This Will Make You More Money and Less Stressed | Ep 782

0:00What's going on, everyone? One, I actually do have something that I think will, one, make you a lot more money, and two, make your life a lot better as an entrepreneur. Layla and I were in this very deep discussion the other day of all the stuff that was on my plate. And so she and I do this on a regular basis because I tend to get overwhelmed with the amount of work that's put in front of us. And she does too. And so this is a habit that we've done. And so if you have an operator or somebody who's number two in your business, I would encourage you to do this on a regular basis. And we don't do it often enough.

0:31But we tend to basically do it when one of us gets stressed out of our mind and is like, I can't handle all this. One of the things that she brought up was such a powerful frame. And I feel almost embarrassed that I've never made this delineation until now. And I want to just hopefully give you 13 years back of stress that I'm looking forward to not having as much of. Which is, we need to understand the difference between problems and missed opportunities. And so what does that mean? So a problem is something that threatens the future livelihood of your business. So it decreases the likelihood that your business will continue to exist.

1:05So for example, if you get customer complaints from your product, that is a problem. If your processor relationship becomes a red flag, that is a problem. If your sales team starts dropping conversions, that is a problem. These are things that threaten whether or not you're going to be alive tomorrow. The second bucket are missed opportunities. These are things that you are not doing, but you should be doing in your business that could expand or grow your business. Here's the fundamental problem. In my life, I have almost equally colored them the same as just things to do. I need to fix the sales team.

1:41I also need to get this email follow-up campaign redone because it sucks, right? Or it's not there to begin with. We need to get this retargeting across all platforms. Why aren't we doing that? And you probably have this list of what I consider should-dos, right? I know I should be doing all these things, but I'm not. And so this is where this gets really painful for the entrepreneur, myself included, which is we only have limited resources, but our list of should do's is unlimited. The amount of opportunities taken to their natural extreme is that you have a business that sells everything to everyone.

2:16Think about it. At every point, there's, oh, we could have a product here. That's an opportunity for revenue expansion. Oh, we should add in this other channel. That's a possibility or opportunity for revenue expansion. And so what ends up happening is that over time, everything feels like something that you should do. And then over time, your list just gets longer and longer and longer. And unless you delineate which thing is a problem and which thing is a missed opportunity, you will get way overwhelmed. This is why I think this is so crucial. Missed opportunities are typically more fun. They're exciting.

2:52They're new things. They're shiny. And that's why us entrepreneurs love pursuing them. The reason that I talk about focus and the woman in the red dress so often is it's because it's the thing that I struggle with to this day most often. And so half of these sermons, probably more than half, are actually just me yelling at me, to be clear. Now, these are really fun and exciting, and they tend to be around the things that you love. And so if you're a product person, you're probably going to have a lot of product should do's. If you're a marketer, you probably have a lot of marketing-related should-dos.

3:24If you're customer success-related, same thing. So if you're finance, same thing. Whatever your thing is tends to be the thing that you like doing the most of. And that's where you tend to see the most missed opportunities because that's where you spend the most time. You can always see the next step, the next step, the next step. And you keep wanting to grab those other things and bring them to your business because you see how much money that we're, quote, leaving on the table. Problems, on the other hand, suck. And they're not fun. And it's usually you going into something that you set up once and having to fix.

3:52You thought it was going to work, but it's not being executed properly. Or there's some key problem that you didn't expect. It's basically you did something, a new piece of information came to light, and now you have to do something about it. The reason, beyond what I just said, of why you shouldn't focus on the missed opportunities, because there's obviously so many of them, and taken to the natural extreme, it's literally everything, is also because when you prioritize missed opportunities, you grow your business. But guess what else happens? You grow your problems. And so if you have not solved your problem before growing the business, that problem just gets bigger.

4:29And I will tell you something that I have, and it's taking me far too long to learn, is that it's easier to solve small problems than big problems. When we're thinking about putting the sequence of what things we're going to prioritize, by the way, the TLDR of this is this is strategy. Strategy is prioritizing limited resources against unlimited opportunities. These are things that you could do with these resources versus the resources you have. And so if you have a fixed pool of resources, the first things, and this is like I'm re-looking at my list right now, are the things that probably suck.

5:03They are the problems. And that is where you can spend or should spend, in my opinion, your time. Because when you solve your problems, guess what else also happens? You grow. So opportunities can grow your company. Problem solved also grow your company. But when you solve problems as you grow, you get growth through getting better. When you grow through capturing missed opportunities, you grow through doing more. And to be fair, I have no problem with growing through doing more. But I do have a problem when more also creates more problems. If the goal of the entrepreneur is to allocate resources across the entire company to achieve the best returns, then we should be allocating more of our time towards solving problems that are coming up on a daily basis.

5:52When you have a business that no longer has problems, you will grow by default. And so my allocation of resources has gone in this direction. Now, I want to zoom out and make this super tactical for you. You probably look at data, hopefully, if you follow my stuff to any degree, on a regular basis. Now, if you're earlier on, you have to go gather that data from tons of places. As you get more advanced, that data becomes pushed to you via dashboards or direct reports. People present those things on meetings. It's the first slide. And then you talk about the data. So I want to give you a 201 level hack here that will change how you run your business.

6:28Number one, the data that you choose to display must be there for a reason. One of the biggest problems that I see across our portfolio companies and even within our holding company is that my direct reports and my employees often over-report because they know I love data. And so it's like, look at all of this data that we have. But if you present me a piece of data and a change in that data does not result in a change in behavior, it is a waste of time. And so right now, if you look at the data and you're like, okay, we're trending in this direction. If you ask the hypothetical question, if we max this out, would it change what we're doing?

7:08If the answer is no, then you should stop looking at that piece of data. It's noise, not signal. When you're making the decisions for your business, the data that you look at, you should clearly know and your team should know what behavior this data influences. If our average view duration drops, then it could be from a number of reasons. But if it does drop, are we going to do something about it and what are we going to do? This also will target your discussions or orient your discussions with your team. And so if they come to you and say, hey, we want to run a meeting about this, the end result of every meeting should be a change in behavior.

7:49It should be what are we going to do? Now, if someone says, hey, I want to report these trends that we're seeing, cool. And I'll give you a really recent one that happened. I had a vendor for a platform a while ago, and the vendor was telling me, hey, we should go for shorter versions of this type of content. And I was like, okay, why? And he said, well, because when we shorten it, a higher percentage of people watch it or consume it. And I said, why do I care? What does the view duration or listen duration have to do with any of the metrics that we have in this business? Can you prove to me that us getting a higher percentage of people viewing a shorter piece of content in some way drives our business?

8:35Now, if he then said, yes, pieces of content that have higher average view durations or average listen durations then create more shares, then I would say, got it, done, we're doing it. But if you just report, oh, we should do this because it improves this metric, how does that metric tie to getting us more customers or making customers worth more. If you can't tie why this thing or this metric that we somehow track tracks to this, I do not care. And the reason I think this is so important is that we have such limited attention in business every single day that if someone's going to vie or bid for our attention, they better damn well have a good reason for it.

9:16And also, your team is limited as well. They are human beings too. And so they have many people. they've got Slack messages, they've got emails, they've got meetings, and then they have the work that they're actually supposed to do. And so if you have a quarterly, for example, and you have your whole team there, if you aren't clear about what change in behavior the data is going to create, you are wasting your time and theirs. If after that day or after that meeting, you go back to business, you might as well have just taken the day off. Wrapping this back to problems and missed opportunities.

9:54You will probably have significantly more data around your problems than you will around missed opportunities. Missed opportunities are going to be purely hypothetical. We think if we had this percentage of people to convert and they pay this price, this is the revenue uplift that we have potential to capture. All of this is hypothetical. Fine. On the problem side, we have to look at what thing we're going to change to fix this problem. And so this is how we do it. We have four steps. All right. So if you're writing this at home, then this is the writer downer part. Number one is the condition or the goal that we're trying to, the problem we're trying to solve.

10:29All right. This is current. This is desired. Cool. Next thing is what is the action? What are we going to do? And this is, to be clear, a hypothesis. Our churn rate is at 5%. Okay. We hypothesize that if we do a one-on-one reach out to every customer as they enter our, you know, buy our product, we will decrease churn. That's the hypothesis. It's an action tied with what we expect and the reason for taking this cost on. Because it will cost you money to do this. Cost resources. The third bucket, and this is the fun one. Did we do it or not? So this is the before and after. So we have the problem.

11:09Here's how we hypothesize it. We have what data that we want to affect. So churn rate was the percentage. We want it to go down. We hypothesize it's going to go down by this much. Cool. That's the before. The after is, did we do it or not? Very simple. Because you can have this whole hypothesis, get to the end of the quarter, get to the end of the week, and then say, oh, we didn't really do it. Okay, well, then we didn't test the hypothesis. Now, here's the fun one. Let's say you do it. Did what we expect to have happen happen? because we're guessing that if we do this thing, churn will go down.

11:44But we could do the thing and churn could remain the same. And so it cost us time and it cost us money, but the problem remained unsolved. And this is the nature of business. And this is why your second business grew way faster than your first business because you already knew the solutions to the problems that you're going to create along the way. And then you run smack into problems that you don't know how to solve. And this is why I want to hit on this so hard. You're not growing because there are problems that you need to solve that you're not solving because they're not fun and you don't know what to do.

12:16So instead, you're doing more of the thing that you know to do around opportunities, but you still have not solved the problem. And you've done this enough times that you've now grown the problems to the point where it's stifling your business. And so you have to stop. And so you have to look at that big to-do list that you have. and you have to think which of these are problems that I need to solve that will make us better and as a result of being better, grow our business. And which of these are opportunities that are missed that we think that we could do but aren't doing yet. I would encourage you to take that entire list of missed opportunities, the MOs, and just move them somewhere else.

12:55And what I have is something called Alex's Big Money Making Idea List. Everybody in the company knows about this. I have more ideas than we have capacity to implement. And I have learned through many years of working with Layla that I actually only get maybe one out of 10 or 20 that I actually get to do because you don't have unlimited shots on goal. That is the problem. So Jeff Bezos has the saying that it's the beginning of this book. I'll actually read it to you because I think it's so significant. Outsized returns often come from betting against conventional wisdom. And conventional wisdom is usually right.

13:30Given a 10 % chance of 100 times payoff, you should take that bet every time. But you're still going to be wrong 9 times out of 10. We all know that if you swing for the fences, you're going to strike out a lot. But you're also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is 4. In business, every once in a while, when you step up to the plate, you can score 1 ,000 runs. This long-tailed distribution of returns is why it's important to be bold.

13:59Big winners pay for so many experiments. Here's the one flaw, and Bezos is much smarter than me, much richer than me. But there's one flaw with the analogy. If you go to a casino and you have a 100x payoff and you've got a 1 out of 10 bet, then you should make that bet every time under one assumption. That you can bet as many times as you please. Let's say you go to the casino and it's a$10 minimum bet. And the bet's 100x payoff. But you only have 20 bucks. You're only going to get two swings. which means the likelihood that you fail entirely is four out of five. You have a 20 % chance of actually winning, an 80 % chance of losing, period.

14:39And so this is, in my opinion, a more realistic take of what it's like to be a business owner. We do not have unlimited swings. We do not have unlimited resources. And so we have to be incredibly measured with which swings we choose to take. The highest likelihood swings are the problems that need to be solved in your business today. These are the sure money. These are the, as soon as you solve it, you cash it in. The things that are certainly not certain is the missed opportunities that are purely hypothetical. If you solve all the problems that you have at a current level, once you get to that, and there are times where you get there where everything's kind of humming along, that is when you look up your big missed opportunities list, your big money-making idea list, and you say, now, which of these will I take?

15:25And here's the interesting thing. If you do this, you will find that many of the ideas that you were jazzed about two months ago, now you think are stupid because you found out more from solving the problems that actually give you more information that this is actually not a missed opportunity. And so it increases the likelihood that the swings you do take, the big swings, do result in the big payoff. This is like the ultimate sleep on it. If you have an amazing idea, don't tell them right then because you're going to oversell everybody. You're going to oversell yourself. If you sleep on it the next day, you're a little less psyched.

15:57If you come back to two months later, you'll be amazed at how many of these things you just won't even want to do anymore. And think about how stupid it would be if two months later, after looking at all your ideas, 90 % of them you don't want to do anymore. It means that every one of those things that you shoved down your team's throat because you were excited about it was a mistake. It was you failing as an entrepreneur because you got too distracted, you got too excited about shiny object, you got too into the stuff that you like rather than confronting the stuff that you hate that will absolutely grow your company.

16:28This is something that I'm personally working on and I'm heated about it because this has been such an epiphany for me in terms of, because I love any frameworks that allow me to better prioritize, that allow me to be a better strategic thinker for my business. And so this operationalizes better. Some of you guys may have noticed that I've been making a little bit less content lately. And so I've been super busy on this big missed opportunity. and I've been pouring tons and tons and tons of hours into this big new project, like massive thing for 2025. Layla basically came to me and she was like, I'm dying over here.

17:04Like, I need your help. I need you back. We're doing business every day and you're over here trying to build the future. And the thing is, is this is not a problem to be solved. It's a dichotomy to be managed. If you're the visionary entrepreneur in the business, it's normal for you to live three months, six months, a year plus out. That's normal. but you can't take your eye off the ball from today. And so for me, this was a pendulum that I was swinging too far in this direction. She was like, dude, you need to make some content. You're not spending any time on it. For you guys, it may not be content, right?

17:35It may be you need to make ads. It may be you need to be looking at the outbound team. It may be our customer success is failing. Whatever that thing is, it was the thing that's hard. Despite the fact that everyone thinks that I'm a content creator, this is not my main job, right? Right. And so my life is not as much as I try, right. As much as I try to make pork content, everybody like it's not, it's not the main thing still, but I let it get away from me. I've given, I've learned to over time, give myself a little bit of grace and saying this, I will never solve this. It is unsolvable, but it's simply about percentages of the pie that I'm going to allocate to now versus the future.

18:11And I get a little bit too over indexed on the future. That's in my nature. And so I have to overemphasize the present because this, if this doesn't work, then that will never happen anyways. Layla has always been so grounded in today. And I've been so grounded in the future. That's been our yin and yang, but we both try and mean them. I have to pull her towards the future and be like, Hey, let's like, this is where we're going. This is, we have to build it this way to get to here. And she's like, yeah, but that's a massive pain for me. And so that's the yin and the yang that I think everybody has with their operator.

18:43if you don't have one. Confront your problems today. Forget about your opportunities for tomorrow. Put them on the big list. Once you've solved all the problems, go revisit the list and then pick the one that has the highest likelihood of yielding the biggest return for you and then go all in on it. With that, bye.