What is the Inverse Entrepreneur Effect?

0:00We're going to talk about what the inverse entrepreneur effect means. And this is a new concept. And I saw a creator channel talking about this. But if you think about business in the old days, business was like a pyramid going up, right? You build the foundation of the business and you add more and more people, more and more people. And then at the top of the pyramid or the hierarchy, you can say is the CEO, right? But now that pyramid's actually been flipped around where let's say we talk a lot about creators like Emma Chamberlain or Logan Paul or Mr. Beast, right? it's actually inverse pyramid now where the creators are the very bottom and then they start to add resources on top of it but everything relies on the creator and so if the company if the creator gets sick or like you know let's say god forbid they get injured or something everything kind of like crumbles right and so that's kind of the the trouble with this new creator economy this this new inverse entrepreneur effect that we're seeing come into play pretty much what you're saying is the companies are becoming reliant on the brands correct like if it's a Tony Robbins, hopefully he lives forever, but people usually don't live forever.

1:00I haven't met anyone who has yet. But with Tony Robbins, if something happened to him and God forbid, there goes the business, right? In essence, same with LeBron James or Neil Patel or whoever it may be. Now you could end up weaning yourself away. Like Ogilvy ran the ad agency Ogilvy and David Ogilvy is no longer around, but yet the agency is still kicking and growing. But same with you and me, right? And I'm assuming the similar goes with Tony Robbins and other people, but Tony has to go on stage. Eventually over time, you figure out how to get your business not to be as reliant on you. It's still to some extent relying on you, but you can reduce how reliant it is on you overall.

1:43Yeah. I'd be curious to actually see a case study on LVMH with Bernard Arnault. And those are all people that founded those companies in the beginning. And those are all names now, right? but nobody really knows who those people are. But point being, if you're going to - I don't think it's reliant on him at all. No, it's not reliant on him. I'm just saying he's a good example of making everything not reliant on him or the brands, the people that started. Yeah, and if you look at a lot of the brands that he's pushing, some of them are brands that are older than like 60, 70 years. Like they're really historic brands.

2:13So people don't know them by the founders. They know them by the brands and they're iconic. Also, when a brand is that old, it starts living on. if it's already survived 40, 50 years and people love it, assuming they don't do something silly, usually can survive. So that that's known as the Lindy effect. So what that means is if something's been around for a hundred years or so, it probably lasts for another hundred years. That's what Neil's talking about. So if you think about the book, how to win friends and influence people, it's been around for over a hundred years. It'll probably be around for another hundred years or so.

2:41Now what's practical here is if you're a creator, so Neil and I talk about needing to build a brand defensible mode, having a dancing monkey, maybe you don't need to be the dancing monkey, but maybe there should be a dancing monkey in your company in some cases, in a lot of cases. So let's say you start off with this inverse model, this inverse entrepreneur effect, right? What you can do is you can start to reverse it into the pyramid. So eventually you can make it where it's like, almost like a, like one of those, what are those things called? The little time things. You know what I'm talking about?

3:10Hourglass. It's like an hourglass almost like you have two pyramids, right? And so maybe you start with the inverse pyramid and then you flip it over into a normal pyramid. And then you build business operations around it. Because again, when you look at like a Logan Paul with Prime, him and KSI, his partner, they're both influencers. They drive distribution, but they're not the operators. And so even when you look at, I don't know, what else is there? There's a lot of these cases where people create these products and they're not the operators. And so just build a nice operation around you and hire great people that know it.

3:41And these creators know that they know what they don't know. And they're really good at going about asking questions, the ones that are scaling about, they're just like, Oh, I don't know this. Can I add value to you? And in return, can you just tell me about what I need to know about scaling this operation? And that's all it really is. Yeah. And the goal of any business is not to be relying on any one person. And the way you do that is you create the systems and processes, you know, meta doesn't want to be relying on Mark Zuckerberg. Microsoft doesn't want to be relying on Bill Gates. Tesla doesn't want to be relying on Elon Musk.

4:14And once a company gets big enough and they create the systems and processes. And a lot of people do, right? Because a lot of these creators aren't just creating videos and making money off that. They end up creating real businesses with products and services that continually live on. If you look at Logan Paul, it's not just, Hey, I'm Logan Paul, check out my podcast or my videos. He also has products like prime that will continue to live on past him or, you know, hopefully if it continually just grows and they do the marketing and they do more partnerships with sports teams, et cetera. I forgot the numbers from prime, but wasn't it like something?

4:50Yeah. 250 million. That's a lot of revenue. And they're doing partnerships with, uh, was it Manchester United or Arsenal or one of those bigger or both? Yeah. Yeah. So they're doing partnerships with really big brands to get their product into many more people's hands and not rely on KSI or Logan Paul who originally you created the business. Yeah. I mean, in business, this is known as key man risk. So it means that you want to try to de-risk your company as much as possible. Otherwise, if you do ever try to sell your business one day, you might have to stick around for quite a while. So that's another thing to keep in mind.

5:23So that is it for today. Please don't forget to rate, review, subscribe to this pod. We'll read it out if it's a really pleasant one, like the last one from Sunny. And yeah. Oh, and the event levelingup.com slash founders happening August 7th to the 9th. That's in Beverly Hills. Hang out with Neil and myself, other great entrepreneurs. It's application only. Again, levelingup.com slash founders, and we'll catch you later.