Unveiling Digital Mastery: A Candid Conversation with Ryan Deiss

25:48And I've had a conversation about the next one as recently as last night. In business, momentum is everything. And so we're doing a pretty significant deal with a pretty significant company right now. and we got our first meeting Monday. And then this event runs Tuesday, Wednesday, Thursday. Friday, I have a, and I'm the one negotiating for us on this deal. I've got an all day thing. And then the next day I go to France for a month. So what do I do? Do I tell them when I get back from France, give me a week to get over the hangover and we'll get together? No. because I'd lose all the momentum, right?

26:34And we're even in the conversation talking about that. So momentum, if you've got leveraged sales, if you've got sales and you're making profit, you can go forward and grow. You've got momentum, which is critical to moving fast. And then last but not least, if you've got profit and transferable value, if you've got profit, you can go get a loan. You can get credit, right? You can just finance and bootstrap within, which we love doing. Or you can say, I've also got transferable value. So maybe I don't want to bootstrap because I would actually like to take some money off the table. Or maybe you say, maybe I'll just sell a little tiny piece of the company so I can take some chips off the table.

27:17Or so I can not have to reinvest and I'll actually have some extra cash to work with. That gives you options. So all of them combined allow you to create a company that has scalable impact. and does that sound cool? Like if you had all three of these things, would that be good? Yeah. It's really, your ability, the impact that you can make is no longer limited by any external force. It's only limited by what you want to do, right? What is going to hold you back when you have momentum, you're scalable, and you have optionality? And so when we think about this as having scalable impact, another way to really think about it in the center is you also have exitability.

27:54So when you have all three of those, you're also exit ready. you can achieve your ideal exit. If you don't, by the way, if you don't have scalable sales, this is when you feel like that hamster on a wheel that we talked about before, right? So, if you feel like that hamster on a wheel, you know why. I'm lacking scalable sales. You have a word for it, a term for it. You know what you need to fix. No bankable profit, all hat, no cattle, toothless chihuahua. Nobody wants to be the toothless chihuahua, but sometimes it's good to acknowledge reality so we and do something about it, and then no transferable value.

28:27That is when you are that dancing bear. You're big, you're powerful, people are intimidated by you, respect you, but bear stops dancing, bear don't get paid. So let's play a game, all right? Let's play a game called Find the Red. What I would like, so normally we're working with our Founders Board clients. We have this tool where it just helps to get really crystal clear on where are you struggling with right now? Because so much of this, I said this earlier, we're all reaching a level of our business where our problems become non-Googleable. Y 'all were in here when I said that, right? But even if we want to be able to Google it, we have to know what to Google.

29:05Half the time, we don't even know what to call this thing. And so we use this to kind of just get clear. So what I want you to do, get out a sheet of paper, please, or a phone if you don't have a sheet of paper. It's gotta be a sheet of paper or my slide doesn't work. All right? It messes everything up. No, yeah, get out some kind of thing. I do think it'll be a little bit easier. You know, yeah, any kind of advice. Right at the top, scalable impact blueprint. Then write down, skip a line, leverage sales. Give me three dots. Skip another line, bankable profit. Give me three dots. Skip another line, transferable value.

29:37Because what we have found is that leverage sales, bankable profit, and transferable value, each one of those is made up of three other kind of sub things. So I further want to distill down, okay, what does it look like to get more leverage sales? What does it look like to get more bankable profit? but what does it look like to get more transferable value? Because it's good to know that, but like now tactically, practically, how do I fix it? How do I get more of it? So let's talk about what that looks like. So in terms of leverage sales, right? The three things that we're looking at, number one, you gotta have a growth engine in place.

30:05I'm talking about this tomorrow morning, but you have to have a documented growth engine where you can visually say, this is how customers happen. I am shocked by how many multi-million dollar entrepreneurs I speak to or I ask them, how do customers happen? They don't have a good answer. People just show up. I guess referrals? I don't know. That's terrifying, y 'all. It's terrifying. You have to know how customers happen because you cannot optimize what you have not documented. One of the best stories to me of that is Reebok versus Nike. Reebok came and was super, super popular in the 80s. They caught on with Jane Fonda and Step Aerobics and that whole that whole era.

30:45And then they just kept going after every single opportunity that came about. And they went into all different kinds of things with no actual repeatable process, which is what the growth engine gives you. And ultimately got sold to Adidas and then sold to a private equity company. And I did an interview with the founder a few months back and he's just doing okay. Then you got Nike that said, here's what we do. We go into a new sport at a time, and we totally dominate the grassroots. We give shoes to all the coaches. Then we get the key players, and we get those people to be endorsers. And then we go into clothing and all the other things.

31:32And then when that's done, we go to the next sport. And if you read Bill Knight's book, Shoe Dog, you'll see, I think he ended up at like$40 billion net worth or something like that. He's become a global powerhouse, right? So that to me is the difference between, yeah. Now, yes, I think the other guy had the better strategy because he saved a lot. He saved a lot of taxes. Don't. You also need authority amplifiers and you need a scalable model. Let's break down what these mean. So growth engines, we talked about it. Our ability to generate a consistent, predictable, and growing flow of new leads and customers each and every month, largely on autopilot.

32:08So I'll ask the same question that I asked last session. Do you have at least one documented growth engine that's responsible for at least 10 ,000 in sales at least three months in a row that you believe can scale to 100 ,000 a month? Okay? Do you have a six-figure flywheel? Do you have a seven-figure flywheel? If you've got a six-figure, yellow. Seven-figure, green. If you say, ah, but I know I'm making this much, but it ain't documented, red. Okay? And so I would go, I'd write down one of the most powerful things I ever did in my entire life. was the document, How Customers Happen. If you haven't heard the story of the million-dollar napkin, I was, boy, on the edge, on the edge, about to go totally bankrupt, made myself a deal.

32:47If I can write down on this simple napkin how customers happen, then I will work my napkin plan. And if I can't, then I'm going to go declare bankruptcy and see if I can get a job. So sitting there at that bar at the Hilton Anatol in Dallas, Texas, I drew out the first, what became the five-step funnel. All right? and it was start with self-locating offer, go into the lead magnet, triple R, like all that stuff was on that napkin back in 2006. Okay? What I did, I documented my first growth engine. Now they look more like that. Haven't gotten that much more sophisticated. So it can be Post-it notes on a whiteboard.

33:23It can be fancy, pretty flowchart software, or it can be a napkin. The point is you have to document how customers happen. I'll give my session a plug again tomorrow morning. You should be there. Okay? You should be there tomorrow morning. I'm going to talk about how to go through this process. So if you put yellow or red, we will have that green by tomorrow morning. In terms of authority amplifiers, our ability to clearly communicate our value through multiple channels. Multiple channels have become known as the de facto leader in our industry. This generally looks like content and social. Content and social.

33:58Content and social. These are the authority amplifiers. I think today there's a lot more people who know Roland than who know me. That was not the case, you know, five to ten years ago. Because Roland is super active on social. He also just looks better. Better looking guy. I think you all see that. Right? No. I think we're equally gorgeous. So is our content and core messaging driving organic viral growth? Okay? If what you're doing is not driving organic viral growth, you need some authority amplifiers. You're in the right place to get some of those. Scalable model. The question I'll ask, could you metabolize a two to three X spike in sales?

34:41So let's say you get it all right. You take the stuff that you learn here, two to three X spike in sales. Could you do that without materially impacting your profit margins or the customer experience? And you'll find this actually happens. It happens when you go, if you're e-commerce or product sales and you go into retail, they will make you prove to them that you can create that your supply chain will handle the scale that they require to go in. So, like, some of the biggest opportunities that get missed are missed just because you don't have this. Just two days ago, I was talking to somebody that said, like, we had one of our companies that's got about 5 ,000 to 7 ,000 customers a month that we're adding, and they said, we want to do business with you, but you need to be able to handle 850 ,000 to a million more customers a month.

35:29And that's like, that's the no shit. Holy crap. You know? And of course, I was like, well, of course we can handle that. And then I went back to these guys and I'm like, holy crap. But that's really important. And so it's not just words on paper or digits, bits on whatever digital stuff is. It's actually real. This will stop you from the opportunity of a lifetime if you don't have it. You've got to be able to say yes. And even if you don't know, like, at the minute how you're going to do it, you have to be prepared to say, I know we can make this happen because I built this in. Is your sales and marketing limited by your capacity to fulfill?

36:10Or do you have ample room for growth? Okay. You're all here. You're at a marketing conference. What if it works? What will break? Go through that thought experiment. What will break? And seek to fix it before it breaks. Which happened in a lot of our initial, especially the very first acquisition we did together. Yep. I remember the conversation. Ryan said, when we were talking to the owners about acquiring him, and Ryan said, well, can you handle if we 5X the number of customers that you've got? The guy's like, of course we can, just like we all would, right? We went in, and Ryan said, and this was kind of new to me back then, because he's way better at marketing than I am, and he's like, we do this all the time.

36:51We go into companies that we consult with, and we help them drive a whole bunch of additional leads and customers, and then the wheels fall off, quote, unquote. And he's like, so we just want to be sure in this deal the wheels don't fall off. And sure enough, what was it, 30 days, 60 days after you did the first campaign? They didn't fall off, they exploded. They did, they totally exploded. The company, it actually destroyed the company. Yeah. Oops. So, red, yellow, green. If you happen to bring colored markers up before you use those, I'm guessing you didn't, so I would just write in the word red, yellow, or green.

37:24Next to each of these, okay? Next to each of these, write it in. Let's talk about bankable profit. Here we're looking at, do you have a$0 budget? Do you have margin maximizers in place? And do you have your cash flow waterfall? Okay,$0 budget, that's just your ability to create budgets and expense projections and actually hit them, okay? Do you have a budget ahead of time that dictates where the money will be spent, okay? And do you consistently hit your targeted expense ratios? If you say, what is a targeted expense ratio? You're red. Love you mean it, but you're generally red. One of the things that we do with our clients, we've got just a very, very simple expense ratio analyzer.

38:08It sounds nerdy. This is one of the coolest things you will ever do. It's just a basic spreadsheet, but it says for the main expense categories, what are we going to decide ahead of time those expense ratios are going to be? but notice that one at the top and in the middle, target profit margin. You start with how much money are we going to make and everything else gets spent out of that. Okay? By the way, when you do this stuff consistently and you've got a track record of doing it, when you go to either sell or raise money, either from investors or lenders, it makes it just a piece of cake. It really is.

38:43And we made this, I mean, look, you can get very complicated in your performance and stuff like that. We made this to be entrepreneur friendly. And by the way, I know we got some founders board members in the room who haven't done this yet. We're going to make you do this this coming month. We're going to drag you kicking and screaming to get these things done because a lot of you need to go into 2023 knowing where your money's going so you can do projections for next year.

39:06Margin maximize, our ability to leverage value ladders, create a pricing and positioning. Basically a lot of what I talked about this morning in my keynote to maximize gross margins while maintaining or even reducing operating expenses. Some questions to ask, have you raised your prices in the last 12 months? Everyone else has. I would join them. Okay? And have you tested high-ticket Slack adjusters designed to increase average customer value? Are you covering that in any session here? Because if not, at 4.15 today, I have a session that covers all of that, too. You should go to his session at 4.15.

39:38Is that in here? That's in the Keep ballroom. Okay. Particularly price, I mean, all of us are paying more. Yeah. For everything we want now, and even things that we don't wish we wanted, like new water heaters when they break and things like that. Oh, yeah, yeah, yeah. That session, yeah, that's good. Yeah. I said you'll need to stay in this room. All right, let's just skip out on that one. That's going to be really good. And then your cash flow waterfall, right? Our ability to cover all our operating expenses and asset investment needs while still having cash left over for reinvestment and distribution.

40:07The best signal that your business is strong, is healthy, is the presence of distributable cash. It doesn't mean you have to distribute it, but if it is available for distribution, and the only way that we're going to do this is if you have a cash flow waterfall. Have you built up a six-month emergency fund? Are you building retained earnings for future investment? Are you able to make regular distributions? Now, the cash sweep waterfall, I'll kind of walk through this really quickly, but I want you to imagine if you've ever seen kind of one of these like champagne glass pyramid things at a wedding, right, where it goes in, fills up the first one, and then goes down, down, down.

40:44That's how I want you to think about your business cash. Okay? That's how I want you to think about your business cash. So we've got five cash flow waterfall accounts. Every business needs to have a basic operating account. I'm sure you got this. You should have a tax account. Tax account is where money goes before it can be gone. You got to set that tax money aside. One of the biggest mistakes ever made in business was getting behind with the tax man. Got a phone call on a Thursday from my accountant. Wow, you had a really good year last year. I know it's bad when your accountant compliments you on the great year you had last year.

41:20Hey, you set aside money for quarterly, right? What are those? I owed an IRS about a quarter million dollars. Didn't have it. You want to set it aside. That was a scary day. One of the only times in my adult life I sat on the couch and cried. Emily, you remember. You were there. My wife. You need to have an emergency fund. You need to have a sweep account. and then you should have some sinking funds. So let's talk about what these things are, shall we, very, very quickly? Because I want you to be able to make some of these things if they're red or yellow, I want you to make them green. Okay? So everything starts in an operating account.

41:56So all the money that you make, it goes into an operating account. I'm going to encourage you to maintain at all times one month OPEX, one month operating expenses in that account. So if you didn't make a single sale for the rest of the month and not another dollar, you could pay all your bills for the next 30 days. Okay? Now, everything over and above that, right, some amount is going to have to go into a tax savings account. How much? Ask your accountant. Ask your accountant how much you should be setting aside for taxes. Anytime money comes in, tax money goes over there. Now, everything over and above the operating account, everything over and above that one-month OPEX, that should then begin to fill up an emergency fund until you've got about three months in there.

42:35Once you've got three months, you can start building it slowly. I like to get it to at least six months. But then it can go into a sweep account. A sweep account is just where money goes until it goes somewhere else. Because I never want to leave money in one place. Because if you leave it in your checking account, you will spend it. Some common sweep accounts, you could have an account where you're going to build up some cash for acquisitions and investment. That could be one. Maybe you need a sinking fund. You know you got a big expense out on the horizon. We're doing a big event. It's going to cost a million dollars.

43:06We should save up for that. Okay? I also recommend that some of it go into a distributable cash account to go to you and your other shareholders. Okay? The point is, money comes in and it goes somewhere. You need to put this in place. Cash flow management is the thing that will cause your company to stall out. So again, red, yellow, green. What you got? Got a budget? You have some margin maximizers? Cash flow waterfall? All right? Red, yellow, green. Let's do transferable value real quick. You've got to have an operating system. Transferable value comes in two forms. You have to be able to transfer the value creation process from yourself to your team.

43:48The value creation process has to be transferred from you and all of your awesomeness to other people. That happens through systems and through having a high output team. The second part of transferable value is the value itself transferring to somebody else. You've got to have that operating system. Having the core value process documented. that's what I'm gonna be talking about after this one. The question that we ask our clients, could you take a 30 day vacation off the grid, come back and your business still be there, ideally better? If the answer is no, you don't have an operating system installed.

44:24Systems, by the way, are not checklists. There is more to building an operating system than just having a bunch of checklists. I'm really proud of this guy, Josh Taylor. He wasn't able to make it, but Josh is one of our Founders Board clients. We're like, we want all of our founders board members to put a one-month vacation on the calendar and tell your team you're going to do it. It's a forcing function. Josh is like, I'm going to put two months. He did it. He did it. Came back. While he was gone, his team broke all their records. That's freedom, y 'all. Again, three o 'clock, clone yourself.

44:55I'd be here for that one. That's your big boy.

45:01Is the team able to manage and scale itself? If you don't have an operating system, they won't. These are sequential. to team members consistently hit the goals that they set for themselves. Amara, one of our clients and now one of our advisors, we've got a tool called the High Output Team Canvas. It saved your 80 grand, right? Looks like that. It's pretty simple. I'll talk about that more in the next session. And then finally, exit-ready structure. Do we know what our business and our assets are worth? Does the structure allow for individual assets divisions to be carved off and sold separately?

45:33We call this an orbital portfolio model. So the way that we're structured, the sun at the center, that's the holding company. So that's where Roland and I live and work. The planets are all the underlying brands. Digital Marketer, Scalable Company, Epic Network. The moons are the assets. Traffic and Conversion Summit was a moon orbiting around Digital Marketer. You sell the moons, okay? Sell the moons. Don't sell the planets, and definitely don't sell the entire solar system unless somebody's offering you a whole lot of money. So another analogy that we use is the goose and egg structure. Sell the eggs, not the goose.

46:06So having, this is pretty advanced level stuff, it's why it's the last one, but having an exit ready structure in place is something that's gonna be really, really, really important if you wanna have transferable value. You don't wanna be put in the situation of, I've gotta sell it all or nothing. Sell it all or nothing at all. You don't wanna be in that situation. So what I would encourage you to do while you're on the break is to think really hard, like where am I red and where am I yellow? Where am I red and where am I yellow? because we gotta get the red out. Okay? You gotta get the red out.

46:36But now you will have terms, you'll have names, you'll know what this different stuff is called. So, just to recap, all right? Be really clear on the exit that you wanna make in the next 12 months. Which of these five exits do you wanna make in the next 12 months? Then, which exit do you wanna make in the next 36 months? Where do I wanna be in the short term and in the medium term? Okay? Which exit do you wanna make? How do you ensure that you can make the exit? It goes back to this. We got to get the red out. We got to turn red to yellow. We got to turn yellow to green. All right? And so these are all the things, you know, we're going to talk about a lot of this here.

47:13Obviously, if this is the kind of thing that you want our more direct, individualized help with, this is what we do for all of our founders board members. And so I've talked about it, mentioned it briefly at the last one, but I said before we talked about it. If you were looking for a mastermind to help you scale, that's what we do. We have a lot of fun doing it. And I'll tell you a dirty little secret behind why we do this, we're also looking for businesses to buy and partner with. Right? And so for us, this is our opportunity to kind of, you know, inform and drive the M &A side of the business, which I know Roland talks about a lot as well.

47:49So anything else you would add? No, I think that's it. That's what is the QR code thing. How does that work for everybody? I don't know. I don't know how this technology works. No, that is, so that will take you to an application. So if you're interested in applying for Founders Board, learning more about it, the first step is to apply. Because if for some reason it's not a fit, we can tell you and give you your time back. So feel free, you can use that link to apply now. We also have our crew in the back. We'd love to chat with you. Sound good? Anything I missed, forgot? All right, well let's hear it for us.

48:37Hey, Roland Frazier here. If you're looking for a way to grow your business exponentially, to get more customers and ultimately increase your wealth, there's no faster way to do it than to acquire other businesses that already have the customers, products, services, teams, and media that you want. If you want to double your sales, just acquire a company that has the same sales as yours. It sounds simple, but far too many people end up starting new businesses that fail and forget that they could skip all the hard stuff and just acquire one that already exists. There's a reason why private equity firms, family offices, big companies like Apple, Google, and some of the smartest entrepreneurs on the planet do not start new businesses from scratch.

49:20They acquire already successful businesses. And when they do it, they instantly increase their sales, their profits. If they want market share, they increase that. They can get new products and services to offer all instantly. Hey, look, 90 % of new businesses fail. 90%. Why not acquire an already successful business and increase your chances of success by 900 %? What most people don't realize is you can acquire highly profitable businesses with no money out of your own pocket in pretty much any country in the world, regardless of your credit and without having to go find a bunch of investors or needing any experience.

49:57Look, I've been acquiring businesses for over 30 years now, and I cover the whole process in my Epic Investing Strategy Training, and I want to give it to you 100 % free. Just visit businesslunchpodcast.com forward slash epic to get your free access to my Epic Investing Training right now while it's available.

50:23ever wondered how some people build real wealth through acquisitions while others just sit on the sidelines well i'm here to tell you it's not about luck it's about having the right system the right deals and the right guidance and that's exactly what we give you in the epic deal fast track if you've been thinking about buying a business but you keep getting stuck whether it's finding the right deal, structuring the financing, or negotiating with sellers. You are not alone. Too many people waste months, even years, just thinking about acquiring a business while the real opportunities pass them by.

50:56The Epic Deal Fast Track is not another course. It's actually an implementation program, and it's designed to get you from the idea to the acquisition in just 16 weeks or less. We work with you one-on-one to help you find, fund, and close your first or next deal. And once you do, we're going to plug you into our elite Epic board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the deal flow engine. So you always have high quality off market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket.

51:39And number three, are closing an integration system so that you don't just buy a business, you actually successfully run and scale it once you have acquired it. Plus, you'll have direct one-on-one support from an Epic Deal Advisor every step of the way. And that's people that have actually come up through the system and done these deals themselves. That's the only way to become an Epic Deal Advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines. just text I'm in to 334-458-9034 and we'll get you in. So text I'm in to 334-458-9034. We'll get you in.

52:17No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now. I'll see you there.