The NO BS Way To Build $1,000,000 Business (on Impact Theory with Tom Bilyeu Pt 2) | Ep 857

0:01Hey guys, welcome back to the game. This is part two of the impact theory guest spot with Tom Bilyeu. We go deep on a ton of topics. It's me. So it's going to be business related. Tom talks about a lot of stuff, but for in terms of this podcast, it's mostly business. And so I think you'll enjoy the exchange. I don't get to go this deep on stuff often. And so it was enjoyable. If you like the first one, you'll like the second one. Enjoy. Yeah. Now the willingness to try things I think is incredibly important. um you said earlier about courage i want to go back to that so what is what is the most courageous thing you've done i actually think it's quitting my job i think that's the hardest thing back in the early days yeah i think because i actually weirdly i think about this a lot um like what are the hardest things that i've done uh hard thing number one was quitting my job the decision of quitting my job and then leaving baltimore uh because i i to give everybody an idea like you see me now uh but i was so afraid of my father's judgment and the few people that i knew from back home that i was going to like quit my white collar job to go to go start a gym and be a personal trainer uh that i actually drove across the country and called them when i was already there because i basically left in the dark of night like no one knew i basically was a stowa away to my own fear and so i had to just wait a second i just had to i just drove there and i called my dad i think when i was going through texas and texas is like forever when you're dropping across it yes it is and um i called him i was like hey i'm gonna i'm gonna do the gym thing and he was like yeah no worries he's like just you know come over we'll talk about it at lunch because he would always talk me off the ledge he'd be like hey you've got the you did vanderbilt you did in three years you got the good consulting job he's like you aced the gmat he's like you're going to go to harvard you're going to get your mba there or stanford you'll pick one of them he's like and you're set like you're good just just follow the plan um and i was like i i don't i don't want to do that and uh when i was like i'm already gone then like the flip you know then the thing that i was most afraid of was that he was freaked out which is exactly what he did and the thing is is that a lot of people would expect the story to be like oh my dad understood and he was super supportive um but he wasn't we didn't talk for a few years after that because I was the prodigal son and I did everything to his plan and I was living the most successful version of his life, not mine.

2:29And it was one of those realizations where you're like, I'm winning at a game that I didn't design. And so I'm actually by default the loser. And so me quitting my job to then pursue fitness was the hardest thing I've done. The second hardest thing I've done was actually getting my gym to work because I had so little understanding of how anything worked. I had$50 ,000 saved up when I was 23 from the consulting job I lived on basically nothing and almost banked all my pay. And I basically bet it all in the gym. I had$5 ,000 left after paying for all the equipment and everything else. And I had$5 ,000 a month in rent.

3:07And I had never sold anything to anyone. And so the idea of making$5 ,000, having never really sold anything to anyone in a local business, which I'd never had in California, which I was from Baltimore, I knew no one. So it wasn't like I could just get on my immediate friend group to come and at least pay the rent. I had no one. And so I think when I was like sleeping on the actual floor of the gym, because I couldn't afford two rents, was when it like really hit me that no one was coming to save me. And like, if I failed, I would have to go back and tell my daddy was right. And that felt like worse than death for me.

3:41And so that was incredibly hard. I remember that I was I have a pretty decent work ethic. But at that time, I was my first session would start at 430. So I'd wake up at four. And then my in my last morning session ended at 10. And then I would do the marketing sales meetings. I would clean the gym. I would set up the next thing. I would do the get the workouts. I would get the music prepped. And then my four o 'clock would start showing up and then four until 730 or so people were at the gym. And then after that, I would run the billing and make sure the contracts are right and then reset up for the morning and do it all over again.

4:16But I had zero employees. And so I didn't know you could hire employees. It was only when a member of mine who was an entrepreneur came up to me and I'd been short with the class that morning. And she was like, you can't treat people like that. And I was like, what do you? But I knew that if she was saying it, like I was really off base. And I think I was sleeping right around four-ish hours a night. And people say that. But I did it for, I want to say, I want to say like close to six months. Oh, God. I was like delirious. I'd fall asleep on the like leaning on things. Yeah, I was very, very tired.

4:50And I used to tell people that it was the kind of tired that a good night's sleep couldn't fix. Yeah. Like I needed a lot of time. But that was probably the second hardest thing that I did. uh a lot of it was just because i i made up for a tremendous lack of knowledge with just i just have to make rent and then everything else is mine so i didn't have any understanding of like i just i spent money on nothing my first gym had sandbags that i wrapped in duct tape as the equipment that i started with um yeah it was crazy um and when i opened the gym i was selling people into a gym that had no equipment because i thought that you should open as fast as possible to start making money.

5:30Now, if I knew now, I would have said I would have three months of pre-sales, only collect money and have no classes. That's what I would have done, but I didn't know any better. And so I was trying to get open as fast as I could, which then meant that eight hours a day at baseline is me with a microphone in front of customers training, doing all of that before I could work on the business. And so it was very real 16, 18 hours a day. And I think setting that standard for people who are new is useful because when you start, you don't have enough money to pay other people. And so you either have to raise money, which you can do, I wouldn't recommend, especially if it's your first shot, or you have to work three jobs and basically throw out all of the opinions of everyone who has no idea how business works.

6:15Because the only people you probably know when you're starting out don't have businesses. And so they will tell you all these things you should be doing and you should take more time off and you should have more balance and this isn't healthy and they will tell you all these things but they are not where you want to be so don't listen to what they say completely ignore them and instead like i like this little ism but it's listen to the opinions of people don't listen to the opinions of people who are closest to you listen to the opinions of the people who are closest to your goals. And a great approximation of that is if I had known that when I was doing the decision to quit, then I would have known that this is where I want to go eventually.

6:56I want to start a business. And if it's hard for me now, it's never going to get easier. As I have more responsibilities, kids, wife, whatever, that's only going to get harder. And the people that I looked up to the most were the most aspiring entrepreneurs and they would have said, go for it. But everybody I knew was saying, don't go for it. Don't throw away what you have. But I think sometimes you have to trade good for great. And there's always going to be a J curve. There's going to be a dip where instead of being immediately rewarded for the decision, you're immediately punished. And you think that you're making the wrong move because of what immediately happens after, which is how humans learn, which is why it's so tough.

7:31But it's like the first week of the gym, just because you haven't seen results doesn't mean you're doing the wrong stuff. You're probably measuring on the wrong time horizon. And so quitting the job, Starting the gym was the second hardest thing that I've done. I would say that the third hardest that I've worked has been now, the season that I'm in right now. This is probably close to the hardest I've worked. But it's different. There is nothing urgent. Everything's important. And I am taking fewer days off than I ever have. And basically working at all hours that I can physically. And so the times that I'm not working is active rest so that I can increase my total output over a longer period of time.

8:16And it was a long winded answer. But those are the two things that I feel like those were hard, hard calls for me to make. And those were real struggles for me. But those those are the times that I feel like it was I'm very proud of who I was then to do it. Now, I heard you talk recently about you can feel a shift in culture, people moving away from the soft stuff, getting a little bit harder. Yeah. What do you think is going on in culture? Oh, I think the pendulum has swung back and I'm so excited. I do think that it's going to swing back too hard. That people are going to go way too hard into like other direction and all that stuff.

8:50Oh, hustle. Oh, that I don't mind about hustle porn. So no, I meant societally, like from the political realm and stuff. I think that the pendulum definitely reached its pinnacle on the other side and then is going to swing back. And there's going to be. And the thing is, is that when the way pendulums work is that we have we start swinging back and everyone agrees. it's not everyone but more people do not agree that the it's better coming back to the middle then it's better and then it's better and then all of a sudden but hey more of that was good but then at some point it stops being better right and so and this is i think cycles is why humanity lives in cycles and so i think it's likely that we will over crack but it might take 10 years for that to happen so i think right now we're going in the right direction um which is uh basically pushing away from the political correctness and leaning more into reality which I am a heart staunch proponent of reality.

9:38You and I both. Now, you've said that you want to normalize guys, young men, working 12 hours a day, six days a week. Yeah. Why? Because I think that's what's required to get where you want to go on the timeline that they want. Why men? Why not men and women? I have an 88 % male audience or something like that. And so I feel like it's my place to speak to them. There are obviously women who follow my stuff. And if that's you, then you can assume that when I say men, I mean men and women. But I think that if a message is going to hit people, if I say men, I will have a stronger reaction and a higher likelihood that it changes someone's behavior than if I said people or men and women.

10:20And so if I look at my effect size of my message, if 88 % of the people who hear my message are men, then I'd rather make it as potent as possible. That's why I do it though. makes sense uh so what should young men be doing like what they're if they're working their ass off 12 hours a day how do they make use of that 12 hours i think being really clear on trade-offs so i and i think you i think i'm speaking for you here um i gave up my 20s uh i would say i sold my yeah sure yeah i yeah i sold my 20s i'll say that well i actually ended up losing everything um and so i did have to start over at zero again but hey with way more knowledge so yes all day long so i traded my 20s how about that so and that and that perfectly mixes with the trade-offs is that you can have the nights out the fantasy football league the rec dodgeball team that you want to go to beers on Tuesdays, you can do that.

11:23You just can't also build your dream unless that is your dream. And I think that's the big part is like entrepreneurship isn't for everyone. And I, as much as I, I talk about entrepreneurship a lot, I think there are plenty of people who don't want that in which case, great. Like you've already won. Congratulations. Right. It's simply the complaining about reality, that's my problem. And so I think that most young men could accomplish all of their goals if they extended how long they would be willing to give themselves to accomplish it. Now, not to anti Peter Thiel here, because I'm a huge Thiel fan as well.

11:58But I think that when you are a novice, you have no approximation of reality. And so one of the difficult parts with how we observe success. A lot of it's social media driven. And this is the best analogy I have. If you were to look at an Olympic marathon, look at where the people in the stands are situated. They're situated at the beginning of the race and they're situated at the end of the race. But watching someone start a race and watching someone finish a race has almost nothing to do with running a marathon. And so that is the closest approximation that people think that's why everyone's really excited to start a business and they're really excited to sell a business, but everything in between the mundane middle, as I like to call it, they're just, okay, if I'm four miles in, it's this times six.

12:49Okay. I'm five miles in it's this times five plus one. Like you just keep playing these mental games with yourself to learn to endure. And I think that that endurance is if I had to pick one trait for a young man to have, it would be resilience. And I define resilience as the amount of time after an aversive experience that you return to baseline function. And so if you have a series of behaviors that you do under certain conditions, and then something bad happens, how quickly you return back to the original behavior set. And so in doing that, Like if someone can not give up and learn, then on a long enough time horizon, you guarantee victory.

13:34Like if you only had those things, you don't stop and you get better. That's it. And I think that if those are the two hypothetical extremes, that's what I would want young men to have. And if you know that, then I know for me, because I've been asked before, like, did you always know you're going to be successful? And I don't really like the question because I only knew and I to my core believe this. I knew I would never stop. And that was the only thing I could commit to. I just knew I would never stop. And I knew that I wouldn't go home to Baltimore if the gym failed for whatever reason. And so my plan B, and this is this is super tactical for anybody, is that I think you should look at your plan B in excruciating detail.

14:14Now, Arnold has this whole thing of don't have a plan B, make plan A work. And I understand both both sides of this. but me knowing my plan B allowed me to pursue plan a, it allowed me to take the jump. But I think the day that I decided to live for me was the day that I, I allowed my father's dream to die. And so I think that you either live out your own dream or you live someone else's and one of them has to die for the other to live. Yeah, that's heavy. It's interesting. I never, uh, love my parents, but I never felt in any way, shape or form beholden to what they wanted for me. now i will say though this is sort of a bizarre similarity uh i was trying to write i wanted to break into the film industry and i thought okay i need a screenplay that's going to be my calling card because this is all before youtube and my mom once calls me in the middle of the day and i'm sleeping she's like why are you asleep in the middle of the day and i'm like i got a new job doing what driving driving what uh driving uh models driving models that's escorts and i was like oh god and so my mom was like you have to call him right now and like turn this down there's no way yeah and so that is the one time where i let my mother's superior judgment i think in this case but yeah so that i could write i took a job driving lingerie models uh to their appointments someone has to someone has to and the funny thing is in the interview they're like first of all the guy he's sitting there playing guitar while interviewing me and he goes i have to ask why are you interviewing for this job and i was like i need something that'll let me write during the day he's like okay well here's how it's gonna work the girl's gonna have a pager you're gonna have a pager if they paid you you know whatever seven they're like you go in there with a gun you kick the door down and and i was like oh god oh god but i actually took the job i can't believe i did yeah very stupid uh i'm very grateful to my mom for ensuring that that did not happen but i was actually going to go on a job where they're like you kick that fucking door down you get in if she sends you a seven or whatever the number was i was like okay cool if that's what it takes to write man yeah then we'll go for it but thankfully not i think it's worth um for those of you who are young men or young women there you go who are listening um i think planning out what b looks like and not being ashamed of it because the thing is is people will judge you based on the career path that you're making.

16:38But you're not making that as your career path. You're making that as the launch pad for what you really want to do. And I think that if you can reconcile that reality, which is that you will have people, like for me, it was super tough because everybody at Vanderbilt was that all the guys I knew were pretty successful. And so a lot of people were like, oh, back home now, high school friends sure are different. But like my college friends, I went to a good school. Like almost all of them are investment bankers, management consultants, private equity. Like they all make good money. You know, they're like heading some software thing like they all are successful and so when i went to do this personal training gym thing it was like oh hermosi gave up like he's out of the race you know he's not he's not playing the game anymore um and i would have these almost like these fan these shame fantasies of what they were saying about me while i was sleeping on the gym floor not being successful having literally kids above my roof because it was i was in a garage so kids would like party at night while I was trying to sleep.

17:33It's really tough. But like literally in front of me, demonstrating the life that I could be having while I actively was on the floor. But they weren't thinking about me to begin with, and nor do they really care. And they're going to all die eventually. And so if they were to die for me, then their opinions wouldn't matter. And if I'm going to eventually die, then what happened to me won't matter either. And so then it's like, wow, I'm going to change my entire present existence to satisfy the fictitious idea of what other people are saying behind my back when they aren't thinking about me. That seems silly.

18:08But it's hard. But people don't do it. And so I'm saying don't be ashamed of the lingerie job or the Uber or whatever it is that you're doing as long as you're using it to build towards the thing. Now, if you're driving Uber all day long and you're making$70 ,000 a year and you spend 100 % of it, then what are you doing? You're using all your time up and using all your money. Like you have to be banking something. You either be banking time so you can work or be banking money so that you can invest in something. When I say invest, I mean, invest in skills, invest in opportunity, not trying to play the crypto market or become a day trader because you will lose.

18:42Yes, you will. Speaking of things that people may lose at and that might be giving them existential dread, what do you think about AI for entrepreneurs? Oh, it's a great question. I'm not worried about it at all from a, what will it change about what I do? So I basically see the history of humanity as humans, then humans plus tools, and then tools beat all humans. And so AI for now is a tool, just like the internet, just like computers, and we will use the tools. So I, as an entrepreneur, will use all the tools available to win. And so AI will come online and we'll do that stuff until AI can do everything better than everyone.

19:26And at that point, it doesn't matter. Nothing matters. And so, again, me dreading that changes nothing about what I do today. And so what I will do today is what I've always done, which is do the best I can with the resources at my fingertips, what's available to me. And so I absolutely, across all portfolio companies, are pushing how do we incorporate AI into this? How do we put it into a streamlined process? How can we incorporate in sales and marketing, whatever? And we will continue to do that until an AI is starting and running businesses without us. And at that point, we will try and do that.

19:56And if AIs own AI businesses and they're just out-competing humans at everything, then the world is different. And I have no ability to predict that. And so I'll just keep playing the game until I can't play anymore. What's the most jaw-dropping use of AI that you guys are doing in a portfolio company? We're getting really close to being able to have it take calls. whoa yeah specifically inbound i assume uh no app on works too whoa yeah sales uh setting i think it will get sales wow yeah i think end of next year it'll be able to do sales whoa but like setting i think we're we're basically like three months off um so main thing the only issue right now is lag so the actual responses are are perfect they're on script they all reason all that stuff works the only issue is the lag time between someone saying something in the response or if someone says something, the AI starts responding, and then they say something else, it can kind of like jumpstart it.

20:50And so the next big iteration that's going to happen is voice to voice. So right now what happens is, you know, prospect says something, it goes to a satellite, which then goes down to a database, which then transcribes it. AI takes that as a text prompt, responds in a text prompt, beams it, translates it to voice, and then beams it up to the satellite to then say to the other side. That takes like a second and a half. As soon as it's voice to voice it eliminates like three steps and so it'll probably be like a half second and at that point that's just human latency and so um that's close like that's i think that's three three months off four months off like that's that's that'll be end of q1 next year wow now are you guys doing any of the training or are these companies that are building these these are tools that we i'm not an ai company and so it's like we were talking earlier about the platform of like are we a you You know, are we a dev company?

21:38Acquisition.com as a holding company is not an AI company. We want to utilize the tools that are available to us. And most of the AI companies that we've, you know, started vendor relationships with, etc. There's usually a training period that you want to train your specific, you know, model, agent, whatever. And so we've been good on that process. Yeah, that's where I want to get my hands in the mix. I want to do the reinforcement learning so that it will do the things we want to do. But yeah, I don't want to have to build the AI out itself. AI is the one that, man, this really gets me excited when I think about how much it's already sped us up.

22:13And we're, you know, what are we just under two years from when it launched? It's absolute insanity how far it's already come. If you could push a button and get it to work in one area of your company, that would just have a huge impact. Where would you want it?

22:32It's tough. I'll give you three. I'll take them. So, I mean, marketing sales. So marketing is like, how can we get the content stuff to be like truly top 1%. The thing that's tough is that whatever, whatever the thing that I hate and like about it is that whatever skill AI can do for you, it can do for everyone. And so it has a massive equalization. So like the ability to execute is going to be not nearly as much of a competitive advantage, which I'll just say transparently I'm bummed about because I'm pretty good at it. But I'd say marketing and sales, both of those. And then the one that people might not expect is decision making.

23:13Like if it can get better at prediction than me for outsized returns, then of the three, that would be the highest return thing that we could do. And so I think that, again, but if it can do that for me, it can do it for everyone. And so that's where, again, this is where I struggle with it. So I just think of like, what can I do today? And then I don't spend any time on what might happen in the future with it, because when it changes, I'll be there. Yeah. Yeah, no, that's, I think, the right way to think about it. With that kind of stuff, the nice thing now is AI doesn't have taste. And so what I have found is that because the output of the prompt matters so much in terms of what I give it, that that still feels like it matters a lot.

23:57To your point about you have limited resources against infinite possibilities, the same is true with AI. So you can have it go a thousand different directions, 10 ,000, a million, whatever. And that matters. So understanding the end target person that you're creating this piece for, but it taking all of the manual work off of my plate so that now I can iterate faster. So I just have to think about, okay, I need to understand my customer. I need to understand what it is that I'm trying to communicate. the angle that i want to do it knowing which piece to say yes to which to say no to where to push it and then to be able to edit it it it is it's taken so much time off of so many of my different workflows that's cool it's really incredible and for us because game development is such a big part of what we do if it can do 3d characters yeah oh my god that all of the cost is in the creation and the rigging of the 3D characters.

24:53How far is that away now? I'm going to guess. So I just saw very compelling 2D to 3D stuff. It's static, so you can't rig it yet. So I'm going to guess 2D to 3D over the next year is going to be extraordinarily compelling. Give it another 18 months. So 18 months to 24 months. And I think that the financial structure of a gaming company changes overnight. Yeah. Yeah. it's pretty crazy so you were saying that you're bummed about it uh replacing certain aspects of marketing because you're really good at it what is the thing because we can all look at you and go yeah you're there's something here that you were unusually good at what is that thing i think it's rhetoric say more um how you structure statements to make them more interesting or compelling for an audience.

25:46So you're doing it intuitively or do you have a method? The single greatest training grounds for this is Twitter. Or X. I started tweeting. I can't remember. You can probably look at my profile probably three-ish years ago. And I think Twitter is one of the best writing tools that exists because it gives you real-time feedback immediately for how good the quality of your writing and thinking is. and so there are basically sentence structures that resonate better with people and so that would be like having three things in a row where you have they all start with the same letter if if you have basically like a reverse sentence like it's not about it's not about listening to people who are closest to you it's about listening to people closest to your goals and so it's like there's a there's repetition there and you change one variable uh you know if you can't do it in a decade or if you if you wouldn't do it for a decade don't do it for a day so there's alliteration um and so there's there's and i would say some of that some of this has been probably subconsciously intuitive because i've i've tweeted probably 6 000 times over the last you know three years and so i've had a lot of reinforcement loops and it's and this is where like ai will do better than i will eventually but like right now i can look at i want to record this because there was this time where leila and i were driving and she wanted to like tweet while I was driving.

27:10And so she would read me what she wanted to say and then I would tweet it back to her. And they ended up like, they just banged it. And you kind of get in the flow. I was like driving on the road. I could just like kind of like zone out and think about it. And like that, that's something that I've gotten significantly better at over the years and making more content. So it's like I have verbal practice and feedback loops, which are more delayed. So I don't think it's as strong as the Twitter feedback loop. and that's probably been i think that's that's the from from a from a copy and content perspective that's where i think um i've put more emphasis i love it because this is really interesting for persuasion is that if you make the statement more memorable people have a higher likelihood of remembering it if people have a higher likelihood of remembering it then they will think it was their idea if they think it was their idea they're more likely to do it and so the best persuasion is when someone doesn't feel persuaded they just think it's their own idea and then they do it and so if you make things memorable in a very real way you will influence and change more people's behavior and so if we look at the best orators of our of our time the last hundred years they were very skilled uh rhetoric rhetoric sessions or whatever whatever yeah um and and and they use specific sentence structures that people tend to like and same it's like probably chords in music i think it's the same thing happens uh with words that's interesting all right what's some of the worst business advice you see people give out all the time?

28:38Do a bunch of things and see which one works. Why is that terrible? God, so many reasons. Well, first off, trying to do many things at once, you already have such limited resources. The easiest analogy I can think of is, imagine you've got one cup of water, and you need to overflow another cup to get it to be an effective dose, right? Enough volume for you to see an outcome. The visual I can give is, okay, let's line up seven shot glasses because millionaires have seven streams of income apparently. And so now we're going to pour that water into all of those glasses and then hope that it somehow overflows, but it's not going to.

29:22And so what ends up happening is you just have insufficient volume of action on seven things and then you accomplish none. And the fallacy is thinking that you'll see which one will work, which assumes that the environment, the circumstance is going to be the thing that makes it work rather than you. And so better stated is that you can make any of them work, but none of them will work unless you focus on one of them. That's all rhetoric, right? That's the idea. And so I think that is a very insidious piece of advice. I think that you can try many things if you want. If you are going to do that, do it in sequence, do one at a time.

30:04But I say that knowing that if you actually try hard at the first one, you'll probably make that work. So try the first one that you think is the best one first, in which case, why do you even have six through two or seven through two? And so that and I think there's this big idea. this is one that I remember talking to a portfolio company about. He was like, I'm not really sure if I'm passionate about this anymore. Like about like this, this, this product or the company, whatever. And so he was like, I think I want to consider starting something else. And I said, what do you think the natural extreme of this looks like at the top?

30:39Because in my opinion, all businesses at the top look the same, which is you're going to have a head of marketing. You're going to have a IT. You're going to have a sales, head of, head of product, head of customer success, whatever. and so if you win and you win all the way it looks the same and so where where your entrance point to the maze is doesn't really matter if that's what the hypothetical extreme is and so i have this story about a friend of mine who started a cookie store actually here in california so he started this cookie and he was in fitness right so that was kind of hilarious like it's the really fit guy who starts a cookie store and i remember i asked him i was like are are you passionate about cookies?

31:15And he was like, no. And I was like, huh, weird. He's like, well, I looked at the market. There's a lot of people. And this was before Crumble. So he had a good inclination that high-end cookies were going to be a thing. So he did his homework. But what he was passionate about was being excellent. And he did amazingly well. And so I think that you can be passionate about ideals and translate that to anything. And so I had a conversation with Ben Francis from Gymshark this year. Probably the best day that I had from a business owner perspective was hanging out with him. Just had a really good conversation.

31:54And there's not a ton of people you can talk to about like revenue levels and problems that come at that. And we had a great discussion. And what was interesting, he's like, I can't believe that you're doing all these different things. Because he saw each of the portfolio companies as a different thing. He's like, I can't imagine doing anything besides Gymshark. This is all I want to do. And I thought about it for a second. I was like, acquisition.com is the only thing that I'm doing. These are just like fundamentally, like you have different types of clothing. I can't believe you have all these different types of clothing, all these different types of apparel.