair— start back over. And they just hit all 3 of those over and over and over again, whether that's new marketing channels, new products, new businesses. And this is a version of the woman in the red dress, is that it's always deceptive to think that the new thing is going to be easier and And the only reason you think it's easier is 'cause you don't know enough. I wish I could just give you the scar tissue of having done that 3-part triangle over and over again. But all I can tell you is that like when I get that little tickle on the back of my neck where I'm like, ooh, this looks exciting, it's now become a warning flag to me because I've been burned so many times doing it to say, oh, I must not know enough about this because everything is hard. I'll give you an analogy that a mentor gave me that I really liked. And I think it applies to a lot of things, but when he was talking to me about departments in my business, he said, you have to know where the bodies are buried. And I was like, what do you mean by that? He said, if you ever talk to like a head of a department like IT or HR, legal or whatever, and they say, yep, everything's good, if you don't know what problems are actually going on in the department, you're too far away. And so that's in a way uninformed optimism. They're just telling you it's great and you don't know any better, so you're uninformed. But you should know enough about the business to know where all the bodies are buried. You should know where all the skeletons in the closet are. And so if you're getting into a new thing, you have to know all of the ways or as many ways as you possibly can about what's going wrong. And once you do a little bit more research, you often find out that there's a lot of things you don't know about. And guess what? The thing you do know is working right now, and the likelihood that you doing 10 times more of that has far fewer unknowns than you doing brand new on something net new. Entrepreneurship already has so many risks and so much unknown. Bezos talks about this. He says, we want to manage as many of the risks as we can. So of course we're going to incur some risks that are going to happen that are unforeseen to us. But the risks that we know about, we want to limit to the greatest degree possible because there's enough risk of our business going out of business by being a business. Why take on more risk for no need? It's risking what you have and need to survive for what you don't have and don't need. Which brings me to number 11, which is growth is stressful. Stagnation is stressful. Decline is stressful. That means that business is stressful. And so the only stress-free people are people who are dead. And if you're in business, you need to accept stress as a fact of life and not something wrong with you or wrong with your particular business. It's just that things are stressful in general. Welcome to life. And so I see a lot of entrepreneurs try and change their businesses because they feel stressed. But every scenario of business has stress. There are different kinds of stress, but they're all stressful. And so the idea that there's something wrong with you or wrong with your business because it is stressful misses the point of how business works. And I'll tell you an analogy to make this make sense. So if you've been in business for any period of time, Think about your first business or think about your problems that you had 2 years ago or 3 years ago in business. You're probably like, oh my God, those weren't even real problems. Those were like nothing problems. Well, future you 3 years from now thinks that about your problems right now. And so I think about this a lot 'cause when I think about my problems of like when I was worried about how to get trainers show up on time and like, you know, if somebody's membership wasn't recurring, I had churn issues or whatever it was within the gym that I had. Those problems, I could solve those in my sleep now, right? 'Cause the problems that I have are bigger. And so the thing is, is that you just become more enduring. You become tougher and your tolerance level for stress or what you deem to be stressful goes up. And so what's really interesting about this is that I still have the same problems I had when I had a much, much, much smaller business. I just don't think they're problems anymore. And so then that means that my choice to categorize the issue as a problem is actually the greater source of stress than the problem itself. And if you can adopt that perspective, you can be less stressed as you grow and make better decisions. And so I wanted to hit this point because I almost stopped and killed so many businesses early on because I thought there was something wrong with me or something wrong with the business because I was stressed, rather than accepting that stress is a fact of life and that I'm going to continue to be stressed as long as I'm alive. So fundamentally, stress comes from an aversive stimulus, a stimulus that's not, that's not enjoyable, right? But if you grow, there's tons of things that are not enjoyable about growth. If you're stagnating, there's tons of things that are not enjoyable about stagnating. And if you're declining, there's tons of things that are not enjoyable about declining. So there's just always gonna be things that you don't like. Get used to it. Number 12, this is a really tactical one. I've come to adopt this theory of something called the lookback window, which is that customers determine whether a purchase was good based on the last purchase they made. And so if you've heard the phrase, what have you done for me lately? It basically, it's phrasing for the lookback window. So lemme give you an example. If you're an agency owner, right? And you start running ads for a customer. Now let's say the first month you charge $5,000 and they make $40,000 with your ads. They're happy, you're happy. The next month you charge the same $5,000 and let's say they make $5,000. Well, they're less happy. You still made $5,000, but they're not thrilled. But in your mind, you're like, well, I covered myself last month for 8+ months because of how much money I made them. And on the 3rd month, they cancel. And you're like, WTF? On the 1st month, I made you 8 months' worth of paying me. But the thing is, is that the way the customer perceives that is the 1st month, I paid $5,000 and got $40,000. That was a good deal. The 2nd month, I paid $5,000 and got $5,000. Eh. 3rd month, you know what? I don't want to risk it anymore. I'm out. And so they will make a judgment on the purchasing decision based on the last purchase. And so we can leverage that as business owners by extending the lookback window, which means that the less frequently we bill, the longer people stay. Think about this for a second. If I billed every single day, there would likely be a day that I had not provided that customer value. And maybe there's 2 or 3 days in a row. And so likely they would cancel 2 or 3 days into not getting value. Being billed daily is pretty high. If I billed annually, they would only have an opportunity to churn once a year. And the thing is, is at that point of churn, what would they do? Now, in the agency example I gave, let's say they made the $40,000 and the $5,000, and then they made $5,000 and $5,000, and let's say throughout the year we had 2 more good months, and all in all we made them $100,000 and they paid us $60,000, right, or whatever. Now, when they look back, they're gonna see $100,000 versus $60,000. But if we bill monthly, there's gonna be multiple months where they were negative or break even. And so the longer the window of time you do between billings, the longer the time you have to provide value in excess of your price. So it allows for less volatility in their business and yours. And so this is something that took me way too long to learn, but as much as possible, try and bill for longer durations. And I'm not saying get people to commit to contracts, that's not what I'm saying. I'm saying try and bill up front for longer periods of time. I'm willing to take a hit on some pricing, which may seem counter to what I'm saying, so that I can get higher LTV. Meaning if I know that I can cut churn by 3x by reducing my price by 30% so that they can pay 3 months up front or 6 months up front, then I'm more than happy to do that. And so there's 2 ways you can use this strategy. Strategy 1 is you just say, this is how we do business and we need people who are committed because there's going to be volatility and we don't want the short-term volatility to affect our relationship, and that's a legitimate reason to do it. The other way you can do it is just have it as one of two options, one that has some sort of prepayment discount that's associated with it, or prepayment bonus, which is one of the things I like, some level of service or some guarantee that comes with prepayment that doesn't come with month-to-month, all right? And by the way, you can add a guarantee to people who prepay and not to people who don't. So if people wanna decrease their risk, so think about it, they're taking on more risk by prepaying, but you attenuate or you offset that risk by adding a guarantee. So they pay the same price, but they get a reduction in risk for taking on an increased amount of risk. So if you offer an annual pricing, we know across our portfolio, because we do this in a lot of businesses, if you, if you don't make it the default payment method and you just offer it, you'll get about 10 to 15% of people who take the prepaid annual option. Now, here's what's cool about that is that if, call it, 10% of people take that option, you double your cash flow in the business. Because you get a 12x price, right, on 1 out of 10 or 1 out of 7 people who decide to buy. Well, if you do that, then you double the amount of cash you get up front. And so for many people and many businesses, that little change alone can allow marketing and advertising to be profitable. And the reason having more cash up front is helpful for a business owner is that you can offset the cost of advertising and the cost of sales commissions. And so you can have these costs you have to incur to get the person in the door. And so if you can front-load the cash from the customer, then it means that you can do more of that faster because something called a cash conversion cycle, which basically just means how fast do I get the cash back that I put out to get somebody new in. And if I can break even on that or even be profitable on that in the first 7 days, then guess what I can do with the money? Go back and get another customer or 2 or 5. Throughout my history as a business owner, I've had 4 periods where I had tremendous growth, and in each of those periods, it's where I was making more than 2 to 3 times what it costs me to both acquire and deliver for 2 customers in the first 30 days. And so what that means is if I pay to get a customer and then that customer comes preloaded with the cash to deliver for him and get another customer and deliver for that customer, then cash no longer is a constraint in the business, which means that I can pretty much just crank the advertising until something else breaks in my business. I mean, this is how I had $1,000 in my bank account in December of 2016, and then in 20 months was doing $4.4 million a month. Like, the only way you could do that is getting it, is basically have an infinite money glitch that happens, because the thing is is that the money that you want is out there. There is money everywhere. If you look out the window, if you look in the room you have, there's somebody who paints your walls, there's somebody who manufactures this camera, there's an electric company that funds this whole thing, there's internet, there's money in everything that you see with your eyes, and you're afraid that there's not enough money out there. There is, you just have to access it. And you can access it with skill by making sure that the pricing that you have and the terms that go with the purchases that you have allow you to advertise profitably so that you can get as many customers as you darn well please without emptying your pockets but by emptying theirs. Number 13, try and sell sawdust. So I was talking to a really good friend of mine who does $100+ million a year and I was talking about this concept of sawdust, which is in the businesses that we have, I try and look at what are all of the assets that we already have at our disposal, right? And so with Acquisition.com, for example, I was talking to him about this. I was like, well, I already have a building, I already have the team that runs my portfolio, and I already have all this lead flow from companies that are not big enough to be portfolio companies, but they're still big enough that we can help and then someday later become portfolio companies., and I was like, is there a way that without adding more infrastructure to my existing business, I could use the sawdust, the stuff we already have, to create a product or service that would meet the needs of those customers? And so the sawdust analogy just comes from sawmill, lumber mills. So they take these trees, they put 'em in through the lumber mills, they cut 'em up, and they put 'em in the planks. But at the bottom, what they figured out is there's all this sawdust, and then some very intelligent engineer was like, huh, We're just taking all the sawdust and we're throwing it out the back. Is there something we could do with this? Well, it turns out, one, sawdust is great for plants and growing and putting it in a mulch and things like that, but also if we mix this with glue, we have more wood planks that we can create afterwards just using the sawdust and the chips. And so they created a whole nother revenue line from stuff they already had. And so right now in your business, you have sawdust, and it just takes a little bit of creativity to think, How can I recombine some of these things that I'm already doing to then create another product line that doesn't take operational infrastructure for me to add to sell? And then those added product lines often are huge margin increases because it's all profit, because it's something that you already are incurring the cost for your main business so that you can have this. And the key to making this work is that it cannot increase operational drag. If you have to do a whole nother thing in order to make this work, that's not what you want. The idea is the sawdust is already there, and then all you have to do is gather it, put the glue on it, and then you have another product. That's the concept. I didn't buy another building. I didn't hire another portfolio team. It's just I used the team that I already have, and they come down and they explain what they do within our portfolio companies to these businesses so they can become portfolio ready. So they understand, oh, this is how they market at a higher level. Oh, this is how they hire at a higher level. Oh, this is how they price. Oh, this is how they,, sell and how they scale sales teams. All of those concepts, I already have the information and expertise within my existing portfolio cuz I do it every day. But by just having another way for people to have access, obviously less than a portfolio company would to that team, then I have another way to generate revenue without having to incur the cost associated with building out a whole nother business. So the process that I go through is I think about all of the resources and assets that I have currently available. So. You have to be as detailed as you can because it's usually like a tiny piece from here. It's the glue that we use for this part of the log process, but then we have the sawdust from over here. If we put those together, boom, we have these new logs and we have the plank-making machine. Let's combine them and then we can do it ourselves, right? And so you have to think, okay, what are the talents and the people that I have available? What are the digital assets or physical assets that I have available to me? And is there a new way that I can combine these things? And so a simple one was like in the gym space, right? I had brick and mortar, but we were only using the space from 5 AM to 9 AM and then from 4 PM to 7 or 8 PM, right? So that means the rest of the day, if I wanted to be a more clever business owner, I could say, what businesses use a gym and turf in the middle of the day that I can rent that space to? That's sawdust. That's additional revenue that basically costs me nothing. And so all I would have to do is say, hey, I'm available, so if you have a team training thing or you have some sort of sports thing with kids that goes in the middle of the day or ends by 4, then you can use my whole facility. And now my facility's generating revenue because I'm paying the cost of owning that facility 24/7. And so I might as well make money from that. So a different way of using that is called excess capacity. So if you have excess capacity, like Uber is based on excess capacity. People have cars, they're not using them. Airbnb. You have an extra room, it's excess capacity. These are businesses built on other people's sawdust, and you have sawdust in your business, so you might as well use it yourself. This is really the concept of double and triple and quadruple dipping, is how can I get more leverage from the same thing? And so I tell stories about our portfolio companies, which like that gives me, I have to do an intervention with the portfolio company either way, but if I tell the story about it, I get to double dip and use that as content. And so there are many opportunities where you can get leverage, you get more for what you put in, by reusing the same thing in multiple different scenarios. And so most businesses have tons of these excess capacity or double and triple dip potentials sitting inside their business and they're not using them. The workshops that I talked about, I get to make content from those workshops. I get deal flow from those workshops. We get cash flow from those workshops. My team gets more exposure to different types of businesses and industries, so they also get better. And so there's many value-additive things that stack on top of each other from one decision. By the way, if you want to check out one of our workshops, you can go to acquisition.com. We'd love to talk to you. It's for business owners only. So if you don't have a business, go to school.com and we can help you start one. Number 14, arm your salespeople. So I see too often a lot of founders and entrepreneurs have this kind of like animosity between their sales team. They feel like they shouldn't pay their sales team that much. My sales team's so needy. They only want lay-down customers. They're always complaining about the leads, whatever. No, like you should be the tightest with your sales team because your sales team is the life, is the cash flow, is the life flow of your business. If you don't have sales, you don't have a business. So they should get that level of esteem. And honestly, a huge portion of the business should be pretty much allocated to supporting them in doing their core activities. And so one of the main things that I like to do is two things. One, I arm my salespeople with an Excel sheet that has all the pieces of content that I have that can help overcome specific concerns from customers. And so right now, if you don't have a piece of content that overcomes every main concern a customer has about your services or your products, do it. And then as soon as you do it, the best converting of those things, one, you'll know because you'll get sales from them because people will DM you about it and be like, oh, I didn't know that, now I'm interested. Take those, put them into a list so that your sales guys have them and they can send them to customers either before they talk to them or after they talk to them so that they can schedule a follow-up call and say, hey, let me send you this video, it might explain your concerns, let's touch base tomorrow after you watch it, and then you can allow that content to do some of that selling for you. And as soon as I did this with my sales team in fitness, when I had weight loss customers, and then in Gym Launch when I had gym owner customers, our sales went up. And the thing is, this is nice 'cause I didn't have to train any of them anymore. They just now had assets and resources they could deploy to leads who are a little bit colder, who need a little bit more selling, and they wouldn't have to spend time on the phone. They just let me do the selling for them via the content that overcomes that specific concern. Now that leads me to the second one, which I'll just make as number 15, which is really big. A lot of businesses don't do this, but you should unify sales and advertising. So those should roll into the same person. And so I saw this really early on in Gym Launch. We had two departments. We had a sales department and we had a marketing department. And marketing always said the sales guys weren't closing as many leads as they should, and the sales guys always said that the leads weren't good enough or they didn't have enough leads, right? But when we unified that under a CRO, Chief Revenue Officer, which if you're the founder, that's you, you then say there's really just an acquisition department. And fundamentally, as I see it, advertising and sales sit on the exact same continuum. You have low-information buyers and you have high-information buyers. And so fundamentally, a low-information buyer needs not a lot of information or already has a certain amount of information to make a purchasing decision. A high information buyer requires more information or doesn't have as much information when they start talking to you, and so you have to fill in more holes. Fundamentally, sales just fills in the holes that advertising failed to answer. And so if you have exceptional, best-in-class advertising, you don't need sales. It's not that they're separate departments, they solve the same problem. One just communicates one-to-many, The other communicates one-on-one. People buy real estate on the internet via auction. You don't necessarily need to have salespeople. If you give a customer enough information, they can make a purchasing decision. That being said, you're like, wait, Alex, you have salespeople. Of course I do, because there's always gonna be a certain number of customers that I can get people to buy automatically, and then there's people who still want more information that most likely they didn't see the advertising that answered that question, and so then the salesperson can just say, oh, these are the 3 piano keys I need to play in order to get you to buy. Great. And they fill that specific information need to turn the customer from a maybe to a yes. And so unifying the two departments is one of the highest leverage moves that you can make as a founder because it eliminates the cross-departmental BS. It's, we're all here to sell customers. And so advertising works hand in hand with sales, not in competition with them so that they can get a pat on the head from you or whatever director is running that department. So oftentimes you are the chief revenue officer who's uniting both of those fronts. But over time, if you can find someone who does that, that usually is the fast track to being CEO. So Kale, for example, at Gym Launch became Chief Revenue Officer, right? He basically stood on top of sales and marketing so that he could control the customers coming in the door. And then once he knew how to make it rain, he could run the business. Number 16, there are 3 legs to the stool. And so every business needs 3 big functional leaders. You need one person who's in charge of getting customers, acquisition. You need a second person who's in charge of delivery and getting those customers exactly what was promised. And then third, you need someone to run the internal operations of the business. This is the day-to-day. This is everything we do to support the other two functions. So this is IT, legal, HR. These are the things that are required to keep you out of prison. And so you have to have contracts, you have to pay people on time, you have to have a CRM that, that collects all this information. And this one functions as a vendor to the other two heads. So think about this: that person should never be making the big decisions in the business. They should be supporting the decisions that allow us to get more customers or deliver on those customers better. Which, if you think about it, those three legs of the stool roll up to the only three things that you can do to increase enterprise value in a business. You you can get more customers, you can make them worth more, get more customers acquisition, make them worth more at delivery, and you can decrease risk in the business. And so that is where the operations comes in. If I know that everything's completely dialed, we have no massive risks that we're exposed to, and we can get as many customers as we darn well please, and our LTV continues to scale, that is a valuable business. And so it makes sense to have people who are in charge, one throat to choke, one chest to poke, who's in charge of that function. And in the beginning, you may be all three, but as you develop as the entrepreneur, you have to think, which of these three hats is more central to my best skill set? And then you can start finding the people who will complement you. And so I'll give you my rule of thumb here, is that if you are not learning from these people in the interview process about what they can do better than what you're doing, you need to hire better. Now, if you're early days and you don't have the cash to bring somebody like that in, then you gotta learn a lot. And that's part of entrepreneurship. But at some point, you want the people that you bring in to be better at the thing than you, which if you really think about it, means that every business pretty much trickles up to the same thing when taken to its natural extreme, which means you're going to have a head of acquisition who might have a sales director, a marketing director. You're going to have some sort of head of ops who's going to have IT, legal, HR, recruiting all rolling up to them. And you have some sort of customer delivery or product person who's going to have fulfillment, product, experience, UX, engineering if you have software, that are rolling into them. If that is what the ultimate end of every business is, then guess what your day-to-day looks like in a really big business? The same in just about every business. And so the idea that you need to keep jumping from thing to thing to thing when the ultimate expression of that business is going to be the same for you at the end kind of seems stupid. If I don't like something about the business, it's like I just need to get out of it. I just need to get above it. And so you can just develop the business, bring someone else in who does like that thing, and then you can have that person reporting to you. And then at that point, you're doing what every entrepreneur does, which is they have a team of people who report to them about the things that they're doing on a daily basis. And so don't get too bent out of shape about, this is my opinion here, this is advice from me, don't get too bent out of shape about the passion thing. Like, love the game. And whether that's selling dry cleaning or selling software or selling books or running a portfolio, at the end of the day, it's more or less the same. You're going to have a team of people that you like, that share your values, that share your mission, and that you're walking alongside together with. And so if you can maintain that frame, it will decrease the relative excitement for the woman in the red dress because you know that when it's taken to its natural end, it'll be the same as the natural end of the current business you're in. Number 17, the person with the highest standard should be in charge. So you can think about this at every level of the business. And so let's say you have a department for media buyers or you have a department for content creators or you have a department for salespeople or you have recruiting. At every level in the company, the person who has the highest standard, the lowest tolerance, should be the person who's in charge. And that goes all the way up to the top of the business. If there's ever someone in your business who has a lower tolerance or has a higher standard for excellence than you, that person should be in charge and not you. And so I use this as a wonderful litmus test to figure out who do I think should be promoted within a company or division or department or even on a tiny team. Who should be the lead of that team? The person who has the highest standards. And so when I think, okay, I've got all these customer support reps, who here has the highest standard for what they believe a customer service experience should look like? That's the person you want in charge. And so it's not tenure, it's not suaveness, it's not how much you like them, it's not what they look like, it's who has the highest standard. And so when I was starting up, I made a lot of these mistakes. I would promote people that I liked a lot, I'd promote people who'd been there longer 'cause I felt bad that this guy had been here for 18 months and this person had only been there for 2 months, and then I'm gonna promote that person over the 18-month person. But guess what? When you have one of those hard situations, guess what you get to do? You get to talk to the 18-month person and you get to explain exactly why the other person got the promotion and what they need to do so that they can get promoted in the future. And if you have a winner, that person will step up. And if you have a loser, that person will step out. And that's okay. Number 18, whenever you're hiring, make sure that the person raises the average bar. And so this is one I stole from Bezos. This is not mine. But it's such a, I love decision-making frameworks because one of the hardest questions I get asked, and it's on a repeated basis, is I don't know to hire, right? Or I don't know what good for this role looks like. And so I'll give you 2 filters for that hiring process. Number 1 is, during the hiring process, am I learning more from them than they're learning from me? Now, if you take 3 interviews, guess what? You might have just 3 bad candidates. Just like if you take 3 sales calls and you might not close any of the 3, it doesn't mean that you should change anything. It might just mean that you got on the phone with 3 bad customers, and just as likely, 3 bad candidates. So you wanna talk to 10 or 20 candidates and then what happens is if you talk to 20 candidates, you'll very quickly see who are the people who really know their stuff and who doesn't. And so I look for the quantity and quality of metrics that they discuss about their position in terms of how they influence success. And so it's how do you define success and then what are the things that you will do, what are the actions you take that will influence or increase the likelihood that this successful event occurs? And so if someone can't describe to me, this sounds very basic, in what ways do your actions contribute to this outcome? Now, if you want the 201 version, this is for leadership and up, you say, how does that outcome drive outcomes in the larger business? If they can't connect those dots, guess what? They probably won't connect them in your business either. Now, once you have an idea of, okay, I've talked to 20 people, there's, you know, 3 of them actually seem like they know their stuff, they gave me good quantitative, qualitative metrics, they could tie their behaviors to the outcomes they want and they could track that outcome to the overall business. Okay, now I just ask the question, of the people that I'm considering, which of them raises the bar of the team? And it's the team that they're joining. So I'm not expecting a frontline customer service rep to raise the bar of the executive team. It's a different skillset, different level of employee. But if that frontline customer service rep is going on a team of 10 reps, then that person needs to raise the bar. We were interviewing for one of our portfolio companies and so we recruit for our portfolio companies because we have a bigger brand than they do. So we can put really high-level talent in using my brand to grow their business faster. So it's a way of me growing the enterprise value of a business without purposely using my face to grow it. So I don't become key man risk, I just leverage my face to get the best talent into those companies, and that's why they grow so fast. Pro tip. But, so we were looking at a media buyer for one of our portfolio companies, and I think that the, you know, they passed a number of candidates and they were like, this is the final guy, we want you to talk to him. So I said, fine. So I talked to the candidate and the guy was great. Nothing wrong with him. Seemed, you know, had decent experience. And when I got off the call, I got the recruiter from my team was like, hey, so what did you think? Should I pass him along or should we hire him? And I was like, I don't think so. He's like, why? He's like, he met all the requirements. He had the experience. He seemed like a nice guy. And I thought about it more and I was like, name the other people on that team. So he named all the other people and I said, is that guy better than any of them? And he was like, no. And I was like, then we're making the company worse. And so that person has to raise the bar of that team because think about the equal opposite. If every person that comes in lowers the bar of the team, you eventually dilute the company to a bunch of people who suck. But if you maintain that bar, which is that this person has to increase the average of the team, then over time a company only improves and gets better. And as that person now is in the team, the whole team's bar now raised a little bit. And so when we bring someone else in, the bar goes up. And if you're like, wait, that means that I have to keep hiring better and better people. You damn straight you do. That's the whole point. And a mentor of mine said this, and I just love this quote. He said, your best talent has yet to come. Your best talent is in the future. You haven't met them yet. And so in me thinking about this, and I can pass that same advice along to you, is that the best employees, the best teammates, the best partners are in your future, not your past. Number 19, when you're dealing with that team, there's 5 reasons that someone is not doing what you want them to do. And this is super helpful for these hard conversations.. And I usually draw a diamond here, but I'll just do it visually. Here's the condition. Someone hasn't done what you want them to do. Reason number 1, they didn't know that you wanted them to do it. So you didn't communicate it clearly or you didn't do it in a written fashion, whatever it was, there was a miscommunication. They didn't know that you wanted them to do it. Okay, now let's say they knew that you wanted them to do it. The second reason is they didn't know how to do it. If they didn't know how to do it, then it means that they need to be trained on the steps in order to recreate that thing. Now, once you train them, If they know that you want to do it and they know how to do it, then they might not have known when you wanted to do it, which means you needed to add a deadline or a timeline with the thing that you asked them to do. So it's like, oh, I knew that. I just didn't know you needed it by Tuesday. Okay, great. So we're working our way around. The fourth reason that someone won't do it is because they know that you wanted them to do it. They knew how to do it and they knew when you wanted them to do it, but they just didn't want to do it. So they weren't motivated. And with motivation, Obviously a massive topic. A lot of it comes down to the reward cycles and punishment cycles associated with the work that they do. And so it's how can I incentivize them properly and not necessarily monetarily. You can incentivize someone by praise and by giving them kudos. You want to know something that really incentivizes people? Freedom and reinvesting in them. If you want your team to love you, give them autonomy and invest in them. If you do that, they're like, holy cow, I get so much investment from these people. Basically what you want is you want reciprocity to still be, like, if the only reason someone does something is for the paycheck, you're going to miss out on the vast majority of human effort, which is discretionary effort. So let's say it takes this much effort to not get fired. Someone usually has 10 times that amount of effort available to them that they put to their hobbies, they put to their other things, they put to their shower time, they put to music or whatever else, but they're not putting it to their role and reinvesting in it. But if you invest in them and you try and up-level their skillset either as a human being or as a professional or both, then they become more valuable in your business. And I think about it this way, it's like, well, what if I invest in them and they leave? Well, it's what if you don't and they stay? So that's the fourth reason. So they know that you wanna do it, they know how to do it, they know when they want it done by, and they're motivated to do it. Well, why still are they haven't done it? They have something blocking them. And so an easy analogy here is I could have the best chef in the world in the most amazing kitchen and I would say, hey, make me an omelet. And if he knows how to make an omelet, and he knows I want it right now in front of me, and he's motivated to do it because he's on television, but he's like, I don't have eggs. There's nothing, he's not gonna shit an egg out, right? There's nothing he's gonna do. And I'll tell you a real world example of this. So my media team was spending a lot, so we have a big office, and we built a huge, a bunch of studio stuff, invested almost $1 million into this building just on the media side to make it awesome for them. But a lot of the guys were spending their time at home editing stuff. And I was like, dude, what the hell? I was like, I think we've made this a pretty sweet place. Like, why not? You know what it was? The bandwidth on upload speed was low at the office. And so their houses were higher or faster upload speeds. And so it was making them way less efficient, which kudos to them for being more efficient by being at home. But then I was like, okay, well this is obviously a constraint. And so then we spent $120 grand to get Google Fiber drilled through the floor, not through the floor, from the road to get brought into the building and now we've upload speeds of 1.2 gigs a second. And so now we're way faster than they were at home and guess what? The media team's here. And so that was the thing that was blocking them. And so here's the cool thing about this framework is that if you have a hard conversation with somebody or you perceive it to be a hard conversation because they're not doing something that you want them to do, you can say, I think there's 5 reasons that someone doesn't do it. Let's walk through them together. And that way you can attack the reason rather than the person. Number 20, the hardest work is the work that you don't know how to do. And the reason this is so tough is that the vast majority of the time, if I said, what would it take to grow your business? If you only had one thing you could do by the end of the year and make sure that it was accomplished, that if you just did that one thing, all of your other goals would get accomplished, what would that one thing be? By the way, that one thing is what we call a priority. Now, the thing is, is that you might not know how to make that one thing happen. So it could be, if I had a mega brand by the end of the year, all of my other issues would go away. It could be, if I didn't have the churn issue that I have, by the end of the year, all my other issues would go away. If I had a good sales director that could scale a sales team, all of my issues would go away. Many businesses have one thing that if you think about it long enough, have enough downstream effects that it would accomplish many of these other goals that you have, or more likely make them irrelevant. And so, What we do oftentimes as entrepreneurs is we solve the problems we already know how to solve. And so we like doing those because we have fast feedback loops, because it's rewarding, because we know how to solve it. And so it's basically like going back to level 2 when you're at level 3 and you don't know how to beat that boss. You just keep beating level 2 again because it feels good. But the thing is, is that the level 3 boss hasn't changed and he's still sitting there, Bowser, you know, with his fists and his spikes, sitting there ready to wreck you. And so the thing is, is that the hard work of entrepreneurship is the failure that you're inevitably going to encounter by not knowing what you're doing and then taking action steps despite that with the idea that you will eventually succeed if you don't stop. And so we as entrepreneurs have to accept that that is what hard feels like. It is confronting the unknown that we don't know how to do and realizing that we're going to take our best shot and probably be wrong, 4, 5, 6 times in a row, and yet that single priority has not changed. If we still built the big brand, if we still hired that really good sales director, if we still fixed churn in our business, if that thing were solved, it still doesn't become less of a priority. But what happens is the entrepreneur fails once, fails twice, and then decides, you know what, I'm gonna go back to level 2 and beat that to feed my ego, to feel good about myself. But most of entrepreneurship is eating glass, and that's why I said earlier, growth is stressful, stagnation is stressful, decline is stressful because in each of those scenarios you're still doing the same thing, which is that you're solving a problem you don't know how to solve yet. And so the actual doing this in all three of those scenarios is the same. And so that's why when you want to, when you want to say stress is the problem, it's not the problem. Stress is a fact that occurs when you solve problems. And if you're solving problems you don't know how to solve, welcome to the game. If you knew how to do everything, you'd already be Elon Musk. And so the whole journey of entrepreneurship is turning the unknown into the known through trial and error. There's a company that I was thinking about investing in that has a consumer packaged good, CPG product, that I asked the founder, I said, how hard is this to manufacture? And he said, it's actually a lot more complicated than I thought it would be. And I was like, that's amazing. And he just looked at me cross-eyed and he was like, why is that amazing? I was like, because that's more things that anyone who's going to try and copy us is going to have to overcome. And if we can bet on the fact that we're more perspicacious, that we're more relentless, that we're more unyielding in our desire to keep solving the problem and keep bashing our heads against the rock until the rock gives way, then we will be able to be the winners. And any single thing that you have to overcome to be successful is what anybody who behind you wants to compete with you will also have to solve. And so I like to think about it like there's this big rock that I have to figure out how to move with rope and some duct tape and a lot of sweat and a few guys with me. And on the other side of that rock is a big bag of money. And the bigger the rock in general, the bigger the bag of money. I mean, I use this frame all the time. At one of our other portfolio companies, we have a software that we've developed and has now gotten really, really good and is generating a lot of revenue. And there's this next big feature that we have to build out. And he's like, this is going to be really complicated. I said, well, the good news is we're going to get paid $150 million when we solve it. And he was like, well, when you say it like that. And I was like, well, it is like that. And so when you think about these things, whether it's I need to add a second acquisition channel or I need to learn how to hire, manage, and train a sales director, each of these are hard things that you have to figure out how to do. But if you can quantify how much more valuable your enterprise or your business will be as a result of this change, then you can ascribe a value to it. And if I said, hey man, if you hire that sales director, I'll pay you $5 million. Guess how motivated you'd probably be? More motivated. But the thing is, is that your business will pay you $5 million when you solve the problem. And so if you frame it that way, it stops being this woe is me, people are hard, man, life is stressful. It's we get compensated for our ability to deal with that stress and take action despite it. One of the biggest unknowns that I had when I started a few years ago is how do you run a family office? So I went from an entrepreneur building businesses to I have to manage cash add in a portfolio and allocations of resources and capital across multiple businesses and different industries. How many resources do I allocate in terms of man hours to each of these companies? Is it proportional to the capital? What kind of deal structures are going to be the things that are going to mitigate risk but also give us the most upside? These are all these things that I had no experience with. And so I just got on the phone with anybody who would give me time and ask them as many questions as I possibly could. And then guess what happened? Once I started doing it, I learned way more than I did from all those conversations and I developed my own thesis of how this works. And so the thing is, is that every time you start on something new, whether it's starting a business to begin with or learning how to run paid ads or learning how to sell, it always feels like this big amorphous thing. But once you take your first phone sale, once you run your first ad, once you hire your first person, all of a sudden you're like, oh, okay, I kind of wrapped my arms around it and now I can see all the holes that are there. And so, In my experience, the faster I can get to me just wrapping my arms around it, me actually taking the first action, you'll learn 100 times more from your first 100 phone sales than you will from 10,000 hours of reading books about it. And so my goal with a lot of the content that I have here is if I can just shrink the time between you thinking about doing it and doing it, the faster you're gonna get to your goal. Because learning is same condition, new behavior. If you have not changed your conditions, and your behavior remains the same after this video, you have learned nothing. And you can measure how intelligent someone is by their rate of learning, which means by the rate at which they change their behavior given the same stimulus. So if I say, hey, pick up the phone and answer it, someone picks up the phone, they say blah blah blah. I say, great, I want you to read this script, now pick up the phone. Now they pick up the phone, they read the script. Same condition, new behavior. They've learned. And so right now in your life, there are conditions that probably remain unchanged. And so if your behavior does not change, you learned nothing. And you can measure every video, every piece of content, every book that you— or every sales exchange, every meeting you have as to will this change my behavior? If it didn't, it was a waste of time. And if you're a younger guy and you're just getting started, like you don't have a business, I don't make as much content anymore for people who are getting started. But if that is you, I just made a video called Brutally Honest Advice to My Younger Self. Check it out. I think you'll enjoy it, and it might help you get started and change your behavior.