$250M Lessons in Bite-Sized Chunks | Ep 914

0:01Your husband has to decide whether a short term rift in the relationship with his father is a sufficient price for the growth that you'd like to have in the business. If you think that the relationship will be permanently damaged forever, then the follow-up question to that is, how valuable is a relationship that gets damaged like that forever from a one-time thing?

0:24Good morning so far? Yes? Okay, good. Alright, let's do the first one. So you sell fitness coaching, you're doing$250 ,000 a year, and you're not sure what you want to do with your life. Okay, go for it. so yeah i mean i'm preparing for medical school next year entering and i yeah i'm running this fitness company as well which i'm passionate about and ideally we would like to be at you know seven figures you know just running it and the medical school process is slowing that down but my end game is is really looking at the branding the long-term play like when i see what you've done, adds to branding around making the greatest impact preventative health and medicine possible.

1:05So that's kind of where I'm at, trying to figure out how to think about it all, the timing, the sequencing. What's the question? How do I go about this process of balancing both? Is that even possible? And achieving both? We already are achieving both. That's true. Yeah. The business has been declining though. Declining? Yeah. So it's, it's, it went from like 320 to 270 ish last year. It's still, yeah, small. So it might be the same size and you know, you missed a week or two. It sounds like I'm going to say back to you what I think the question is, which is like, should I quit medical school to pursue this fitness thing all in?

1:42Or does it make more sense for me to forego some income today to have MD next to my name so that I could potentially make more in the future? It's not about making more. I think it's also about, you know, my vision would be to write books, speak around the world and be an expert in preventive health. I've had to say all that without an MD. Wow. I mean, can you name me some of the big health experts that aren't MDs? Not at the level that I've thought of, like Dr. Hyman or Peter Atiyah. How many years left yet? Oh, I'm just starting next year. So that would be the plan. Yeah. Do your parents want you to be an md they don't care after all the success i've must be nice business well before i started the business i was pressured immensely but after all the success where i'm in a place where with the assets have accumulated gratefully i don't have to do it but it just it's calling me i've been volunteering in non-profit space and with what do you say split about dude i mean you're gonna you give what seven years or six more years and then i mean if you if you if dr t and the amen clinic and you know Huberman and all that stuff well Huberman's a PhD right he's not an MD and Tia is he an MD or PhD he's an MD yeah he's an MD yeah if that's like I want to be a doctor then go be a doctor okay you know like the trade is that you're going to give six years and you're going to under earn for the next six uh-huh and then you'll earn more later how would you build a brand around it in the greatest in the best way possible being a doctor being not a doctor going down that path would you document the whole journey what would you do for like brand leverage in the long like the best long-term way possible.

3:13I mean, what's going to matter more is that once you become a doctor, then that's like you're using the establishment as your brain credibility. So it's not a fair comparison for being real, right? It's not a fair comparison to say, would me with an MD be more successful than me without an MD? It's more, would me with an MD starting with a six-year not headstart, whatever the reverse of that is, be more advanced than me with six-year headstart without an MD? So which of those do you think? But you don't want to make money. I can't remember. What was the whole thing? The goal isn't like making it.

3:42This is why, just so you guys know, my biggest pet peeve in the world is that because, and I'll tell you why, I'll tell you why. This decision is so hard for you because you have nothing to optimize against. Like solve my life decision. What do you want? Don't know. Hard to solve. Right? If you said I want to make more money, cool. Easy leverage to pull. Make big number go up. Happy face. Right? If you're like, I want to have impact, then it's like, cool. Make the number of people that we're, you know, interacting with go up. Happy face. if it's I'm just not sure what I want to do with my life that's a you thing once you figure that out like figuring out what to do is the hard part getting it's the easy part and I think way more people get stuck in the just years of like I'm not sure what to do it's because they're afraid of making a decision they're afraid of the path not taken and so if you think about what deciding is decadere it's latin right which means to cut off and so which is which cut which future do you want to cut off when you're 85 and you look back which one do you regret more not doing them the done yeah great so you just have to eat shit for six years and realize there's not gonna make so much and that's the trade cool thank you thank you appreciate it yes sir hey Alex thanks so much um I just wanted to follow up to your question you don't need to be an MD to do all that stuff I'm an MD I went to Harvard Medical School there's nothing new before it was an indoctrination center by the way um he knows that yeah he has his own thing he's got you gotta do that for his Yeah, you don't need an MD.

5:04Yeah. But my question is, so I... He's already making money. Yeah, exactly. You're doing great. He's already making more than the starting salary working part-time. Yeah. Yeah. It's like, imagine if you worked full-time. Right. That's his journey. Yep. So I run a clinic that does mostly telehealth, and part of it is in-person, a highly technical procedure called TMS for depression. Okay. We do about 3.5 in revenue. It's our eighth year. I started right after residency. I would like to be about$5 million in revenue. And what's stopping me is, first of all, the in-person procedure is a highly technical procedure.

5:40It requires a lot of training. And not a lot of other referral sources know about it. A lot of people are depressed. But nobody really, people think it's ECT or you're getting electroconvulsive therapy. It's covered by insurance. We take all insurances. So for that, it's finding referral sources, getting trust from clinicians who want to refer, or direct-to-consumer marketing. And then for the telehealth portion, retention of clinicians who often quit and finding patients. So it's very hard to hire a nurse practitioner even who makes$190 ,000,$180 ,000. By the way, great career, a lot of money right out of school.

6:15But when they leave, we are devastated because they have hundreds of patients and we have to hire again really fast. So that's limiting our growth just off the top of my head. Okay. So what's stopping me is you would like more patients, not sure what source to get them from. You do have some issues where if staff leaves, that limits your supply and you want to grow by 30%. Yes. Okay. So right now, can you handle more customers or not? Yes. Okay. How many more customers can you handle? It's a balancing act between - Can you handle 30 % more customers? Yeah, balancing act between like I'm hiring two or three new clinicians a year.

6:49Okay. But we can never fill them and then they get angry and they're like, I signed up for full time. You're only giving me half time and we won't pay you per hour. So the way we compensate needs to probably be thought out. Okay. Yeah. I don't have any MPs that work for me. But I would probably try and ask like, what do you want? What would make this opportunity compelling enough for you to stay? Because we want to just continue to invest in you. It makes it difficult for us to do that if we're not sure if the investment walks out the door within 12 months. Now, that being said, someone stays five years, you won.

7:17You know what I mean? Yeah. You had a pretty good stay. So you are demand constrained. So it's basically, you need to get more patients. If you get more patients, you can fill up the NPs. If you fill up the NPs, they'll be more likely to stay because they actually have a full roster and they're making as much money as they want. Yeah. Okay, so we have a demand constraint, just from a focus perspective. Okay, so if you demand constraint, then you alluded to earlier, we can do, you know, there's an affiliate path. That's one way, which is you can find other providers who send you business. But you're seeing a lot of them don't know what you do.

7:45Obviously, you could solve that with education and outreach. We could do direct-to-consumer. The question is, the thing is, is that... We do Google and Facebook ads currently. Yeah. I mean, I like direct-to-consumer personally, just because most people in that space suck at advertising. So it's like not that hard. But the reason... So something of this is... I'm going to go like underneath of your question to something that I think will be more valuable for you, which is you have the Harvard medical, et cetera, background, and you're probably a very bright guy. You have to take how you advertise down a hundred fucking levels.

8:16I'm being super real with you. Yeah. There's a reason that I run every single piece of copy through Hemingway and I get it below fifth grade, ideally below third grade reading level. Because if someone has to pause when you say a word, you've lost them. Because you're already onto the next word and they're like, what did that other word say? And then they're trying to think like, what does this mean? They're not listening to what they're, they're trying to decode rather than just immediately absorb. And so I'm, I, the more I've been doing this, the more I'm an advocate of clear over clever. and for your marketing you said not your marketing for the business you said it's highly technical it's very advanced it's hard to train people up on this thing it's hard to explain uh how this works insurance covers it if i'm the consumer i care about sad face go happy face right and i care about insurance covers so if you say i'm harvard medical doctor i tell you you sad face i can make you happy face and insurance covers it and it's more effective than talky talk i'd be like fuck yeah.

9:14Right. And I think honestly, that's probably what's missing in the advertising and sales process, which is you need to strip away everything that you currently say that's medical and just speak to what the avatar, you know, the customer who is depressed, meet them where they're at. And I think that if you can advertise in that way, any of these channels will work. But I do think that if I were you in swapping places, I'd probably go the ad channel personally. Okay. How about telehealth? Is there something different there? No, same, same. Yeah. Yeah. I would say local is, if I had to pick like what's the easiest button, local services that are high ticket is like, it's hard to lose money.

9:53Okay. Because in person, you have so much less sophistication in a local market and local competitors. And so it's like, if you study the stuff that we do when we're competing on a global level and you put it in Kentucky, you crush everyone. It's like not even close. you just drop a pin on the map you say okay you know 25 mile radius and like you're just competing against everybody in the 25 mile radius you're probably the only harvard guy who's doing this in the 25 mile radius so you literally are boston unfortunately so i have mgh brigham they're all there whatever fuck it doesn't matter so like i stand by my original statement but like but the thing is is here's the good news is that the thing that makes you great right you're very smart did the medical stuff all that is actually is going to be everyone else's weak point right Because all of them, you probably know this, all of them have massive egos and all of them are like, well, if they can't understand me, then they're too dumb to be my patient.

10:44It's like, yeah, and you'll just be poor. Whatever. So as long as you can just basically quiet that part of your brain and turn on the how do I make this as simple as possible so they understand it, you'll still crush them. And then they'll be upset and assume you're doing something wrong or you have somehow made money in a way that they would not prefer. Right. Right. And so I will translate because you will start advertising. And the more of my stuff that you go through and work with us on it, the better it will work. And the more they will hate you because you're doing something that they don't do.

11:15And then they're just going to decide that morally they're superior to you because you've lowered yourself to advertise your business. Just as a prep. Thank you so much. Thank you. By the way, if you ever get like hateful comments, the easiest translation in the world is you live your life in a way that I would not prefer. It's just the easiest thing. Like, That's how I've gotten over many, many, many, many negative comments. Like, I can't believe he lives his life in a way I would not prefer. Okay. You can live your life whatever way you want. Yes, sir. Hey, Alex. Name's Zach. I sell property damage repairs, so emergency services for residential and commercial clients.

11:46So pipes break, wildfires, hurricanes. We do that kind of stuff. Do you 13.5 million dollars in revenue? 2.5? 13.5. 13.5. Nice. Want to be at, well, 100 million dollars is long-term vision, so that's the plan. What's stopping us right now is insurance covers most of our clients' bills. Right now, Landscape in California is they're exiting, dropping a lot of coverage. We've noticed over this last year alone that a lot of clients that have property damage aren't being covered. So we're going from being able to just start work to low-cost estimates and price bidding wars. I'm watching the landscape turn into kind of a red ocean in my mind.

12:20And I am wanting to launch, kind of get out of a red ocean, wanting to launch into a kind of Costco-like membership where we sell subscription access for low-cost services just as a way to try to swim uphill. You mean like a home services membership? Yeah, home services membership. Yeah, exactly. As an alternative to insurance, as most people aren't, or less and less people are being covered. I guess where I'm going with it is I've heard a lot about focus in this conversation or in the last couple of days. And I'm trying to figure out balancing focus versus needing to pivot when I have big questions about our industry and the viability of it.

12:54Real quick, guys. I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our Scaling Roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

13:29Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap. R-O-A-D map. Roadmap. Are you all in California right now? majority of our work's in California. We travel a bit for, but that ends up being in Florida for hurricanes. And so you're national. We travel nationally. Yeah. But I'd say 70 % of our work is California.

14:02Okay. Got it. Are you growing? This year? No. This year we we've taken a hit. What was last year? Last year was 13 and a half. This year it's a bit seasonal, but this year we're probably going to be closer to 10. Okay. What are margins? Bottom line is 35%. Okay. I mean, do you have a lot of fixed costs or is it mostly variable so that like at 10, Then you'll just still do three and a half million in profit. And at 13, you did five or whatever, four and a half. It's, yeah, a lot of variable costs. Okay, got it. And so to restate the question, it's, should I change my business model from what I'm currently selling?

14:33And how do you get customers right now? Right now, most of it's online. So like Google PPC. So PPC is the primary source. Like people search, I have an emergency, blah, blah, blah. Water break, you know, someone come help me. They call us. Got it. That's how you're getting customers now. And you want to switch the whole business to the membership model. Yeah, because we had customers originally calling years ago, covered by insurance, price insensitive clients. We could charge premium rates, make our margins. Now, without being covered, they're price shopping a lot more of their work. Our model isn't working well for that low cost.

15:07so two possible paths of solution and you know changing the entire business is typically is like in my opinion like the armageddon button of like let's blow the world up so it's like are there other things that we could do beyond that that's not blowing the whole business up and i think the simple one is like is there just another place i need to get customers who already have full coverage now if you think that all carriers across the u.s are now changing all of their policies then that's a systemic issue so then it's like okay then maybe maybe we have a model thing or is there a way that we can test sales process so that we can just get basically if we have first contact we can just close and if we can do that then it's like okay great so we're going to do a blend of cash and insurance we get some cash up front and then and then we'll get insurance on the back so the cash covers our cost to acquire and then you know basically we make our nut on the back the difficulty of switching to what you were considering just so that you can kind of see like okay this woman's really cute she seems nice and then you get home and she has pictures of every guy she's ever dated on the wall.

16:03And you're like, this is weird. And then she like keeps little clocks of their hair. And you're like, that's not what I expected. So the issues with the model that you're getting into or the considering is like, if you think that it is hard and competitive to sell when part of it is being covered, it is even more competitive when none of it is being covered. And selling a one-time solution when someone is in pain is way easier than selling a recurring solution when someone's not in pain. And I've seen a huge, huge number of businesses in the home services space, typically venture backed that are trying to do this membership model.

16:38I've yet to see someone who has done so profitably and well. What I have seen is guys who will come in to fix the HVAC and then get people into memberships. That works especially well. And so I think the easiest like 1.0 test for you would be continue to respond to the increase that you're getting that are emergency based, but then don't let that be the only sale. So once people, you know, once you do the work or whatever afterwards, it's like, Hey, by the way, let's get like, let's make sure that this doesn't happen to you again. And that would actually make a lot of sense. And if you can't close those people, then definitely don't switch the model.

17:14But I'll bet you that there is a very compelling offer that can be made on the back end of the emergency thing, because Because the thing is, it's emergency for you is there's like levels of emergency. But if it's Vegas and your AC goes out in the summer, it's a fucking emergency. And so in terms of sellability, it actually, the whole sales motion works the same way. Which we can walk you through. Cool. Thanks. Yeah, you bet. My name is Tyler. I'm the founder of Fluence, which is just an influence relations agency. We do about a million a year in revenue, but we'd like to get to a million a month, 12 million a year.

17:44I think the biggest thing that stops us is that we're trying to get our name out there a little bit more. So a lot of what we've been doing has been kind of just behind the scenes. We do influence relation services with marketing agencies, companies. We just provide them with influencers that they need. And on the back end, we manage influencers as well. And I feel like we're struggling to have more companies find out who we are and what we do. You should use influencers. Well, yeah, right? and we're also struggling to have influencers find out who we are what we do and i think a part of it is just because if you're a company and you get a lot of success from us you're not going to want to go tell other companies obviously and if you're an influencer you're getting a lot of deals from us you don't really want to go tell a bunch of other influencers as well and so i think we're struggling a bit to just get our name out there a little bit more and um i think that's our biggest constraint so your domain constraint cool so we just gotta like run ads why aren't you doing that i don't know yeah i haven't thought about it i think that would work pretty good and all you have to do is get one of your influencers to be the influencer in the ad tell their story run it to everybody else and i'll bet you with targeting you can get you know people over x followers things like that because the nice the thing is is like in a lot of ways you have like the easiest offer in the world you have following you don't have money i give you money and then marketers it's like hey you have no brand we have people with brand and audience let's have fun like i feel like the offer is like really straightforward it's very easy to understand you can say it quickly it's something for almost nothing like this is a really easy business to advertise you just run ads and so right and i guess one question so i we considered it but obviously we were kind of thinking of the more better new sort of thing and so the previous year we did about 250 000 in revenue and then we forex so you forex so what was okay so how did you get customers just organically really just word of mouth type of thing so there were some influencers telling each other about us kind of yeah but it was more that the influencers we worked with we just figured out ways to make them more money okay and so we were trying to like i guess i'm just trying to figure out as if do we keep doing that do we go into ads i guess it's just a weird yeah so with the business that you're in like more word of mouth is tougher like if you were a software and we could just like know that what's our viral coefficient and be like all right this is what we need to optimize towards and then we're blowing zillions of users through there, then like, yeah, I'd be like, we can just compound off of word of mouth, especially if it's like a consumer product, right?

20:07Yours is B2B on both sides, kind of, which does make kind of word of mouth a little bit more difficult. I would lean towards, like my initial gut is just immediately doing the ads thing. If there was a strategy that you were using to get the referrals, then obviously we would juice the hell out of that first. But I'm gonna guess, this is just me guessing, just having seen a lot of companies similar, there's gonna be a limited runway for that. It's just more likely you're going to have to develop a sales motion. Got it. That's the cold traffic. And I think we can make it happen because, like, on the million we made last year, we profited, like,$900 ,000 or so.

20:39Amazing. So we can make it happen. Okay. All right. Thank you, Ben. Yeah, you bet. Hi, everyone. I'm Shaggy. Shaggy. Yes. All right. See, you won't forget that. Yeah, Scooby-Doo. Let's rock. My real name is Shaggyella, but... Shaggyella. Yeah, but we'll go with Shaggy. So I sell beautiful custom porcelain veneers to anyone with healthy teeth. so we don't do dentures it's like the smile makeovers uh last year we did 2.4 million and i would like to be at 5 million revenue for each location across the nation how many locations do you have we have two right now okay our second one is struggling so i i know alex like you i was like laughing so hard because you're like oh yeah the we just have to open up the third and i want to open up my third here in vegas at the commons i know right and so it's like if the first one was here and the second one and then this one came up a little bit now we're less profitable then the answer is definitely to add a third yeah it totally makes sense right i know i'm crazy so originally like you know i i came in here because i was like i just need to find the perfect team to get me like across the nation right we're gonna open up so that way people have someone that they can trust and then doctors don't hate their lives because they're changing people's lives instead of just drilling, filling, you know, I'm going to solve.

21:57Well, yeah. And so that's originally what I came here for. And now I'm focused on revenue. So now I have to figure out how can we increase the revenue, more Google ads, more LinkedIn posts. Do I become the Alex of cosmetic dentistry? You know? Yeah. Yeah. So first off, great, you know, kudos on focusing on making more money for a model like yours it's absolutely a it's a it's a mousetrap thing so there's going to be a brand so you being the face of the brand I don't think it's a bad idea I think that's fine but most of the people who I who I see really succeed in that space are they're basically doing very regular collab posts with people who are prominent semi-prominent um showing off their their results you if you want you know offering some sort of discount in order for people to do that you might be able to just get away with it anyways and not offer a discount because some people are very happy with it.

22:50I don't know the space as well. Well, I don't know the sensitivity in your space to showing off the smile. In the plastics world, some people, depending on the plastic surgery, you know, some women aren't like as apt. Obviously it's co-ed for what you're doing, but yeah, collaboration posts in terms of building out the brand long-term, but in terms of increasing revenue, you got to get more customers because I'm guessing average case is what,$20 ,000, something like that? Yeah. 15 to 50. Okay. Yeah. So, you know, when I hear 2.5 million, I'm like, okay, so you did a hundred ish cases last year.

23:15So that's two a week between each locations. It's one person per week per location. It feels super slow. We can do it every day. Right. Yeah. Instead of being like, okay, I want to get across the nation. How long does it take to do one of them? A full day? Just four hours. Four hours. Can you do two in one day? Yes. Okay. You have the potential to do 10 a week. You could be at a million a month per location. You have 25 million just within your existing capacity and you're doing 2.5. You have a 10X without increasing any capacity. Like when you're like, I want to open a third location. It's like, for why?

23:50It's like, let's go from 2.5 to 25 with the two we've got. And until we're at 25, why bother? Like, let's just milk this. Because fundamentally, all we have to believe is that you can get 10 people in a local market to say they want to fix their teeth. All cash, correct? Yes. Okay. So you just have to have a local ad strategy and you continue to make the content because it's going to be a combo. It's going to be a combo because the brand is going to be for sure a huge source. You know, Instagram DMs, people saying like, oh my God, I've been following your page for however long. Just making sure that in your stories, you're regularly doing CTAs so that you can, you know, siphon that.

24:27The next thing is that people who follow you, you should immediately have your staff DM them. Just like a quick triage question. So right now, how many people do you have on Instagram who follow you? 6 ,700. Great. Do you know how many you get a month? No. Okay, worth looking at. Okay. You can find out in exactly 10 seconds. So 10 seconds from now, when you know what that number is, let's just say that you're getting 100 followers a month net. Basically, those 100 followers, that's three a day. You just have your front desk DM them all and say, hey, three new people every day. Are you here just to look at the smiles or because you're actually considering this for yourself?

24:58And right there, you just created yourself 100 leads a month. Maybe one out of four says, yeah, I'm kind of interested. Cool. Well, there's 25 qualified leads per month or 25 interested leads. So it's like, okay, well, there's 25 consults a month. That's like, boom, there's that right so i was just watching you take notes to make sure sorry no yes thank you so basically the great thing about your business is that it's easy as shit to advertise and because it's so visual right so you know it's literally like sad face happy face like it works right it also is so easy to do collaborations with and the the other thing that's amazing is that the margins are insane and and the other thing if but wait there's more everyone to compete against is not a business person and sucks at business.

25:41So it's like, my God. So yeah, all that to say, yes, go from 2.5 to 25. Don't open up a third location. We need to increase demand. One of them is you can milk your Instagram way more by doing collaborations, doing regular CTAs, and then having people who follow you, DMing them to see if they're interested. That's like level one. And the second is getting the ads going, which you need to do. And we're happy to walk what's cta called action thank you sorry i do know that and then the other as far as the collaborations do that with my personal page or with my business page you do all three do you have other doctors okay because you can do i think i think did anyone know how many i know you can at least for sure you can do three you need five yeah you can do five you do your your doctors you the location and the person okay do it all cool have a dance yes absolutely uh yeah so my name is Dominique and I'm with the Deep Pockets team.

26:36Deep Pockets. Yeah. We've essentially made 20 million in revenue across all different companies. So we have quite a small core team that kind of essentially starts. The company is called Deep Pockets? Yeah. Okay. Cool. But we've started like a bunch of different businesses. It's a holding company. We have an umbrella company called Swaggy Inc. But then we just start different businesses that we essentially have been doing really well in. Okay. So you guys start companies and incubate them. Yes. Yeah, right now, DeepPockets, this is our financial literacy program where we just sell educational content to traders and anyone who wants to like branch out for that for Forex.

27:14But we have a small core team. And what I was essentially asking for any business other than the CEO and like the founder, what would be the three core members or roles that any business would need in order to succeed? Because right now we do have some employees that kind of are flexible in what their roles are. and they're looking at like just being a key asset to the team, but don't have an actual job description or name for that. The first thing I'll do is I'll just kind of challenge the question, which is that it's not like, what are the three key people? So I could just be like, I'll reject the premise.

27:48It's more so what are the functions, what things must occur in a business and whether one person does them or 20 people do them, these things have to happen, right? At the most foundational level, you have to have someone who can promote, right? Someone who can advertise, let people know about the stuff, right? Now, that also technically includes conversion. So that one person who goes and gets customers. The other person is the person who builds the thing. Who's the one who's the head of product or the service, making sure that it continues to be exceptional. And then the third kind of function is who's running the day-to-day, who's operating, who's leading the team, who's continuing to basically build the culture, who's the one who's recruiting the people in, setting the standards for how the company runs.