How To Learn Anything Faster Than Everyone Else

We're live. We're live. Are you guys live? Am I live? Is life real? Where are we right now? I don't know where you are, but I'm in the exact same chair that I'm always in, so this shouldn't be super surprising. But how are you guys doing today? This is a Monday. Well, Monday Live is aggressive. Yeah, Monday Live is aggressive. People's heads are on fire. Businesses, uh, businesses rocking. Yeah, we got a New Jersey. We got some America in here. That's nice. Uh, we litty kitty. Okay, I can appreciate that. What's up, claims department? Greetings from Poland. Okay, I changed your life. Thank you, Paco. You probably actually changed your life. I made videos, um, so that's on you. Uh, David, a little Israel action. Okay, so we are all over the world. We're international, baby. So today I have 3 kind of separate topics that I wanna talk about. The first one is I've been developing kind of like this little rules of thumb, kind of like ratios to pay attention to. That sounds less sexy than I'm gonna make it sound. But fundamentally, just different relationships between numbers in your business that you can look at and immediately kind of assess whether this is a problem or something that you can improve. So we'll talk about that first. Then I'm going to talk a little bit more broadly around just trade-offs. It's been something that's been on my mind a lot lately that I think is underappreciated or underdiscussed, I'll say, for goal achievement in general. I'll probably relate it mostly to business because that's the world I live in, but it probably applies to anything. And then a third topic I'll keep as a nice mystery surprise for you because open loops and all of that kind of good stuff. Um, so key kinogenic properties, Nigeria. Hello, bonjour, Alex du Canada. What's up, Alexis? North Carolina, a little, a little Arizona, Utah, Kenya, Chicago. I love that we have like countries, cities, states all mixed in. Hi from Germany. What's up? Greetings from the UK. What's up, Oscar? Okay, cool. From Russia. I don't know how to say your name, but greetings from Russia as well. Greetings from Las Vegas, Sin City. So yeah, we're going to talk about the making of money and specifically rules of thumb that I live by. Cool. Sound good? That's what we'll kick this, kick this bitch off with. They're going to have to censor that. But you know, what are you going to do? The number one thing that people are surprised of when they meet me in person, they're like, "You make way more inappropriate jokes and you are far cruder." And so I'm working on that. And so my public persona will likely have a little bit more whitewashing in it. And that is apparently one of the number one time constraints that my team has to deal with is just constantly scrubbing the ridiculous and just frankly disrespectful things that I say on a regular basis. With that being said, no one's feelings were hurt in the making of this video, nor will they be hurt in the making of this video. And if they are hurt, remember that I'm on a video, um, saying words into the internet. So don't take it too seriously. Um, but this is some stuff that's helped me make some dollars, and hopefully it helps you make some dollars as well. So without further ado, I've been in business for 14 years. Acquisition.com, our portfolio does over $250 million per year. Recently, 9 weeks ago, just at $106 million in sales alone, making the Guinness fastest-selling nonfiction book of all time. We doubled the formal record. And so that is just my credibility for what I'm about to share with you, which is 12 of the most important kind of rules of thumb that I've learned or picked up along the way in my business career that you can use to analyze your business to know where you are versus where you could or should be, whether this is a problem to solve or something that you just need to manage and pay attention to. And so this will help you allocate where you're spending your time within the business with a clear yes/no answer of am I doing a good job or not? So let's dive into the first one. The first one is close rates versus pricing. So if you sell people stuff, now this would be specifically for people who sell with a salesperson in person or a salesman online, so on the phones or Zoom if that's how you fancy it, I wanna kind of give you kind of a tier ladder list to think through in terms of rules of thumb. And so the reason that there's a relationship between obviously price and close rate is that if you lower the price, we know our old supply-demand curves, if you lower price, demand goes up, et cetera. The idea is if you're closing at 80% or more in whatever you sell, so 4 out of 5 people you talk to buy your thing, you are typically underpriced by 3 to 4x. That might sound mind-blowing to you, but That is just the data that I've, again, rule of thumb that I've collected over many years of business. Now underneath of that, let's say that your closure isn't necessarily over 80%, but let's say it's 60 to 80. So you're closing between, you know, 3 and 4 out of 5 who are there. You're probably underpriced by between 2 and 3x. So if you're currently charging $100, you might definitely consider going to $200, and you might have a $250 or $300 in you, and you'd be able to make more money. Now, the next tier above that is between 50% and 60%. So as we get closer, you'll notice that the jumps compress. If you're between 50% and 60%, typically you're underpriced by 1.5 to 2x. So that $100 price point should probably be $1.5, so $150 or $200. Now, if you're between 40% and 50% close rates, you're probably between 1.25 to 1.5x underpriced, meaning now you should be at maybe $125 or consider $150. As a final price point. Now, if you're like, okay, between, I'm at 35%. Well, you're between 30 and 40%, which for me is appropriately priced under the assumption you have all of the selling mechanisms in place to educate a consumer prior to the purchase so that you're not creating a pitch or a spiel. Instead, they've already consumed all of this stuff prior to the pitch, and then the entire close call is about personalization and helping them make the decision. That is appropriately designed sales motion. If you have that sales motion and you are closing 35%, you're appropriately priced. Now sometimes people have that close rate, but they don't have any of that stuff. And in those conditions, then you still probably have a double or triple on your price if you set a proper sales motion in place. Now, if you're below 30%, so that means that less than 1 out of 3 people who you talk to buy, then you either have an avatar issue, you're selling to the wrong person, you have a sales motion issue. Um, and I fix those two first before ever considering lowering price because it almost always is the thing that the sales team might consider wanting to do if you have a bad culture on your sales team or an entrepreneur who's afraid. But more realistically, raising prices is almost always the direction that businesses go in with one clear exception, which is if you have a business that has unlimited scale, let's say you sell a software product, that pricing is going to be, that pricing decision is gonna be incredibly important to you because it balances two of the strongest influencers on the value of your company, which is gonna be if you lower the price, it will also typically increase growth. And so you've got your gross margin, which is what the price dictates, and also the growth as a result. So if you have these two things, then you lower the price, growth rate goes up. If you raise the price, gross margin goes up, but growth rate goes down. And so the idea is we wanna maximize both of those things. Now that's only for SaaS companies, which probably like 5% of you here. For everybody else, that is kind of my point here, which is that you probably have an unscalable business, which 80% of businesses are. Unscalable meaning they're service-based. And in those conditions, there's only one way you go in service, which is up. Because if you play it out long enough, you get good, you get enough demand because you're good, you can't service everybody, so you change your chart, you go up in price. And then around and around you go, and the faster you spin that loop to going up in price, the more you will progress in business because your gross margins will go up, your reputation will go up, you'll be able to hire better talent because you can pay them now, and it becomes a virtuous cycle versus the vicious cycle of trying to serve more people and paying less, having lower gross margins, hiring worse people, having worse customers at lower prices, and around and around you go into the toilet. So that is the end, end-all be-all. That is the pricing ladder that I use between price and close rate, which brings up rule of thumb number 2. LTV to CAC. So you'll notice that a lot of these are relationships between numbers, and the reason that's important is, um, it's not like, oh, your price should be this. That would be ridiculous. Every business is different. But when we take two different pieces of the business, which is typically paired or antithetical in nature, uh, so like an example of this would be like speed and quality. These are things that are going to be ratios. So you want to settle as many support tickets as you can, but you want to make sure that the support tickets are done right. If you cleaned buildings, it would be, I want my cleaners to clean as many places as they can, as long as we still get 5-star reviews, or we still get retention, we still get referrals. So it's always going to be relationships between two things that are paired, which create rules of thumb. And again, these are not written in stone. These are rules of thumb. So let's go to the second one, LTV to CAC. So for those of you who don't know, lifetime value, how much a customer spends with you, how much gross profit you make over the entire lifetime of the customer. CAC is cost of getting that customer in the door. So In plain speak, that's how much money does it cost you to make more money? CAC is how much money it costs you, lifetime gross profit or lifetime value is how much you make. Now, a very traditional rule of thumb here in the software world was 3 to 1, and this has been pushed all over the internet. And many businesses took that because all these big tech giants and very huge company CEOs talk about 3 to 1 as though it's a rule of law. And I want to say it is true under specific conditions, which only apply to like 5% of businesses. So let me give you the other scenarios and what I consider to be ideal for that. So 3 to 1, and this relates to— I don't have anything drawn. Hold on, I'll draw this for you guys so this will make more sense. So let's imagine— do we have overhead cam on? Okay. You guys digging this? All right, so we have our attraction, right? How we get people in the door, that's number 1. We have our conversion, which is how do we actually get them to give us money, number 2. And then number 3, we have our delivery. So if we were to use a binary scale of 0 or 1, 0 or 1, 0 or 1, Then we would say if we have zero, basically of unlimited scale, I put zero operational drag for attraction, conversion, and delivery, what is that? That's probably a SaaS product, right? You can run ads to a checkout page and then the SaaS, the software does the delivery, right? All the way zeros all across. And so for that, when you have all zeros, 3:1 between how much it costs you to get a customer and how much you make, is an appropriate ratio. But what if one of these three things includes a human? So let's give a simple example. You run ads to a checkout page and then you have somebody who does delivery. You have a human being who does delivery. Well, as soon as that occurs, or said differently, maybe you run ads to a salesperson and then you have some sort of lighter touch delivery on the backend. In any of these scenarios, I want to now have 6 to 1. Sorry, this is a 1. I wanna have 6 to 1. Now, why would I double this? So let me explain. As soon as you add a human in the loop, as soon as you add a human to the system, you're going to have lumpiness or inconsistency. So what do I mean by that? If, let's use the salesperson example. You're running ads to a salesperson. As soon as you get to a certain point where you've capped that salesperson's calendar, what do you have to do? You have to hire another salesperson. And what happens when you hire a new salesperson? That person's not going to be as good as the main person, especially right off the bat and maybe even ever. And so we have to build into the business padding so that we can incur the cost of training somebody up and also having them suck. Because if we're at 6 to 1 with our one guy, or rather if we were at 3 to 1 with one guy selling, as soon as the next guy comes in, we're below 3 to 1, right? And so we have to be at 6 to 1 so that when that next person comes in, we have some, We have some cushion, we got a little cushion for the pushing, if you will, that gives us, again, padding. I keep saying padding, so you'll probably hear padding a bunch of times, but that's what it is. Now let's say that you've got 2 of these 3. So now let's say we're running ads and we have a manual person who's taking the phone call closing, and then delivery is also service. This is, honestly, this is many of you guys, is that you are in service businesses and this is what it is, okay? When I'm in this situation, I want 9 to 1. Now, the reason this is so difficult for people to wrap their heads around is that most people want to scale when their business model has not been nailed yet. And so that's why we say nail it, then scale it. And so people get ahead of their skis, they overexpand, they bring on, you know, they try to open more locations or bring on more reps too fast because their ego is tied to the number rather than looking at the fundamental economics of their business and saying, is this ready to scale? Because if I had the pick of like, I would rather scale really fast for 3 years and then realize the business is broken or spend 3 years just nailing all my— nailing the model, getting all the metrics right and then scaling it, I would obviously pick the second one. But the thing is, is people, if I say that to you, most people would be like, well, of course I picked the second one, but people don't behave that way. And so what you say you would do versus what you actually do are typically very different. And so because now I have 2 humans in the loop, I'm gonna have inefficiencies on delivery when I bring in a new rep or a new technician or a new whatever who's not gonna be as good, not as effective as the other people. I gotta be able to eat that. If I have a bad salesperson when they come in, I'm gonna have to be able to eat that. And so now I gotta be at 9 to 1 to have the cushion to scale. And then finally along the same line of thinking, if I have 3 people all the way through, I've got humans who are doing the attraction, humans who are doing the conversion, and humans who are doing the delivery,, then I wanna be at 12 to 1. All right? Now I wanna put this in perspective for you guys. One of the gifts that I could hopefully give is frame shifts, is a change of perspective. So let me know in the chat, the first year of Gym Launch when I started running ads, okay? So we had automated here and I would say we were like probably a 0.5 here. It has half media, but we had half kind of like some support reps that help with tech stuff. And then this was human-based. All right, we had a phone sales team. What do you think my LTV to CAC ratio was? Let me know in the chat. 5 to 1, 10 to 1, 4 to 1, 6 to 1. What do you guys think? What do you guys think? Let me see some numbers. Let me see some digits. 6 to 1, 4 to 1, 9 to 1, 2 to 1, 30 to 1. Liam, nice. 30 to 1. 3 to 1. 15 to 1. I appreciate the, the belief, guys. Arpit, 100 to 1. You crazy mofo. Uh, Ronald, 5 to 1. 25 to 1. 20 to 1. Okay, you guys wonder who it was? I'll tell you. The first year of Gym Launch, my LTV to CAC was 100 to 1. I spent $100 grand and made $10 million. Wild. Recommend. It was wild, wild times, okay? Now, how is that possible, right? How is that possible? Most of the money that I've made in my life has happened during these distinct windows of opportunity where there was huge arbitrage between what it cost me to get a customer and what a customer is worth to me. And I've had that happen 4 times in my life. And each of those times have been above 30 to 1. And so the reason I'm so adamant about this is that I know, because I've had it happen, that you have to just keep beating up the system. You have to keep tweaking the money model, which is why I made the book Money Models. You have to keep cranking on this thing until eventually you crack through that lever. And so you see 12 to 1, people like, that's crazy. I'm like, this is the minimum. And again, this is if you want to scale big. You can absolutely run a business that does 6 to 1 and make a million bucks a year, a couple million bucks a year, you can do that. I'm saying if you want to see what the biggest companies in the world have, they have absurd LTV to CAC. Now, there's only two ways to improve that ratio, right? Way one is you drive CAC down to zero because there's only two long-term winning strategies in business. Have extremely low CAC, which means you build massive brand, A, or B, you have a product that is viral. Those are the two types of things that create really big companies on the cost side. On the other hand, you have the extremely high LTV side. So look at a company, I'll give you an example of each. So Facebook is a company that wasn't, oh, we have unlimited LTV. No, they have a business where CAC approached zero. And so if you can get CAC to zero, you could figuratively get 8 billion people for $0. And when you do that, even if you make a couple hundred bucks a year on them, you still make a lot of money. On the other hand, you might have a company that's like, Salesforce, right? And a company like that, they might make $1 million or $5 million per year on an enterprise-level customer. Now that customer isn't coming to them for free. Now they do have some brand, of course, that's gonna offset some of those CAC costs, but there's still going to be huge costs of getting those customers, especially the larger customers with contracts. They have to bid against other CRMs, et cetera, et cetera. And so both of those are big companies. The idea is that you have to know what type of company you're going and your winning strategy to scale. And so to make this extraordinary LTV to CAC ratios, one of these has to approach zero or infinity. That's the game. So that's the second rule of thumb. Look at your three steps. Am I zero to one on attraction? Do I have unlimited scale on attraction? So if you're like, what's an unscalable version? This would be like, I do manual outreach. That would be human in the loop versus I run ads or I make content. Conversion here would be checkout page is scalable, human, phone team or sales team in person, that has a human. Delivery, if I sell services, I'm gonna have humans. If I sell software, I sell media, that's gonna not have humans. I sell physical products, for example, that would still not have humans by my definition. That's the idea. You can see what your LTV to CAC ratios are. You can see where you're at and whether you need to improve them. Which brings me to rule numero tres. That is Spanish for rule number three. I think it'd be regalo, but like, let's not get crazy. Or no, does it have a gift? Fuck. Well, I messed that one up. Either way, hopefully you're with me. So rule number 3 is rule of 100. So fundamentally, if you're trying to grow the business, I have never seen a business not grow when they implement the rule of 100 when they're starting out. And to be clear, this works for all levels. So it's either rule of 100 on your first acquisition channel or rule of 100 and ideally for 100 days, so 100 and 100, right? And if you're like, wait, 100 times 100, you're like, you're right, that's 10,000 actions. And what happens when you take 10,000 actions in one specific direction, you tend to get results. And the amount of screenshots of content and reach and impressions that I've gotten from people who actually tick the box 100 days in a row doing 100 actions, that they get their first customer, most people get it by like the third week. But you have to commit to doing 100 days, and it's kinda like the idea of the heart of a missionary versus a mercenary. You have to commit in your heart that you're gonna do 100 days, and then it happens very quickly. If you try to do this for 100 days to try and prove me wrong, Congratulations, you won. You're still not succeeding. Probably not the perspective 'cause it won't change anything in my life, all right? And so where this becomes a symptom that you can recognize in your business is volatility, all right? And I said this applies to all levels. So if you're a bigger business owner, you take the Rule of 100 and you just apply it to new channels. And so if you're like, we run Meta ads, it's like, great, well, we need to just take the same perspective on how we're gonna run YouTube ads or Google ads, right? If you're on content side, it's like, we make, you know, Reels, Awesome, it's like, okay, we do it on this platform, we need to do this on a second platform. If you're doing outreach, every time you expand into the new platform or medium or channel, you would implement the Rule 100 yet again. Now, if you're a smaller business, which most businesses are small by statistics and reality, 95% of businesses left at $1 million, so here we go. If your business feels feast or famine, meaning if you get a sale this week and then there's nothing and there's nothing and then next week you get one and then 2 more weeks and then 1, 2 and then another 3 weeks of famine, The issue is not that you have, quote, inconsistent lead flow. It feels inconsistent because the timeline you're measuring it on is too small. So if I were to look at it year over year, if you're the type of business that does a small amount of advertising, you might sell about the same number of customers every single year. But that volatility, or the perception of volatility, is a symptom of insufficient volume. You're not doing enough. To get enough out. Now if we expand that time horizon, let's say that we expand it to 30 days and let's say that you on average get 3 customers a month, okay? 30 days, 3 customers a month. That means you get 1 customer per 10 days. And so that means that in 10 days what we can reverse this into is that there is an amount of advertising that is occurring either through content, through word of mouth, through outreach, through paid ads, whatever affiliates, people referring them to you who are partners or centers of influence, if you will, or we're sending you business, that in that 10 days there's enough advertising for one sale to occur. And so the idea is, okay, well, if I can just look at the amount of advertising that I'm doing, probably haphazardly over a 10-day period, and then do it deliberately instead of on accident on a daily basis, then I could take what I do in advertising in 10 days and do it in one. And if I do it in one, then I'm gonna get the same outcome as doing 1 sale every 10, and I'll get 1 sale every day. And so the companies that are doing 30 times more sales than you are typically doing 30 times more advertising than you are, real. And so I've put this in perspective, many I've seen, I mean, because obviously businesses fly out here every week to acquisition.com, so I know a lot of numbers around what businesses are doing at different revenue levels. If I look at a $1 or $2 million business, and I look at how much content they're putting out just on a pure volume basis. And the thing is, is like, of course there's quality of content, but the thing is, is if you look at it across all pieces of content with the outliers already baked in that you know that 1 out of 10 or 1 out of 100 are gonna be super outliers, of course, the top 1%, the top 1 out of 100, the top 10%, you know, 1 out of 10. With that volume baked in, things tend to normalize again. And so we make, whatever it is, 450 pieces of content a week, right? Almost 500 for simple math. So we're looking at 25,000, 30,000 pieces of content per year. And many of the people that are at $1 million are doing something in the neighborhood of like 1 a day. And so they're doing 365 and we're doing like 25 or 30,000. And so we get 9 or 10 times the, sorry, way more than that, sorry, that's 1,000 times, 1,000 times the outcome that they are. Now you can even make the argument that I'm even less efficient than they are, but diminishing returns are still returns, right? So like if I do 1,000 times more than you, but I get 100 times the outcome, I'm good with that. And I think this is the piece that people really mess up is they see diminishing returns and then think, oh, I should stop because my return per action has gone down, rather than thinking I'm still getting more and it's still worth it. And that's the part that I think most people who are smaller miss out on. The amount of conversations I've had with small business owners who are all about optimization, and again, there's nothing wrong with that, you just can't have both. You can be like, "I wanna optimize." It's like, fine, you can get the most for the least, but you're not gonna get the most, period. And the difference is that the people who want the most are the ones who win. Which leads me to, drum roll please, rule number 4. Yes, Julian, it's live, motherfucker. Of course it's live. Why would I be doing this live? Of course it's live. Muhammad, what's up? Okay, back to it. Rule number 4, lead response times. So rule of thumb here, for the love of God, please call your leads within 60 seconds. I don't know how, how many times I have to say this across how many videos. And it's just like, do you hate helping people? Do you hate having more revenue and more profit in the business? Would you prefer to pay 4 times more per customer than you currently are because you are like, you know what we're gonna do? So this person just opted in, they're like, you know what, I really wanna solve this problem, this company looks interesting. And then you're on the other side saying, let's let them cool off a little bit. They're a little too hot and heavy, you know what I mean? Let's make sure they don't make a decision that they would regret. I don't want them to take that wallet out too fast because that might be unreasonable. And so let's let them simmer, let's let them marinate for a couple days. And you know what? Let's let them date around. Let's let them call some other businesses so that by the time we finally get to them, if we ever do get to them, they have a lot more information from different competitors so they can compare the pros and cons of our business and our offering to everyone else so that we can get in a pricing war all the way to the bottom. And so when we do that, not only are we spending 4 times as much as we should to acquire a customer, we're also not able to make as much per customer because your close rates will go down on top of that and so will your gross margins. And so It's one of those like, I think Brian Johnson from Blueprint was talking about this. You're like, where is he going with this? I'll bring it back home. He said he has boiled down like however many years of doing all this research and stuff into one number which is your resting heart rate before bed. He said, if you show me that number, I can see your soul. To me, I would say LTV to CAC would be that number but underneath of that number would be your lead response time and the reason for that is like it's how you do one thing is how you do everything and I have some elements that I take take offense to that particular term, but I do think that it is a way of doing business. How dedicated to excellence are you, right? And if you know, if you know, this has been proven over and over again in business studies and in the real world, right? That if you call leads faster, 'cause saying, hey, you're going to 4x your sales, people think, yeah, but I can't afford to hire somebody to call my leads in that speed? Well, do you think if you had 4 times the revenue you currently do that you'd be able to afford it with the revenue that you would now make from that person? This is how business works. You invest and then you get something back. That's how it works. But this is the first time I think I framed it the other way around. Look at how much it costs you to get a customer. If you divided that by 4, would that improve your LTV to CAC ratio? Would that be the thing that you need in order to scale? Do you think that if your leads cost too much might be a factor of the fact that you don't know how to sell? So when I look at rules of thumb, it's like, well, I'm gonna attack these areas first because there's huge returns for minimal effort. Talk about maximizing and optimizing. For the love of God, please call your leads quickly. Sorry, a little passionate about that one. All right, I think spirit moved. I'm sorry. I don't take it back. We can just move on. Okay, which brings me to rule number 5. Yo Yo Sai, I thought maybe it's just a video that is played live. No, Yo Yo Sai, it is not a video that's playing live. Oliver Nakos, hi. Okay, rule number 5, 70% calendar utilization. Okay, so this is a rule of thumb. So when you have more salespeople, There's another issue that starts to come up, which is my sales team's underutilized or they're booked out. So what's the sweet spot? The reason this is important is because, well, if you miss it, you will— let me, let me go either extreme. If you have your sales team completely booked out, fully utilized, here's two things that happen as a result that are bad. Number one is that your total lead conversion will go down. You will make more sales because they're booked out. For sure, absolute will go up, but your conversion rates will go down, meaning your CAC, your cost to acquire customers, will go up, which is, depending on how sensitive your numbers are, could be very bad for the business. And so that utilization happens, and as a result, one, people have to start booking out further and further because tomorrow, the next day, they're all booked out, they can't find convenient times. So one, it's further out, and so show rates on further out appointments compared to sooner appointments, Goes down. Number 2, show rate on appointments that are inconvenient versus convenient, maybe they do it a little sooner but it's still not the time they'd ideally like, show rates go down. Number 3, what happens if a sales guy is making calls all day long? What are they not doing? They're not doing outbound. What are they also not doing? They're not following up on the calls that they should just, they have 6-inch putts, they have some tip-ins that they need to do that they just aren't doing because they're on calls all day and rightfully so, they should be focused on, like they should reasonably focus on the leads that are in front of them. But it is your job as the entrepreneur to move their calendar, better utilize their time so you can maximize conversion, okay? So on the other extreme, let's say that you have 30% utilization. So, you know, 70% of their calendar's empty. The problem with this that I've found is that sales team morale can start to drop because they don't really ever get in momentum. So if you have like 2 calls a day, like the calls sometimes mean too much and so guys will have kind of commission breath. They're like, I have to close the sale, right? I'm not going to get paid. And so it's a balance between both those things. So I've found 70% is kind of the sweet spot. I don't let it get above 85, and I try not to let it drop below 60. And so that's kind of give you a range. I would say 70, 75 is right around the sweet spot for this. And I'll explain the reasoning why. When we see conversion rates, as in we get 100 leads, we want to maximize the conversion of those leads, which functionally is what a sales team is supposed to do. Why you have a sales team rather than just a checkout page. If we wanna maximize that conversion, then we wanna give the time, we wanna give, one, enough times for the prospect to book soon, two, enough times for that time to be convenient for them. Both of these things increase show rates. Number three, we want to have the salesperson have enough blank space in their calendar so they can work their pipeline and bring people back in. And I remember the realization I had around this was we would have high weeks and low weeks with ads in terms of booked calendars, but our sales remained relatively the same. And I was like, I was like, how does that work? And it was just because when a big wave came in, the guys were really inefficient, and when there was a famine, if you will, and there was more empty calendars, the guys squeezed their pipelines. And so I was like, man, if we just squeezed our pipelines all the time, we would just make, on the high weeks, we'd make so much more money. Well, how do you do that? You typically need to hire more salespeople. And I will say, as a personal note, I have yet to make less money by hiring more salespeople. So when in doubt, Sales tends to drive business. And I also have some belief around the fact, and this is most cultures, not our shared acquisition, but the vast majority of sales cultures, guys will get fat and happy. They will make enough sales to make whatever that nut is for them that they don't wanna work that hard anymore. And so I would rather have the guys just below whatever that amount is so they're always striving, they're always squeezing the pipeline, rather than they can sell to their goal within the first 2 weeks and then they take the last 2 weeks of the month off. And that's where entrepreneurs will say, hey, do I need to change my sales commissions? Maybe, but more often than not, it's like you can just add salespeople so that they can squeeze their opportunities better. All right, which leads me to rule number 6. So that is payback. Anyone done 6 figures a month? Rudy, I have done 6 figures a month. I've done 6 figures a day. I've done 9 figures in a weekend. So thank you for hanging out, Rudy, appreciate that. 5 figures a day. Thanks, Aviral. Is that, hopefully I didn't say that name wrong. Aviral? Okay. Kyle, stuck at 5K a month like a wagee for all of my time. A wagee, I hope that's a UK term for an employee, 'cause that's awesome and I will use that. Are you a wagee? Sounds like a wedgie. Anyways, go and eat your money, Alex Hormozi, Web3 SaaS guy. I don't think you can eat money. I think it's a bit gross. It's so funny when people have like weird views around money because it actually just shows who they are. Because if someone has an issue with someone making a lot of money, it's like trying to decry a thing that you want. It's like, I don't want to get— I'm going to make fun of somebody who's in shape It's like, here's a great way to never get in shape. And then on top of that, it's the assumption that somebody— like, money's just potential, right? Like, whatever you do with it is a dictation of whatever you're going to amplify. So do you give more back, right? Do you help more people? I don't know. So they build skyscrapers and hospitals just as much as they fuel bad movements. It's just potential. That's all it is. So thanks for that Web3 SaaS guy. Uh, so, uh, appreciate, appreciate you, bro. Uh, that being said, rule number 6, payback period. Actually, that's how it felt. Very aggressive. Payback. Um, so what is payback period? It's how quickly you can recover the cost of getting a customer. Now for me, ideally I try to do within 30 days. So payback period in general is how fast you get the money back. From what it costs you to get somebody. My goal is within 30 days. Why? Because just about every business owner, at least in America and at least the developed world, can typically gain access to a credit card, which gives you 30 days of interest-free money. Now the reason that's important is that if you have interest-free money, then it means that you can grow without money out of pocket, and that allows you to have limitless growth. If it— if I can take $100 of credit card money, which I don't have to pay anything for until the end of the month, and I can take that $100 and go get me a customer and at the end of the month make that $100 back, then at the end of the month I owe no one anything and I now have a customer. That is the power of this. Now you can repeat that ad infinitum, which is Latin for lots of times, into infinity, but let's not get too technical. So the reason that I use that as my rule of thumb is for that very practical reason. Now you might think to yourself, well, our payback period is 90 days. There's nothing wrong with that. It's the same as like, We had LTV to CAC at Gym Launch of 100 to 1. It didn't stay 100 to 1. It was 100 to 1 the first year, right? And over time it ended up being somewhere in the neighborhood of 30-ish to 1. But the idea— because as you scale, more levels of infrastructure will get introduced to the business, and so that will drive down operating margins, and that's okay as long as you have a business that scales. Now, back to payback period. I want to shift the perspective on this, which is that even if you currently spend and get paid back in 90, you should still think to yourself, like, is there a way, is there a money model, is there a setup, is there a configuration of pricing and products of what I currently have without introducing operational drag or too much operational drag that could pull cash forward? And functionally, this is literally what the entire book For Money Models was about, was driving more cash flow forward. Now, if you have a business where you're funded from the outside, A, or B, you're a very large business that has huge capital reserves, you have a huge base of recurring customers, then you can get more aggressive. Of course, right? Like if you're gonna go head to head with Apple, then sure, they don't need to get their money back in 30 days. I mean, they are a bank at this point. Like they can borrow money from the entire world and fund whatever they want. But for, again, everybody who's watching this, most of you guys are bootstrapped. Actually, can we do a poll real quick? Can we do a poll? All right, let's say who here is bootstrapped versus has investors? That's it, bootstrap versus investors. And if you don't own a business, you can actually put third, wagee. Wagee as the third option. All right, so wagee, bootstrapped, and investor. No, no, I wanna get the poll answers. Put it in the poll, don't put it in the chat, put it in the poll. Well, I'm already seeing bootstrap. Justin, Justin, get these wagees outta here. I think that might become permanent. Okay, put, put it in there. Put it in there. I want to see. I want to see. Okay, 97 votes. 106. Okay, we had 200 votes. Okay, great. Let me see what we got. What are— let me see some results. Resultatos. See what we got. Okay. 5% bootstrap, 21% wagee, 4% investor. Okay, great. So 1 out of 25 of you guys, you don't have to worry about the payback period, but you still should, uh, which is all the investor bros. Now all the guys who have outside investors, I promise you, you will get investors frothing at the mouth if you can, uh, show that you can get payback period within 30 days. Number 1. Number 2, if you have payback period within 30 days, guess what you also don't need? Investors, because you don't need their money to scale, which gives you a huge amount of leverage into when you're getting into your fundraising period. Now that's the 1 out of 25. For the other 20 out of 25 of you who are bootstrap business owners, y'all are like me, which is that I like Bank of Alex is what's funding this stuff. And so we have to think, are there initiation fees? Are there setup fees? Are there, is there an onboarding process? Is there an on-ramp? Is there a front end defined program or setup that I can sell? Can I bundle in some sort of physical product up front with my services? Can I sell a bundle of an extended period of time to cash flow at day 1? Can I do a buy one get two? Can I get them to pay for the last month up front? All of these are different tactical versions of solving for the same problem, which is I wanna pull cash forward so I can recover CAC within that first month. Because when that happens, I'm telling you, like all of my businesses, every single one that's gotten really big, we have been able to recover what it costs us to get a customer in the first 30 days, period. So it's the strongest recommendation I can give you. All right. With that being said, let's go rule number— that's a 6. There you go. Rule number 7, gross margins. So gross margins are wildly misunderstood, which is interesting. If you are a business owner, you have to learn the language of business. All right? It is for sure, they're different languages, but there's not a huge amount of words that you have to know. You might need to know like 100 terms. And think about this as like you were studying for a test, right? Like learning 100 terms, not that hard to understand it. Almost all of them are relationships between two things. That's what almost all of these terms are. So what is gross margin? It's one word that's a relationship between two things, how much you charge and how much it costs you to deliver the thing. And the difference between those things is your gross margin. To be clear, that's not your net profit margin, which is a different ratio, right? Between two, not necessarily ratio, but the difference between two different numbers, right? But your gross margins are very important because it is what dictates everything else in the business. So what do I mean by that? If you, like, your net margins, cannot exceed your gross margins. Think about that for a moment. If you have, if you're like, man, I'd love to run a 50% net margin business, that's an amazing goal. And I love that goal for you. If your gross margins are 50%, that means that you can have literally no other cost besides the thing you sell in the entire business. You can't have any cost of acquiring customers. You can't have any fixed overhead. You can't have any employees that are not specifically in delivery. You can't have any admin, any help. Of course, Now the likelihood of you getting to a 50% margin when you have 50% gross margins is basically zero. And so this is why, and traditionally small business owners will undercharge because they sell out of their own wallet, right? And they sell out of their own wallet in two different ways. They sell out of their own wallet because they don't have that much money and so they feel bad charging other people when they don't have much money 'cause they're like, man, I get what it's like to struggle. And I think there's nothing wrong with that, it's just understand the business is not gonna grow and you're not gonna help more people. The other reason they sell out of their own wallet is that they believe that the service they deliver is not that valuable because they know how to do it. So to quote the Joker, right, my father always told me, when you're good at something, never do it for free, right? And so the idea is that like, if you're good at fixing cars, right, you're like, well, it comes naturally, it's not that hard, you gotta know where the, you know, it's like, what we do is really straightforward. To you, to you, but to a customer, we have to sell off the value of what their life would be like if they didn't have this problem solved. That is what we have to charge off of. And when we charge off of those prices, then we create more opportunity for gross margin. Now here's why this is so important. Let me give you a math example that will blow your minds. And I always, you know, everyone gets a heart palpitations when I say math. So let's just say a money example. Okay, so let's give you a money example that'll get you really happy. All right, so let's say that I've got some service that I, that I deliver, okay, and it costs me $100 a month, okay? That's what it costs me in services and whatever. All right, so if I want to have 80% gross margins, which I said these are rules of thumb, my rule of thumb for services is at least 80%, okay? So I want to show you two different scenarios here. So at 80%, at 80%, this $100, I have to have $500 has to be my price. Okay, at 70%, and I have $100 cost. Oh God, can someone do the math on this one? Hold on. Um, God, I gotta do this backwards. Let's see. There's a, there's a calc— who can do this math for me? 350-ish? Thanks, Leo. Yes, this is live, obviously. I think it's a little higher than that. Is it 400? 350? Is it? Now, now, now it's all fucked up. Oh God, who's— who can do this math for me? All right, I gotta do this. All right, 100 equals 0.7. Julian, you were pre-med, do it for me. Oh well, I'll tell you what, I'll tell you what 90% looks like. Equals $1,000. All right, where is it? Where, where are we at? Why you jackasses keep asking? Thank you, Gross Salons. Is it 350? Is that it? We should, we should know this. I feel like as a collective community we should be able to figure out when, uh, 30%. Okay, so it should be 100 divided by 0.3 is what it should be. So 100 divided by 0.3, right, is 333. Thank you. So that would mean that 233 should be 70%. Um, so 233 divided by 333. Correct. Thank you. Okay. So 333. Okay. So look at how big of a difference this is, right? Between these, between these numbers. Um, really significant, right? Like very materially different. And so the reason, and I'm sure somebody will correct this in post, but fundamentally look at how, like when people are like, oh, well my margins are at 60%. So I'm close to 80. It's like, bro, we're not even like, you're in a different stratosphere. Okay, so let's take this to the natural end. If you have a business, let's say, that runs 20% margins at net margins at the end of the year, what you can pay yourself, right? If we say, hey, is there a way you think we could go from 70% to 90%? Well, that, that sounds like it's not that big of a deal, but when you go from 70 to 90, what happens to the actual margin? You double. You make way more money. And sometimes it means a lot more than that because sometimes the incremental margin is all margin, whereas every dollar revenue up to that point covered cost, right? And so what is our— we make $233 here, right? We make $400 here, and we make $900 here per customer. Big difference, right? And so when people hear these numbers, because these numbers look similar, they think that these are going to be very similar, and they are not. And so this is why I'm so adamant that 80% is my minimum. I target, like, that's my baseline. And then from, like, I will not get into a business with less than 80% gross margins. I won't do it because I know that I then have to run everything else off of this 80%, right? So if I want to have a 50% net margin business, I only have 30% left. I got 30% to cover everything else. I got to cover rent, I got to cover admin, I got to cover insurance, I got to cover I get over marketing, I cover sales, I got to cover everything else with just this 30% so I can have 50% left over. Is this ringing with you guys? Is this making sense? Even if it's a service-based business, bro, this is for service-based businesses, not the— in Australia, this is for service-based businesses. And this may This is why, like, so ideally I like to have, I mean, again, this is minimum and I know this is gonna blow your minds here. Like one of the first things we did when we fixed gyms is we made sure the pricing was at least 80% gross margins. That's a service business. Now some of you are like, well, that's not possible. Of course it's possible. It's not possible when you sell a commodity. If a customer can look at your thing and somebody down the street's thing and say, these are about the same, I'll buy the cheaper one, you sell a commoditized service, just like you can sell a commoditized product. And so you might have salt and salt and you got FSG salt and whatever, you know, Pink Himalayan, it's salt, right? And so how do we make these two things different? We have to brand it. It's Pink Himalayan versus just normal salt, right? And they charge a premium for that. And so you have to figure out how to reconfigure. If only there were a book written about how to make an offer that's decommoditized so that you could achieve 80% or higher gross margins, that would be amazing, wouldn't it? And for those of you who don't know, I wrote a book on this. It's called $100 Million Offers, 27,000 5-star reviews. You should read it. But I want to draw this because this like, if you're trying to figure out what's wrong with your business, it's usually because your margins are off, you're mispriced. But again, sometimes this is the, fundamental mathematical problem with the business, but this might really be the symptom of the fact that you have a commoditized offer, A, B, you have a sales process that doesn't function properly, right? And so that's the big idea. So if you wanna run a high margin business, then you have to run exceptionally high gross margins for whatever it is that you sell. Okay, cool. That math was tough, wasn't it? All right, so let's do rule number 8, Rule of thumb number 8, if you will. 30-day cash collected. So this is an add-on to the 30-day payback period. So what is the exact amount of money that I want to have collected within that 30 days? It's gonna be COGS, so the cost of delivering, cost of goods sold. I'll just write out cost of goods sold. Now the goods sold can be services too, to be clear. So it's cost of goods sold, how much it costs you for the stuff, plus cost of getting customer. Okay? So if we have the cost of getting the customer and the cost of whatever we got them back, we want both those things together. We want whatever we collect to be greater We want the gross profit or the cash we collect in that first 30 days to be greater than this plus this. The reason this is so magical is that once this occurs, customer comes in, you acquire that customer, and then you have to deliver on that customer, and then that customer pays you back all of that cost, and then what can you do? Go get you another customer. That is why it's so magical. And so that is what the whole point of this 30-day cash collected thing is. We want to pull it forward. Cool, great. Now, manufacturing study with Zorro— no, manufacturing, you're gonna have different margins because you have cost of goods sold, and that's going to be a little different. Um, I would, to be fair, I would still prefer to have a business that has 80% gross margins, but with services, for human services I have that as my rule of thumb, is that I always want 80% or higher gross margins. Okay, that brings us to rule numero nueve. Is this all about just raising price, the whole thing? No, my God, Gingerbread, we talked about a lot of different things. Talk about calling leads a little faster was one of my— it was rule number 5, which you missed. Back to rule number 9, sales funnel benchmarks. Okay, so Let me think about the best way to explain this. Being able to analyze a business to figure out where the hole in the process is. I'm going to skip this one and come back to it because I think it's too many numbers for everyone. Okay. So I'll do a different one. Rule number 10, which is functionally rule number 9, but we're calling it 10 because I skipped number 9. Let's just go with it, which is Churn and retention. So I want to only have to acquire customers once. The reason that most businesses cannot get big is because they are always filling a leaky bucket. Now you've heard this terminology before, but think about how difficult it is to acquire a customer. It's a lot of work, right? And to go through that entire process only to lose them, to have to go get another one, is exhausting. And so you want to be, and this is John Paul D'Aggiorgio, is a quote from him. He said, "You don't wanna be in the sales business, you wanna be in the reselling business." And so what he meant by that is how do we get customers to just buy again and again and again? Which does come down to product primarily and then brand secondarily. And so the idea here is that for your business to be A, significantly more valuable, but B, way more fun to run, you wanna keep the customers you have. And so when you're a small business owner, you're typically just barely figuring out what's going on. And so what happens is people will typically try to scale too fast before they've actually figured out revenue retention and churn. And so what are, quote, good benchmarks? Well, good benchmarks for anything B2B is you probably want to be above 80% in terms of retention annually. So that means that if I get 100 customers Jan 1, right, so this is January 1, let's say 2025, Jan 1, 2026, I want to make sure that I have at least 80 of these customers. Now this is where people get confused. Let's say that they grow because they get better at marketing sales throughout the year. They, and they come January 26th and let's say they're at 160 customers is how many they have. They think, oh well, I definitely retained all 100 customers and I also got 60 more. Uh-uh. We're looking at of the original 100, how many of them made it to here? This is the issue. Now you can take whatever your annual retention is and then you can basically reverse engineer into what your lifetime value of a customer is. So if you have 50% annual retention, then you can take whatever someone pays over a year. Let's use simple math and say someone pays $100 per year. If you have 50% annual retention, then it means that you can basically double it. So you divide it by 50% equals $200 is what you're going to make from a customer. Now here's where this gets really wild. Let's say that you have 80% annual retention. It doesn't seem like that much different, right? It's only 30%. What is it actually different from a math perspective? It means that you're going to get functionally 4 turns, 5 turns, 5 turns, because every year you're going to lose 20%, right? And so simple math on that is around the back of napkin on that is about $500. What? Cómo se dice? A lot. Mucho dinero. All right, and so think about two businesses, and this is why this is so important. The cost of getting customers between different businesses is typically very commoditized. So CAC in an industry is a commodity. Think about how weird that is as a sentence. If there's two social media marketing agencies that both sell generically similar services, now of course, We don't want to do that, but this is how the industry by and large works. If you have two different businesses that are selling relatively the same thing, the cost of getting customers there is typically about the same. Here is where one business can become 5, 10, 100 times more valuable, is that those customers are worth 5, 10, 100 times more to the other business. And so they are able to play a huge arbitrage game so they can spend way more money in the acquisition than the— than the business that only has, call it, 50% retention, right? This guy's getting 2.5 times more per customer than the first company, even though maybe the cost of getting the customer in both these scenarios might be the same. This is where there's a huge amount of alpha or kind of arbitrage above what market could get in terms of improving a business. And so right now, if you don't know how many customers stay with you year over year, definitely worth figuring out. And so that is my rule of thumb is that I target. And so for each of these numbers as I'm sharing them is like, This is my target. This is what I want to get to. And if I don't have that, I see this as a huge problem in the business and I have to go fix it. Otherwise I just know that I'm going to create a, I'm going to scale problems, right? When you scale problems, they just get meaner and uglier and they have more faces on them, right? You do not want to do that. And this is where most people's ego gets tied up in it, which is why most entrepreneurs can't scale. All right, so rule number 11 or rule number 10 for those of you who are following along, uh, What, like, what is a good rule of thumb for how many people prepay? So a lot of you guys, uh, some of you guys follow my stuff. I'm obviously a big fan of pulling cash forward because of all the reasons I already mentioned. One is if someone prepays for a year, no one can churn. If you prepay, right, you already paid for the year, can't really churn out, right? Uh, what other benefits, uh, happen when, when you prepay? Well, if you, uh, prepay, you get all that cash today. If you get all that cash today, what can you do with that cash? Go get more customers. Right? Think about this. Everybody here should at least give a 10% discount for getting paid in full today. Why? Because the value of money today is typically at least, or at least that same value of that money in a year will be worth 10% more. At minimum, you could take the money, put it in the darn stock market, right? And then wait a year and it would be worth 10% more. All right? And so like at minimum, That is the amount that I'm willing to give to pull cash forward. All right? Now, what percentages, rule of thumb, should you expect? So let me give you a couple. So if you have, call it a, like a buy 10, get 2 type deal, like you pay for 10 months and you get 2 for free, you can expect somewhere in the neighborhood of like 15 to 20% of people to take that offer. Alright, if you give discounts in excess of that and you give bonuses for people prepaying, and so the way I think about that is 3 ways you can do that. How can I deliver something to them faster? How can I make it less risky? And then how can I make it easier? So if I say, hey, you can prepay and if you prepay you skip the line. That sounds nice. Hey, if you prepay, you'll get a dedicated concierge versus being in group. Hey, if you prepay, I'll also add in our guarantee, or I'll double the length of our guarantee. Right? So these are some of the things that you can manipulate in terms of variables to pull cash forward. Now, when you have a moderate discount plus one or more of those kind of like ancillary benefits that I just rattled off, you should expect 30 to 40% of people to prepay. That's a monster difference in terms of cash forward. Now, simply offering that, for many of you, if you're not doing it, will pull cash forward. Now, a corollary to that is whether you have a third-party financing company. Now, this is directly from a firm, so I know a lot of the high-ups at a firm, not a lot, I just know a very high-up at a firm, I'll just say that, a handful of them. And the metrics that they quote is a 35% increase in sales overall. Kind of interesting. So not only does that money come forward, if you have good financing, you can also increase sales overall. People who would not have been able to buy are now willing to because they have more convenient ways of paying. So that kind of gives you a double whammy of, oh, people who wouldn't buy did, and they went from not buying to me having all that cash today, which is why having very good financing partners can be a huge game changer for a business. Now, I will put this little caveat in place, which is that financing will not save your business. If your food sucks at your restaurant, financing it will just get more people to find out that the food sucks faster. All right? So I've never seen a business get saved by this, but I have seen businesses grow for sure by making some of these deals and putting them in place. Now, let me give you a couple payment structures that you can use that have worked really well for me. So right off the bat, if you just say like, hey, people go on a monthly, it's like, that's a way of doing things. But I would prefer to sell durations and then say, cool, prepay and get guarantee, priority, and concierge, right? Let's pull it forward. If they still can't, I say, great, let's split it half now, half in a month. Now this is a little, little pro tip on this. Half now, half in a month. I might sell 3 months or 6 months of stuff. There's no need for me to wait 3 to 6 months to get paid. I still want to get paid now and in 30 days because they got the money. I might as well ask The worst they can say is no. After they say no to 2, I say, "Great, let's go for a 3rd payment." Again, 1, 2, 3, even if it's a 6-month or 12-month. I want to pull that cash forward. Now, a little pro tip again is always ask if it's to— if you're talking to a wagee, ask them when they get paid and then align the payments on those days. If you're not talking to a wagee, you can ask when they have the majority of their deposits hit. When they are the most cash flush in the business, and then you can set it for those dates. You do not need to coordinate payments with your delivery. Now, one of my favorite methods of payment so that I can pull cash forward is something that came out of the Depression in the 1930s, which is something called layaway. It might be something as old as time. I'm sure it was in 2000 BC, but I just know it from the Depression because of course I lived there at that time. And so the way it works is simple. You start paying now, and when you finish paying, you get the thing. Very straightforward, that's it. So you can, I remember the first time I did this. I had, I was selling, this is with Allen. I was selling, we had this big onboarding, 'cause Allen was a higher kind of enterprise SaaS, so we would sell to agencies. It was $25,000 to white label, and then they would use it kind of as their own operating system. And so it cost 25 grand to kind of like get onboarded, and so I would do 2 agencies at a time, we do is a full day onboarding with me and my team, and we'd help them get set up, walk them through everything, et cetera, right? Now, I remember having two partners who were on the phone saying, they were like, $25,000, they're like, that's awesome. And then they said, can we split it into payments? And I said, sure. And they said, well, how many payments can I split it up to? And I said, as many as you want. And they were like, oh, amazing, we'll just spend, you know, we'll just do $2,000 a month. And we'll pay it off, you know, this year. And I said, okay, cool. So we'll just set your onboarding for a year from now. And they're like, oh, we got to like pay before we come in. And I was like, yeah. And they— this is why it was such a reinforcing moment for me. They just said, oh, okay, well, we'll do half now and half in a month and we'll be out next month. And so what's cool about layaway is that when people understand that, like, The faster they pay, the faster they get. They are now incentivized to pay it off as fast as possible rather than you trying to pull it forward, which is why I'm such a big fan of layaway as a payment option. In addition to that, collections become significantly easier because they haven't got anything yet. And so they've already decided they want this thing. I also like layaway because people have anticipation. Think of the last thing, maybe you were a kid when you did this, but like, I remember there was this pair of Oakley sunglasses that I thought were the coolest ones. You might have remembered them. They were an, um, X-Men, Cyclops had that like orange pair. I think I was like, I don't know, young when that came out and I thought he looked like the coolest guy ever. So I saved up for a whole summer doing chores to buy $160 sunglasses, right, which is absurd. But I think they were $120 or $160 at the time, inflation. And they were like the hottest, coolest sunglasses. So anyways, I save up the money, I get the sunglasses and I remember the anticipation of being able to get the sunglasses at the end of the summer. Was better than the sunglasses ever were. In fact, it was so good I literally never wore them because I was so afraid of losing them because I'd spent so long to save them, which was also a great lesson in like sometimes you got to just learn to spend money and enjoy what you spend. A different thing for a different time. But that being said, you also benefit from that customer anticipation when you set up the payment this way. So there's a lot of benefits to doing this way. And the biggest one of all You risk nothing. They pay before you deliver anything. And so you get to have the cash before you have to risk delivery. So those are all different ways you can accelerate cash flow in the business. I'll give you a— let's see here, do I have any more notes that I wanted to go over? Yeah, I was gonna give you guys some rules of thumbs for like different kind of conversion metrics. So one of the simple ones would be like If you're doing— the thing is, there's so many variations. So it's like if you're closing off of meta leads for in-person, it's like you should close 10% of the leads that you have. So you get 100 leads for an in-person service business, you should close about 10%. If you're above that, amazing. If you're below that, you probably have some opportunity for improvement. If you're closing off cold webinar leads, if you're selling to broader markets, you're probably looking at 2 to 3% conversion of those leads as in webinar opt-ins to sales. If you are a little bit more niched, then that can go up to 5% of leads. The craziest I've ever seen, and again, that's leads, not shows, right, or people who are there during the offer. That's just overall, like you had 100 people opt in for a webinar, all right? If you have a salesperson that's in person, right, if you're going to someone's home, again, my rule of thumb with salespeople in general with a proper sales process is 35%. I would like them to close at least 1 out of 3, of the prospects that they're getting in touch with. Typically, if it's higher than that, I will raise price. If it's below that, then I will fix the process before I would even consider lowering the price. Web pages, most times it's gonna be between 1% and 2% in terms of conversion rate on those pages. I'll give you a fun factoid for school. So, I think school right now is at like 4%. It's really good for school about pages, and it's because when you have trust in a platform, that starts to increase your conversion overall. So I'll give you a wild example on this. Again, these are rules of thumb. My Amazon page for my books, so like offers for example, this is the last time I looked, we convert roughly a quarter of the traffic that hits that page. Think how crazy that is. 1 out of 4 clicks buys. Now what you trade off when you have a platform like an Amazon, right, is that I'm not making all that money. Amazon's basically making all the money and then like paying me a small commission. And so you just have to play with the numbers there, which is like, okay, instead of it being, you know, 25%, I'm getting 2.5%, so I'm getting 10x the conversion per click and I might be getting 1/3 the gross profit. Is it worth it? Yeah, I'm still making 3 times as much money, right? But you just have to understand the difference between those things. So those are just a handful of rules of thumb that I have followed that have served me well in business, in services, in order to scale. And so I'll leave you with a final rule number 9, which is my— I'm filling the holes back up for rule number 9. Anybody remember Love Potion Number 9? I might be dating myself. That was a movie. You can Google it. Anyways, I'll bring this up, which is this: industry averages are dumb. And so what do I mean by that? The amount of times I've had a conversation where someone says, hey, you know, manufacturing, these "these margins are pretty good for manufacturing," or, "Hey, our margins are this in our industry." It's like, if the average American is in debt, divorced twice, overweight, and just mid as fuck, right, why would I want to have that be my bar to compare myself against? You say you have this, I mean, so many business owners have this hatred for their competition. They hate their competition, they wanna crush their competition, and yet you wanna measure yourself by the same stick that your competition measures themselves? Well, it's a great way to be average, right, is use averages as your determination of whether or not you're good. And so I would highly encourage you to just ignore averages altogether and play to win. And that is just something that has really served me well, which is like, somebody will, I'll come into a space, We'll say, well, you know, you'll learn. You know, I know you guys have seen this clip of Tiger Woods when he's doing his first interview before his first Masters or something. And the guy's like, he's like, well, you know, how do you feel being so young, you know, coming on the Masters Tour? And he's— I don't know how it gets to it, but he's like, I'm here to win, or I'm playing to win. And the guy's like, you'll learn, you know, you'll see. And then they play it forward like a year or two or whatever, and he's there with his jacket talking to the same guy, and the guy just has to like eat his words. Like, it's so visceral. Like, the moment is amazing. And so like, that is what I envision when I go into an industry that I don't know anything about. It's like, that is the advantage. I'm not going to— I'm not going to operate within your frame of reality. Like, why would I operate within the frame of beliefs that what the average person has achieved is what I will achieve? Why would I say that is the appropriate outcome that I should be shooting for? 'Cause fundamentally, when you quote an average to say this is good enough, you have accepted that you are no longer going to try to get better. And I just wholeheartedly reject that. Like, the winner of every category is not the industry average. And I can almost promise you that they don't look at the industry average 'cause why would they care? Like, there is only one rule that matters, which is physics. If it's as long as the rules of physics allow it to exist, there's no reason that we cannot get this outcome that we desire, period. And so I'll get asked the question like, do you think you can have margins in a manufacturing business that are above 10%? Yes. You know how I know? I also have a friend of mine who does complex machinery. You know what his margins are? Net? 70%.

Net.

Well, what does that mean about his gross margins? That means they gotta be way above 70. You wanna know what, how he did it? He builds machines that he sells to big industries that automate a huge function of different workflows and he will charge $400,000 and a machine will cost him 17 grand because he has know-how. And so if you think about what a business is, a business is functionally a black box that transforms raw materials into an output where the value is higher than the inputs. That's it. That's all a business does is we have raw inputs, we transform these inputs into something that is more valuable at the end. That is all a business does. And when we do this over and over again over an entire civilization, we take many raw inputs and we increase value. And that is how the entire world moves forward. And so with that being said, those are my 12 rules of thumb. That I've learned in business, different ratios that I use as my guideposts, my lights, my lights, my, what's the light towers? What are those things on the edge of oceans? Lighthouse. Those are the lighthouses that guide my path. And I hope that they serve you as much as they have served me. Big Trust Trading, is school still a great platform to use? Yes. That was a good question. That was an excellent question, thank you for that. Okay. We're going to shift gears here because I want to talk, because I'm looking at these comments, right? And this was something that I was messaging Julian about. I was like, okay, I want to talk about this topic when we go live. So I think you will like it. Joan Montalvo, hola. Hello. Hello. Salutations. Okay, so you guys ready? You guys ready to rock and roll? Is school good for winemakers? Yes. Instead of saying, is school good for winemakers, I want you to think differently about this and say, is having a place for all of my ideal customers to gather and talk to me and get feedback good for my business? And if the answer is yes, if my customers were together and I could create a community about my business, with my customers, I would make more money. If you believe that to be true, which I think almost all businesses would believe that to be true, then school is a good idea for your business. Now, school can also be a business in and of itself, but for many of you, or many people who use school, they just use it as a place for the people that they meet in the real world to exist online. So if you have a prayer group, you can start a school group for those people so you can stay in touch between prayer group meetings. If you have a Fantasy Football League, you can have a school group about the Fantasy Football League. Like, if you have a sports team, even rec league, you can have a school group about that, right? It's just where— it's just a place for people to meet online to build community. That's the whole platform. That's all it is. And obviously we have lots of cool features to make it like fun and easy and accessible. But that's it. It's $9 a month. All right. So it's free if you want to just be a user, but if you want to host a group, it's $9. Okay. That being said, I'm up next, BTO and good stuff. I don't know what BTO means. Is that some internet slang, Luke? Yeah, he doesn't know. And he's like 17. So if he doesn't know, you're just making stuff up, man. Okay. Big picture. Let's dive into this next one because this one has been on my heart. You're not getting what you want out of your business or your life because you want too many things at the same time. You're not willing to make trade-offs, and I will prove it to you. And so in this video, I'll break down the core problem and the way to frame the trades that you make at different seasons in your life. And so If you don't know who I am, my name is Alex Hormozi. I own acquisition.com. It's a portfolio of companies that did $250 million in aggregate revenue last year. Just a few weeks ago, I broke the Guinness Book World Record of fastest-selling nonfiction book of all time, doing $106 million in sales. We sold 3.6 million books in just under 3 days. And I've only gotten there by making trade-offs. Now, some people would not agree with the trades that I've made, and that's okay, because their life is theirs, and my life is mine, and each can live according to their preferences. And so everything in life has trade-offs, and people just need to determine the price versus the value. Like anything, there's going to be both of these things. And so when people say, I can't believe he did this, it's because they're only looking at the cost and not the payout. Now, if you say, hey, that guy made this trade, I wouldn't have made that trade, Awesome. And that's why you don't have to make that trade, right? And so let me give you kind of like a frame of mind for this. I was thinking about this because we were— Layla and I were looking at home stuff lately and we're thinking about, you know, buying homes and all that kind of jazz. And one of the things that was such a striking example is that you cannot have it all. There are many examples in life where it is— this is not a— I'm sure you've seen it, like, you can have it all. You can't. Let me give you the example. If I say I want to have a house that's in a ski town, but I also want it to be near the beach, and I also want it to be secluded, but I also want to have a town and shopping in walking distance, and I also want it to be cozy and not too busy, but I also wanted to have lots of space for activities and a yard, I can't have all those things. They are literally structurally impossible. For them to all be in the same thing. One, the beach and the snow mountain, probably not going to exist in the same house. If I want to have something cozy versus lots of land and space, probably not going to happen. If I want something to be in walking distance but also have a great aerial view, might not happen, right? And so each of these things— that one could happen in a high-rise downtown, okay, that one maybe, all right? But there's going to be some of these that you have to make trades. And I think basically like confronting that is like the core element of what you have to do in life to move forward. And so many people stay in decision limbo. They stay in purgatory. And purgatory translated into reality is that they don't achieve what they want. They don't get what they want out of life because they never make a trade to begin with, right? And so I'll give you a couple more common ones like, should I get married versus should I not get married? It's not should I, it's just am I willing to make the trade? Right? Should I have kids versus not having kids? Should I sacrifice my 20s versus sacrificing your 30s? There are always trade-offs. Like, if you sacrifice your 20s, you will miss out on some of the kind of youthful, fun experiences that some people have. Like, that's a trade. That's real. You will give up on some of that stuff. The question is, what are you trading it for? Now, the worst trades of all are the trades that we don't consciously make but still trade anyways. Right? Like you didn't get the fun experience of your 20s, but you also didn't build the nest egg. You didn't build the reps. You didn't build the experience so that you could set yourself up in your 30s. Right? And so a lot of like your 30s is a reflection of how you lived your 20s, just kind of taken forward. Now, some people I meet love their 20s. They backpacked across Europe. They had all these different experiences. They got culturally enriched, and I love that for them. That wasn't the trade that I wanted to make. And so it would be ridiculous for me to say like, I want that and I want to develop this very deep well of skillset that I can use for the rest of my life. Now those people for sure build skills. Are those skills as marketable? Maybe, maybe not, I don't know. Some people are like, well, I could travel and learn. Maybe, I don't know. I mean, I haven't like, Zuck didn't do that. Bill Gates didn't do that. Elon didn't do that. So again, there's also to what degree, right? How big do you want to go? And so I think like you can't expect a 1% outcome without having a 1% trade-off, right? And I'll give you a different kind of, like I give you a house example. Let me go really, really small. You walk into a store, there's a pair of shoes you like, okay? A pair of shoes you like. You look at the price tag, it says $500. At that point, you make the decision, is it worth the trade? That's all it is, right? And then if you see somebody else make the trade, this is how dumb the internet is. They will then say like, that guy's an idiot, that guy's a moron. But the thing is, is that if that guy's a billionaire, who cares what he traded? Like, for him it made sense. And if you're on food stamps and minimum wage, $500 shoes probably doesn't make sense for you, probably not worth the trade. And so is the trade inherently good or bad? No, it's dependent on the person and their context. All right? All of these are examples of trade-offs, right? And so the question is, what are the trades and are they worth it? And so there's also a big component of knowing what you have to lose, but also, let me say this differently. The reason people struggle so much with making trades is because they know what they stand to lose, but not what they stand to gain. So the cost is guaranteed and fixed, but the upside is not, which is why it's so hard for so many people to make bets, especially on themselves. And so if you had a single belief that I could transfer to you, it's that you will figure it out if shit hits the fan. And when shit hits the fan, if it does, and it will, the reality is it's not gonna be as bad as you think it is. And so you have this fixed cost that you believe that will happen, isn't actually real because it's a fear inside of your mind. You think if this bet doesn't work, I will go homeless, lose all my friends, and die. But that's not reality. The worst case scenario for most people who are social, as in like just are functioning members of society, is that you crash on someone's couch for a while. That's the actual worst case scenario. And I only say this because if you look at homelessness, right, the vast majority of homeless, not all, vast majority of homelessness is due to addiction and mental health issues, as in like they struggle to live in reality. I'll just say that, okay? And coming from a family of people who struggle with that, all right? So I guess I have my card there. Do I have my card there for mental illness? I have a card there, all right? I can say that. So my point is most people have this fear. Now, even the people who are— I'll say, I'll be politically correct— the unhoused, right? The unhoused, Even the unhoused, it's hard to say, it's so funny. Anyways, even those folks still have food, still keep living, still have access to medical attention, okay, at least in the US, in the developed world, okay? And so I say this because the worst case scenario is that you have no boss, you have food, right, you have medical attention if you need it, and you walk on the streets doing whatever the hell you want. That's the worst case scenario. Some people might say that's better than their current scenario. And so when I think about this, I think about this in an inordinate amount, I'll say that to be honest with you, which is that like your level of subjective wellbeing doesn't change a dramatic amount throughout your life. A lot of it is inherited, right? Like your demeanor, your disposition. And I'll give you a simple example that makes people uncomfortable. So think about how were dogs created, right? So there were wolves, And then there were some wolves that were a little nicer than the other wolves. And they were like, let's breed the nice wolves. And then nicer wolves breeding nicer wolves breeding nicer wolves, eventually you get a Labradoodle.

Okay?

Take it enough times. And so people don't like to think about humans in that same way. But like fundamentally, if you've got assholes breeding assholes, they tend to make more assholes. And if you've got nice guys and nice gals, they tend to make more nice people. Of course, there's genetic variety that happens there. But over time, that does happen. And so that also happens with happy people and unhappy people, believe it or not. And so a lot of that, like, of course you operate within your genetic potential. Of course, like, you can move things. Like, you can have genetics for muscle and never work out, you're not gonna have the same level of muscle, right? Period. And so you might have genetics for more happiness or genetics for less happiness. Sure. And you want to maximize those things. But I only bring this up to say we have this idea that we're going to, like, I'll do this thing and then I will be happy. I will do this thing and then all my problems will be solved. But our brains are only meant and evolved to keep us alive, and most of that is about finding problems and potential threats within our environment, which tend to keep us stressed out and unhappy. And that core unhappiness, that core anxiety, tends to move humans forward because we continue to innovate, we continue to try to solve problems, because we all think that when we solve that problem, we're going to be happier, and we're not, but we do move civilization forward. And so I bring all of this up to say that the downside of your bets are not as bad as you think they are, and the upside of you making it all work is also not as good as you think it is. And so it's really, what do we want to do with our time? And so the people who are rewarded most in life are the ones who are willing to simply embrace uncertainty. It's just embracing the idea that you do not know what will happen. I have no idea what's going on. Okay. And so big picture, zooming back out, if we were to quantify the trades that we're willing to make in terms of, I know I'm going to lose these years, but I will probably look back on this time and not be upset by it because of what I got in return. And a lot of this comes down to the framing of life happening for you, not to you. And I think that you can live a life without regret as long as you always believe that you had to go through that to get to where you are now, period. So as much as you say, like, and believe me, I can go back and say, if I had known this at this time, my God, I'd be so much further. But how could I have known that at that time? I had to go through this to know this, right? And played out the other way, let's say that I did know it at that time and then I was better off now. Now what? I'm just better off and I'm still going to be probably about as dissatisfied and satisfied as I am right now. And so some of you guys are sitting on the edge in decision purgatory You're trading the time you have, you're trading the years of life, but you're not getting anything for it. And so the only thing that I would encourage you to do is be number one, conscious of what you're trading, and number two, be conscious of what you're trading it for. And as much as the people around you will decry or speak down or speak against you for making trades, the question is, do you want their life? Because I have yet to receive criticism from somebody who is ahead of me in any domain. I have not had people who are bigger than me say that I sucked at fitness and that I shouldn't work out. I haven't had people who are richer than me say that I shouldn't work as hard as I do. I haven't had people who were married longer than me tell me that I'm doing something wrong with my marriage. The only people who have shit to say are the people who have time to say it because they're on the sidelines doing shit, as in jack shit. And so I only say this because like, I really struggled for a long time to get over what other people thought. It was very hard for me. And then I think like at some level, like at some point you just have to prove to yourself that you will survive, that you will not die, And I'll tell you a very weird version of this story, but I think it could wrap us up, which is this. So believe it or not, when I was in, up until 8th grade, I was actually very like, what do you call it? Not a hypochondriac, when you're afraid of germs, what's that? Is that a hypochondriac? But like afraid of like dirty stuff. Like I was a germaphobe, there you go, I was a germaphobe. And that seems probably maybe weird for you to see now. I mean, mind you, it was a long time ago. 8th grade was a while ago for me. But before that point, I would hold my breath if someone was walking in front of me because I didn't want to breathe in their germs. If someone hit a doorknob that I saw, I would use my arm and work my way around and do all sorts of crazy canoodling. I would do all sorts of craziness. You're like, where is this going? I promise there's a point. And it got to the point where it started to become a little bit debilitating. It started to get in the way of how I lived my life. And so we had to go on this trip back in the day called Expedition 8. So you did it in 8th grade, it was like you went camping, it was like a field trip. And so we had to go 5 days in the middle of the woods with like our grade. And so we went out camping and I committed that it was gonna be impossible for me to like be a germaphobe in the forest. I was like, this is not gonna work, I'm not gonna be able to eat, right? And so I basically was like, I'm just going to, I'm just going to not wash my hands and I'm just going to eat everything that's there and just not worry about any cleanliness. And if I die, I die. And so the craziest thing happened. I did the 5 days. I had dirt on my hands while I was eating the food. I didn't wash my hands once. And then at the end of the trip, I was still alive. And then I waited another week to see if all of the maladies that were probably inside of me were going to come to fruition. And none of them did. And then at that point, I was like, so all of the energy that I had been putting into all of this concern around germs amounted to nothing. That was a huge— it was actually a very big moment for me. And I have maintained that viewpoint for the rest of my life. I just don't sweat about that stuff. And so other people's opinions are a lot like those germs. You think the whole time, like, you know, what if they, like, you're holding your breath. What if they say this? What if this happens? It's like, well, what if, and let's play it out. And then you realize that not only did you not die, no one cared to begin with, and no one's even thinking about you. And so, like, and as somebody who has had a fair amount of, like, different people try to take shots at me, nothing's changed in my life. Nothing. People make hit videos. People take stuff out of that I said out of context. That's okay. It's the internet. If I expect to be completely understood, that is a silly goal to have. And I'll give you another story that really drove this home for me. So I was on TikTok, I think, this is a while ago, and I saw this really old white dude, just normal generic white dude, just giving financial advice, talk about the economy or whatever. And he was getting roasted in the comments, like grifter, like old man go home, like all sorts of craziness, just telling him he was a fake guru or whatever. The guy was Ray Dalio. He's worth $30 billion and he's like 79 and he's just trying to like help people. He's like on TikTok trying to like help the younger generation. And when I saw that, I realized that you cannot save— like you will never be legitimate to the ignorant. And that To be hated by a bad person is a good thing. Think about that. Many of us want to avoid being hated in general, and I understand why. It makes sense. No one wants to get hated when they're growing up, etc. But think about the worst person in the world, right? Wouldn't you want them to hate you? Right? We should judge our character by the quality of our enemies. And so if somebody who's completely ignorant, who has no context, wants to speak ill of you or your goals or way of life, take it as a compliment. Or at the very least, just feel bad for the fact that they don't know any better. But in no way should we put weight on what they say in the the scales of how you decide how to live. And so anyways, I just say this because like I had, I've had too many voices that were too loud for too long in my life that prevented me from doing the things that I wanted to do. And so I share that little story about Expedition 8 and the dirt under the fingernails, if you will, that those germs, you think that they're going to kill you and then nothing happens. They're just germs. So be easy, guys. You can't teach people who aren't ready to learn. Yeah, 100%. So you guys wanna rock one more? I got some time. I think I got time. I got time. You guys good? You guys feeling energy? Socrates-ass statement. I appreciate that, Fitzy. That might have been my, might have been the comment of the day. Socrates-ass statement. All right, we'll do one more. No, I mean that, dudes, and dudettes, obviously, for my 13% female audience. Dudettes. Actually, can I have a shout out for dudettes? Can I get some— actually, what would be a female emoji? What's a female— would be like a heart, is that an emoji? I feel like a heart could be a female emoji. Actually, females all— oh, bows, bows would be good. Bows is a good one. If you're a female, female founder— Corinne, what's up, Corinne? Rock and roll, baby. Got a bow, got some hearts. So all the dudes are like, I'm saying, like, you guys having trouble finding a girl? I'm like, here they are, man. They're right there. We got ladies. Mosi Nation got some ladies. We here. What's up? There's like 7. Do I speak foreign languages well? Yeah, come on. OK, so how do you get ahead of stuff, right? So big picture, we talked about some rules of business very tactically, right? We zoomed out and we're like, listen, we got to make trades to get what we want, period. And you got to be willing to make those trades and be willing to bear the costs of the trade, which you know right now what you're going to incur, but not necessarily what you're going to gain. OK. I'm going to actually make one more point on that and then I'm going to transition. My team, we could feed it into the other video. The biggest gains come from the unknown. So that unknown upside. And so functionally, like, you could only go to zero, right? And if we really play it out, the likelihood of you going to zero as a regular person is almost zero, right? But Bezos said this best, which is, uh, humans underestimate the upside and overestimate the downside is one of the fundamental psychological biases that humans suffer from. And it's because there's no real benefit for humans besides avoiding death. And so it makes sense that we'd have cognitive biases that disproportionately represent downside. Because if you didn't do that, your genes would not have proliferated and come down generations, right? The guy who thought, hey, maybe there's some upside if I eat the berries, it's like, well, then they die, right? And then that's the end of that guy, right? And the end of his line. And so all the optimists are dead, right? All those genes ended. And so all that's left is the pessimists that continued to believe that the worst was happening and the world and the sky was falling. But it's like, the world has changed, our genetics haven't. And so it's like we have to make these conscious decisions to realizing that all of the upside is in the uncertainty. And the fact that you weren't certain, so is everyone else, but that is where the arbitrage lies. The arbitrage lies in the uncertain and the delayed. I'm gonna say this again. All the upside that you want in your life is on the other side of uncertainty and delay. Everything. And it's because those are the two things that people are unwilling to bear the price of. They will not pay that price because it feels like too much, because they don't know how much they have to pay and they don't know how long they have to pay it for. But I'm telling you that it is faster than you think it is and it is not as scary, but you have to take the first step. And this again, it scales all the way up, right? Like we're taking some huge bets at acquisition.com and there's a lot of stuff that I don't know how we're going to do it yet, but I believe that we have the ability to figure it out. Because if somebody else can figure it out, so can you. It's not like they're made of different tissue than you. It's not like they spend different money than you do. Every— like, these things are solvable. And at the very least, there's somebody who knows how to solve it, and you can figure out how to do something for that person so they can help you, whether that's money, whether it's a favor, whether that's relational capital, whatever you have to do. And so, like, if I want to transfer this to the greatest degree possible, because I had so much fear, like, what if I don't figure it out? You keep trying. If you don't figure it out, of course, like you just, you didn't figure it out that time. You'll just figure it out the next time, right? Like unless you die, right? And this is a Jocko Willink quote, which I'm so angry that it's his quote 'cause I love it so much. But basically, all failure besides death is psychological. Did you die? No. Did you figure it out? No? Guess what? You're not dead. Try again. And I just wish I could pass it on because like that's the worst case and everyone's so afraid. What if it doesn't work? Okay. What if it does? Because if it doesn't work, it'll change nothing. But if it does work, it'll change everything. Okay, let's hit this. So the girls are here too. Inara Beauty, what's up? What's up, girl? How you living? Okay, we're guys ready for, for numero tres. All right, then we'll do some— then we'll do Q&A. You died, Azam, you died.

Nice.

Um, okay, so, uh, in this video I'm going to show you how to learn anything very fast, and this is the exact process that I use to learn stuff for the past 14 years in business and more recently I just broke the Guinness World Record for fastest-selling nonfiction book, which generated $106 million in sales in less than 3 days. So if you see everyone who's moving ahead of you faster than you, and you hate that everyone's moving ahead faster than you, you might not be as smart as you think you are. Now, that has good news and bad news. The bad news is you might not be as smart as you think you are. The good news is it's under your control to change, and you can do it quickly. So this is the process that I'm going to walk through on how to learn anything fast. So number 1 is— that was pretty— I see that. That was pretty good. Hold on. We'll use the original one. That was pretty good. Okay. So number 1 is we have to understand what learning is. All right? So what is learning? So learning is same condition, new behavior. So that means you do something different in the same exact situation. So if I go knock knock and then open the door and you say, hi, this is Alex, and then I say close the door, next time I want you to say welcome to Starbucks. So then I go knock knock, they open the door and they say welcome to Starbucks. Same condition, knock knock, new behavior, welcome to Starbucks, right? To the same degree, if I go knock knock after saying that and the person says anything besides welcome to Starbucks, That person is a little dumber than the person who got it on the first shot. The number of times it takes you to change your behavior in the same condition is a dictation of how intelligent you are because learning is same condition, new behavior. Intelligence is speed of learning. Intelligence is a rate. It's a question of speed. If you think about how you describe somebody, like, he's quick, he picks things up fast. So for you, there's a couple ways to think about this. Way one is, oh, he picks things up in terms of it takes fewer iterations for that person to change their behavior. That's good. But guess what else you can do if you're somebody who didn't have that level of, call it intellect. Let's say it does take you more iterations. Guess what you do? You can change how quickly you do them. So some people might take 3 iterations to get something right, but they delay the iterations once a week, another week, another week. If you say, I'm going to lock in and I'm going to do 7 iterations because I'm twice as dumb as they are, but I'm going to do them all in one day because I'm going to not let any light in my room and I'm just going to lock in, then guess what? You are smarter than them because you change your behavior faster than they did on a timeline basis rather than an iteration basis. So there's 2 vectors you can think of here, and this is important to me to realize this. Because I, so I went to Vanderbilt, fancy school. I think it's like top 5 or 7, whatever, in the US right now. And when I was there, I felt like I had below average intelligence of the people who were in the room. And so I was like, how am I gonna be able to beat these guys? And so I just said, oh, okay, I'll just work from the time I wake up until 9:00 PM every day. So that's what I did. From 9:00 to 9:00, I was in the library unless I was in class or I was in the cafeteria or the gym. Those are the only things I did. I ate, I studied, and I worked out from 9 to 9. That was it. That was all I did. And once I realized that, I was able to move forward a lot faster than other people, even though I felt like they had intellectual capacity superior to me. They might've been able to learn things in 3 iterations, but I was able to do my 10 iterations faster than they were able to do their 3. And so fundamentally, learning is same condition, new behavior. Now, what is a skill? People have said this a lot. A skill is a chain of adapted behaviors. All right, that means you learn multiple things, same condition, new behavior, same condition, new behavior, same condition, new behavior. When you chain those together, that is a skill. So thing 1, understand what learning is. Number 2, deconstruct the skill. So what does this mean? Skills are typically chunked up or chunked down. Basketball, so people are like, "He is good at basketball." They're saying he has many skills that relates to this thing. Now within basketball, you've got dribbling, you've got shooting, you've got passing. These are subskills underneath of basketball. To the same degree in business, you can be good at business versus good at marketing, good at sales, but at Good at product, good at hiring. All of these are subskills underneath of those larger skills. Now, if we were to go even deeper than that, we also have generalizable skills across domains. So if I have great hand-eye coordination, I might be better or learn something faster. Like I will learn how to shoot faster, but I'll also learn how to play ping pong faster. I'll also learn how to serve a tennis serve faster because I have generalizable skills. And so a specific skill is a skill that does not generalize across domains. Now, when you have more specific skills, it's more a degree to which it generalizes rather than does it generalize or not. So I could have that eye-hand coordination thing, which would pretty much generalize to anything that I use my hands and my eyes, which is a lot of stuff, right? But would shooting, the specific skill, generalize over to, I don't know, Chess? Probably not. It's like, well, you're using your eyes and your hands, but not really. It's a lot more about decision-making, right? And so are there closer ones? Would that go better for beer pong? Probably. That would generalize over. My foul shots versus beer pong probably does generalize to a great degree. Not 100%, but decent. And so the reason this is important is that people— like, language matters. And so some of you will say, I want to get good at business, Alex, but business is not something you can get good at. It is a bucketed term that has many skills underneath of it. And since we just defined what skills are, which is adaptive chains in behavior, you start something and you do 3 or 4 things in a row that get an outcome, right? Business has marketing. And guess what? Marketing is also a skill that is an adaptive chain. And so you basically have to keep chunking down until you finally figure out the skills that you can quantify in terms of behavior. And so this goes all the way up and all the way down. Like reading, writing, and speaking are generalizable skills that will apply to everything. Learning in and of itself is a skill, like your ability to learn, your ability to figure it out, right? And so back to this little example I have here, many of you want to learn more stuff, but because you have not broken down the thing you want to learn, you stare at the screen and keep searching, hoping that you are going to get some recipe. But the recipe is that you have to keep breaking it down into smaller and smaller constituent parts so that you can get it into an understandable unit that you can change your behavior within. So I say this, but that then leads to point number 3. I know, right? A little bit of open loops, keep it spicy, which is that we have to define success. Now this is a bit of a trite term, but fundamentally this is what it is, success of the skill. And so we would need to identify the specific behaviors and actions that demonstrate mastery of each subskill. So we want to get clear in what good looks like in practice. What does this actually mean? Okay, so if I said I want to get good at foul shots, all right, so foul shots probably have different parts associated with it. There's probably going to be— I have to measure the distance, and I could probably say what percentage of my shots did I hit within the box? Okay, what percentage of the shots did I get within the hoop, what percentage of them did I get in altogether, right? And then within that, I could probably say how many times did I finish my follow-through? And like, I don't know anything about basketball, but I would be like, okay, am I finishing above my head? Because that's where I want the follow-through to be. And where is my shoulder position? Am I twisted? Am I straight up? Am I squared with the basket? How many times did I do this? And so you might hear this and be like, wow, this sounds overly complex. It's like, well, welcome to winning, right? We have to break things down and you have to think about yourself in some ways like a child because our ability to learn gets worse over time, right? We are less plastic, but our skill at learning, so rather our horsepower at learning is worse, but our skills at learning can get better. All right? So how do we reconcile this? If our skills get better, then it means that we are better at being specific about the thing that we need to change, right? And if you are not specific about those things, you will wander for a long time why you are not getting good. So you have to quantify to the highest degree possible. And to be clear, you'll start quantifying things in the beginning and then you'll get better at describing them. But if you do not track, you do not care, period, on anything. In any skill worth learning, if you aren't tracking it, you already demonstrate that you don't care because there's no way for you to know if you're getting better. So that brings me to number 4, which is ignore the black box. Okay? So ignore black box. Okay. So let me explain what I mean by this. A lot of times people will try and create this narrative around psychology, around emotionality, around biomolecular, whatever the hell, gobbledygook. And so I can say that it is incredibly difficult to understand why something works or why people do things. But what we can observe is whether something works or whether they did something. And so we want to say, okay, we have this box. There is an output. Instead of trying to figure out what magic is happening inside of this box, We just want to focus first on the inputs. And what's interesting about focusing on the inputs is that the inputs themselves will give you the feedback loop that is required in order to get better at the skill. So basically, being inefficient, sucking for a lot of reps will get you better at not being bad because you will be so bad that you'll think, my God, I suck at this. I wonder if I could suck less at this. And then you'll tweak a couple things and you'll be like, wow, I'm not as bad as I once was. I'm not good, but eventually you keep doing things that make you less bad until eventually you look back and you're like, you know, if you less bad yourself 100 times, you're actually pretty good. And so this is where doing more in the beginning without the obsession on understanding why will get you closer to your goal because so many times people say like, well, I want to understand why. You want to have a narrative that someone gives you to scratch a psychological itch, not because it inherently does anything. I'm going to give you an analogy here. Let's say that you're like, I have this issue with sales and I think it's because my mother didn't hug me enough as a child. Right? That's your why. I want to give you a sports analogy that I think will make sense. Imagine we do a tennis lesson. You go to a tennis pro, right? And let's say you're gripping the racket wrong. In order for you to grip the racket correctly, does the tennis pro then say, "Hey, we should really discover why you grip the racket incorrectly." What different teachers didn't describe to you the proper way to hold a racket. And let's try and understand the undermining emotionality behind the grip that you have. No, they're just going to get you to grip the racket correctly. And so for you, I would encourage you to ignore people who try to put on all of these whys and these psychology and the subconsciousness and the neuro-linguistic programming and all this hullabaloo. When like you just need to send this email, say these words, move your body in this way, use your voice like this, hold your head up, stare straight. If someone cannot tell you what to do with either your mouth or your body, they are not giving you clear directions to succeed. And so I would encourage you to use that as your razor as who is good at teaching shit and who isn't, because they will try to appeal to some sort of mysticism that they are tapped into the universe, like, and they'll anthropomorphize, fancy word, the universe saying that it's whispering the secrets, like you can have it, it's telling you, no, there is observable reality. If you can describe that observable reality, by the way, very difficult, right? Much easier to tell someone to be charismatic than it is to actually come up with the 37 activities that people then later ascribe as charisma. So the way to think about teaching yourself is to look at situations through an observational lens, like a scientist, like, uh, like somebody who does not understand the emotional context, and then say, why do— what does this person do that gets these people to smile? Output: smile. What are the inputs? The inputs is this person shook that person's hand. When did he do it? When he walked in the room. Okay. Did he smile? Yes. So you walked in, he smiled, he shook their hands. How is he holding his body? Is he like this? Is he like this? Okay, so I need to contract my traps and my mid-back so that I can stand up straight. Okay, when I do that, people perceive me in a different way. How do I know they perceive me in a different way? I don't. But what I do know is that they have a higher likelihood of complying with my requests. And so this is the idea when I say, Like, have you ever heard my stuff where I'm like, listen, people will say like, he bought because we hit his emotional trigger. Where is this trigger that we can observe that it got hit? We only know, did he buy, did he not buy, period. And so we just wanna manage the variables prior to the desired outcome. And can we do more of this stuff that increase the likelihood these things occur? Which obviously, in order for us to do all of this stuff, We have to measure. And so I said it before, but if you don't track, you don't care. And so you have to find a way to measure your success, measure the outputs, or you will never improve. And so what I do in my learning process for whether I'm learning from a guru, from a course, a webinar, a podcast, anything, right, is I look at the top 10%, the top 1%. Of people first, and then I try to observe what do they do, not what they say about what they do, what do they do that I can replicate. And I want to give you like the hack of all hacks here. Most people who are good at stuff don't know why they're good. Michael Jordan, not a very good coach. Player, the GOAT, bar none, no question, right? And so how can we, how can we have this guy who's so good at basketball not be good at getting other people to be good at basketball? Because this is another skill. Transferring skills, teaching is a different skill than doing. And so it's difficult because when we— this is why if I could probably transfer something that has been helpful for me is that I struggled socially earlier. And so I had to observe. I'm like, why are they cool? And I I am not. Now to be clear, I'm not saying I am now, but I'm saying that for them, I was like, these guys do something different than me because their outcomes are certainly different than mine are, right? But it's that observational muscle, which is like, I have to just only describe the world by what I can see. And when you do that, it becomes significantly easier to break things down because you say, like, because the reason this is important is because that's the only medium through which you can communicate. And so all of the rest of the hullabaloo doesn't transmit the physical plane. Now, for those of you who believe in all of the other hullabaloo, I'm with you. Let's go, let's go manifestation. But manifest on your own time and just focus on doing the behaviors that increase the probability of these good outcomes occurring. Now, when you're doing it for yourself, once we've observed the top 1%, top 10%, and said, okay, I'm going to observe the things they do and I'm going to replicate them to the best of my ability. You will suck, and it's probably because you have not observed all of the things they do. And so you don't have complete context to every single one of those microsteps that they did that made it good. Because if you look at a good reel and a bad reel, like on Instagram for example, let's say you want to get better at making reels, you might not have the awareness, the perspective from which to make a judgment, the observational skill to delineate why this is different than this, but you can say that this sucks and this doesn't. It's a great first step, right? Now, if you can't even say why does this suck versus this one, we don't know and we don't know why it sucks. We know that it sucks because of the algorithm and because of the views and because of the likes, right? And so we just like fundamentally all we're doing is replicating skills that we can observe in other people. And once we replicate them, at some point you will start to learn from first-party data, meaning you will start to learn from yourself. Now, what do I mean by that? So some of you guys may have seen the interview that I did with Amjad on Replit, the CEO, the founder of Replit. We talk about how learning works. AI has to get trained on data. We have to clean data and say good, bad, good, bad, good, bad, over and over again. Once AI can learn in the real world, the feedback loops are significantly faster. And so it's first-party data. It drove in the road here and then all of a sudden someone honked and it got feedback and it went back in the lane. And so at a certain point, you'll stop relying as much on modeling all the people who are doing better than you at the thing. And then you will start to do a tremendous amount of volume. And then from your volume, you will look at your— so let's say this is the volume we did. This is all of our reps. And we say, okay, what made these different from all these? What is the difference? Now, there is for sure a difference because these are the top 10%. You might only be able to identify 1 or 2 differences. So you will take the things that you find different and then you will do another set of many repetitions where you do this. And then you'll have a top 10% again. And on here, you'll get another inference of why that's the top 10%. And then, but wait, there's more. We will then go taking all those inferences and then we have our top 10% again. And here you get the idea. Your idea and observation density will increase like coats of paint. Every time you go over it, you'll learn one more thing. But I would say that the key to learning is observation. Once you can observe the differences between current and ideal, and this is honestly the gap. People like, I get the compliment often that Alex breaks things down in such a simple way. It's really just looking at the world through the lens of analysis, of observation, and saying what is different about these things, and looking at it almost as an autist where there is no meaning behind anything, just simply This person extended his hand, that person extended their hand, this person nods when that person talks. When that person stops talking, this person doesn't nod. Why doesn't this person nod when that person's talking? Oh, okay, people determine that this person has more influence, the person who nods when the other person is talking. Okay, if I want more influence when other people talk, I should nod and then occasionally interject, "Yeah, sounds good. That's interesting. Go on, tell me more about that." Okay, great. So then I could start observing that. What else does this person do? This person, when he asks for things, takes a step back. This person doesn't. Okay, so when I ask for things, if I wanna increase likelihood of compliance, I'll take a step back. And so it's these observational differences which separate the people who win from the people who won't. Now of course, there are naturals. What I would determine as a natural is someone who observed not consciously, but still learned. So I'll explain. Many of us, we learn a lot of our stuff not consciously. When you were a kid, when you're a toddler, you learn from your surroundings. When you were 2 years old, you weren't like, "Huh, what observation is Papa doing today? I will observe him and I will model his behavior." No, all you did, and here's a wild thing, is that if you see someone get rewarded, you will automatically want to do that. What do you think testimonials are? It's modeling. Oh, that person is like me. They got what I want. Their behavior was they bought this thing. I will therefore buy this thing, model what they did to get what they want. That's how it works. So step 6 is that we have to analyze the differences, analyze and iterate. Which is what this is. Look at the top 10% of people, take their initial, and then use that as batch 1. Then look at the top 10% of your stuff, look at the observational differences, and keep doing it like coats of paint. Then step 7 is repetition. So if innovation— if it was it, uh, if necessity is the mother of innovation, repetition is the father of skill. Which is that you repeat these steps over and over and over again until people call you a natural. And so I've had, I've been, you know, blessed if you want to use that word, um, at being good at, I was good at school. I was not bad at school. Some people are like, I became an entrepreneur cause I sucked at school. I was good at school. Um, I was good at school and when I got into the business world, I took it like a, like a, I took it like curriculum, you know what I mean? Like I wanted to learn all the language. I wanted to learn the lingo. I want to learn how it all worked. And what became difficult for me was that many people described similar things with different words, and that became very confusing. And so I get asked a lot now, like, what are my primary sources of learning? Like, what do I learn? Like, where do I go for learning now? And the honest answer is that the vast majority of my learning is first party. It's we do lots of stuff, we look at what worked, and we do more of the stuff that worked, and then we do it again. And then I tell you guys what I did, right? This is the process. This is what we do. Now, if we're going to go into a new field, I'm going to hire experts and I'm going to hire them so that they can get me on iteration 9 as iteration 1. And then I'll start at 9. And then my goal is to beat them at that thing just by simply applying this process with a faster feedback loop than they have. And so this is important. If, like, on a long enough time horizon, the speed of iteration is the only thing that matters. So think about this for a second. Your speed of iteration and/or improvement from the iteration, to be clear, not just changing things for no reason, but improvement, your rate of improvement on a long enough time horizon, independent of your starting point, is the most important rate that is required for you to win. The team that gets better the fastest wins on a long enough time horizon because your rate of growth, your rate of improvement beats everyone else. And so you mastering this process, although it may seem simple, being able to observe objectively what is this person doing differently, why do these videos do better, why do these salespeople outconvert the other salespeople? And I want to reemphasize point 4, ignore the black box. Do not try to explain. And like, there will be very few things that you've probably seen on my channel where I actually commit to the word why. The only things that I can say that I feel like I can say why someone does something is because they've been reinforced for doing it in the past. They've been rewarded for doing so or punished for doing something opposite to that. That is all. That's the only thing I'll commit to saying why. Everything else, I just know that. And so I have saved an inordinate amount of time in my development cycles by not trying to figure out why people do things. Because the reality is they don't know why they did it either. If I were to ask you, why did you do X, Y, and Z? You probably can't consciously answer it. Now what you might do is you might mouth noise something back to me because you've been reinforced in the past for responding to questions. But whether or not what you say is true is irrelevant. And so this is why when sometimes experts, people who have great outcomes, try and teach how they got the great outcome, their mouth words don't actually help anyone because they're just responding to a question. So have you ever had someone say, so I'll give you an example of this. So let's say you've probably had someone say like, hey, what's up? And you say, I'm good, you? Right? You probably don't even think about saying, "I'm good, how about you?" or whatever. It's automatic, right? And so to the same degree, people are rewarded for answering questions a certain way. And so is that person good when they say, "I'm good, you?" Maybe, maybe not, who knows, right? And so in that same vein, when you ask someone, "How did you become successful?" the first time they get asked that question, they might think a little bit, and then they start using the same answer over and over again. Especially if people say, "Ooh, ah, mm, so intelligent, so smart, ah, mm," right? And so they get rewarded for doing that. But that has zero bearing on whether what they said is what they actually did or whether that was the reason that they were successful. And so there's a famous professor, Professor Bergman from Stanford, who said this quote that I always think about. He said, "It's better to fail and know why you failed than to succeed and not know why. And it's because if you failed and you know why you failed, then there's a possibility that you can course correct and then improve. If you succeed and don't know why, you won't be able to recreate it. And I'm not somebody who believe— like, I never want to say somebody got lucky if they're successful. It's just not really in my ethos. But over my career, I always look at somebody who— anybody who's done better than me at anything, I'm like, they've done something I haven't done. What is it? Right? And I'll say that honestly, and I probably could say that 99, which is a pretty— 99 out of 100, which is a lot, right? 99 times out of 100 when I meet somebody who's better than me at something, they've done stuff I haven't done. I can name on maybe one hand people that I met and I was like, I actually just think they got lucky. And the thing is, is that when I say that though, it almost makes me feel sick to say it because I'm like, maybe I don't have the observational skill to see what they did well. And that's still on me because me calling someone else lucky makes me better in zero ways. No ways. And so when I think about that, I would encourage you to remove luck from your lexicon. In no way am I saying that it doesn't affect things. Of course, luck, you know, probability, chance, etc., is a reality of life. To the same degree, your genetic hand for whether you gain muscle or lose fat is something that you get dealt at birth. But the question is, and so what? Are you gonna not work out, not eat healthy, not try hard because your genetics are half as good as somebody else's? No, you still want to be cut, you still want to be in shape, you still want all those things. So guess what? You got the card that means you got to work twice as hard. And so what, right? They got lucky, and so what? You're both going to die eventually, and 5 generations from now your progeny won't remember what you did to get with, and the whole point of this game was for who you become, not what you get along the way. So it doesn't matter if they got lucky. If anything, luck robs them of the opportunity to become as good as they possibly could because they won. And I'll tell you a really weird story just to show you how messed up I am. I remember this is, I was 20, 20, 21, somewhere in there, 20. I bought a Powerball ticket with my girlfriend at the time, and it was like when it was like a billion dollars or something crazy, right? Everyone got a ticket, it's like, "Ooh, what do we want?" And I remember after we bought it that I had this, or after I bought it, that I had this moment of like sheer terror when the drawing was happening. And the terror that I had was that I would win, because I thought if I win, I will never be able to prove that I could do it. And thank God I didn't win the Powerball and win a billion dollars, because if I had, I don't think I would— I don't think I'd be me. I'm very happy with who I am. And so I think that luck, as much as you could say, man, that guy's lucky, Think about how unlucky they are because they never had the opportunity to go through the gauntlet that you get to go through to become the person you're gonna become. And I think that's something— I'll rest my case on that. I think I'll wrap on that. So hope you guys dug that. That's how we learn anything. At least that's how I learn shit. And so let's do some Q&As. Let's do some Q&As, baby. It's interesting he feels this way because if someone won $1 billion, was able to level up to more billions, you'd say they're still smart. But here's the reality. If you won $1 billion, the reason that my favorite Magic card is Burning Wish is they wished for a weapon but not for the skill to wield it. And so if you win $1 billion, the potential energy, if you will, the potential output that $1 billion has, it's very hard to comprehend. So, let me give you guys a fucked up visual for this. The difference between $1,000 and $1 million is the same difference between $1 million and $1 billion. Think about how little $1,000 is compared to $1 million. That's how little $1 million is to $1 billion. Wild. So I think there's another one that's like, if you do it with time, I think 1,000 seconds is like 14 minutes or something. I could do the math on it. And then, uh, 1 million seconds is, I don't know, a few weeks. And then 1 billion seconds is like 30 years. It's very hard to comprehend just how much that is. So With that being said, let's do a couple. I'm going live chat. So for all you guys in the chat, I'm dedicating this time right now to you guys. Okay? So how do I get over imposter syndrome if you ever had it, of course? Great question. I will tell you how I've avoided imposter syndrome, which is state the facts and tell the truth straight up. I'll tell you a story that'll drive this home. So I had an agency owner who came to me, one of our workshops, and he said, "Hey, how do you deal with imposter syndrome?" And I was like, "Well, what do you mean?" And he was saying that he used to own an agency, right? And now he got appointments for other agency owners. I said, "Okay." I said, "So what do you feel impostery about that?" He's like, "Well, you know, Just like the success level, blah, blah, blah, blah, blah. And I was like, "Well, I mean, from what you told me, you had an agency, you sucked at agency work, and you were good at getting customers but not at retention." And he was like, "Yeah, that's true." And I said, "Right." I said, "Are you saying that in your marketing? Is that how you're depicting that?" And he was like, "Well, not exactly." And I was like, "Right, so you're lying, and that's why you feel like an imposter." I was like, if you state the facts and tell the truth, two things happen. One, you won't feel like an imposter. Second, you'll sell more. Think about this for a moment. If I got on the— if I started marketing and said, hey, listen, I was really good at getting agency clients, sucked at delivering, really not that good at client services, don't really enjoy it, but very good at getting appointments and closing them. And so I just stopped doing that. And if you're an agency who's actually good at doing delivery, I'd love to just like sell appointments for you or set them up and show you how we sell so that you can feed your own business. This is just what I'm good at. And so I stick to this. What is wrong with that? Where is the imposter? Like, either you can do it or you can't do it. And so I think the imposter syndrome comes from getting ahead of yourself, getting above your skis. If you state the facts and tell the truth, what is there to argue about? You did this stuff or you didn't do this stuff. And I think the issue comes from when we're not being honest with ourselves about how we're portraying or positioning ourselves to the public, right? But the ironic thing is that if you were just honest about your deficiencies, you will become more compelling, more authentic, and persuade more people, not fewer. Real? Okay. I'm 21 and have big goals in business and content and have been at it for 6 years. Any recommendations? Keep going. You're 21. You're in good shape. Just keep getting better. I mean, you're doing it for 6 years. The question is like, how much feedback are you taking to improve? And again, what is the nature of the content? So I'll be clear here. You want to like, What makes people interesting is that they're exceptional in some way, right? How do you become exceptional in some way? You work at something, you have feedback loops. And so you can absolutely become, like Charli D'Amelio, right? She got famous really young. Why? Because she's exceptional in a lot of ways, right? She's a pretty girl, right? She's also like a very good dancer, from what I understand. I'm not like a dance judge, but like she's a good dancer. And here's the third element that I think makes her really unique. She also, from what I understand, I'm not a huge consumer of her stuff, she's also really humble. And so you've got, when you've got like pretty, in shape girl, really good at dancing, humble, now you have something that's unique, something that's interesting. There are tons of really good dancers, but do they have the other two? No. Now also pair that with like knowing social media, which would be a fourth skill, right? It's these stacks of skills that when combined together create these exceptional outcomes. And so you might be good at one thing, but you might need to be good at 4 or 5 for those things to stack together, right? Like, this is like a very important point. You can't just be good at one thing and be exceptional. There's lots of people who do that. You have to be good at like 3 or 4 things, and you have to be very good at all of them, and that takes time. Okay, Hollabox. That was very complimentary. Okay, love you, love how you do stuff and how most legit real people in space think. Okay, okay, that was just compliments, thanks, man. Okay. Trenton, how would you go about increasing revenue at pawn shop? Okay, requiring large capital expenditures, remodeling new locations, and the business is for sale. I probably wouldn't do a big, I probably wouldn't make a big capital expenditure if I'm about to sell a company. I would just like pencil that out and have it prepared for the next guy. But I wouldn't take a bet like that at that point. That wouldn't make sense. Unless, I mean, that's obviously off of one sentence of context, but like at the face value, that doesn't make sense. Razvan, are local service businesses best for beginners, especially who can charge a minimum of $1,000? I mean, I like local services a lot. I mean, obviously I came from that space. I'm a little bit biased, but the re— I'll tell you why I like local services. I like local services because you have no inventory. And the acquisition process is the easiest. Now, the limit is that it's more difficult to scale and more expensive to scale. Not impossible by any stretch, but just more difficult to scale. And so I love it as a great way to start a business because either B2B or B2C, as in business to business or business to consumer, works for both. But like, if you're like, hey, I want to start a car wash business, it's like not that hard to be 16 years old and knock doors, right? It's— if you want to start lawn, you know, mowing lawns, it's not that hard to knock doors and mow months, like it's just not that difficult. So that's kind of like, that's kind of the, it's not difficult to do if you want to, and so B2B, it's the same thing. And you can just phone call, email, show up, it's just the acquisition process isn't hard, and so because there's, the real thing is that there's an inherent trust to local. And so what somebody who markets nationally has to make up for is the fact that no one trusts you. And so you have to make up for it with marketing skill, more content, proof, social proof as in like your own proof, like this is the stuff that I've done, but also proof in terms of customer success. So there's a lot more that has to get done because you're competing against the ocean, so your game has to level up. But you can absolutely start as a local business with almost no dollars out of pocket, start doing stuff, make the money, and then use that, leverage that into bigger opportunities. Okay. Is it possible to increase enterprise value by converting a standard business into SaaS? All right, I'm gonna answer this question for you, Luke. Software is not inherently valuable, just like a standard service business isn't inherently not valuable. The thing that makes software valuable are business characteristics that software companies, when done right, typically have. And so they will typically have high gross margins, They'll typically have high revenue retention and ideally some sort of viral coefficient that allows them to grow quickly. But if you think about any business that had high gross margins, high revenue retention, and lots of growth, you would want to invest in that business. And so software or SaaS, software as a service, right, typically has, when done right, all three of these things. If you take a service business and then have an identical software business that has the same characteristics, let's say you have shitty retention, shitty gross margins, and no growth, that is not inherently valuable, and probably not even more valuable than the service business. If anything, it might be less valuable because now you have this whole dev team that you have to maintain, whereas service business you can just keep going and it's less operationally complex. So no, software does not inherently make anything valuable. It just has characteristics that when done right can be incredibly valuable. Okay, let's go, let's go. Cycling, jeez, calm down. Emergency dental leads. How do you print more leads? You spend more money on Google search would be the fastest way to get more leads if you want emergency dental leads. That's number one, fastest. Number two would be probably doing partnerships with people who do triage for inbound emergencies or health really, like urgent care type stuff. That would probably be my second thing, but Google search inbound is gonna be, it's like for that type of thing, like, toothache near me kind of stuff, that, that's what's gonna, that's what's gonna pull it. Um, okay, how would you scale a car garage, car mechanic business? Well, we're gonna want, uh, you know, maximize utilization of the space first. So like, can I have the guys working 12 hours a day, all the bays completely, you know, used up? Can I make them more efficient at, um, turning cars faster? Is there— can I triage the types of work that is getting done so that I can move the cars out more quickly in terms of like, am I going to take jobs that I think are— basically we have to look at dollars per hour. Now you can have an hourly billing rate, which is one way to do it. Not the biggest fan of that model, but it is a simpler way of running the business, not necessarily a better way, but it is simpler because then you could just say like, this took this many hours, and that way your costs are kind of controlled. But the more profitable way is to sell to solve the problem, and then try as hard as you can to solve the problem as fast as you can so you can do more jobs per unit time, meaning you make more money per dude per minute, functionally. That is how I would think about it. Now once you go from like, okay, I've maximized this location, you have to follow the same MO of nail it, then scale it. And so we gotta nail it first, which is like, do these four walls work without you? Is it growing month over month? Are we getting good retention of customers year over year that they come, they come back, they refer? Friends, etc. If all those things are true, then I say, okay, great, let's, let's open another one or buy one that's failing, which is, I think, in your space, probably a better move because there's gonna be tons of really old mechanics who've had the business for 35 years. There's tons of capital expense. You got all the lifts, you got, you know, the zoning. There's all these, you know, components to that business. You probably sell or finance those things. What is kind of interesting for the retiring folks, an interesting deal structure that I've seen working a lot is kind of like call it 15 or 20-year earnouts or like seller finance deals, meaning they just basically use the business as an annuity. And so that way it's like they just use, like if they're 70, they're like, okay, I'll just take 20 years of payments. And they're like, great, this will probably take me until I die. So that's like one way of structuring it if you want to have as much cash out of pocket and maybe there's some elements of the business that aren't as like sexy. Okay. Um, Pratt B, I've already built an ERP app for one client, a barbershop. How can I expand and get the next client? Um, I mean, you should advertise, man. Like reach out to other barbers, run ads to other barbers, make content about barber stuff, and then get them to buy your thing. Affiliate with people who have barbers as their audience. So that would be like, go to somebody in a school community that has 500 barbers in their community and ask if you can white label the app for them or give them some sort of commission for doing it. Like, there's a lot of opportunities that you can do there. And I'll tell you this, because I remember doing something like this when I started. Don't reach out to one person, have the deal not work, and be like, I guess this doesn't work. Obviously it works. You just have to work it. You have to work it like you mean it. Okay, PQ, what did you learn about selling to chiropractors? I'm currently selling SaaS to chiropractors, been struggling though. Big thing is you're not selling SaaS to chiropractors. You're not really ever selling SaaS, you're not selling products, you're not selling service in general. We're selling an outcome, right? And so if you're struggling to sell SaaS to chiropractors, it's because no one wants to buy software, but everyone wants their problems to go away. And so we have to sell to the problem and then we ascribe our value relative to the problem as the chiropractor suffers from it. And so as far as I'm concerned, chiropractors would love to have more time. They'd love to be more efficient with their patients. They'd love to charge more money. They'd love to have better margins. They'd love to improve their team. They'd love to get more leads. Like, all of these things are things that chiropractors would like to do. The problem is that their CRM doesn't allow them to do those things. Yours does. That's why they want to buy yours. Okay. Um, Musa, I sell randomized 8-item mystery surprise cups. How should I drive customers into— I'm gonna assume you said into this business. Okay, surprise cups, that is a weird thing to sell. Okay, well, I mean, fundamentally you're gonna advertise it, so I'm not really sure. I'm actually not really sure It's kind of an odd thing to sell, but I'm guessing they're themed in some way? Like, it's like, I mean, think of like a booster pack for Magic: The Gathering cards, or like a booster pack for Yu-Gi-Oh or Pokémon. Like, you're selling a mystery box. The question is that there's, is there some degree of promise that they're going to make an amount above that? Like Amazon sells mystery boxes, kind of interesting, I don't know if you knew this, where it's like, I think it's like 2 or 3 times the money. It's like $30 or $40 and it's $80 to $120 worth of items inside. So that's like one of the things that they do. It's like a mystery box. So people just are willing to take a risk on money if they believe they will get significantly more than what they paid for and they're willing to gamble to some degree and do it. And I actually did a big analysis for a thrift store that had this model. That's why I'm familiar with it. One thing that they found, or at least that I found at least, is that people might complain when they don't get any of the items that they want, but it didn't mean that they stopped buying. This is why we have to divorce what people say versus what they do. People will complain that their lottery ticket didn't win, but they will still buy another lottery ticket, which is why we observe behavior rather than what people say. Okay. Uh, Samuel Chapman. Alex, how do I find my niche? It looks like I'm not good at anything. Thank you. Thank you for saying that, man. Uh, I listen, um, you might be right and you might not be. So I'll give you, I'll give you an answer for both sides. Here's why I think you are good at something. You probably just aren't good at something that is immediately as monetizable as you would like. But if you chunk up a level to generalize skills, so can you read? Can you write? Can you speak? Can you type? Okay, great. So we have these skills. What's a degree closer to that? Well, I can learn relatively quick. Okay, great. So it's like we can take these skills approximately. It's like, all right, well, what things do other people want and can I learn how to do them faster than they can so then I can sell them the thing that they want? Right? Hopefully. And the reason that you might not be good at anything is that you're just not good at anything that people want to buy from you yet. Nothing wrong, but just nothing that people want to buy yet. So we just go learn that stuff. You want to do some hotline? Yeah? Do we have some phones? Okay, cool. Oh, my headphones. Oh, here they are. Okay guys, we're going to take some call-ins. We're gonna take some fun, fun time with Alex and the gang. All right. Hello? What's up? What's up? What's up?

Hey, what's going on, man?

You know, just hanging out on YouTube Live with my buddies. What's up with you?

I love it, man. Well, I appreciate everything you do for the community. Thanks, um, absolutely. So to give you some context for my business, uh, I own a landscape design construction company in the Florida Panhandle. We sell primarily to homeowners. Last year we did around $1.5 million in revenue, around $300K net. This year, closer to $2.2 million and $400K net. Uh, I have one main crew 7 crew members, and then I sub out another like 5 guys. Um, I got about $300K in cash, and my big goal is to have, you know, a $50 million plus landscaping construction firm with multiple divisions.

Enterprise, my main ballroom. What is it, enterprise value or sales? Enterprise value. Okay, got it.

Yeah. So my main bottlenecks right now, uh, it's, it's kind of a little bit of everything. Recruiting, ops, uh, deciding where to place the big bets, you know, buy property, invest in crews, um, you know, where to put that big allocation of money. So really the main question I have is with everything that you have with context as far as what I do, With the revenue, the net cash, what I have in, uh, you know, dry powder, where do you think I should put the next investment that gets the highest compounding return over the next 12 to 4 or 24 months? That'll get me the closer to my goal. More trucks, you know, buying or leasing a property that I've thought of that's high traffic area that can get me ideal clients, more marketing brand, or something else I'm not seeing.

Yeah, well first off, kudos on the question and context in getting to it. It actually gives me, very helpful. So basically you have to 20x, right, if you want the $50 million enterprise value. So $8 million in EBITDA, call it 6x, 6.5x is what you're gonna get in multiple. So that gives you your $50 million enterprise. You're currently doing $400K, so 20x that would be $8 million. So we gotta get to like $44 million, you know, top line. As the goal. So that's a great long-term goal, but in terms of short-term, the best allocation of resources is always going to be the constraint because that's where you get the highest return. And so the question is, number one, why can't you do more of what you're currently doing? So what stops you?

So right now I am kind of in everything, you know, I'm in what you call the swamp. Sure. That $1 to $3 million where I'm— my hands are kind of in everything. I have like 2 to 3 tailors. That can run crews or, you know, eventually division. Like, I kind of have to put out all the fires. Yeah, I have to make all the decisions. Yeah. And I can market and sell. I've marketed and sold up to this point, and I think if all I had to do was market and sell, I could easily take it to $10 million plus. Yeah, pretty quickly. But I'm only able to allocate maybe 20 hours of my time per week. Got it. Actually go do consultations, market.

What are close rates right now?

Close rates are right around 30%.

Okay. What's the sales motion?

The sales what?

Sorry. How do you sell people? Like, what's— walk me through the process of selling.

So the process is—

So lead comes in from what?

Yeah, they usually come in inbound through organic search, organic social. That's where I get about 70% of my lead flow right now, 60 to 70%. And then they fill out a form and then we schedule an in-person consultation where we decide what they want to do with their property. And I have a range of services from everything from, you know, full refreshes to $150K+ landscape design and renovation projects. So there's kind of a huge range.

And you close on that meeting?

No, it's a two-part— it depends on what I do. So if it's a design, then we have to walk through the property, get a design, and then from the design I try to close during the design presentation because I bring a proposal with all the numbers with it.

Yeah, got it. Um, do you have any like videos or anything that they see in between there?

So I have my social media content. We post like 3 times a day between Instagram and Facebook.

No. Yeah, I don't have it there yet. Yeah. Okay. So, um, one is there's 2 VSLs that are missing. Number 1 is VSL between, um, setting appointment and then, and then you showing up there. So it's VSL number 1. Number 2 is between first appointment and second appointment. Need a second, second VSL. So video sales letter for anyone who's listening. Um, we need to do that. I would do that so that you could, like, that might be the single largest influence on your close rate. And so basically, like, you are properly priced without the correct sales motion. So if we do that, you might boost to like 50, maybe 60% close rates. And at that point, we'd be able to increase the price by like 25%, 35%. And so when we do that, we more than double the profit. When we double the profit, that'll then free up the cash so that we can hire some, like, a crew chief, um, or crew leader that we need. So is there somebody inside of the company right now that you think is a leader? I'm guessing no, because that person would have already come up?

Well, there's one guy that is definitely, uh, head and shoulders above everyone else.

Okay.

He leads, he leads the main crew. So like the bigger projects, more complex projects. He's been in the industry for a long time. Then he helps on the smaller projects whenever it's needed. And then he also oversees some of the subs. So he's honestly kind of spread thin. And the goal is to get a crew leader to make him a full-time project manager, to make him a pure, you know, operation.

How much will that cost?

He handles all of the operations.

Yeah, how much would that cost?

You know, 20 hours a month.

Yeah, how much would that cost?

Right now he's at about a $75K.

How much would it cost to— no, how much would it cost to get him the help that he needs?

Another probably $60K position.

Okay, so two options here. I do think you should do the VSL regardless. I'll just say that, number 1. Number 2, are you willing to make $340,000 so that you can get the time back to be able to like double the revenue of the business? 100%. Okay, so if we wanted to go like 2-step plan, make the 2 VSLs, that should take a day. This is not long, right? And then number 2, immediately go put out the ads that you need to or do the outreach. To get the crew leader, which should be easier than replacing the main guy, right? So that you can debottleneck that constraint so that you can have that person handle most of the fires so you can get another 20 hours a week back so you can scale the business.

Got it.

Okay, that's it. And that's it. Awesome. Just do the VSLs. That'll improve the close rate. That's, that's upside if nothing happened. We should still put through— we should still make $340,000 so that you can get the time back because you can still double it, assuming no margins change.

Right.

I gotcha. And where do you think we should allocate the large kind of, you know, amount of cash I'm sitting on now?

Well, you're going to need more— you're going to need more trucks and equipment soon. You're going to need more trucks and equipment soon. That's what I'm going to save it for.

Yeah.

Okay. So for your business, like, where is capital going to go? It's always going to go towards the constraint. Right now, the constraint is talent. So we're gonna allocate, of the $400,000, we're gonna make $340,000. $60,000 is gonna go to the talent, so we're gonna increase capacity. Once that talent comes in, you're gonna free up your time to do more marketing and sales. With the improved motion, you should be able to close at slightly higher prices, which will make up for that $60K pretty easily. With that, right, we can still grow the business. What's gonna be the next constraint? You're gonna be like, well, I don't have enough crews, or I don't have enough mowers, whatever, right? At that point, it's like, great, well, I'm gonna need to put out another $150,000 for equipment or whatever. So it's like, great, we're gonna put that out, That's how we're going to roll. And then at that point it might be, uh, talent constrained again.

Right.

Gotcha.

Okay, cool. And yes, I did have one more question if I have the time. Um, as far as enterprise value goes, because right now my business is kind of smash and grab, you know, we go in, we do the project and more or less unless somebody calls us for a project down the line or, you know, they give us word of mouth. You know, that's about all I get from them. Should I try to allocate, you know, maybe this is a 6 or 12-month play, more recurring revenue into the business to get a higher enterprise value?

1,000%. If you want to sell this, yes, absolutely. So the best version—

be done sooner than later.

I mean, yeah, I mean, I would rather get you out of the weeds first. So like get your time back. The first, basically the first two steps that we just said, get the time back. Right. Then from there with the extra time is do I want to expand the existing model or do I want to add more recurring? Either of those would be the next step. So I would probably say I would add the recurring nature to the business. The reason I think this is important, or the way that I would think through this, is that most people that I've seen who succeed with this model, they will run— they basically run this as their way of acquiring customers profitably, and then that serves as a phenomenal price anchor for the ongoing maintenance and continuity. Got it. So it's like, it's $75,000 for a whole backyard, you know, a whole backyard redo, whatever, you know, plants and all that shit, right? And then afterwards it's, you know, $800 a month, uh, to, to mow the lawn and keep it going. You just made the $75,000 investment. You'd rather just have the guys who like know where all the pipes are, no, they're not going to cut one of the, one of the water hoses, you know, they just know where everything is. You're just like not worried about it. Cool.

Yeah, absolutely. And then as far as acquiring leads for that type of caliber clients, that's what I'm looking for.

With your—

with you going through everybody that you— contractors and home service that you've seen through the workshops, what's been the most effective lead source?

It's not like most effective lead source because all like there's many. So Google search crushes for it. You know, again, all of them, every lead source is a different sales motion. So the way that you treat Google search inbound leads, it's going to have a different motion than how you're going to treat Facebook meta ads. And the conversion rate, like you should be converting 30%, you know, 30% of your, you know, Google inbound leads at minimum. And then on Meta, it might be 10%, right? It's just going to be different because it's colder, it's interruption-based versus intention-based.

Gotcha.

Yeah.

And the only reason I ask is because we've invested a lot, honestly, since consuming your content over the last 2 years. We made like 1,000 pieces of content and I haven't really leaned into Meta ads or Instagram ads. And I've started to gain some traction and got some branding from it.

So that's why. Yeah. No, that's good. I mean, don't stop doing that. It's an and, not an or. Cool? Right, got it. All right, rock and roll. Appreciate you, man.

Thanks, man.

You bet. Don't worry, chat, I'm still here. Matt Y, Alex, come back to the chat, we miss you. I'm still here, uh, bro. I just made $1K from zero. Amazing Cravings Clarity. Bigfoot Stepper, Alex is legit. Thank you. I like videos so I can see more of these lives. They're my favorite. My favorite too, Bronce. I appreciate you. All right, I'll answer one of these and then I'm gonna hit the next guy. All right, when, uh, to jump to a PEO and corporation to do— to doing my own— from a PEO and corp to doing my own operation? Currently a general manager of a large national roofing company. Dude, you do— you jump the day that you decide you're ready. And I'll give you a secret about being ready: you're never ready. Basically, you have to make an argument for why you being older is going to make it more likely for you to succeed, right? That's how I think about that. Um, cool. Ping me. Ping me.

What's up, Alex?

What up?

Hey, so, um, $8.7 million, um, trailing 12 months, $1.2 million profit.

Uh, we—

my brothers and I own a designer handbag resale company.

Oh, interesting.

Okay. And a a pawn shop specializing in gold, silver, jewelry, and luxury watches.

Are these two different businesses?

They're two different— they're in the same office, but they're very— they're mutually compatible, so they work together.

Okay, got it. Okay, and so the handbags, I'm guessing you're selling nationally, right? That's just online? Yes, sir. Okay, and then the pawn shop's in person? Yes. And single location, or you have multiple?

We have a singular primary location where all the primary clients come in, and then we have two buying locations.

What's the revenue mix between handbags and pawn shop?

Uh, revenue for handbags is 5, and then revenue for the pawn shop is 3.75.

Okay, and then what's profit on, on both?

Profit for the pawn is $900,000, and then profit for bags is $210,000.

Oh, interesting. So bags is low. Mm-hmm. Huh. Hmm.

Hmm.

Hmm.

And so I asked you the question like a few weeks ago about this, and we've been like working at it. So it's a tricky one to grow right now because— an added caveat to this— is we're in the, we're in the process of selling and we're in the later process.

So we've—

the whole thing— signed. Yes, sir. 8K signed, LOI both signed, waiting for the lenders to get SBA approval.

Okay.

And then I have a hyper-specific question.

Okay.

Um, I recently caught one of our main employees kind of skimming off the top, stealing. What would you do in that scenario?

It's, uh, is it the guy or is it like what guy is— I mean, it's not really going to change my answer, but I'm just curious.

It's, it's someone who is replaceable, but it would be a huge hit.

What is it? What is a hit?

Like, we would have to—

well, the, the financials are worse because they're stealing, correct?

Not significant. So it's, it's like, it's small. It's not—

let me give you the TL;DR on this. Let me give you the TL;DR on this. When you're 85 looking back, you're going to want to have been honest, period. Also, you expose yourself to liability because as soon as you, as soon as you know, or it's demonstrated in any way that you knew about something, all of the reps and warranties that you're doing in the sale are going to be flipped. And so if you basically are knowingly giving somebody an organization that has some liability that you have not came forth with, you take on that liability and they could basically take off, basically take back, not take back the money, but sue you, it'd suck, right? The good news is this, is I think that all of this is going to be how you frame it when you're going, like when you're telling the buyer, right? I would just say, hey, like, you know the business you're getting into, right? Like we deal with some nefarious characters. That being said, it's a very profitable business and it's a good business. I've got good news and bad news. The good news is we're slightly more profitable than we've let you know, and we're willing to honor the existing price. The bad news is I have to replace one of the people because I found out he was skimming. But fundamentally, you have to be upfront, state the facts, and tell the truth. I don't think it's going to blow the sale up.

Yeah, I agree, I agree. And Truth be told, I already did talk to this person. I'm more interested in what you would do because I spoke to them, met a middle ground, didn't ask for any money back. We changed the—

oh, I mean, I would kick them out moving forward. Dude, they, they stole for the sale. Yeah, they stole, man.

Oh, that's interesting.

They stole.

Okay.

Would you say that from if it was like $100 versus $10,000? Have you seen— have you seen—

yeah, have you seen— have you seen— hold on, hold on, what show am I— I'm trying to figure out the show. Have you seen Ozarks, the show? No. Okay, I'll give you this. I'll give you the scene. So Drug lord finds out the main character and his partner are skimming in some way, right? So drug lord shows up. The guy— the main character is an accountant. His partner is also an accountant. They have a legit accounting firm. They also do this drug cartel stuff on the side. The main character doesn't know what's going on because he's not the one skimming. The drug lord tells a story about when he was growing up, they ran a grocery store. And he says his father caught Lupita— everybody loved Lupita, Lupita was amazing, right? And he caught her pocketing like a $5 bill on her way out the door. And so the drug lord then goes to, you know, the secretary of the accountant who's the main character and says, what would you do? And, you know, the secretary says, yo, it's just $5, not a huge deal. And so then he kills her, and then he goes to the next one and says, what would you do? And he's like, well, I mean, hey, you know, there's— we got to understand the situation, blah blah blah blah blah. And so finally he goes to Marty, who's the main character, and he says, what would you do, Marty? And he says, well, I'd get rid of her. He says, why? He said, because it's not the first time she stole, it's the first time you caught her. Gotcha. I would not want a snake in my business, whether it's $100, $1,000 they stole. To be fair, that's how I do business. Yeah, it's just like, what kind of signal does that— I mean, it's like, what signal do I send to my team? What signal do I send to myself? It's just like There's no reason.

Well, I could tell you, I could tell you what happened is I got tremendous pushback on a different person on the gold side because this was an inherited business, which is one of the reasons we're selling. Yeah. And that was kind of the way things were. Yeah. That was the status quo that people skimmed. And I can't— I— yeah, it was like, I, I do this, I make your company this much money, this is the way we do. That's wild. I know, I'm looking at you, I did the same thing. I did the same, I almost, I couldn't believe it, but we're selling the company and I don't know how much to push back to how much to be lenient on it.

And so that's the scenario that I'm in. I mean, I stand by 100% what I said originally. Which is like, I think the game is long, and reputation is something— the only thing that you defend with your life. And like, when you do a deal in the future, because hopefully you will, they will call your last acquirer and say, how was it? So I think state the facts, tell the truth, be upfront about it. I don't think it's going to blow the deal up. I think that you get it basically putting things on the right foot the right way, you will feel better about it. There is a short— I mean, these are real. There's many people who wouldn't do this. This is a judgment call. This is an ethics call, not a business call. But I will tell you 100%, that is what we would do. And it would pain me, to be clear. I'm not saying I would be happy about it. I'd be pissed. I'd be like, why did you have to do this? Sometimes I'd be like, why did I have to catch you? Why couldn't you have been better at stealing? Right? But like, when you know, you know, right? The best day to catch someone stealing was 20 years ago. The second best day is today. Copy. I do think that the people who you do business with will respect you for bringing it to them. And again, when I have these hard conversations, I'm going to go longer on this because I think it's going to affect more than one person here, is when I say state the facts and tell the truth, It's stating the whole facts and the whole truth. And that's what actually gets you through these things. It's the half-truths and the half-facts that get you fucked. So basically it's like saying, listen, I had a big— like, I'm talking to the buyer, right? Listen, I had a big internal debate about whether to even bring this up, right? Paul, as you guys have met, he's one of the 4 leaders that we have here. I caught him pocketing $200, all right? I and with integrity. I do not want to— I don't want to represent something that isn't. Now, the good news is, you know, it wasn't a huge amount of money. Um, the bad news is I did let him go because of it, because it's not something that I stand for. And so that being said, I don't think it's going to affect the operations. I think there's a potential the profit goes up. You know, when you remove cancer, that's usually a good thing. Um, but I want to be upfront with you guys, and at least at the very— like, at the very least, you will know that this is— I'm the type of person that you're doing business with. And that what I said the numbers are is what the numbers are. If somebody did that to me, I'd be like, fuck, I love this guy. I wish I could do more business with this guy. Yeah, I figured there's always going to be skeletons. I know that. I'm a buyer.

Yeah, no, I hear you. It's tricky.

No, I mean, it is. It is. But like, that's why they're ethical dilemmas. And it's way more a question of what type of business person, what type of reputation you want to have than it is like, again, this is a values question more than a business question.

Copy. Yeah, I already, I saw the Q&A before was all psych-based and this was something that happened literally a week ago. And then you already answered my question earlier in the chat.

Oh, good.

That's all for me.

All right.

Rock and roll, man. Appreciate you. Sorry that this had to happen, but I'll say this. You will always be proud of how you acted in this, in this moment. And the real real is that the business seems like it's solid. You were able, obviously, to get a buyer. If this actually does fall through, you'll be able to get another one and you'll have time to improve the business, get a higher multiple.

Hope so.

Appreciate it. Appreciate you, man. Thanks for calling in.

All right, thanks.

All right, bye-bye. Yo, was that wild, right? This is why we do this. This is why we do this. The good shit, right? That was good. That was fun. That was a good one. All right, I'm gonna answer one and then I'll hit back. Okay, Flavia. You're the one. Hey Alex, how to make good media buyers work for me and my agency instead of leaving to build their own? Huge hugs from Brazil. Well, huge hugs back. You have to make— basically, you probably have to compensate them better than you are right now. That's the truth of it. You probably have to pay them better. And the way that I prefer to have client services is not one-to-many, but many-to-one if you can, or many-to-many. Meaning let's say that you've got client services that have 4 components to it. I'd rather have a 4-person team doing the work. It's much harder for 4 people to leave and take customers than 1 person to leave with their book of customers. Does that make sense? So it's like you get a pod approach rather than a single service provider approach, and it makes the business significantly more robust. So that's the, that's the real tactical answer. So that's structural versus paying them more. If I had to pick, I would go structural because then it'll be business model focused. Bingo bango, let's do it. Money mangos, live and interactive. That's right, that's right, baby. We got someone coming on. How do you base business ethics so you have fewer regrets? Act in a way that you would be proud of looking back on. I think if you can think that way, you will always feel better, um, because even when it feels hard after suffering the, the cost of the decision, you will know that you— I'm just saying, like, I've had— obviously I've had plenty of these types of scenarios, and the more I've done the quote right thing, the more reinforced for doing the right thing I've been. So it's my two cents. Do we have somebody coming on?

Hey, Alex.

Hello, what's up? I can hear you. What's going on? Hello? Hello? I heard, hey Alex. Hello? Can you hear me? Yeah, I can hear you. Okay, shoot. Tell me the stats. What's going on?

My name's Jordan. Okay. Yeah, so I, I run a digital marketing business that helps clinics in the Gulf markets attract Arabic-speaking patients. For elective procedures.

Okay, hold on, hold on. Digital marketing agency helping Gulf, like the Gulf of— Gulf of—

like, like the Arab Gulf or the Persian Gulf, like, like talking about like Saudi Arabia. Okay, cool.

Persian. Okay, marketing agency helps Persian people find— no, Arabic speaking. Okay, cool. Yeah, people.

Okay, elective procedures.

So this is plastic surgery.

So yeah, plastic surgery, dental, this elective, you know, like the ears, things like that. Got it, got it. Okay. And then we're not making a ton. We do about $300,000 in revenue. I probably get about $150,000 in total take-home, um, and as far as like my, my profit and comp. And, um, Right now we're kind of struggling because I'm not sure the market is big enough, because we're doing like a ton of cold outreach. We've been doing it for 2 years. We use Instantly and we use Apollo and kind of all the main services there. The thing we struggle with is like we, I'm struggling with doing the whole 100 action thing because when we like research cosmetic surgeons in Saudi Arabia, we might be lucky to put together a list of 150 of them. And then it's like we do the outreach, you know, for a week, and then it's like we run out of prospects. And then, you know, we try to look for, for dentists, and then, you know, we find another 200 to 300 that can do, you know, elective procedures, and then we run out. And so kind of struggling with it.

What made you start with that? What made you get into Arabic speaking? Like, what made you do that?

So originally back in 2014, involved. I started an agency doing like Arabic SEO, and we were like the only one in the market doing it. Um, I, I lived in the Middle East for 4 years and, and, uh, and just thought I'd try this skill out, and it worked really good for a while until probably a couple years ago. There just like was a ton of competition in the market, so we started niching down. And since we've had a lot of medical clients, I thought, you know, let's focus on elective stuff and try to get clinics. But I'm kind of like struggling with the market size. Like, it's kind of a developing market.

So you can get leads for them. What's your— I mean, do you— do they retain?

Yeah, so a lot of them, a lot of them retain, you know, they stick around. Or with some of the clinics, you know, they'll pause for like a period where, you know, like—

what's annual revenue retention? What's annual revenue? What's annual revenue retention? What's that? What's annual revenue retention?

Annual revenue retention. So we're churning about 50% of our clients every year, I would say.

Yeah, yeah, you have an acquisition issue. The problem is, so you have kind of like, you have two issues, right? So issue number one is that you are dealing with very small businesses, and so there's going to be structural churn that exists there because they are not very big business owners. And so as a result as a result, their volatility translates to your volatility. That's thing one. Okay. The second issue is that you don't have a reliable way of getting them. Outreach is obviously a way of doing it. You might benefit from just straight running ads for anything that's elective. The good news is that with Andromeda, you can be very specific and still keep the targeting relatively open, meaning your creative can be like, All right, well, we're gonna run a campaign for dental cosmetics, we're gonna run a campaign for ocular facial, we're gonna run one for just pure facial, we'll run one for noses, we'll run one for necks, we'll run one for boob jobs, like we'll run one for each of the different surgeon types. And I would bet that if you ran ads with those objectives, you would probably do better. There are certainly more than 150 of each of these things, there are tens of millions of people, you know what I mean, in that whole area. There's for sure some issues with like wealth and money and whatnot, but I feel confident in saying that you could just run ads rather than do outbound, because I just think you're just not getting as many leads as exist.

But okay, so it's maybe cold outreach isn't a good channel.

It's not a bad channel, it's just that you don't have enough wealth. You just don't have the ability to get the leads. So it's like, I could say, hey, try harder at getting leads, it's just you have been doing this for a while, so I didn't feel like barking up that tree, and so I think just running ads to get them might be a better next step. I would still say like, you niche down to a super, super niche, you might do well just like opening it up to like the US, and not make it Arabic, and just, open up to the US. That would be like my second thing. I would still try the ads angle first though. Yeah.

One of the things that we struggle with, like with the ones that we do work with, is their budgets are relatively small and we constantly are getting compared against having like a freelancer in the market that's super cheap. They're like, you know, I can hire 5 people for the price I'm paying you. Well, here's the downside.

Here's the downside of what you're doing is that you're kind of reverse market arbitraging. Yeah, so the ideal way to do this is live in Indonesia and sell to Americans. You're like living in America and selling to people who don't live here. Yeah, right. So I think that, um, yeah, I mean, I would prefer— like, I'll bet you just be able to not have any of these issues if you probably were US-based. If you have the skill, you could just market here and compete. Um, you've been doing this for like 12 years. So I would say it might be worth considering to expanding to the market where like the most buying power is.

So you think it's a lot easier being in the US where there's more competition? Because at least the thing we have in the Middle East is like there's less competition that's hyper-focused on this.

Yeah, no, there's less competition. I mean, how good are you? Do you feel like— are you good?

Yeah, I feel like we're really good.

Yeah, well, dude, if you're really good, then you— so here's, here's the big secret. If you're really good, you want to go where the competition is because that's where all the pie is. Okay, if you're not good, you start by niching down so you can be really good in a tiny pond.

Yeah, that makes sense.

That's why you niche down to begin with. I'm not in a niche. I mean, business is my niche, but that's a pretty big, you know, pretty big ocean there. Right? And so like, as you get better, as you can compete in the wider and wider ocean and you're a bigger and badder shark, the more you want to go where all the fish are at.

Yeah, that makes sense.

So you might have just leveled up. If you're, if you're good, if you're good, then compete, man. Like, go and win.

So I'm gonna do—

yeah, you got this, man. Just win.

Awesome. Thanks, Alex.

Yeah, you bet. Rock and roll. Thanks for calling in, man. Appreciate it. Sure. All right, Matt, the chat does not die. I'm still staring at the chat, guys. Back to my roots. Uh, systematic versus unsystematic risk— what a question. All right, I'll do, uh, I'm gonna answer one of these chats. Let's see here. Hey Alex, left my job, jumping into uncertainty. Personal training is the goal, but right now I'm using my creative agency Skills to Live and paying for a fitness business course but no ROI. That's okay, you might have to buy 5 more or go through all the ones online and then you'll get it. Just like, fundamentally, you have to believe that there is a way to get customers for fitness for sure, and you just do not have the skill to do it, and there will be somebody who does. And so I'll give you guys this analogy. You've probably— every single thing you've seen online that sells any kind of information, even ones that don't, will have testimonials, case studies, etc. Sure. Anything around education for sure. And so I want you to imagine a bridge that has lots of bricks on it. Okay? Would you take your first course, you do your first learning experience, whatever you want to call it, to get your first credit. Okay? Think about it like you got the first 3 bricks on the bridge. Was it a waste? No. It's just that you need more bricks. And so maybe the next one you get the next 3 bricks on the bridge. Was that a waste? No. And maybe the third one, you get the last 3 bricks and then the dollars can start going across the bridge and then you can be over here, you know, nice and happy and celebrating. But the thing is, is like we do not look at arithmetic, our first grade math teacher, and say, "Wow, you're such a scam because I couldn't do calculus after I finished arithmetic." No, of course not. But you have to do arithmetic in order to get to calculus or to get to algebra. And so, I always have this very big issue when people are like, and to be clear, there's for sure, there's charlatans, there's people who give bad stuff, and I don't think it's nefarious though. I think the vast majority of people try to help and try to do a good job. They are limited by their skill at teaching. And so, more realistically, someone might be able to teach you skills, let's say there's 10 skills required, they might be able to teach you skill 1, 3, and 7 well, And then people who happen to have had skills 2, 4, 5, 6, 8, 9, 10 will succeed. And then people will be like, holy cow, this thing was amazing. That guy changed my life. And then you'll see that testimonial and think, oh, therefore I should buy this thing. The issue in the alternative education world is not the products, it's the promises. If that person just promised, I'll be able to get you brick 1, 2, 3, you'd probably be fine with it. And so I always try to reframe, like, of course I'm going to try and be the best student I possibly can, but I want to learn everything that person has to teach me. And then I want to go learn what the next person has to teach me, and the next person. I want to learn from everybody. I'm not going to be like, oh, I only want to learn from one person. I want to learn from them all, because every single person has some stuff that I don't know. And if I learn it all, I might be able to do all of their stuff better than all of them. And so I think about it like that. I would encourage you to not get down or learn the wrong lesson from mistake, which is, oh, I tried to learn this thing, I didn't learn this thing, therefore this thing doesn't work. That's the wrong lesson. It's just that you weren't skilled enough or that person wasn't skilled enough at teaching, and so what? We try again. You're not going to stop having dreams, you're not going to stop having goals. You just got to keep going. So with that being said, I love you all. Hope you guys had an amazing time doing the live. I certainly did. Keep slaying dragons, keep taking chances, just win. Love you guys, rock and roll. Out!