Leila & I Answering Questions about Partnerships, Growth, & Operations - Q&A | Ep 773

0:00A partner has to have time you don't have, money you don't have, skills you don't have. Right. Right. One of those three things. And you trade a piece of your company for one of these three things with the hope that the trade of that then gets you to your goal faster or increases the likelihood that you hit your goal. Right. And so if you think that you're going to hit your goal no matter what, then the only thing that you're making that trade for is time or speed is how quickly can I get there to my goal? And time has very real value. If you can get to your 10 year goal in four years, that might be an amazing trade.

0:26I would use that as my framework for appraising a partner. That being said, if no one is approaching you or you have no one in mind. then keep crushing. All right. So the topic of this is business partnerships and everything related to that. My name's Randy and I own a law firm in Miami. We focus on estate planning, trying to niche in on special needs estate planning. So I'm delving into paid marketing, specifically webinars for the first time that I've ever done any kind of marketing. And I want to know that when shit goes wrong, how do I know what to fix first in that? I don't even know what to expect coming out of it.

0:59Let's say there's like no people that show up. It's like, how do I like analyze that process it depends on how much time you have but a consideration for doing this is actually doing these with very small groups and so you can coordinate between like one to five people and then they all know what time it's going to happen and that way you don't have to worry about the tech and automations and all that stuff and your shorts will be basically a hundred percent and so then you can lead them through the call and it's like a little bit more casual a little bit more personalized and that's a lower risk way to kind of get reps in and then know what the questions that they're going to ask are and so then when you make your more formalized presentation, you know it's going to convert because you just did it with smaller groups and you're just increasing N.

1:36And so that would be like my crawl walk run. So crawl would be like, do it with one person or two people, one-on-one, do three or four iterations of that. The walk version of that would be go to my email list and then bring everyone together after I've tested the messaging. And then the run version is like I'm running ads to the webinar and the reminder sequences I tested on the walk are now with colder traffic who don't know who I am, who don't trust me. At each of those levels, everything just needs to be more dialed. Thanks for the partnership answer. Let's go right here. We make a great team, and so does the other CO, like friends, brothers, partners.

2:08As the company grows, we're small companies, as a COO, do I want to look for another COO or do I want to grow and keep leveling up my skill? When we grow as a company, are we going to look for somebody that's got really good COO skills or can I continue to grow and be the best CO for a company at different stages. What do you want to do? Be a great COO and keep going with the company. This is the way I look at it, which is being a great COO, it's not like I brought in specifically a COO to learn from when I was COO in Gym Launch. I just brought in other people from the outside and the inside that I could learn little bits and pieces from.

2:47Because if you really think about what a great COO does, they're usually a great operator of things and people. I think that you can learn that from a CFO you can learn that from a CXO you can learn that from a CMO so it doesn't necessarily mean that you have to bring in a COO to learn from you can learn a lot of those skills from other people that have been there or looking for outside mentorship or advisement I'm CO of the company, I'm not a co-founder if you weren't CO and you brought in another, what would you do? do you fire yourself? I don't know, I'm being honest I'm being honest because I'm a good friend too, so I don't want to hold him back either.

3:29That's a good frame to have. You don't want to be the reason the business isn't growing quickly. And so as long as you are aware of what your deficits are and that you are able to increase your weight of progress in terms of acquiring the skills to overcome those deficits, as much as possible, I think we're both pretty self-aware. But if at any point either one of us even just whispers a hint that the other one may have something they need to look at, we immediately change our behavior. And so I think how fast you change your behavior shows if you're worthy of being that person when the company's bigger.

3:58Thanks. One of the videos you created on YouTube, which was phenomenal, was the consulting, coaching business, and then there's the, I guess, a scaling business that can really take off. It really hit home. It seems like you're going to tell my brain and taking it and making a video for it. Doing your thing or teaching the thing. My question or challenge is, I started one company, which was a real estate company, syndication multifamily. It got to a certain level. I got interested in doing coaching, consulting, and so I started a separate company with a separate team. And I'm running both. They're both successful, but obviously I'm juggling back and forth.

4:30My passion is in the coaching and consulting, but I really like the fun part of scaling the other company. Returns are obviously different at this level. One's really on track to create a nine-figure net worth, but the other one is very fun and enjoyable. And there's some symbiosis. So some physicians on that side invest and vice versa. It's the eologists, all sorts of stuff. My dad used to say, just because you're passionate doesn't mean you need to make money from it. Otherwise, I'd be a bartender at a ski slope. And so I think that one of the big misnomers of the whole follow your passion thing is that we assume that everything that we, quote, enjoy, we need to monetize.

5:10And I think sometimes it's like trying to make your primary home also a great investment. You end up with a mediocre home with a mediocre investment rather than the house you really want or a really good investment that you would never live in. And I kind of see that the same way with the issue that you're dealing with. Because if you want to coach and you want to give back, you can just give stuff away for free and know that you make all the money on your fund side. And I can promise you as somebody who has done that, you will help way more people. This is a super common dilemma. It's like, hey, I've got a$4 million plumbing business and you know what, I really love helping other plumbers.

5:43And it's because what you get to talk about is the stuff that you're really thinking about, which is like kind of helping other business owners with these business things rather than dealing with Sandra who showed up sick in the actual business. So it kind of gives you this respite. But at least in my opinion, all the enterprise value, all the worth is going to be in the thing that compounds. And so you could just do it for free. And what would be interesting is like for that plumbing thing or for you, you'll be amazed at how much bigger you'll be just doing it for free. and you'll probably attract 10 times the deal flow to the other side.

6:14You're like, it's cool because I get some people here. It's like, give it away for free, then see what happens. That's just my two cents. Obviously, you can do whatever you want. Thank you. Yeah. This is about business partnering, for sure. When do I even start looking? One woman team. I don't even, is there like a revenue threshold? You don't need a partner. Why do you want to do, why do you? I don't know, actually. That is actually part of the question. Like, do I even need one? No, girl. Okay. Okay. I think a lot of times, and even for us, people come to us all the time and they're like, we could partner on this thing and I can open up this division of acquisition.com.

6:51There's people pitching us all the time on partnerships. The question is, are you going to get there with or without them? Are you going to get there anyways without bringing in a partner? I want to think I can, but that's the thing. I don't even know if I'm thinking about it correctly. Let me give you a framework. A partner has to have time you don't have, money you don't have, skills you don't have. Right. Right. One of those three things. And you trade a piece of your company for one of these three things with the hope that the trade of that then gets you to your goal faster or increases the likelihood that you hit your goal.

7:20Right. And so if you think that you're going to hit your goal no matter what, then the only thing that you're making that trade for is time or speed is how quickly can I get there to my goal? And time has very real value. If you can get to your 10 year goal in four years, that might be an amazing trade. I would use that as my framework for appraising a partner. That being said, if no one is approaching you or you have no one in mind. then keep crushing okay i think that's another problem too is like i'm extremely introverted and like i don't think it's a problem it's also a label that's irrelevant oh well okay i don't say that as a slight i say that it's like how much does this serve me yeah and then we have this like it just means that sometimes in these situations i prefer to not be around other people and so does everyone feel that way um no but it's like i there's so many times people are like oh i don't want to do this because and they insert label right it's like define what does that mean how do you know that and why does it matter thank you so much Yes, sir.

8:11Appreciate you both. It's exciting to see what you built and what you'll continue to build and create. In acquisition, when you're doing acquisitions and you're merging two companies in this partnership, that company has some culture, intentionally created or not, and you have a very intentionally created culture. How do you think about merging your culture into their culture or keeping them separate? What's your view and position on that when you guys do acquisitions? Don't merge. We don't merge. That's not our model. Mergers is different than acquisitions, right? If we bring a company into the acquisition.com portfolio, that's a standalone company.

8:46So we actually just don't do, in general, any of the companies that we have that are adding on other companies to them, like a platform company, we just kind of let them keep doing their thing. And maybe it means that then we create a handoff where we hand off the customer to different sales to facilitate another sale or an upsell or an ascension or whatever it might be. And maybe we consolidate financials. I think there's value in consolidating some of the shared services. So like Gym Launch, we consolidated HR, IT, finance, all into one shared service that then fed each entity. And then that was the shared services team that was all operated by one leader or CFO.

9:22And then it fed these companies. But they were all very – like we served the same customer. But again, this is not the same because we didn't buy one company, buy one company, buy one company. We started, started, started. And the same people started. It's like Alex and I started Gym Launch. Then we started Prestige. Then we started Alan. in terms of looking at the success of merging companies, it's actually a lot harder than people think. Because merging the culture, it's like you have so many personalities that clash. You kind of have to decide what's the dominant force. Because it's not actually like people merge.

9:51This is something that we've talked about with a lot of people in private equity. It's like one dominates the other. And so the question is, who's the dominating force? Who's the one that you want to dominate the other one? And the other one just kind of gets swallowed by the more powerful force or dominant culture. So we don't do them. And just to clarify, it's a little more with your values. You have your three core values. And how do those, not merge like the emerging companies, but just culturally aligning culture and values with the new acquisition? Is that something you're just screening for before you're even creating an acquisition?

10:23When you say culture, what do you mean by that? I'm referring more to values, the way that you do things, the way that you operate. And the reason that I asked that was because I think if you can define it really clearly for your team, then you'll have a higher likelihood of influence on their behavior. And so we see culture as the rules that govern behavior. That's what it is. It's the rules that govern reinforcement and punishment in an organization. And so the values that you have are intended to be chunked up terms of those many skills. So we talked about earlier charisma, kindness, whatever.

10:50They're really chunked up. They're big, big amorphous terms that then represent with the largest, broadest brushstroke all of these many behaviors underneath of it. But every company might have their three values or five values or whatever it is. and then somebody comes in and then they very quickly see, oh, these are the rules that govern behavior. So if I come in here two minutes late to a meeting, no one cares. And so that is a rule that governs my behavior. There's no punishment for attending work late or coming to work late. But if I curse, then in this culture, that is a rule that is enforced, that people don't like it or it's frowned upon.

11:20And so it's getting really clear on what are the rules that we have, spoken and unspoken, in the organization that govern what is reward and what is punished. And so if you want to change the culture, I think the first step is understand what are the differences or discrepancies between what they do. And a lot of that takes keen observation of behavior. What we have found with teammates too is if you're very clear, it usually gets done pretty quickly where you give feedback to someone and you're like, Nancy, you know, or, you know, John, can you just stop being a dick? The problem is that John is a dick naturally.

11:51And we use that one term as a bundled term for many smaller behaviors underneath. And he doesn't know how to stop being a dick because he doesn't know which behavior it is that causes other people to call him a dick. And so if you're like, hey, when you cut people off, when they're speaking, they describe you as a dick. If you counteract what someone gives as an idea and they immediately say why it's dumb, people will consider you a dick. And so if you stop doing those two things, it'll decrease the likelihood people will call you a dick in the future. And it's like, oh, wow, thanks. And then when he stops doing those things, people stop calling him a dick.

12:20And so all of a sudden it's like, oh, it wasn't that. It was just the two or three behaviors that he did that then pissed people off. It's just taking that one micro example and expanding it towards an organization, and that's fundamentally how culture is both created and destroyed. Actually, culture always occurs. It's just the accumulation of those rules. And is that something that you guys are looking for somewhat of an alignment on before you're partnering with someone to ensure that there's going to be alignment on these values and working towards that? Or just how important is that to you in your acquisitions?

12:47Basically, we come in as a growth partner. We're not coming in and taking over the business and kicking the founder out. And so that's probably the thing we screen for the most heavily. We have looked at so many businesses that are, I mean, we just passed on one earlier today. Super sexy business, really high EBITDA. But I was just like, dude, I don't think the expectations are aligned, nor do I think the values are perfectly aligned. I think they're probably missing one. And so, again, it's kind of like what we were talking about, like outlasting. Like what partnership is going to be able to outlast?

13:14And I think for us, it's either finding people who already have those values or finding people who are open to assimilating ours. And I think that's worked really well for us is also finding people who have founders who are first time in a very successful business. and they really want to learn and they've watched our content, they've assumed all of it and they're like, I want to partner with you and I'm not looking for anybody else to be my growth partner. Like I'm not looking to work with PE, like none of that. I just want to work with you because I respect the kind of people you guys are and I would like that.

13:44And so you find with someone with that desire, they watch everything we do. You know, they see how we run the meetings with them. They see how we communicate with them. And I talked to our team about this for like these workshops. We demonstrate rather than teach. If we come up here and talk on stage, but then you guys hear somebody on my team talking shit behind my back, it doesn't matter what I say on stage. Same goes with the portfolio companies. It's like they are watching us more than they are listening to what we tell them. And so I think for those relationships, it's like heavily screening on the forefront.

14:13And those relationships, the most successful ones, we worked with for a long time because it's such an important thing. We don't want to get wrong. And so if we have to build a relationship where we get to know them over a year and uncover the fact that those values are absolutely aligned, then we're like, that was worth your investment because otherwise it's not like it's a reversible thing to buy 65 % of somebody's company. And so I'd say the same process that Frank went through for hiring, we have the same process in terms of the values for looking at portfolio CEOs. We actually use a lot of the same questions.

14:44We do more interviewing, more questions, more in-depth, and we have more people on our team do it. But it's fundamentally the same thing as it is interviewing somebody for a role. And it's a lot of that plus, I will say this one thing, which is no matter how aligned we are with the founders, their culture, even if they have the same values, looks a little different. Because the founders are all a little different. We have some founders, I would say they embody the same values as us, but they're a little bit less professional and a little more scrapped. And so it looks different in their organization.

15:15It's kind of like Gym Launch, when we had Gym Launch. Here we have competitive greatness as one of our values. In Gym Launch, we had grow or die. They kind of mean the same thing. You know what I mean? But it sounds very different. It attracts a different type of person. They might not have our values on their website as theirs, but they have very similar ones just set in their own way. Great. Hey, guys. Thanks so much. So I have a golf fitness and rehab business. We do everything online. Cool. I started brick and mortar just to build authority. We've got the largest database in the world, 15 ,000 on the physical metrics, change data and all that.

15:47So at this point, we guarantee results in 10 weeks. Within two weeks, they pass their four main mobility centers. Within 10 weeks, they gain 10 yards, which any golfer here knows it's a big deal. After a year, they gain 20. My question is around the offer. There's a lot of guarantees of speed in the golf world. Most of them are BS. How would you recommend differentiating? What is the problem? Is it that people aren't buying? Is it that people aren't clicking? What's the problem that you're trying to solve? They're buying. We close 50-plus percent. It's more on the front end. It's how do we get more traffic into the funnel?

16:20How do we know the guarantee is a problem? I don't know if it's the guarantee. How do we make the offer more? Are you running ads? Yes. Okay. Then it might not be any of that stuff. You might just need better creative. Okay. Most people are limited because their creative is not good enough more than their offer. And if you have all the amount of proof that you have, I'd want to put as much of that as I possibly could inside of the ads themselves. I think I was talking earlier about amazing offer, shit loads of proof. I'd still take tons and tons of proof over a really compelling offer. I doubt that the nature of your guarantee is the main constraint in the business.

16:50It's probably the quality of the creative. And if I had to zero in on it, how much are you spending a month on ads? 35K. And how many pieces of creative a month are you making? Probably we film 30 ads a month. Okay. I mean, it's not terrible. And if you do that weekly, that'd probably be a better start. And then also when you look at, when you're making the ads, how long have you been running ads? I guess six months. Okay. Well, so you have some library that you've made. So you've got probably 150 ads that you've run since day one. Look at the top 1%, 5 % of your ads and look at the first five seconds.

17:22and then only use those first five seconds for your next batch of ads. And I can almost guarantee that your next batch of ads will outperform all of your other ones. So every time we film ads, we film it not like through the entire ad, but we film all the hooks, all the what we call the meat, which is the offer, and then all the CTAs. And so what you can do is you can mix and match them if you're wearing the same outfit. That's what we do. And that's what Alex was showing me is like you can get so much more out of them because if you make an ad, you find the ad with the one winning hook. And then you're like, shit, we should have different meet and different CTA for that ad and different creative.

17:54But then you're like, well, shit, I'm going to have to clip it. It's going to be all weird. But if you film them all, so it's like I film 20 hooks and then I film the meet, which is pretty much the same for most ads. It's your offer. And then you film 15 different ways of doing call to action. Then you can mix and match them. So basically, when you do have a winning hook, when you find one, you can then match it to the other ads that you have. So when you do that, I mean, this will give you 60, 80 different ads from one kind of recording session. but the real magic happens once you have your winners you're going to have your you know five ish winners that you use on the vast majority of these this is like how i get people started but your second and your third and your fourth and your fifth everything after your first like i'm just trying shit out is all going to be 80 of my ads are past winning hooks and then 20 are going to be let me see if i can beat the control i would say that the big thing that has changed over my career as an advertiser is I used to spend all this time on trying to figure out new ads and new angles and new hooks.

18:52And now I spend 80 % of my time just doing the exact same thing over and over and over again. Once we find a winner, we just keep hammering it to absolute death. And so it's like, can I do this same winner winning hook in a different shirt? Can I do it as a different background? Can I use a prop for it? Can I take the same video that was a winner and then just put a black and white filter on it and run it again? Can I change the captions and the headlines and the header and the footer stuff of the ad. All of those things are just permutations that I can use on my winners, and that will often give you 10x the original ad in terms of performance.

19:26That's great because we're doing it, but we're only doing five hooks and three. Yeah, and just once you have the one or two hooks that work on your best performers, make that the hook for everything, and then take 20 % for just the random other ideas that you have, which usually I'll take those from I watch ads. It's what I like doing. And specifically, I watch hooks. That's what I pay attention to. And so for you guys, I have premium on nothing because I want to know what the hooks for the ads are that people are running. And it's just as powerful or more powerful to listen to hooks in other industries.

19:55And so even though you're in golf, you can still have a hook that you grab from the hotel space. It still could work great. And you would do that weekly, those 23 to 5? Filmed ads last week. We'll film ads this week. Same ads in a different setting. So for you, it would be like you could do something that you try direct to camera. You could do some where you're walking on the street. You could do some in the facility, like showing it behind you. And you could try the same ad in all those different settings. I think the more close, like you can like show, rather like talk about like show, don't tell, like show yourself.

20:24Like if I have an ad, I'm right here. And like, you can see people in the background. I'm talking about a workshop that's like right there. It's like, they don't believe you because they see the customers. You know what I mean? Awesome. Thank you. Can I have a couple of your thoughts on sort of building a team of family and friends? Risky, I know. but this is like my goal of building a huge basically family company you have to treat it when you're in the work setting as objectively as you would anybody else you know and i think that that's one thing that we've done really well within our partnership is like it's not like we got into the partnership because we were dating it was like this makes a lot of sense and it made more and more sense as we as we carried on and then the thing that we always talked about and we always said to each other is like this has to make sense even if the relationship didn't And that goes the same for any family that I would say you hire in or you use to build a team.

21:14Because where I made the mistake was that I hired in a family member, immediate family. And with that person, I was much more lenient on what behavior I allowed them to exhibit in the workplace. And so because of that, they probably stayed a year longer than they should have. And so then when I did let that person go, it was even worse because they'd been there longer. And I was like, I haven't really – I should have done this a while ago, right? And that's a shitty conversation. versus like my dad now works in the company and it was like, okay, this is what it's going to be. And this is what needs to happen.

21:41And then even when, you know, for example, my dad's like, he says, he's like, you know, I've messaged Alex, but I was like, dad, it's not how we contact Alex. How we contact Alex is you put a ticket into Davina in Asana and you don't text me about it. You don't text him. That's not worth his time. Do you know yourself well enough to know that you can uphold the same standards with family that you do with the rest of the company? Because if not, it also discredits you because if I employ people in my family and I treat them differently than other people on my team, I lose respect with my team for doing that.