We were stuck at $10,000,000 until we did this...

What's up? In this video today, what I want to talk about are the sticking points from $0 to $1 million, $1 million to $10 million, and $10 million and beyond, and how to make sure that you actually set up your business from the start and as you are continuing to grow so that you do not have friction at those points in time and you can actually scale and make money and be profitable. And this comes from a conversation I had with one of our Acquisition.com clients the other day. If you guys don't know who I am, my name is Leila Hormozi and I have a portfolio of businesses that does about $85 million per year in revenue. I do not sell coaching. I don't have online courses. I am documenting this to help people not bang their heads against the wall like I did for so many years with our first few businesses. And just because, you know, selfishly I want to document it. So here I am. But it comes from a conversation I was having with one of the companies. What actually happened was there are two CEOs in one of the companies, right? And so I've met with both of them. I've had a relationship with each of the CEOs. Something just still didn't feel right in terms of how the company was structured and I could just kind of tell that the piece that was missing is that neither person was like a clear operator. And typically when we're looking at businesses that we invest in, we want somebody who's like a pure executor. What I mean is like you tell them what to do and they just go fucking do it. You know, for our business in the beginning, that was myself. It was like, you know, Alex was like the big vision for our business. He was like, this is where we're going. And I was like, cool, I can fucking get there. I don't know how to do it, but I will figure it out and I will get there. And that's always been my strength. And his strength has been the vision, right? Ask me to come up with an idea. Don't ask me a question like that on here. I'm not gonna— I don't have an idea. I mean, I do. And like, when they are, they're pretty good, but it's like once every 6 to 12 months. I was talking to them and I just felt like that was still missing, you know? And we were trying to work with one of the CEOs and say, okay, you are going to just work on that. Cause it's absolutely learnable. Like it's not something people like to tell themselves, oh, I'm this, I'm that. But like, reality is like Alex and I talk about it. Like if I didn't have Alex, I would just go hire somebody who has Alex's skillset. And if Alex didn't have me, he would just go hire somebody who had my skillset. Like that's that just is what it is, right? Like businesses, there's no specific person, like you don't have to have a specific skillset to have a business. I know people who have $100 million businesses that are pure execution and $100 million businesses that are pure idea. Like it just, it is what it is, right? You know, I'm like, we can train you, we can coach you on this, but it still just wasn't feeling right. Um, and I think that's because that person has a lot of creative juice in their brain and it was like, you know, you just get drawn to that. It's like what you're good at. And there was so much of that needed in the business too that it's hard for them to go and look at operations and systems and processes. And so I was talking, uh, I wanted to meet with one of their other leaders in the company, and so I met with that person. It was actually after I had met with the person we were trying to get to be the operator. And then I met with this woman who was essentially, uh, in a marketing, uh, favorite role. And when I talked to her, I was like, epiphany, this is it, you are the operator. And here's why is then it all came flooding in my brain at once, which is there are 3 legs to the stool that hold up a business. Okay? There's promotion, there's product, and there's people. Okay? And in the beginning, you typically start with one of the three as the strength. And then in order to grow, you have to gain a second to be the complementary strength. And in order to really fucking crush it, you have to have all three. And so immediately when I was on the call with her, I was like, oh fuck, I've got it. And my breakthrough was I had just been on a call with the CEO who didn't want to focus on operations and didn't want to focus on people and leadership. And I was like, fuck, he's all product. Like, he is the product. He's the one that wants to make the videos. He's the one that drives it forward. He's the one that's constantly thinking, what does this customer need? And he just wants to make it better, better, better. He's product. I knew the other co-founder was promotion because he fucking crushes it with webinars. He's great with all that. He's great at sales and persuasion, right? But I was like, there needs to be somebody that's focused on people. And I talked to someone on the phone and I immediately dropped it and I was like, Alex, I went to him and I was like, fucking got it. I was like, it's the three legs. I found them. Like, I get it. I know what it looks like. So we had a conversation with the founders and they were like, you're fucking— this is spot on. This is in line with what we think, you know, etc., etc. And so we've been making a lot of changes with that business so it can fit that structure. This is something that for myself and Alex, we really— when we dissect our success, right? And when I dissect success from other businesses, this is something I notice all of them have is that they have those three legs covered. Right? They've got promotion, they've got product, and they've got people. Okay? And people, I mean operations slash people leadership. It's funny because, you know, Y Combinator talks about this, which is that the most successful startups have typically 3 co-founders. And I think that's because there's 3 legs needed. Uh-huh. And I think that they're typically in those roles. And when Alex and I looked at our success and how we're able to duplicate it over and over again with different businesses, we're like, oh, well, shit, Well, Alex is always promotion. I'm always people. And then product is, you know, it's— I would say it's 65% Alex, 35% Leila. Right. And that's because, like, with each business that we've had, we've both been very familiar with what the product is. We've educated ourselves enough with Gym Launch. We've each been in the fitness industry since we were teenagers. And so the product was something that was natural from all of the years that we had had prior to that. It wasn't hard. We could continue to do that. We can continue to do it now with Gym Launch because we still understand it. We're still learning, innovating, and continuing to study the market. Same with our other companies. But I will tell you that one company— many of you may know that we brought in a partner and sold majority in our software company, Allen. If you don't know what it is, it's a software that works leads. We developed that and it honestly, many people would be like, that was a monumental success. Because revenue-wise and money-wise, like, it made a lot of money, but the software had a ton of bugs. Um, it had— it was slow, and we didn't really know how to innovate it. And Alex and I came to a point where we said, you know, we could focus all our time on this business and fix it, or we could bring in that third leg of the stool, or, you know, sell part of the business, that third leg of the stool, because neither of us were product, right? I built an amazing team. Alex had amazing promotion. We were like, the product was— we didn't have an owner owning the product. We had a lot of staff, and then we had a lot of developers, and we had a lot of vendors that we had come in to help and, you know, consultants and shit. But like at the end of the day, like if you have a fucking rock star coder who is your co-founder with you in a software business, you are going to absolutely crush it more than anything else. And I can tell you that because I joined like the best masterminds for software and that was what I realized. I was like, oh, we're fucked. We don't have this leg of the wheel, right? I actually think we were fucked, but I was like, this is a lot of work to do from the ground up. So like we should bring in somebody and just kind of give away a lot of the upside. And so that's what we did. And I share this because I think that a lot of people are wondering right now, why am I not getting further? I think that's every business owner's question. And this framework has helped me so fucking much because I'm like, this is why we are stuck in a certain spot. And now when we build new businesses, like when we start building Acquisition.com, right, like we have done, we're like, we need the 3 legs of the stool. And so like my hiring decisions, I base off that. So right now I'm looking at where are the 3 legs, which one is the weakest, and I need to go get somebody to bring in to help us with that. What I have noticed to be the trend, right, is that in the beginning— and this is probably more relevant nowadays than it is any other, because I think that the culture of the internet and how easy it is to start a business, I think that's why this is the natural occurrence of what I usually see with businesses. And it kind of sucks because it's kind of backwards, but it's just the nature of the game. A lot of people in the beginning have the one leg, which is promotion. They know how to promote the shit out of something. They don't really have a good product. Okay. And they might think they have a good product, but a lot of times they don't have a good product because they don't even know what a good product looks like because they're new to business. Does that make sense? Like, it's not like they're trying to do harm. They just don't know. That's all it is. And that's because it's so easy to start a business nowadays that people just aren't able to put themselves in the seat of the customer and really think like, am I delivering more value than I'm capturing from the customer? And so that's why typically in the beginning you see that people have promotion, their product is like and they have like basically no people, or if they do, they have like, you know, it's a team of 5. So like anyone can have people on a team of 5. In order to get from 1 to 10 million, what they have to realize is that, oh shit, I know how to promote, but I need to make this product amazing. And the product is going to be what is delivered. What am I exchanging money for? Right? What is the good that I am getting for my money? And is also what is the experience around that? So product has 2 pieces. It has results and it has experience. So a lot of businesses, can be very experience-driven with low results, right? And so people will often stay longer, but then they will search for another solution because they're like, this isn't actually solving my problem, but I really like you guys, I'm gonna stay. And then with the other side, which is like you get a high ROI and a low experience, people will usually stay actually longer than that because they're like, wow, this is killing it for me. But they're also going to look for other options. They don't know what they're missing though. They're often like, well shit, I could never justify to replace them because they give me such a high ROI. But the reason is, is because the experience is low. And I can tell you that we've always built our businesses around a high ROI first, because I believe that is harder to do than to create a good experience. And then the experience has been kind of the follow-up. So we've always led with high ROI and then followed up with experience. And those are the two pieces that you want in product. So in order to get from being a $1 million per year business that's all promotion, you have to say, cool, now what do I do to deliver the absolute result and the absolute experience? For a, you know, a physical products business, they can get delivered the product, but what's the lead time? How long does it take? Do they get a receipt? What do they get afterwards? What's the follow-up? What's the keep 'em hot sequence if it's gonna be delayed? There's all sorts of things around that that create the experience. It's much easier with a service-based business to understand what this looks like because with a service-based business, obviously it's, are, is the customer able to achieve the result that we have said that they're going to achieve, right? Especially if it's a coaching relationship. And then what's the experience around that? How much support do they have? How fast are the response times? Uh, what do we do to go above and beyond? What memorable experiences do we create? And it's looking at all that stuff. And then in order to get from 10 to to $30 or $50 million, you really have to hone in on the people piece. And the reason I say that is 'cause I've seen a lot of businesses that you're able to jerry-rig it to get to $10 million with honestly not many skills in terms of leadership and management. And to be frank, I have seen people who have had bigger businesses than that and their intention often outweighs their lack of skill. So if you have a leader who truly cares about people,, they will get a lot further than somebody who doesn't care about people but has processes. I hope that makes sense. So the intent behind the founder or the person who is that third leg of the wheel is more important than their skill set. What I have seen is that often you're at $1 million, you have the CEO who is the promoter. In order to get to $10 million or to sustain $10 million, right, they need to bring in someone who's purely product focused. Okay. Whether or maybe decide if that's them. And then in order to go even further, they have to say, am I a people person or do I need to bring in someone for that? And that is what's going to be able to actually scale you because one, in order— like, if you study the greatest companies of all time, people need to feel secure and they need to feel like they can rely on their bosses and on the company. And a lot of the time, somebody who's in a promoter seat or somebody who is in a product seat, they're not focused on that and they don't have time to focus on it. And people in itself needs its own seat.. And so that is usually the role that's going to be able to get you to scale because scaling is usually adding people. And so you need someone to focus on the act of adding people, the experience of adding people, the expectations of adding people. And that's where a lot of people miss out is they try to, they try for too long to split roles. You know, if you're one person, you're doing all this shit. I don't know. I would never do that. Like you just, you're going to be running yourself to the ground for forever and there's just no fucking point. So what, so you can keep 100% of the upside? So you can be 100% miserable but have a ton of money like that doesn't make sense to me. So it's like give away a little of the upside, like share it. Also, it's like if you keep all the upside for yourself, there's nobody to celebrate with when you win. What's way cooler is bringing in people who complement your strengths. You can build that stool with and then you can celebrate with. It's way more fun that way. And so I hope that if you're stuck at the $1 million, if you're stuck at $10 million, or if you're trying to get to $50 million, and you haven't filtered your business through that lens of thinking. It's been really, really useful for me and it helps me in solving a lot of problems when I'm thinking about how to help the businesses that we are, you know, taking stake in get to the next level. It's always looking for that stool. If that stool is not there, assembling the stool and then further looking at which leg is the weakest so we can support it better. So with that, I hope you have a great Tuesday or Wednesday or whatever day it is. It is sunny and hot here in Mexico.