10 Ways To Turn $1 Million Businesses in to $10 Million Businesses with Perry Marshall

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. The only daily show interviewing the world's top entrepreneurs seven days a week. And today we'll be breaking down 10 ways to turn a$1 million business into$10 million businesses. So, talk about these value bonds I brought to Perry Marshall and the EO Fire Studios. Perry is one of the most expensive business strategists in the world. He is endorsed in Forbes and Inc. Magazine. And today, Fire Nation, we're talking about the network effect for mere mortals. We will talk about the AI opportunity that consultants and subject matter experts are completely missing, the seven-figure dessert and oh so much more.

0:35And the big thing for sponsoring today's episode goes to Perry and our sponsors. Be ready to sell wherever your customers are scrolling or strolling on the web, in your store, in their feed and everywhere in between. Upgrade your business today. Sign up for your $1 per month trial period at shopify.com slash on fire. Over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, and HR into one platform. Download the CFO's guide to AI and machine learning for free at netsuite.com slash fire. Fire Nation, we have a special guest today talking about the 10 ways to turn$1 million businesses into$10 million businesses.

1:27because once every three months, one of Perry's clients sells their company for eight figures. Most of them do it bootstrapped and do not surrender half their equity to investors. And we'll talk today about some ways that he's helped them do that. So first off, Perry, how are you doing today, brother? It's beautiful being this show. It's been a long time and we're going to have a rocking good time today. We're going to have a great time. It was actually September 9th, 2014 was your first appearance on Entrepreneurs on Fire. And I've been doing it every day since then, brother, you are episode 4 ,623.

1:59And I'm never stopping because I get to talk to people like you. And speaking of that, I think it leads perfectly into the first thing I want to talk about, which is the network effect for mere mortals. Tell us about that. The network effect is the most powerful moat that you can possibly have around your castle. And most people think it's just for Silicon Valley, but the Silicon Valley version is Uber gets more riders, which attracts more drivers, which lowers the wait time, which attracts more riders, which attracts more drivers, which lowers the wait time. And by the time Uber's as big as it is, you'd be insane to go try to start a taxi company now.

2:43That is a ferocious moat around the castle. And it's just because the riders and the drivers, they're all using the app. And so Silicon Valley usually spends billions of dollars building these things, but we invented a version that I call network effect for mere mortals. And it's layering on usually service businesses, brick and mortar businesses. It's layering in digital feedback loops that do not cost a lot of money to build, but once they are built, become a moat around the castle. So a good example of this is I was working with a roofing company and they got a process down very, very brick and mortar to get good five-star Google reviews.

3:35And it was because they had their act together. And they got to 200 plus Google reviews in the Washington, D.C. area. And the first day they opened in Houston, they had 200 five-star Google reviews. And that meant that every new customer cost them less to acquire in Houston than maybe some of the best roofing companies in Houston on day one. And that's one little example of network effect for mere mortals. And I love how you were talking about the moat as well. Like I've been obsessed with a moat for over a decade now. Now, that's one reason why I said, hey, if I want to do a podcast, it's got to be seven days a week because I want to have the barrier so high that the competition, they just can't keep up with me.

4:25They're not going to want to keep up with me. And Amazon's done it. My most recent passion that I was talking with you about pre-interview, MicroStrategy, they've done it with Bitcoin. Like, I love these companies and these businesses that have that most. But we can't hang here because we get a lot to talk about today. You're about to share with us the most important tool that we can ever discover in business. I mean, this was invented back in the 60s, yet 99 % of entrepreneurs have ever seen it. What the heck is this, Perry? It is star principle. So who are the 20 % of companies that make 80 % of the money and the profits?

5:00It is star businesses. And here's what a star is. Number one in a market that's growing 10 % a year or more. That is where all the money is. and if you're not a star, your life probably sucks. Hey, you can run a taco stand and there could be 10 other taco stands in town and you can grind out a living doing that if you want to. But if you want to make money, you need to be the number one taco stand and tacos better be growing for whatever reason. And if you are not in a growing market And if you can't be number one, you need to go do something else. And this is true whether you are Toyota and General Motors or a lemonade stand.

5:56And what I just told you is just as true for a lemonade stand as it is for a Fortune 500 company. It applies at every size of business in any market. And the good news is you get to choose what market you're in because you get to choose what problem you solve. But you've got to be number one. It is way better to be a big fish in a tiny little pond. So I wrote a book four years ago that I literally have said a million times can be summed up in one sentence, which is become the best solution, the number one solution to a real problem in this world. because of what you just shared, Perry, I am forever going to amend that to become the number one solution to a real problem in this world that is in a growing market because that is the addition that is so true.

6:49So I love that you shared that. And listen, it's 2025, brother. I mean, it's been 11 years since you've been on Entrepreneurs on Fire last. We're not going to make that mistake again. I promise you that. But right now, which was not the case back then, AI, artificial intelligence is everywhere. It's an opportunity that consultants and subject matter experts are completely missing. What are they missing with AI? They either fear it and they're afraid to talk to it like it's a human. I'm not suggesting for a second that it's a human, but it really is powerful when you talk to it like it's a human.

7:23But either they resist it and fear it or they roll over and capitulate to it. When you use AI, you have to remain in charge. You can build a Lego house with Lego blocks and AI could make all of your Lego blocks. but you are the architect and you are the designer and you are the builder. And this is all about human agency and choice. And if you go back to before AI, John, I'm sure you would agree, there's a lot of people in the world who are sleepwalking through life. Oh, big time. And you can sleepwalk through life with AI. and it's just another version of following the taillights behind you on a crowded freeway.

8:29And maybe this sounds philosophical. It is so, so important. You as a human being have something that AI doesn't have, and you can use it instead of trying to compete with it. I love personally when people find their unique selling proposition, like they really get it. And you have this formula for risk reversal that nails our killer unique selling proposition. Tell us more. I call it the if, if, then else guarantee. And it recognizes that in every transaction, somebody's taking the risk. And most of the time, salespeople just try to disguise the fact that the customer's taking all the risk. And so it works like this.

9:16If you are the right kind of customer in the first place, if you should even be here talking to me, and if you customer cooperate with my process, which I have outlined for you, then you will get a definitive guaranteed result or else there is a penalty to me, the vendor, if it doesn't work. And all four stipulations have to be really concrete. So I had a friend who had a, they made pharmaceutical valves that got installed in tanks that made bioactive medicines where if the medicine was corrupted, it would kill the patient. And so very conservative industry. And he said, if you buy my$4 ,000 valve and you install it properly, and if it's late, if it's the wrong part, if it doesn't work right, if it's contaminated and causes infection in your medicine, then I will pay$40 ,000 to have a union electrician rip out my valve and install a competitor's valve.

10:41And he actually had to make good on that guarantee about four times a year. They budgeted$150 ,000 to$200 ,000 a year to make good on that guarantee because sometimes a mistake would be made. And they considered that a marketing expense. and it caused them to meticulously vet every system in their entire company so they were always delivering a quality product and it forced them to identify every possible thing that could go wrong so that the customer was never uninformed about what was required to make that system work. 98 % of especially B2B, they will never make a guarantee like this. and this is how you take the risk out of a situation.

11:30This totally may be off base, but what this makes me think of when you're talking about this is Domino's Pizza, believe it or not. When they made this claim and they said, hey, we will get your pizza to you in 20 minutes or less or it's free. And what happened was before they had that promise, what was happening? It was taking 45 minutes, an hour and a half. The pizza would be old. It would be cold. It'd be stale. It just wouldn't be great. It'd be soggy. And I know the guy was just like, the founder or the person that was running Domino's was just like, hey, we need to find a way to get these fresh pizzas to people still fresh.

12:02So we're going to make this claim and then we're going to find a way on how to do that so that people get piping up pizza fast. And hey, if we got to eat it sometimes, because we're there 25 minutes or 35 minutes, that's a marketing expense that we're going to factor in. Is that on base? That's absolutely on base. And so let's just take that Domino's pizza guarantee. And most people are selling something much more sophisticated than pizza. Why don't you have a guarantee? Why don't you put skin in the game? Why don't you tell the customer, if you follow these steps exactly and you don't get this result, then it's on me, babe.

12:40And Fire Nation, we're going to be talking about specific use cases like this when we get back from thanking our sponsors. EO Fire turns 13 years old this year, and I'm still loving every minute, interviewing amazing guests, having complete location independence. What's not to love? If you're doing what you love, there's nothing better than being surrounded by people who love it as much as you. And if you own your own business, you want to hire employees who love what they do to boost the overall success of your business. Plus it makes a pretty great place to work. But how do you find passionate employees who are a good fit for all of your roles?

13:12Zip Recruiter. And right now you can try it for free at ziprecruiter.com slash fire. Zip Recruiter is the hiring site employers prefer the most based on G2, in part because ZipRecruiter's powerful matching technology saves you both time and money. Hire experienced people who are excited about what they do with ZipRecruiter. Four out of five employers who post on ZipRecruiter get a quality candidate within the first day. See for yourself. Go to this exclusive web address to try ZipRecruiter for free. ZipRecruiter.com slash fire. Again, that's ZipRecruiter.com slash fire. ZipRecruiter, the smartest way to hire.

13:48When you think about businesses who are crushing sales like Mattel, it's easy to say they deserve all the credits. They've come up with a great product, they've nailed their branding, and they've got some great marketing. But an often overlooked secret is actually the businesses behind the business making selling and for shoppers buying simple. And for millions of businesses, that business is Shopify. Because when it comes down to it, nobody does selling better than Shopify. Shopify is not only the home of the number one checkout on the planet. They also offer ShopPay, which boosts conversions up to 50%.

14:22So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are scrolling or strolling on the web, in your store, in their feed, and everywhere in between. Businesses that sell more sell on Shopify. Upgrade your business and get the same checkout Mattel uses. Sign up for your$1 per month trial period at shopify.com slash on fire. All lowercase, go to shopify.com slash on fire to upgrade your selling today. Shopify.com slash on fire. No one really knows what the future holds for your business, not even you. Predictions are just that, predictions.

15:04Rates will rise or fall, inflation's up or down. Can someone please invent a crystal ball? Until we can actually see into the future. Over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, and HR into one fluid platform. NetSuite gives you one source of truth so you can have the visibility and control you need to make quick decisions. And with real-time insights and forecasting, you can see into the future with actionable data. If our business needed this type of software, I'd use NetSuite in a heartbeat because whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities.

15:44Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com slash fire. The guide is free to you at netsuite.com slash fire. netsuite.com slash fire. Perry, we're back and I want to dive into some actual real life use cases. I mean, one of your clients was a trade show vendor who got decimated by COVID. He slashed his staff from 25 to eight and then resurrected it and sold it for eight figures this year. Tell us that story. When COVID hit, I had a bunch of coaching groups and I noticed something very interesting that the higher level and more expensive the coaching group was, the faster the students were at chopping and cutting when the inevitable, like when COVID hit, there was a lot of people carrying a lot of overhead that they were dying.

16:44They were choking. And the less sophisticated clients dilly-dallied around and procrastinated. They would hope that that COVID would go away really soon. The really sharp student said, we're on it. And within days or weeks, I had one client who literally laid off his own sister. But what happened within the next three months was that the ones that took those measures really fast, when the world started adjusting to COVID, they started growing. Now, the worst business you could be in at the time was the trade show business. Like it was worse than concerts. At least you can have an outdoor concert.

17:30There's no outdoor trade shows. And so his business basically went to zero and he had to cut from 25 employees down to eight. The only reason he had any business at all was he had some corporate clients that were still, for whatever reason, renewing their annual contract. And so he cut that thing down to the bare, bare, bare bones. But then the trade show business came back. He used all of that leanness to dial in his systems better. And somebody came along and scooped him up for eight figures. Wow. I love hearing stories like this. I mean, Fire Nation, this is great. Now, let's talk about the client who eliminated friction.

18:13And friction can come in many forms. And they actually spiked their growth from 22%, which is good. to 56%, which is insane. I have a client who's in a very old, slow-moving, traditional industry, and I asked them a year ago, how long does it take to onboard a client from the very beginning to all the paperwork is signed and everything is ready? And he said 180 days. And I asked around, nobody was even asking for it to be shorter because in that industry, it's completely normal that it takes six months. I went to, I stuck my neck out. I went to the client. I said, if you cut the 180 down to 90, your rate of business growth will grow 50 % and you will have at least a couple of completely unpredictable, like something sails in over the transom that you could have never anticipated because you created this efficiency.

19:21He took my word for it. He believed me. He put his operations manager on it. A year later, they are down to 107 to 110 days and their business grew 56 % last year. And like you said, John, the year before they were only in the twenties. And, and basically what he told me was we found when we set our mind to doing this, we knew it was theoretically possible, but you know, nobody was asking for it. So we didn't do it. When we set our mind to this, we found so many cockroaches, so to speak, that all these little friction points, all these little irritations, he said, most of them were not even customer friction points.

20:09They were internal friction points in the business. Our sales reps are tied up doing tasks that really somebody in the back office should be doing. Things that appointments that should happen in one week are taking three weeks. And then three weeks later, the prospect is not as warm. And they haven't even had the big opportunity come over the transom, which I still know is coming. And so one of the best ways that I know to have a USP where you didn't have one, double the speed at which the customer gets their result. There's a Seth Godin quote that I've shared multiple times because I'm such a believer in it, which is the problem with the race to the bottom is that you just might win.

21:02By the way, you can use that, Perry, and just give Seth Gordon credit. That's the only request. Now you believe the absolute curse, the sinkhole of being a little bit better and a little bit cheaper is real. That curse. Tell us more. Oh, heavens. So there are two kinds of really successful companies in the world. And they are either premium priced products like Apple, who deliver an absolutely superior product at a premium price, or there are companies like McDonald's or Ikea that deliver an acceptable product at a really low price. And those are two completely different cultures, completely different mentalities.

22:04And most people try to do both. Most people try to be a little bit better and a little bit cheaper. And you know what? Most of them succeed at being a little bit better and a little bit cheaper. But listen, there is no money in being a little bit better and a little bit cheaper. There's just not. You either pick one or the other. And frankly, 95 % of entrepreneurs that would listen to a show like this, John, the only way to succeed is in the high end. You have to have a superior product for which you can command a higher price at a good margin. And that is literally the only way to make a lot of money in small business.

22:55Perry, you have dropped so many value bombs today. This is chock full of just great content. I know my audience is very grateful for that. Give us one final piece of advice. What is one thing you want Fire Nation to walk away with from our conversation today? I want you to enjoy freedom to create, invent, and reinvent every single day. And here's what I mean by that. I think that the Protestant work ethic, if you will, is so drilled into people's heads that they think they have to be working all the time. But here is what I constantly find. I find my best thinking, my best ideas, my best insights come when I'm in a flow state.

23:46It's not when I'm banging away at a spreadsheet or a keyboard. I could be pushing a toddler on a swing or I could be on a bike ride or a hike or swimming in the ocean or building an electronics project or like whatever geeks you out. So lately, I have been not only doing, but telling my clients, you need to carve out space in your life to do things that you enjoy and put you in a flow state. And this is actually more important, takes priority over banging away and slogging through. The solution you're looking for is going to come when you're having fun. Perry, if Fire Nation wants to connect with you, wants to learn more about you, what is your call to action for our listeners today?

24:40Go to perrymarshall.com slash podcast and sign up for the Perry Marshall Minute, which is a daily email. And if you like the concepts that I talked to you about today, I have a book called Detox, Declutter, Dominate that goes through those. It's only 36 pages. It's a very short, very, every word in that book was meticulously slaved over so that it would be as short and punchy as possible. It's called Detox Declutter Dominates on Amazon. Fire Nation, you're the average of the five people you spend the most time with. And hello, you've been hanging out with Perry Marshall and JLD today. So keep up that heat.

25:25For links to everything we talked about, visit eofire.com. Type Perry in the search bar. The show notes page will pop right up. and check out the episode we did on September 9th, 2014. I have no doubts. It was awesome as well. Perry, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you, brother, and we'll catch you on the flip side. Thank you, John. Hey, Fire Nation, a huge thank you to our sponsors and Perry for sponsoring today's episode. And Fire Nation, what can 4 ,000 of the world's most successful entrepreneurs teach you? How about how to achieve financial freedom and fulfillment?

25:59my first traditionally published book, The Common Path to Uncommon Success, is a revolutionary 17-step roadmap that will lead you to the lifestyle you've been dreaming about. This book took me 10, count them, 10 years of accumulating the genius of the world's top entrepreneurs. And you can get it all in one place when you visit UncommonSuccessBook.com. I'll catch you there or on the flip side. Shopify is home of the number one checkout on the planet. It's simple. Businesses that sell more sell on Shopify. Upgrade your business today. Sign up for your$1 per month trial period at shopify.com slash on fire.

26:39Over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, and HR into one platform. Download the CFO's guide to AI and machine learning for free at netsuite.com slash fire. Thank you.