Before You Run Ads, Fix This One Thing First | Ep 964

0:00I've been in business for 14 years. Last year, our companies in total did over$250 million in aggregate revenue. I co-own the platform School, which is over 22 million users. And School's a platform that allows people to start and scale digital businesses. And so I have access to quite literally millions of data points on what makes digital businesses work and what doesn't. And so in this video, I'm answering your questions about how to scale. I sell dreams and I built an ecosystem to make it happen, essentially. What does that mean? Let's get into it. I start off flipping homes. Okay, thank you.

0:30I started off flipping homes and it got to a point where I saw hope and opportunity. It works. I flip houses, got to a certain point. We got about 30, 40 consecutively every year in the same market. Revenue is about four mil. Just an outline itself. But then it got to a point, just too much competition. You had a hard time being profitable per flip. So then develop a model where we convert competition to collaboration, started a contracting company instead of buying the product, becoming the product, and then started a coaching channel where I feed this ecosystem. Vertically integrated HVAC company, roofing company, dumpster company, contracting the whole nine yards.

1:07So I'm teaching people how to do it, and I'm giving them the process on how to do it. All that is different revenue drips for me. What's stopping me? I got too busy too fast and owner-operated for a long time, up until about three months ago. hired a COO now transitioning a lot of the operations stuff onto her really I don't know what the fuck I'm doing because like I'm trying to transition myself out I don't know how to run a COO are you trying to transition out of the role or other company a little bit of both so out of the role because to be honest I don't really care about the revenue growth factor I care more about the impact so I promise I made myself is I want to impact at least five like one million lives before I die so how do I do that I'm not going to be doing like flipping homes at a small scale.

1:49But I built a company that's so based in locality that I'm trapped within it. Because it's so local, my team is there, my resources, my companies. The coaching program only makes sense because it's local. But because of my market size, there's only so many people I can get consecutively every time unless I keep dropping prices, the opposite of increasing price. So what does that mean? I have to go to a national stage. How do I take this coaching at a massive scale? And that's where I'm stuck at because I'm too busy in the operations. and that's where Amy came in as a CEO to kind of help me get out of it and focus on the next phase of the origin story.

2:25So dude, I appreciate the national scale vision. I think you could probably get to, given the ticket size and how you can monetize the customer in all these hundreds of ways, the reason you would do that setup is so that you could dominate a local market. You're not dominating a local market right now. You're barely getting started. And so you could probably realistically get between Fayetteville and Raleigh, you could probably get to$100 million a year. Just in that market alone. Yeah. And I think if you just take your eyes off of like, I want to conquer the entire world, it's like maybe. But like, in order to conquer the world, you have to conquer a country first.

3:02Right? And before you conquer a country, you got to conquer a city. And right now you haven't conquered a city. And so what happens is when armies overexpand, they collapse. And so you need to fortify your base better. Because 10, dude, 10 a month is nothing. So what do you recommend? Do I try to automate what I have? Or do I just put myself more into it? Yeah, I think you should just ignore the national thing. Yeah. And let me just ask the simple question. Can you, could you sell 20 people a week right now? Not like, let me say it differently. Can you handle 20 people a week? We will be soon.

3:37Okay. That CEO has kind of taken over. So you could have an 8x increase in sales within your current infrastructure. So that would take you from four to 32. This is a revenue problem, not the impact problem.

3:53Do you make content? I don't have time. Yeah. If you couldn't tell. Yeah. But that's where I'm slacking the most. Yeah. It's the content. It would be far easier for you to just make content about the stuff you're doing, impact millions of people that way. Yeah. Then try and get every single person in America to be a home flipper. And that's not achievable anyway. I agree. It's more about the financial education, like selling the dream of like, you can be something more than just what you think you are and where you came from. And you can make content about that and you can distribute it for free with leverage.

4:26It's a beautiful thing. And so like you can be legit because you have a legitimate business and then you can talk about it and help all these other people. And then you just keep growing this thing. Okay. So double down locally. Yeah. Yeah. You went through whatever the hell you did to go through and build all that stuff. It's like you just built it and you're like, you know what? I'm going to leave it now. I'm going to do another thing. It's like, no. I'm glad you brought the COO in. But it's probably so that you can do some of the stuff you're doing now. So you can do the stuff you know you should be doing, but you're not.

4:55And so if you want to do the impact, you see you don't have time. You have the COO. Go make some content. It's not going to take that long anyways. And that way you can scratch your impact itch. And then for everything else, it's like you need to learn how to run paid ads and sell shit. because like you for sure can sell 20 50 100 people a week in a local market no problem for the offer that you have should i increase pricing to make it better or should i keep it where it's at given that it does feed my other channels you probably have a better time just like charging 100 grand and saying you'll do that stuff for free or at cost yeah but yeah i mean can you raise prices it's just like can you sell and can you like yes you could typically an offer like Like this is a hundred grand.

5:32Yeah. So usually they have a done with you style offer that's between 15 and 25. And then there's a total turnkey offer, which is a hundred thousand dollars. No one on my market can afford that. That's the problem. That is just not true. Dude, no one in your market that has heard of you through word of mouth of you emanating your presence into the workshops that you run once a quarter or whatever can afford it. If you run ads, yes. It's just that like how many people show up to your thing? the venue holds 55 is packed out every time yeah 50 so you have 55 people a month that come in the doors every three months yeah every three months right dude so it's like the way this looks in reality is you'll bring 100 people in the room and you'll do three of those in a day and you'll pitch and you'll close 10 15 you'll close three or five at the you know like the 100 K and you'll close a handful at the, you know, call it 15 to 25 K.

6:27And that's, that's the business. So you're like, you're, you're like, you see 200 people a year and you're like, my market can't afford it. It's like, well, those 200 can't, it's like, look at 2000. I'm sure there are some, let me give you a stat. 9 % of people in America have a million dollars in terms of their net worth. So if you include the asset, like value their home at like 9%, it's significantly higher than you think it is. They just look older. Real. Okay. We sell motocross training. Okay. So we, we hold five day camps. What we did to be able to get our projection to 26 to the 4 million is we scaled down our single day tour dates.

7:06We were, we, we did more in 24. We went all the way to, we scaled from 70 single day tour dates in 23 to 140 of them in 2024. And it was just a ton of operational drag. I mean, it was like we were like a rock band on tour. It was nuts. But what we realized in looking back on it is the bottom 20 of those were net negative. The next 20 were net less than a thousand dollars. So inconsequential. And then I started looking at in 2024, we did three of the five-day camps kind of as a test run each of those net well over 100 grand each and i'm like well hang on a second this is the answer so this year i told the team at first i called them i said hey i just had an epiphany here it is we're going to do 10 camps and i said actually no we're actually going to do 25 and they're like 25 what do you mean 25 my question is do i continue to my were you just able to charge more for the three day than the one day uh why did they make some earth.

8:06So the one day is$300, which is probably not enough. The five day is$1 ,200, which is definitely not enough. So that's what part of the question too. Cool. I want to continue to scale the five days and scale down the single days. But my fear is we basically own the space. Nobody else does what I do. It's pretty large market. Um, there is one copycat company and he's trying to hit all these single day tour dates in the regions that we're doing them. So I'm afraid if I scale them down too much, we won't be able to copy the model that makes the money. That's a great point. Yeah.

8:40Love this for us, right? I hope he does. Honestly, I could go home right now and I'd be happy after that. Yeah, you're right. You're right. And I feel more confident that I don't think he could do what we could do anyways, but he certainly can't do what we can do in a five-day event. I mean, we've run those five-day hours like nobody else. Yeah. And I'll land the plan on that for you too, which is that you will never go out of business focusing on the customer. And I'll tell you a quick story. So the biggest business mistake that I've made, the two most costly business mistakes I've made, one of them has nothing to do with this.

9:14This is the other one, which has everything to do with this. I had a competitor that ended up taking a bunch of my top testimonials that we kind of converted to semi-employees because they were big evangelists back in the gym launch days. And as soon as they took them and they were big ads for me, all of a sudden they were running ads for this other guy. So it's kind of like when the Verizon guy went to the AT &T, remember that, that, that switch over that actor, it was kind of like that. And this guy was offering one-on-one coaching to help people out. I never did that. And so, and they were cheaper.

9:46So they were cheaper, they were doing one-on-one and they had some of my top, you know, customers, uh, becoming advocates. And they said that the 10 of them had come together, they partnered, he partnered with these 10 people or something like that. And when that happened, I got rough, my feathers got all ruffled. And I was like, it's wartime. We got to go to the mattresses. We got to really change the business up. And so I did this big relaunch internally to my existing customer base. And I did this big value stack. And then I said, you're going to get all this extra stuff, not for the same price you're paying me, but for less.

10:20And so I took my existing recurring base and I reduced my revenue by$500 ,000 top line per month. And so that translated because we to take it off top line and the cost went up. So I increased my costs and I took my top line down by 6 million. And I ended up losing in profit somewhere in the neighborhood of$6 to$7 million a year for that business at the time. I then ended up selling that business, obviously, and the business never recovered that profit. It stayed there. And when I did make that move, the first comment in the chat after I dropped that it was less was a complaint that I had not done it earlier.

10:59So it was not, thank you so much for lowering the price and giving us more shit. It was, I can't believe I was paying more. And I was like, I want to fucking kill myself. And, and here was the best part of all my churn changed zero. So I just cut my top line by 20%. Churn remained the same because the willingness to pay change that I made, I basically reduced it from call it 3000 a month to$2 ,500 a month. It actually made no real difference in whether someone would cancel or not, it was past a threshold that this is a lot of money. And so it changed nothing. I just made less money. And then when I sold the company, that six got multiplied by a lot.

11:38And so that probably cost me the neighborhood of probably$50 million. And so the big lesson that I learned there was that I shouldn't, and that competitor ended up killing that business because it wasn't fucking profitable. And so I was the market leader and someone came in to undercut me. And then I said, oh, I'll copy the moron. It's easy to let happen. Yes. And so don't lose$50 million. Let him figure that out for himself. You just focus on the customer and you'll win. Good answer. Thank you. Appreciate you. If you're a business owner, I'd like to invite you out to come to our headquarters in Vegas to see how we scale businesses using what we call the value acceleration method, which is a compilation of all the stuff that we've learned, breaking down different businesses across different industries.

12:22And if that sounds at all interesting, you can click below and book a call. And we'd love to potentially meet you and see you in person. I sell coaching to real estate agents. I do two and a half million. I'd like to double it. What's stopping me? That's a good question. Your boy, Ed, he seems to think I could be just super famous. And he's like, you need a brand manager. Yeah. And so, you know, he's like, you need somebody that has already kind of achieved that with someone else. Yeah. So I guess my question is, how do I find that person? because 99 % of the stuff out there is scams. Yeah, totally.

12:56And I would even define them as scams. I just people with that are not that competent. Scam. I think it comes down to deception, whether they intended to see or just aren't that good. But back to your point. Yeah, I agree. So fundamentally, if you want to just make more money and you are a brand that promotes itself, then you need to advertise more. Are you constrained on your delivery? Delivery as far as the fulfillment? Yeah. No, it's group coaching. It's easy. So you could double the amount of customers you have right now and it wouldn't be an issue. A triple, quadruple, yeah. Okay, well then, yeah.

13:26I mean, this is a pure advertising play. Yeah. You probably, I mean. I'm interviewing sales guys and I'm looking at paid ads, like hiring people for that. So like I'm getting into that. Yeah, the paid side is going to give you, call it like a one-time three to five X off of a baseline. Not a promise or guarantee. Just saying like that's what I would say is kind of typical if you've gotten to this point off of just organic. Obviously, we can help you with that stuff. but like the long-term kind of like, uh, well that you need to keep digging is you want to. So think about like this. So you have, just imagine this is your audience right now.

14:05You're monetizing these people, right? The people who are just like super hot, they love you forever. And you continue to promote and you know, this gets filled up with new eyeballs and then they come up because they see your stuff and then they give you money. Yay. right so when you start doing if you do more organic and do it across more platforms do it more consistently do with higher volume do with higher quality then we're going to do is you're going to grow this this base this percentage will stay about the same but now it's going to go to here right so then that dollar sign goes up that's a great long-term play and you just want to keep growing the pyramid what ads will do is that ads will keep this the same and then it'll move this line down and so you want to do both so like in the short term if i was like how do i like double your business is like, that wouldn't be that difficult.

14:48I would just be like, cool, just pull the ad lever. It's done. But if we're looking at a 10 year horizon, then I would say, well, we need to do both of these in parallel. We need to continue to plant the seeds and then the ads kind of reach off the top and skim. That makes sense. Yeah, for sure. So how do you find an ad manager? I mean, I mean, I mean, I mean a brand manager. So that that's good. Yeah. The best thing. I mean, I just, we just poach. We just, I mean, just outreach. Hey, you've crushed it so-and-so can I pay you more to do it here right and tends to work I guess how do you realize who those people are to poach like who look at the brands that you admire and then reach out to them and offer them more money to do it for you but you see the brand but you don't really know who's behind the brand LinkedIn like Frank and like yeah solvable gotcha for sure solvable yeah I mean and most of the people who are really good at media stuff do have some presence anyways on their own so they don't make themselves invisible.

15:44Like you could probably chat GPT, search who are the people who are involved with that. Here's my question. Like, like, is that something that could be outsourced? You mean recruiting? No, no, no, no, no, not the recruiting part. Like the, like the brand manager part. No, I wouldn't recommend it. Yeah. Bring somebody in house. So what are the core things to the business? So for every business, you have attraction, you've got conversion, you've got delivery, right? Those are the things that are core to every business. IT, recruiting, finance. I see all of these functions as ancillary that aren't core to value creation for the customer.

16:17They're things that must occur for the business to continue to be a business, but not things that are core for the value to be created. And so for you, your brand is arguably the most important asset that you have, and for sure would not be something that I would outsource. So bring somebody in house working directly for me. Yeah, I would poach somebody. Obviously, we've done, we've hired a lot of media people, you know, with that. But beyond that uh i would probably if i'm doing order of ops it probably be because the thing is is right now are you selling you're selling who's doing the sales well so i do it in a challenge okay that's the only time i offer it you know you do one to many five day things something like that yeah okay and someone switch to book a call single cell guy close and do it on a recurring kind of evergreen basis or still do it in this law i'll do it both okay okay but you're selling straight to checkout Yeah.

17:03Got it. Yeah. That motion, as soon as you turn on ads is going to break in all likelihood because it's totally different selling to cold than it is to warm. And so the motion break, you will not convert the same percentage you currently do. Yeah, no doubt. By a lot. And so the whole, the whole, the economics of the entire funnel will change. And so that'll take some adjustment in motion. So just more like preparing you for that. Cause that's what comes next. Yeah. So high level recruiting for brand manager, that's going to start building the base. And then ads plus sales motion are going to have to come in tandem because they both have to be good.

17:37The ads have to be good and the sales motion has to be good. If the ads are great and the sales motion sucks, it won't work. If the sales motion is great and the ads suck, it won't work. Cool. That makes sense for next steps. What's that? That makes sense for next steps. Yeah. Yeah. Go to LinkedIn and poach somebody. Got it. We sell sales coaching and lead gen to financial advisors. We're at 6.6 million. We'd like to be at 20 plus. Um, app on paid ads, events. How do you sell paid ads? Okay. Yeah. Straight to VSL to phone team. Correct. Cool. Yeah. Biggest thing is churn as with pretty much all agencies.

18:12So we've basically transitioned from lead gen company to sales coaching company. Cause we know that advisors can't close. No offense to any advisors in here. Yeah. So we're, we're doing a lot of sales coaching now. So we have like the big head long tail where we can sell the lead gen on the backend. Okay. So yeah, the main question is, have you seen other agencies successfully pivot from lead gen to sales coaching? Or in very non-sales or industries where founders or business owners are sales deficient, have you seen companies successfully train their clients on sales? Yeah, sure. So like a gym launch, how did you guys successfully do that across thousands of gyms?

18:54We had something called Boiler Room. We train their trainers and front desk people every morning and drill them role played and separate them in the groups the same way with our own team. So we just did it every morning for them. And it was just an add on. Just group role play basically? Just like you'd have a sales manager meeting where you'd role play whatever particular part of the script they were all struggling with. And so we break sales training from the team side, not on the one-on-one side, into five parts. We've got intro, we've got disco, we've got offer, and then we've got objections and looping.

19:23And then fifth day is basically whatever is kind of the hot topic of what's the thing that we think is going to benefit the team the most. And so that's kind of how we rotate through. We have to keep each part of the script crisp, otherwise they'll fuck up something. And so that keeps the sword sharp. And that's what we did across the team. We do that for our teams too. But I think it's likely that it's under, basically, you need to provide more value or you need to lower the price. And so if you want to tackle churn, it has to be like there are for sure businesses that work in the space that you're at.

19:52I think big head long tail is a great model, like charge the upfront, and then just make the continuity much, much smaller. So it's a no brainer, like they almost pay that just to be kind of in the network. And so this is, I'll just, I should have said this earlier, but it's like, I try to answer the question so that it affects as many people as possible in this room. But the problem with information and kind of quote, quote, coaching or education type businesses is that people try to make continuity out of the front end value that you're providing, and then the value drops once you have the skill.

20:23And so you have to separate out the consumables from the one-time things. The one-time things also have significantly more value than the consumables do. Now, sometimes they don't have the money to pay for the one-time thing because they don't have the skill the one-time thing would give them. Yeah. Right? That's kind of the issue. So in order to separate it, it's like you just have to think, what are the things that they get on an ongoing basis? And if we only sold that, what would the price point be? Likely significantly lower. And if we got from that skill, it would be significantly more but once they have the skill assume they have the skill on the ongoing basis yeah what would they still pay for now you have the lead gen thing um i mean the lead gen oh everyone wants it when they learn how to sell using our process they stay okay the biggest thing is just making sure they actually they just don't know how to close so it's so it's like it's activation as well so like getting them to come in and actually engage yeah because most advisors is it all remote it's all remote and they don't they also don't like sales like the word sales like they like cringe inside and they hear it so we've literally like banned the word sales like we we just say consulting we don't call them sales calls we call them consults so like you know like that but um yeah i'm just curious so it sounds like you just have to get better at training them yeah so okay your issue though is that if someone gets activated they stick for sure.

21:43For sure. Well, then all of the, all of the effort we have is how do we get them activated, like better, faster, which is going to be a function of two things. One is going to be, are there some avatars that are better than others? Right. So we only sell those avatars and we split that into three buckets. You've got demographics. What do they look like? Right. You've got the quantifiables, which is like, what are the, uh, what size business do they have? Whatever. And then you've got the ethnicity, the, um, I said demographics and there's quantifiables. There's a third one. I can't remember, but those two will at least get you on a headstart, um, in terms of segmenting the traffic.

22:15So you can be like, this is who the avatar is. These ones have a significantly higher likelihood of converting. And what will happen when you do that is your cackle go up, but then your stick problem will get fixed. Okay. So like, for example, if I sold everybody who identified as a fitness person, then gym launch would never have been able to exist because I would have had too many shitty customers who are personal trainers who've got 10 clients, whatever, and they can never pay. And it doesn't matter what I do. And so for me to deploy the resources required to actually get them up to snuff, I have to have somebody who at their onset can pay more so that I can actually help them.

22:49Because below a certain extent, it just needs to be DIY, which is a different business, not the business I wanted to be in. So there's probably some advisors that are better that you need to basically scan out and say, all these people were not going to service because they have a low likelihood of actually working. And maybe you need to adjust price to only accommodate those people in that newer avatar that's better. So this is probably an avatar issue. And then obviously the ops on the back end in terms of activation is what do, yeah, that's the third bucket, the behaviors. So what are the people who have the right demographics and the right quantifiables?

23:18What behaviors did they do that caused them to activate and stick? And what did the other people who look like them not do? And then that becomes the activation process we reverse engineer. Makes sense. Quick last question. How did you optimize for time to value at Dream Launch? And how can we potentially do something similar? Because for us, deal cycles are... Yeah, we'd email their list. They make a sale in the first seven days. Okay, so just reactivation. Okay, sweet. Appreciate you. If you're doing a million dollars or more a year and you'd like to get to 10 million or$100 million, I can promise you absolutely none of that.

23:51But what I can do is create an environment where you can actually talk to other business owners and players within those businesses that are doing those numbers. And for me personally, the big breakthroughs that I had in my business was when I came in with an open mind and was like, I don't know what I don't know. And so you probably have one of those. Like, how do I get my content to scale? How do I recruit these first salespeople? How do I recruit my 20 other, my VP of sales or director of sales? Every single level of this game has more complexity than the last. And so if that sounds at all interesting, I'd love to invite you out to our headquarters for two days to talk to me and the team, director of sales, director of marketing, director of strategy, director of ops, director of investment, all the people that who actually run our portfolio at acquisition.com.

24:32And as a bonus, all the other business owners in the room are doing a million dollars plus. And yeah, so this is your invitation. So if that sounds interesting, click, book, call. If it's a good fit, love to invite you out here and maybe see you here in Vegas.