It Took Me 14 Years to Realize What I’ll Tell You in 70 Minutes | Ep 974

23:54And I prefer not to live my life that way. I prefer to say you will get, I would prefer to set my expectations at zero and then you have to be pleasantly surprised rather than promise the world and never be able to fulfill. Now, the next sales concept I want to talk about is one of the most common mistakes I see entrepreneurs make. So fundamentally, they don't have an issue with how they're selling it or what they're selling, but actually it's when they're selling it. Because the right offer at the wrong time is still the wrong offer. And so this is why sales timing is so important. So let me explain on this a bit more.

24:22You want to make sure that we sell at the point of greatest deprivation, not the point of greatest value. And so this is one of the big mistakes that people make when they're trying to sell stuff is they actually sell at the wrong time. And so I'll give you an example. So if we go to a restaurant, you order steak, you've got an amazing steak. And I say, awesome. How was it? You say it was great. I say, awesome. Would you like another steak? And you're like, no, I'm good. And I'm like, why? Wasn't the steak good? And you're like, yeah, it was great. I'm like, then why don't you want another steak?

24:45And you're like, because I'm good. It was, I'm like, so you didn't like the steak. And you're like, no, I love the fucking steak, dude. It's like backup. Right. Right. And so, and that's because like the offer is right. The timing's wrong. And so if I wanted to sell two steaks, what I would do is say, hey, sir, how's it going? You say, great. I'm like, how hungry are you? You're like, dude, I'm fucking starving. And I'm like, a guy like you, you're going to need two steaks. That's when you sell two steaks. Before you've had your first bite, before you're full. When you're at point of greatest deprivation.

25:12What people get confused is they're like, hey, people got a lot of value. That's when I want to sell. The point of greatest deprivation and the point of greatest value only sometimes intersect when once you've created the value, you create deprivation around the next thing. And so the motivation for any person to take action on anything is the amount of lack they have. Deprivation. You're incredibly motivated to sleep when you're exhausted. You're incredibly motivated to eat when you're starving, incredibly motivated to fuck when you're having, right? And so the idea is we want to extend. That's why in a pitch, it's all about the pain.

25:42It's like, how can we agitate the pain? How can we extend where they are to where they want to be and make this gap bigger and bigger and bigger? For us in a monetary world, which is what you sell in, the gap isn't physiological. It's perceived. And so we have to build up the perception of deprivation. And if any of this is like, sounds too complex to stop me. but basically when you get around people way richer than you, you feel poor. And then when you feel poor, you get motivated to get richer. If you're the richest person in all the people that you know, you have no motivation because you're the richest man in the, not Babylon, but the poor part of Babylon, the hood of Babylon.

26:20Do you know what I mean there? Yeah. The next sales concept I want to talk about is how do you sell without giving away all your secrets, right? A lot of people are afraid when they make content, well, what if I give away all the secrets. Like no one will have anything to buy from me, which is the exact opposite because 99 % of people are never going to buy from you, but they will judge you based on the quality of your free content. And so the idea is like give away all the information and then sell the implementation. So many of you guys sell information, education, media related stuff where people make mistakes, where they're like, how much do I teach versus how much do I pitch?

26:50Right. The issue is not understanding what kind of information you should teach at each stage. And so there's two types of education. There's declarative knowledge and there's procedural knowledge. I didn't invent this. It's just education system in the last 100 years, but people still talk about it. So declarative knowledge is knowledge about something. This is what you use to sell. Procedural knowledge is about how to do something. This is what you sell. If you use this to try and sell stuff, people will walk away with a shitload of to-dos and they're like, I'm good. What you want to talk about is all the things about how it works, about the outcomes, about what is possible, teach how it works conceptually.

27:31So if I say, I'll give you an example. Hey, you have a business, you're doing$2 million a year. If you go from$2 million to$5 million, you cross over the institutional threshold. At that point, your multiple goes from three to seven. And so you go from having something that might be worth $4 million to something that might be worth$35 million just by adding another$3 million in revenue. And here's why that is because institutional buyers, blah, blah, blah, blah, blah. Me explaining that for like, whoa, that is really interesting. I didn't know how that works. I didn't teach how to do it. I teach about how it works.

28:02That still is incredibly valuable because what's really nice about declarative knowledge is that everyone gets value from it because you just have to be there to get the value. When you teach tactics, you have to do the tactics to get the value, which means they can't do it with you. They have to go and then do it and then they would extract the value, right? So it's at a delay, which means they don't want to buy right now. And so whatever you're teaching, you want to be predominantly declarative in nature. Let me teach you about this stuff that you aren't aware of. This is where breaking beliefs around specific.

28:31I think that like, this is the old model. This is the new model. I'm not teaching you, here's how you set up a domain. Here's how you warm it up. And so, right. Here's how you have an AI agent. Here's how you personalize the first, like we're not teaching that. We're saying, did you know that if you go from not personalized to personalized, this is the increase? Whoa, whoa, I'm not going to, I'm going to show you that's how it works. And then I will sell you how to do it. That's what you separate. Again, secrets, implementation. The next sales concept is about training your sales team. So this happens a lot where you've got maybe three, four, five guys, let's say, and you've got one guy who's a star and he sells half the volume or she sells half the volume and the rest of the team sells the other half.

29:09Oftentimes that one star suppresses the rest of the team, number one. Number two, doesn't follow the script or process. And so scaling that team becomes very difficult because there's no consistency across reps. And so one of the things that a lot of business owners want to do is like, man, if I only had six Sarahs or six Sean's, I'd be good to go. But there is a way to get six Sean's or six Sarah's. And it's by breaking down what they do into significantly more detail than you probably have, and then training far more frequently with far faster reinforcement cycles to actually get that to be duplicated.

29:41Now, that might have sounded like a lot of big words. So let's dive into what that means. And the big thing with sales training that I think the vast majority of businesses underestimate is just how much training is required to make a truly world-class team. I think 90. So everybody who has the sales handbook can kind of get, you guys have my schedule for how we onboard and how we train. And I think for many people, that's a big belief breaker. It's hard for people to comprehend exactly how much we train at acquisition.com. It's a shitload. And so to give context on that, our sales team trains every single day, every day.

30:10And they all role play every single day. And every week they have a one-on-one with game tape with their manager of what they specifically need to work on. And like that muscle and like, do you know how to train? Like, do you know how to train a salesperson? I would say no. Okay. So you train salespeople through like role-playing until your eyes bleed. Because fundamentally it's the fastest feedback loop that you can give someone in terms of training anything. So they say something. And so the way that we train is number one is you have to memorize a script. And so the way you memorize a script is you put the script in front of someone, they print out a second script, and then they read the script out loud, and then they black out one of the words, and they read it again.

30:49And they black out another word, and they read it again. And by the time you've blacked out every single word, you've said the script for as many times as there are words in the script, and you tend to fucking know it. And so then you're staring at an entirely blacked-out page saying the entire script. That's how you memorize a script. Once you can breathe the script, which is what we call it, once you can breathe the script, then we practice the role-playing component, which is us going back and forth. And so when you're reading the script with someone, we have a hand up with heads nodding. And the first time someone's going to go through a script where we say, hey, just to be clear, we're going to interrupt you probably like 50 or 60 times by the time you get to the end of it.

31:21That's okay. The worst way that people do role-playing is that someone, they go through a whole role-play or someone just says the script. That's the worst way. The second worst way is that you go through it and we quote role-play. And at the end, the guy says, all right, so, you know, at the beginning, you could have done this a little bit different and, you know, kind of said this a little bit bad at the end, you probably should have offered it like this. No one's going to remember that. It doesn't matter. It's way too late. The reason that superstition happens is because you change something and then you immediately get feedback.

31:47And so once someone does it, we call it locking it in. So it's like they mess something up. We say, hey, stop, try it like this, do it again. They do it. If they get it right, we say, great, lock it in. That means do it again, do it again, do it again, keep going. And so that's how we trill the script so that every person delivers it's a script the same way. The vast majority of sales teams have a script. It's loose. No one really pays attention to it. And the way that they recruit salespeople is that they just hire a bunch, see who sticks, and then let the rest go. Except which I consider us to be, can take anyone to be a savage.

32:22It's just a question of how much effort we're willing to put into somebody. As long as you know how to train the skill of sales, which sales is so trainable as a skill, That's the feedback loop that has to get created. So the first step for you is we have to observe the salesman and we have to document the words they say and what they do. Once we have that, that becomes the basis for the memorization. And then the role playing becomes making sure they execute that. And I always want adherence above everything. So we are like the New England Patriots in terms of how we run the sales team, which is the process is above everyone.

32:51No one's but in the process. and the way we position that is like thousands of sales calls, thousands of hours have gone into, like men died and gave their lives to give us this script. You were not better than the script. And so you say the script because you know these words close people, period. And that's the approach that we have and that's the deference that we give to the process. And so if you have a star salesperson, one of the difficult parts is that that person tends to be a cowboy, right? Does whatever he wants as long as he closed deals. That is a cultural issue. It will be a cancer long-term if he's a prima donna.

33:21And so most of the time, I would rather have a team of all eights closing on a 10 out of 10 process. And that team will always outperform a team that has one star and no process. Okay. Now in this next section, I want to talk about influence and branding. And the reason this is so important is that fundamentally branding is building a history of positive reinforcement with a large audience that ideally has a high likelihood of purchasing from you in the future. And so think about branding as pre-programming sets of behaviors. And so if I have a cold audience and then you have a branded audience or people who have an association between you and the thing that is good, right?

33:57Then these people are going to be far more likely to take a desired action, right? So branding is the action that we do as businesses to make those associations, to increase the likelihood they comply with our requests, AKA they do what we ask them to do when we ask them to do it, which is like, hey, go check this my thing, or hey, go schedule a call, or hey, check out my next video, or hey, read this email. Whatever it is, you have to build up history of reinforcement that shows that the last time they did something good, something good happened for them, which makes it more likely that it happens in the future.

34:26So I'm going to break down a four-part framework in thinking about this so that you can gain influence, not just reach in views, for you and your business as an entrepreneur. So there are four components of influence, right? You have SPCL, special is the easy way to remember it. You have status, which is the number of reinforcers that you control. Stuff that people want, you control that. The second is power, which is say-do correspondence, which is when I tell someone to do something, if they follow those instructions, a good thing occurs. You gain more influence. The third is credibility. So is there a third-party world that proofed that what I'm saying is true?

35:03And then fourth is likeness. How similar are they to me? Now, in this audience, it's mostly men around my age not all obviously but i have a preponderance of dudes around my age um and so that's because likeness is a strong influence on that leila talks about many of the same things that i do and her audience is 54 female is it like and if i were to talk about her stuff i'd probably still have more men right um and so okay you're like all right i understand that and so how do we reverse into i'm going to talk about each of these in a little bit more detail and we'll talk about how to apply to the video.

35:37So from the status perspective, each of these operate independently, but can also be combined. When you have a four, it's significantly more influential. And so a kid who has a trust fund and a kid who doesn't have a trust fund, somebody who's rich inherently, didn't earn it, but just is rich, has more influence than somebody who does it. Now, do they have the most influence? No. But if that person was a trust fund kid, or sorry, rather, somebody who had a lot of money and gave you 10 stock tips, and out of the 10 stock tips, all 10 worked, and you made money on all of them, on the 11th stock tip, the likelihood that you would follow their request is high.

36:10If they had credibility, it's, okay, do I have proof that these things occurred outside, right? Now, some of these boxes can check multiple things. And so if he gave you stock tips and they worked, and then he gave you another stock tip, he has credibility, he has power, and he has status. If he said, here's another investment that's not stock related, here's a real estate investment, he no longer has credibility, but he does have power still because other things you generally have listened to have worked, not specific to the thing that he's talking about. And then finally, if he looks like you and he talks like you and he's your twin brother, much more likely that they're going to listen.

36:45And so in any of these situations, if it's just a dude who looks like just like me, I'm more likely to listen to him than an old lady. I'm just more likely to. If somebody has credibility around the thing, oh, I scaled a sales team. I'll give you a different example. If I scaled a company to a billion dollars and I had zero equity in it, but I was the CEO, I would have credibility. If I was also the founder and had all the money, I would also have status. Now, if I've never given you any advice in the past, I have no power over you. If I then gave you advice and it worked, then I have three of the four.

37:11And if you look like me, I have all four, right? And so the idea is that if we want to gain influence, we want to have as many of those loops demonstrated as often as possible in the content that we have. The reason I start every video with, my name's Alex Ramosi, I have an acquisition.com, it's portfolio last year to over$250 million a year. And the reason I make these videos is so I can help you do X, Y, and Z so we can eventually blah, blah, blah, all right? I do that because I'm trying to demonstrate these things as fast as I can. I try to demonstrate status, credibility. The power occurs from how good the advice that I give is.

37:37And that is, if I had to pick one of the four to have, it's that one. It's how well can you give people directions in order to get something good to happen. So some of you guys have heard of Martha Stewart, hopefully. Martha Stewart's a goat. I have a tremendous amount of respect for her. She was the original influencer, one of the first ever. And everyone was amazed that she became the first self-made female billionaire. No one talks about this. First self-made female billionaire. Why? she literally gave women instructions for years on how to do stuff. And then they followed those instructions and then good things happened.

38:08They made the cake exactly. And then everyone said, oh, you're amazing mom. And they do that over and over again. So when she says, buy my book, they're like, of course I'll buy your book. Every other thing that you've told me to do has worked for me. Now, one of the best ways to have strong influence is by building a strong brand, which I covered earlier. And so fundamentally, let's go more tactically into how to build one. So So what is brand, right? Brand is the association we make between two things through an outcome, right? That's what brand is. So thing you don't know, thing you do know.

38:37You put thing you don't know next to thing you do know. If you have positive associations, these positive associations transfer until eventually you don't need to have this thing anymore. Positive associations maintained. That's what branding is. Fundamentally, it's teaching at scale. So like if I brand the, so this is a tree, right? And if I say tree to a kid over and over again, they will associate the sound with that thing. And so then eventually they will say, oh, that is a tree. And so branding will have occurred. It's teaching. And so what happens is you have your existing brand, and then you have the new association that you want.

39:12And we have some people that may get left behind and say, I don't like this new association. And then you will have some people that you will gain as a result of the new association. This would be an even trade. The ideal branding move would be like this. We lose this, we gain this. And so whenever you change a brand from anything, you will always lose some and net others because any change will get some people to say no and other people to say yes. And the goal of good branding is that we net more than we lose. And so for me, if we think about the elements of brand, we have reach. So how many people, you know, see it?

39:50we have influence which is uh the percentage likely they comply with their request will they do what we ask them to do and there was direction which is like you can have influence and then it's against you right like trump has super high influence and polar just both sides right like people are like but he changes people's behavior so if they see it they're either i hate him or i love him but either way their behavior changes which means he has influence right and if a lot of people have that then it's even bigger brand your parents have super high influence very small reach. So all of our parents here, or most of your parents, if you didn't have parents, sorry.

40:25But let me tell you how parents work. So for most people, parents have super strong brand for you for very tiny reach. So in other words, you'll have a strong brand when you have large reach, high influence and in the right direction. So let me explain what happens when you build a strong enough brand. And so, but like, but that's, but that's exactly the point. It's just like, once the brand gets high enough, then you can just make the offer with no promises and say, every other thing that you've bought for me has been good. You'll like this too. Trust me. And then people will buy it. As long as I keep that promise, the next time I have a thing, hopefully you'll still want to get it.

41:01And then that cycle continues to reinforce. And so that is the brand loop. It's like what you say about you, what other people say about you, and then finally what the customer thinks about you after delivering the product. At that point is the final point. So like said differently, if you're going to go see a movie, you see the advertisements of the movie first. And then you're like, huh, that looks interesting. And then a friend of yours sees the movie and you're like, was it good or bad? And they're like, oh, it was good. And you're like, oh, okay. Now way more likely to see it. But then when you go to the movie, you don't really care what your friend said.

41:29You're going to make your own call on whether you like the movie or not. And so that is the reinforcement loop that occurs with brand. It's just that most people, where's my, where's my home, where's my, where's my team, guy, where you at? Yes. So the reason that you keep doing more offers is because you say it's great. You get a handful of testimonials because if you sell 1 ,000 people, you can get 10 people to get a good result because they're going to get a good result no matter what because 10 out of 1 ,000 are going to have something good happen. So you get your 10 results, and then you convince people, and then they buy.

41:56And then all of a sudden, those people say this sucks. And so then you have to start all over again saying this new thing is amazing and great. And then get your 10 testimonials from your beta group because you can take 100 people, and 10 of them are going to get a result. You talk about the 10 results that are good. This is obviously lying in advertising, by the way. And then you go to sell the product and it sucks. And then you just do that loop forever. And that is what most internet marketers are doomed to do. The next principle is arguably one of the most important, if not the most important, to scaling your business.

42:24It's figuring out how to solve your main constraint. You can think about constraint from a quantitative perspective as the area in the business where you will get the highest returns on effort or improvement. If you think about it from a manufacturing perspective, it's going to be the bottleneck. So if I've got a four-lane highway that goes into a one-lane and then to four-lane, what's the limit of the business or the rate of cars going? It will be a one-lane highway. So I could make four lanes into five lanes. It's still not going to change the total throughput in the system. And so the idea is we have to focus on that bottleneck.

42:51And the thing is, and the reason the theory of constraints is so powerful is that every business has just one constraint. But the reality is that most business owners are not working on that constraint. They're working on something they believe to be the constraint. Or even more commonly, they're just working all day long, not even thinking about the constraint. is hoping the business will grow. So I'm going to share a six-part framework for thinking about constraints to help you identify any constraint that you have in your business. This is a newer framework that has only come from doing like 10 ,000 Q &As.

43:19I was thinking through like, what is the actual decision tree that I go through in order to do this? And it turns out there is one and I'll walk you through it. But basically this is the deconstraining meta framework that we use as a company that you can apply to your business over and over and over again. And I walk through this for me. So if I'm like, what should I do next? I like, I'll just go through this. So the fundamental question that we always have to answer is, why can't we do more? Right? And the answer to that question or like the, if I say, okay, who here would like to grow their business?

43:56Everyone probably raised their hands. And then I'd say, great. So why don't you do more of the thing that you're currently doing? Now, 10, 20 % of the time, they're like, oh, I just didn't really think about that. And I'm like, great, we'll do that first. And the reason more is almost always the best action to take is because it's the highest risk adjuster return move. Because it already is working. And so the likelihood that more of the thing that already works will also work is super, super likely. Whereas if you think about how many times you tried before you actually got this thing to work, whatever your thing is, how many failures you had, it's like there's an unlimited amount of ways that something doesn't work.

44:35There's a finite amount of ways that it does. And so you taking experimentation is a very high likelihood path of things not working. Like new almost never works. It's something worth like new almost never works. And so that is why more is a significantly better return on assets if you look at risk adjusted. Now, there's going to be reasons that someone says, well, I can't do more because and then there's going to be five reasons that someone just like can't do more and so um the the first common one is i can't do more because of my market i can't i'll write them all and then we'll go through um i can't do more because of my market i can't do more because of metrics i can't do more because of my model they're all we call these the mosey six because are all m's there we go um i can't do more because of money and i can't do more because of manpower so i can't do more because um i'm in a you know some of you guys might have seen that clip where the guy was like hey i want to make my lounge make more money and i'm like okay well where's your lounge he said in the middle of the sahara desert and i was like okay well that's probably not a good idea and he's like so i should advertise more it's like no that's just a terrible idea in general right thing he's like so i shouldn't be in the sahara desert i was like dear god okay um i'm kidding uh he was a champ about it but this is a real constraint rarely like if you actually live in bumfuck kentucky and 100 of the customer service are in bumfuck kentucky then yes you will be limited by bumfuck.

46:17It will absolutely limit you. But you could also like do more of that in another market. Right. So it's like, sometimes it just takes a one degree of thinking of like, okay, well, I could just duplicate this somewhere else. Right. Um, this is a, you'll see how cool this model is in a second. Um, but we're just talking about from the customer's perspective. So, uh, it's likely that you are not constrained. I, I service chiropractors and we're B2B. Okay, great. How many customers do you have? A hundred. Okay. Well, there's 50 ,000 chiropractors? Do you feel like you're really limited by your market?

46:46Do you really feel like you've saturated the market of chiropractors? No, just no one knows you exist, right? And so we need to advertise more. And then we go back to that, right? The next issue is I can't do more because I don't even know what more is because I don't have any metrics. Okay. So we have a data constraint. So we have to figure out what you're currently doing before we can do more of it. So that should be kind of some common sense. So let's get data, but then that becomes the constraint. Okay, great. Once, as soon as we have data, then we can go do more. The next issue that'll come up is like, why can't I do more?

47:17It's like, well, I'm just not sure my current model is really what I want to be doing long term. Or like, if this is the best opportunity vehicle for the skills that I have. And there's a lot of like this, like, what do I do with my life? That, right? And the model issue really comes down to like, one of the most common things that I'll end up responding with is features versus bugs. So Suzanne Shifflett, who was my CFO at Gym Launch, phenomenal lady, phenomenal CFO, she used to say, Alex, I've been doing this 38 years and all businesses have shit. She was from Deep South. She was awesome. And the point was that, like, every business has something that's hard about it.

48:06And so we often want to switch opportunities because the thing that's hard about this business, another business doesn't have that thing that's hard. It just has another thing that right now you didn't realize is easy for you because that's not a component of the business. So taken differently, like at one extreme, if you're in the cleaning business, cleaning homes, finding people to clean houses for is really not hard. People are very happy to not clean and pay someone else to do it. On the other hand, finding talent who want to clean houses and are competent and show up on time and don't steal and speak English and are honest and blah, blah, blah, blah, right?

48:42Really hard. Now, flip that the other way. Finding people who want to talk about fitness. And Eva, you're talking about this morning, right? Who want to talk about fitness, who want to talk about helping people. Tons of people will do it and they'll do it for free. The problem is no one wants to sign up for fitness services because no one wants to wake their ass up in the morning and go to the gym, right? And so like all businesses have components of the business that are difficult. There's going to be some businesses that are more supply constrained, some that are more demand constrained, but they're all going to have constraints.

49:11Otherwise, if there were a business that had truly no constraints, then every business of that industry would all just be gazillion dollar businesses. But they're not because sometimes for short periods, that is true. And then what happens? Lots of competition emerge. And then you have a constraint. Now we have pricing pressure, et cetera. And so the idea that like you're going to find the perfect business and it's just like one degree separate from your current one is probably not true. It's just that the hard problem that you have in front of you is the thing that you get compensated for solving.

49:39Like that's the game. And so the way that I frame this is like, if I solve this problem, if I have my cleaning business, and I figure out how to have a recruiting engine and a training engine that can take somebody who's low-skill talent and get them to be proficient in a way that's more efficient than my competitors, then I have an extra 10 or 20 or$50 million of enterprise value that gets added to my business. All of a sudden, that feels like a much more desirable problem to solve if I now have a$50 million pot of gold on the other side. And so rather than just saying like, oh, this sucks, it's like, well, for$50 million, I'd be willing to solve it.

50:15And so for some reason, that just tends to perk me up a little bit. Okay. But fundamentally, all businesses have shit. All businesses suck to a degree. And almost all businesses, if you stick in them for a long period of time, you can become exceptionally wealthy. Like the guy who owns the building that I live in, he's my neighbor. He owns Panda Express. us. If he were in this room, he says, hey, he got up and said, hey, I own a fast, casual Chinese restaurant. We sell Kung Pao chicken and General Sao's chicken and spicy pineapple, you know, sweet, sweet, you know, that new one, the one that they came out with like five, six years ago.

50:49Anyways, and, you know, chicken teriyaki. And, you know, we've got five locations and, you know, each location does$3 million a year top line. We run 27 % net margins. Some people in this room would give that guy advice, you should teach other people how to sell chicken. And that would be terrible advice for him. Because what he should do is keep doing it for 45 years, and they do 3.7 billion a year in chicken sales with 27 % net margins and take home a billion a year in cash every year and do it tax free because he owns all the dirt and the real estate. It just took him 45 years. And so I say this because like most of the goals that you have are probably attainable, just not on the timeline that you gave yourself.

51:35And so like even something, like think about how shitty of a business model that is. Who wants to scale brick and mortar, fast, casual, low-skilled labor business? Most people are like, I don't want to do that. Right. Raising canes. Deck a billionaire. Owns them all. So like, is it a suit? I don't think you can scale that. Yeah, you can with work and skill and time. And so I think that's the piece that like everyone is so concerned about getting really rich in the next 36 months that almost all vehicles can get you super rich in the next 36 years and many, many orders of wealth along the way. We just don't think in those time horizons.

52:17And I think that is maybe one of the bigger things that I can give you around model. So why can't you do more? I don't know if my chicken shop is, you know, the best opportunity vehicle. well, if you keep doing it for 10 years, you'll probably be better than most people who do chicken chops. And if you keep leveling up in the game of business, the people we compete against. So if you are in a low opportunity vehicle market, here's the advantage. Your competitors, typically not that sophisticated. If you want to go after AI, whatever, then you're competing against the best capitalized, smartest human beings on the fucking earth.

52:48Depends where you want to play, right? All businesses have shit. Okay. The next one is like, why can't I do more? I can't afford to. Now, this is where it gets a little bit hairier, hairier in that there's more splinters underneath. So you can't do more because leads cost too much. You can't do more because you sell too few. You can't do more because your LTV is too low, right? LTV is too low, sales is too low, leads is too low. Now, this is where it takes more question answering and kind of pattern recognition to figure out which of the problems it is. because all you know right now is I can't afford it.

53:26But you might not be able to afford it because you don't make enough for customer rather than it being inherently some marketing problem. This happens common where you have a business that has a front end, but no backend. And they're like, man, I'm making sales, but I have no, they don't know that they don't have a backend. They just know that they're not profitable as a business. But it's like, oh, dude, you have a break-even or slightly break-even acquisition process. Now sell the thing to all those people. Oh, and now this is amazing business. It's just like you're missing a piece of it. That's an LTV issue.

53:55Or maybe it's a churn problem. It's like, hey, we're a car customers. I think it costs us too much to get customers. It's like, no, dude, you churn out in three months. It doesn't matter what the cost of acquisition is. You need to fix churn, which then has lots of hair on it. Is it a messaging issue, it's an avatar issue, it's an onboarding issue. There's things underneath of that. If it's I can't afford to advertise more to get more people because my leads are too expensive. It's like, well, are they too expensive? Now, there are instances where like we have good, like, let's say you're in insurance, right?

54:23And so it's like, okay, our LTVs are already almost given to us by the insurance companies. We close 30 % of people we get on the phone with. It's just like our leads just cost too much. Okay. In that instance, like their leads cost too much. So then there it's like, all right, we have to increase quality of creative, increase quantity of creative. We have to look at CRO within the funnel. All of these that we have to see if we can have a better lead magnets from an offer perspective to generate the lead. It's like, okay, all of a sudden, all those things can drive down the lead costs. and all of a sudden this business prints.

54:50And then you have the middle of the sandwich there. The lead costs are fine. We're making enough per customer. We just can't close a barn door if it had a handle on it, right? And so then we have to look at messaging. We have to look at scripting. We have to look at price points if we have to. We have to look at the follow-up process. We have to look at the training process. We have to look at the onboarding compensation for the sales guys, or if it's a webinar or whatever it is, right? What's the messaging that we're telling to get someone to take their wallet out and give us money? But each of these things.

55:14So if we say, okay, if I solve all of those things, So let's say you're like, I can't do more. Not because I have enough people in my market. I have the metrics to know that like what I'm doing is working. I'm fine being a plumber. I have like the lead costs are fine. We're closed the amount that we're supposed to. Our LTV is good. I just don't have enough technicians to go and do the HVAC services or do the plumbing. Or I don't have enough coaches to do my backend. I don't have enough whatever's, right? Then you have a manpower constraint. Here's the cool part about this model. and by the way i did the order wrong b should be like this metric should be first then mark it

55:55it's a cycle it goes back to the top so i don't have enough manpower great what do you do to get manpower okay why don't you do more of that well i can't do more of that because i don't have metrics around how i recruit talent okay great so let's say we solve the metrics all right well well, there's not enough talent in my specific market for HVAC whatever's. Okay, fine. But maybe there is. Okay. Well, I'm not sure if the offer that I have for the guys is compelling enough. Okay. I can't afford to. Okay. Well, how much do you make per HVAC rep or per coach or per whatever? Why make this? Okay.

56:36Well, then do we have an issue that we need to change in terms of the business to fix our acquisition of talent or the acquisition of talent's fine because the business works. Okay, great. And so this whole thing, you just repeat it again on the other side. So this is just how you decontrain anything, whether it's supply or demand. So I wanna dive a bit deeper into the last M that I talked about, which is manpower. Making the right hires and be able to train them is one of the highest leverage things that you can do as a business owner. Now, one of the most common pushbacks I'll get is, well, they can't do what I can do.

57:05So if you want someone to do something and they're not doing it, I want to share a framework that might help. And I call this the management diamond. Now, I'll give you a little management diamond that I do for employees, which is a really good framework for having hard conversations. But if you want someone to do something and they're not doing it, you have like four or five reasons that they're not doing it, right? The first is they just didn't know that you wanted them to do it. Motus comms. Hey, did you do that thing? And they're like, what thing? You're like, damn it. I didn't write it down, did I?

57:37Okay. So we have to write it down. We have to, we have to put a deadline on it. Fantastic. So now I say, why didn't you do that thing? They say, well, I didn't know how to do it. Okay. Well, fine. So they didn't know how to do it. Now let's say we train them. So I told you that you needed to do it. You know how to do it, but, um, you didn't know when I was going to do it by, oh, I need to do that tomorrow. Okay. So I knew that you needed to do it. You knew how to do it. You knew when to do it. The next is you have something that's blocking you. So I knew that. I knew how. I knew you wanted to do it tomorrow.

58:14But you also told me to do three other things. Which one did you want me to do? And then finally, you get into this, which is that I didn't want to do it. Which, in my experience, is the first place that we go to as entrepreneurs. and typically the last one that's reality. Most people I have found when they have a job prefer to keep it. And I've also found that most people prefer to feel like they're doing a good job at their job. And so it's usually one of these other issues. And so this provides a really good framework for having those conversations. Now, the reason I bring this up is because we can also have these conversations with ourselves.

58:51I know I need to do more. Why am I not doing more? Did I not know that I needed to do more? Well, now I do. Okay, do I not know how to do more? Oh, I don't know how to do more. Great. Well, now I have something to attack. That becomes my to-do. If I don't know how to do it, I know what to do, which is to figure out how to do it. Right? Is it not urgent enough? Right? Or is there something blocking me? I would go recruit more people for my HVAC company. But right now, 80 % of my time is dealt with these customer service issues that are coming up onesie twosies all day. Okay, great. How much does it cost to replace the onesie twosie thing?

59:25Cost me$60 ,000 a year. I have$400 ,000 in profit. Am I willing to go from$400 ,000 to$340 ,000 in profit in order to get 80 % of my time back? Yes. But that means I'm going to make less money. Yes, today. But then I'm going to get 80 % of my time back so that I can then focus on how to figure out how to do more. And so it's just, it's taking second and third order consequences down to their natural end. And then ultimately being like, okay, this is what I need to do. I literally went through this process. So post-launch for me, I was like, okay, I have this bandwidth back. What's the next constraint of the business?

59:55And for me, it was six questions down for me to be like, that's what the issue is. And that's what I'm focused on. And so right now, 80 % of my time is in with that constraint, which is I'm heavily recruiting executives right now. That's what I'm doing with my time. Yesterday at four executive meetings and I have follow-up notes and connections afterwards that I have to do. That's what my time's right now, because that's the constraint of the business. And then once that finishes, because those people get onboarded and they do a good job, I'll go through this again. Now, one of the most common limiting beliefs entrepreneurs have is that no one can do it as good as they can.

1:00:25But this eventually creates something called keyman risk. And this is the next business principle that I use. And so fundamentally, every business, if it's relying on any person, whether it's the entrepreneur or otherwise, it's that person is going to be keyman. Now, this is a double-edged sword because the better you get at something, the more keyman you are. And so the more you've invested in yourself, and in some ways, you become a liability for the business as much as you are an asset. But this applies across the board. And so the only real way to pay this down, I'll explain in this little clip.

1:00:52So one of the big issues that especially like when you're coming up, the problem is that everyone here, we had to learn all these different things, right? We had to learn marketing. We had to learn sales. We had to learn product. We had to learn hiring. We had to learn all this different stuff, right? And then we want to hire one person who's lived our entire lives and then expect them to work for us for a fraction of what we pay ourselves and are barely even willing to keep doing what we're doing. Right. Yeah. So we have to break it into parts. And so I give the analogy of the unicorn, right?

1:01:21So like you're a unicorn in your business. You looking for unicorns is probably not a productive activity. But if you wanted to create something that was an approximation of a unicorn, it's like, okay, well, I need the horn so I can go find a rhinoceros and I'll get the horn part. And then, but that body's not going to work. So I got to go get a horse. It's going to be a white horse. It's not going to have a horn. Well, fine, I can get the horse. But then what about the magic pixie dust, right? So then I got to get my fireflies and I can add those on. And so I just bolt on the horn of the rhinoceros onto the horse and get some fireflies.

1:01:50Is it as good as you? No, but it'll be pretty good. And so if the business requires somebody who's as good as you to run, then the model doesn't work. If the business can work with somebody who's half as good as you, then you're always going to sacrifice some margin in order to scale. And so I'll say this differently. One of the terms I use is scale zero. And so the goal is like, how can I get? So let's say hypothetical math. If I do something, I make$20 million a year and it's 50 % margins and I'm heavily involved in a whole bunch of shit, right? If I hire truly all the people that I need, maybe my margin goes from$10 million to$4 million.

1:02:29Let's just be an extreme here. But I do nothing now. But now that company can then go from$20 to$40 and I can make$8 on$40. And it requires zero of me. And so, again, it's this, a lot of times we have our ego tied to, because you said it, you're like, I got to this. And as soon as I'm there, there's the CEO. And so it's because you have this tie for whatever reason that like, if it's not this number, you suck or whatever that is for you. And so we need to be able to give up some of that profit in order to break the activities that you currently do into component parts. The activity of doing that is we do time studies.

1:03:04So you look at what you do in a current week and then you start parsing out, okay, you can take the entire time study, plug it into GPT and just say, hey, what roles? if I were to replace 100 % of these activities, what is the smallest amount of roles that could replace all of them and give me the job description and names for those? And it's like, okay, well then actually you do things, you do some HR shit and you do some marketing stuff and then you do some sales shit. Okay, great. So you need one of these, one of these, and one of these. And it's like, cool, how much is I going to eat in my margin?

1:03:34I'm going to cut half my margin away. Okay, am I willing to do that so I can actually have something that works? And the first time you hire them, two out of the three will suck because you don't have pattern recognition. and then one of them will be okay and then you'll hire again and it'll take you six months to figure that out and like but that thing is is that once you get there though you will finally be able to get to 500 or a million a month or wherever the next stopping point is and then you'll be like fuck i don't know how to hire this next person and then you'll fail for a while and then you'll get it you just can't stop you can't stop trying just look at what you do like what do you spend your time actually doing what you think about all that stuff doesn't really matter all that matters is like, I communicate these people in these ways.

1:04:10I make these decisions. So fundamentally, most of the time, you're going to be making decisions or you're going to be doing some sort of individual contributor activity. Those are going to be the core elements of what you do, right? If you want ideating, then maybe that's going to come here and then we'll make a decision about it, right? But most small businesses don't need more ideas. They need more execution. And so we just have to break what you do day to day to the buckets, the constituent parts of what they are and just take all the mysticism out of it of like visionary and the energy and whatever.

1:04:39It's just like, you do this stuff, this stuff makes money. We need other people to do that stuff. So I wanna move on and talk about culture. So a lot of entrepreneurs throw this word around and they don't even know what it means. And so they wanna improve something they can't define, which makes it very hard to improve. And so I will walk you through how I define culture in this clip and more importantly, how to improve it. So, and I bring that up because many times we as entrepreneurs will say, I really wanna fix this thing. And then we say, cool, then what's that? It's like very hard to fix if we don't know what it is.

1:05:07Sure. So I define culture as the rules, spoken and unspoken, that govern reinforcement in an organization. So what are the rules? If that, like, and then what is a rule? A rule is a conditional statement of if this, then that. So if you do this, then you will get rewarded. If you do this, then nothing will happen. If you do this, then you'll get punished. So culture is a series of rules that govern what happens, good stuff, bad stuff when you do things. And so the reason that culture I think is so difficult for people to transpose from one to the next is that there are so many rules that govern behavior within an organization that people are like, you just got to be around there and like soak in the culture, which really just means you need to observe many rules and conditions of reinforcement occurring over an extended period of time to understand how the rules work here.

1:05:50Yeah. Right. And so as a result, people just don't codify the hundred plus rules of behavior. And so there's kind of like, I would say two paths that you can do. I would say my preference and then what's probably the easier, faster one. So that my preference is actually codify it all and say like, what are all the things that make us us? And of course you're going to have your values and whatnot, but I see values as chunked up rules. So if I were to say, I have 200 rules of behavior that I want to say, these are the things that are rewarded. These are the things that are punished. Okay. How can I chunk these into three statements or three bulleted words that when unpacked would mean that if I believe this to be true, this is the set of behaviors that will go along with it.

1:06:31that's that is how i would approach um this type of thing if you want to do the fast fast and dirty way you have the three values and then you just try to describe them the best way you can and that's how values should be created um but i do prefer the like let's do more of that work and say like how are all like how do we like and think about when you're thinking about these rules think about the conditions where behavior exists and it'll be much easier for you to think about the rules of behavior. So it's like within a meeting, what are all the rules of a meeting? Right? So maybe at acquisition.com, if you're not talking, you're muted.

1:07:04That's a rule. And if you talk while you're in a meeting and you're not talking, like you're not talking to everyone else, like that's like close to grounds for termination. Um, just because it means you're not paying attention. Why are you here? Then like, you know, what are we doing? Sure. Uh, so it's like one of the things. So it's like, what are all the conditions in which we interact? What are the rules of engagement around those interactions. And then that codifies up to three statements that should chunk up what culture means to you. And then when you have that as the litmus test, when you go and transpose that to new location, one, you want to make sure that the leader does actually adhere to those sets of rules and behaviors.

1:07:40And my way of doing this would be to take the biggest culture champion here and move them there, provided that culture can still reinforce itself without that leader. Death creates clarity. A business owner asked me about what I meant by death creates clarity. And I want to leave you with this message. Death creates clarity. Yeah. What are you clearer on today? I think it creates a forcing function around prioritization. And I think that like,

1:08:12I mean, it's the ultimate razor of like, will this matter? And I think that writing, I think writing my mother's eulogy was really valuable for me because if anyone here has written a eulogy or an obituary or anything like that, you get to see what's included and what's not included. And a hilarious amount of the things that we stress about in life are not included. Also, a hilarious amount of the things that we strive to achieve are also not included. And so when I think about, and I think Charlie Munger is the first, like, he's the first person that I know said. I'm sure plenty of people have said it before him.

1:08:45But I love the concept of the reverse obituary or the reverse eulogy of like, what would Alex's eulogy be? It's only going to be 500 words to a thousand. That's how long eulogies are, which by the way, you're like, wow, that's not that long. Because people are there, they're busy. It's, you know, it's rush hour. They got places to be and you're not trying to take too much time. And so you have to write it out. And so usually like the accomplishments we have, like, if I really think about like what the, you know, the Alex funeral is going to be, no one's going to give a shit about how much money I made or anything like that.

1:09:24No, like imagine Titan of industry, right? Like some people want to be cover of Forbes or whatever it is. It's like when you go to that guy's funeral, you know, they don't start with like, he was a Titan of industry. Okay, fine. That was one sentence. And that was, that covers 40 years. Great. Uh, but then they're going to transition to two things, which is what I saw as the common theme, which is service and character. And so in thinking about like what, what are the things or what are the causes that I, that I do meaningful enough to serve? And then what traits do I need to exhibit in order to become the person capable of serving them at the highest level?

1:10:01I think everything that we do between now and then, or at least for me, is in service of that eulogy or that obituary. And I think that's the reason that death creates clarity, at least for me. When you have those nice moments, it's like, how can I benefit from this?