If You Went Broke Today, Here's How I'd Start Over | Alex Hormozi Compilation

0:00I made some mistakes before I started following your content and like an idiot I started three businesses. So I have three businesses. I'm exiting one. I know it's a problem. So the main business is my primary source of revenue. Me and my partner very much on same page. I'm transitioning an exit right now. I have a large buyout coming and I'm trying to decide do I redo that same business? I'm good at it. It's my primary source of revenue or do I pour it into one of these other two businesses?

0:26>> What's the business you're selling? >> So I'm in financial services. >> Okay, great business. >> Yeah, I was the top producing rep like number two out of like 3,000 reps. Really good at >> you right now, do that. If you're two out of 3,000, you're not even 1%. You're like 1 whatever percent. And so these other things probably sound really sexy and interesting. You can tell me what they are and they'll tell you that they sound sexy and interesting. >> Well, so I guess my problem was is like I've got a non-compete non-solicit to re-re-relocate.

0:51So it's like I have to move 60 miles away. My whole network has to relocate. >> sale for? >> So I'll have about a million bucks probably when it's all said and done. So I have to >> So you just have to move to a new location? >> So I if I want to not take a like three-year hiatus, I have to move 60 miles and I'm very regional in my my business. Like all my local it's all local multi-family habitation all like >> Yeah. >> So if I move

1:17>> how to build it. >> Yeah, but it's a six-year process to start all over again I guess is where where my brain goes is like >> Don't you think you'd do it faster the second time? >> Oh, for sure. >> [laughter] >> I could do it in third of the time. So yeah, so you're 24 months away from a brand new business doing the same thing you do right now except you know all the lessons you learned. >> So just go for it and >> What are the other two? Just so I can know. >> no I I've got Well, I've got a real estate portfolio and I I feel like I'm really good at real estate too, but the problem is capital, right? Like I can buy buy buy, but who's insurance did that and create all the deals through a network. I had all the contractors and it like they fit into each other really well which is why I started it.

1:51But um the problem is is like then you were like well hyper focus and I was like well don't >> you need to stop real estate. I mean like I own a bunch of apartment buildings. It but like it's just not my main game. Like I've got some money that I'm like, this is my like if I go become a [ __ ] vegetable, like there's cash flow for everybody. Um but like what's my main game? Right? And so I want to make sure that you're not like trying to make your your side hustle your main hustle. >> Okay. >> Cuz the returns on real estate are not as good as the returns in business, period. Private equity owners are by far much wealthier on average than than real estate. Real estate makes more millionaires, private equity makes more billionaires.

2:23>> Yeah. >> So, low risk, high likelihood. Business, once you gain the skills, is always where all the upside is. All right, what's the third one? >> So, well, the third one, I did the same thing again when I was like I started a junk removal company to feed more leads into the real estate. Cuz I was like and it does. So, then but then it's like how far can I move horizontally before I'm losing that vertical integration? Cuz it's like, hey, it does provide leads and flips that feed into the real estate and finds deals. So, it's like

2:49>> old ladies and they've got money, so you do the financial services. I know, we're just >> Well, and part of my question I think is how lateral can I get inside that vertical before I'm losing focus where it's like >> already losing focus. >> I know. >> [laughter] >> So, do I just sell it and dump it? I mean, what do you do? >> So, I will give you the unpopular advice that I would give to myself. Which is like, do you believe you can win? >> Yeah. >> Then [ __ ] it. Do the thing. Do the main thing. Forget the other stuff. Basically, on some level doing these side hustles is almost like a hedge against your own risk. But you incur more risk because it decreases the likelihood that one sure thing actually is the sure thing. And so when if I gunned your head, I was like, you have to make money, what would you do?

3:29>> I'd sell insurance. >> Then do the thing that you would do when you need to make money and you will make money way more. >> Okay. >> I'm only saying that because I have done this. >> Yeah. >> I had a dental agency, I had a chiropractor agency, I had a gym. If I went out of business tomorrow, like my I had a some hundred thousand dollar bill, what would I do? I'd launch a [ __ ] gym. For sure, in my sleep, I know that's what I would do because I can do it in my sleep. So then Leila had this brilliant idea. She's like, why don't we just do that thing that we're really good at over and over again and just not do the stuff that we suck at?" And I was like, "I don't know if that's going to work."

3:59>> [laughter] >> I was like, "What if these other ones take off?" >> That's right. Thanks. >> So, Adam, at 22, want to build a multi-million dollar business, should I start now, feel forward and learn on the way, or spend one year just building skills, cash, and clarity? To me, those are one in the same. Um like you will build skills by failing. So, I would try and try and do stuff. Like, just being real. Like, do stuff.

4:24Uh learn from it. And if you can make money while you're doing it, great. I think that for many people, one of the the what like a huge leg up that you can have is working 1 to 3 years in the industry that you want to get into. Like I think there's just there's huge upside there because you don't even know what you don't know, and you learn so many like default ways of operating because when you have to >> [clears throat] >> I'll give you an analogy. So, imagine you've got a pile of bricks, right? So, you've got this pile of bricks.

4:53All right, let's say that these bricks represent you know, stuff that you can use to build. This is going to be a terrible pile of bricks, but whatever. Okay? And someone says, "Go build me a building." Right? So, you then try and assemble these bricks in a in a hundred different ways. And the thing is it's like, if you don't have directions on how to assemble those bricks, you're not going to know what assembly is the correct one for a building. And so, the thing is is that if you have an ideal building in mind, right?

5:22Then there may be a few ways that you can correctly assemble the bricks to get a building, but there's going to be way more ways to not assemble the bricks to make a building. And so, for me, I'd rather just like kind of like if you're building a building, like you're building an IKEA desk, right? If you don't have the directions and you have the pieces, you might eventually figure it out, but it's so much it takes so much more time than having a model to look at because you automatically know you're like, "Okay, well, first thing I'm going to do is I'm going to separate my tools over here, I'm going to put my screws over here, and then I'm going to put my my blocks over here. Great. So, that's the first thing. That's what you do. And then after that, you're like, okay, I'm going to look at this picture.

5:56This got these four legs. And you're like, all right, let me put the leg number flip it upside down. So, put leg one, leg two, leg leg three, leg leg four. You're like, okay, it's almost looking like a table. But if you have no idea and you've never built a table before, you didn't build anything before, then it's way harder to do. And so, that's why I think I would recommend make money, earn and learn 1 to 3 years. Like my first thing out of college, and like college is different now than it was then, but like like I did college for 3 years, and then I worked for 2 years. And then the next thing I did is I still didn't even start immediately. I then um started as like an apprentice at a gym because I wanted to get into fitness business. So, I went to a successful gym owner and said, "Hey, can I like work for free? Can I mop the floors?" And I was like a white-collar consultant. So, I went from making I think I actually don't remember what I made. I know I had $50,000 in savings. Uh the reason it's like unclear is because I I got paid on contracts. It was like very lumpy.

6:44Anyways, um but anyways, I uh he then basically started paying me minimum wage um to follow me around. But like an amazing ROI for me because he was like, oh yeah, like email marketing. And I was like, what's that? And he was like, oh, it's this whole thing, right? And again, YouTube wasn't really like around the way that uh when I started doing this. Um and so, I had to had to learn the hard way. So, that being said, hopefully that helped uh for Adam in terms of thinking about what to do.

7:12>> Is there a framework for knowing when to quit? >> Mhm. So, I think there's the there's like the math behind it. And the math I think is pretty straightforward. So, like when do you quit your business? I like you've saved up 3 to 6 months of personal savings, number one. Number two is that you have started something because nowadays in the digital age, you can begin a business on the side that can generate income. >> [snorts] >> And that income um in the small amount of time that you're not working uh replaces or at least matches the existing income you have from your your current job and you've been able to do that or demonstrate that income for like 3 to 6 months. If you do that, that's a very like math way of approaching it.

7:51That also is basically never the reason that people are quitting their job. [laughter] Right? Like that's a really like I have I have I have backlog. I have matched my current income with my part-time work and if I just put my full-time work, I would probably make more. Very reasonable, but never actually the reason that people don't do it. >> I was I was thinking about the two sort of reasons why someone might quit something or feel like they want to quit. And one of them is clearly because it's hard. And that's obviously not reason enough to quit. And then there's another one which you were speaking to there, which is it's not moving me towards a meaningful goal irrespective of how hard it is. Like a marathon, you're raising money for a charity you care about. It's hard, but you don't quit.

8:28And then there's maybe if you're running a marathon for no apparent reason, you know, there was no charity, there was no one watching, there was no like fitness benefit, then that's a good, I guess, moment to consider quitting. Um my story mimics yours in a way that I didn't realize. I didn't realize you went through a similar thing in terms of call the the parents disownment ship. >> Yeah. >> Um no real great option to to flee to, but feeling like the current path that would have led me to be, I don't know, business management student was significantly worse on balance than taking the risk, but if I think maybe a point of distinction is it didn't I was so naive that it didn't feel like a risk.

9:05>> Yeah. So what's really interesting about that is um the guarantee. And so a lot of times we don't we don't look at what I call the don't, which is like the the alternate path. And so if I had played out my existing path, I had a guarantee of outcome I didn't want. It was just out of delay. Whereas here, there's a chance that I can make it.

9:29And so one of the final kind of framework for making the decision was guarantee bad, chance at good. And I was like, well, I might as well take a chance. And I I strongly um encourage thinking about uh playing it out. And so what I mean by that is like I think fear exists in the vague, not in the specific.

9:55And so when you say, "I'm going to quit my job and then what if this doesn't work? I'm going to failure." Tons of fear. If I say, "I'm going to quit my job and then I'm going to try and start a business and if the business doesn't work, I'll probably have a compelling story that I could tell for business school if I wanted to to show that I had some entrepreneurial slant. In the meantime, I could use that experience plus my job experience to probably get another or maybe even better job in the meantime and match or or supersede my existing income and the actual loss would be maybe the savings that I'd saved up. But if I'm younger or I haven't made as much money as I want, then that's never been the amount of money that would be material anyways on the grand scheme of what I would like to make. Um and in terms of living situation, I will worst case go back to my parents' house with my tail between my legs or sleep at a friend's couch because I have enough people that would be willing to put me up in a garage if I had to. And so it's like, "Okay." So my actual worst case scenario is just like I have a cool story and maybe some shame that I is self-inflicted cuz it's not like no one else cares, really. But it's self-inflicted shame and maybe a detour or a different story that I have to tell later on in my career.

11:08Not as much fear there, right? But like the first one like I'll fail, everyone will hate me, and I'll die. >> [laughter] >> The first one sounded like it was written by your like amygdala. Like the fear center. And the second one was pure like prefrontal cortex. It was all logic. >> Yeah. >> And I'm wondering, you know, as you're going into that decision, obviously fear is going to lead it. So of course you're going to go for option one where you just think about the downside. Maybe there's a a practice that allows you to get into your prefrontal cortex into logic. >> And I think that's I actually So, I think you nailed it and um said it way better than I did. But, I think that's I think going from vague to specific basically disengages your amygdala because it's it can't reason the logic chain of causation and causality of what's going to happen next in chain of events. And so, when you get into the specific of it, all of a sudden you're like, "Okay, I'm not going to be homeless and then shamed and die.

11:57>> [laughter] >> Um I might live in inferior living conditions for a short period, which by the way, when you're later on in your life, you'll look back and think of as the good old days cuz I can't believe I was couch surfing, I was pursuing my dreams, right? It's it's only like in the moment that it feels bad. When you look back, like even I I find this hilarious, like like how long after you do something embarrassing is it funny? Right? Like at at some point for most all of us with enough time, the shameful experience becomes funny.

12:24And so, if it is going to become funny eventually, it might as well become funny now. >> Yeah. >> And so, it's just like pulling the time horizon up. But, all of that's prefrontal cortex decision-making. And so, no, but I think that's exactly like I think that that nailed it because when I thought about this this decision, obviously I had my very, you know, emotional statement around like his dream has to die for mine to live. Yes, also logic downside risk here. I'll have a story, and I can always get my job back.

12:51Okay. And if I can't get that job back, I'll have other ones that will be available. Fine. And if I have a downgrading and some people think that I'm not as successful as them, okay. I'll not stop, though. And so, I think that that that demystifies a lot of the fears. I think that applies not just for entrepreneurial fears. I think it applies for any fear. Like, I'm going to talk like I can't tell this person this bad news. All right, let's play it out. I say something and then they're going to kill me? Probably not. So, what's going to happen? I'll say these words, and then they're they'll they'll flip the table, they'll they'll flick me off, they'll maybe just feel hurt. And maybe they'll cry, maybe they'll shout. Okay.

13:25Okay, if they shouted at me, what would I do? Like, and you just kind of play it out and you're like, okay, I think I have like most of these conditions prepared for. And then all of a sudden you can like have those things. >> What you also said is that in the face of guaranteed misery, any option is better. >> Yeah. >> And like >> It's real. >> You get to live once. Yeah. So like, why would guaranteed misery be better than any available option? >> It's the latest counting. That's What's crazy is the latest counting happens both ways. Like, um So like, you set your alarm for 5:00 a.m. at night and you're like, I'm going to wake up at 5:00. But that's because you're delaying the pain of waking up and when it's immediate, when I have to quit the job, like I'll quit my job tomorrow for 20 years.

14:05>> [laughter] >> And so it's just like we always we we we delay the fact that we're going to be miserable into the present uh to it like a like we we massively discount what a whole lifetime of misery would be. >> Amen. If you had to start over question, so I'll I'll read this. If you were starting out today with little or no capital, knowing what you know now, what type of business would you start? There's a That's theme is recurring. >> You want You should do yours and Algemon cuz I have I bet you they're different.

14:31>> Um anything that actually provides a pay for performance is what I would start. So that is the first thing. The second thing is The second thing is you also want any business that you don't have upfront capital, right? So I will tell you my favorite thing if I were to start something right now, I would be a recruiter. >> Um >> Right? So If you take a real estate agent or a recruiter, what's the difference? A real estate agent has to go get a listing and then has to market the listing, has to spend the money there, has to sit open houses, has to do all of that. Or a recruiter still has a listing, but then can work it without any extra cost to be able to do that, right? So if I were to start something today, one, something performance based, and second, that I can actually do on my time and and actually without a lot of spend upfront.

15:13>> So I'm going to piggyback on Sharan's because you you want to when you when you have no capital, right? You only have skills. And so that means and if we're going to do something performance-based, then you want to sell the thing, you want to get a small percentage of something that has a lot of zeros. That's how it works. And so obviously comes to the real estate space, lots of zeros. Even though it's small percentage, you sell a $20 million building, takes you zero capital in order to do that, and you can get 4%, 5% of a building like that, it's a million dollar commission, okay? Huge.

15:44Thing one. Thing two. If you're recruiting, you can recruit for VAs. Smaller ticket, and you can sell VAs for $5,000 a pop. Okay, fine. Or I could get a higher level skill set and be like, I can I can go recruit executives. And also the term changes, by the way, to headhunting. >> That's right. >> And you want to be a headhunter, not a recruiter. No one's like, I'm headhunting VAs, because it's ridiculous, right? Of course you're not headhunting VAs, right? You just you're catching with a net, right? Like we're harpooning, right? We're looking for whales, and so we need to use that language. And so if you want to go hunt whales, then you go find businesses that are bigger, have the ability to pay and write big checks, because many of you guys might not know this, but in recruiting, it's typical to charge 20% a commission,

16:28>> the sale, the item that's being sold is what that person's going to get paid all in. So if I recruit an executive that gets paid $750,000 a year, that's like being a salesman who sells a $750,000 product, but you get a 20% commission. >> Right. >> Absurd. It's a $150,000 commission check. >> Correct. >> Per. >> Per.

16:52>> So like, insane opportunity on that side. On the flip side, I come from the customer acquisition side. So I like I have lost everything multiple times. I'll be here all week. Uh actually, I'll be here for the next five 5 hours. >> [laughter] >> So So Before I'll do that or I'll pass out, one or the other two. All right. But the point is this. Um the uh where was I going with this? Oh, yeah. So so I have lost everything twice and so I've I've always operated off of performance. And so I went to business owners, local's the easiest, and you say, "Hey, Mr. Business Owner, if I get you customers, the the easy the cheap way of doing it is if I get you customers, will you give me a commission?" That's the easy way.

17:36>> Mhm. >> My preferred way is, let me negotiate with the business and say, "If I got you 100 customers, what's the cheapest you would sell your delivery for?" >> Mhm. >> And because if you go to a less sophisticated business owner, they're going to be like, "Well, you know, I sell my thing for 100, but I would If you did 100 of them, I would do it for 50." And I say, "Great, 50's the number." Now, what I'm going to go do is I'm going to go sell it for a thousand because I know how to sell, and then all of a sudden, of course, they're going to get a little upset, that's fine, and I'm going to say, "Hey, I'm going to sell this for a lot more money." Now, old me would have just gone and sold it for way more.

18:10>> Yeah. >> Newer me, it would be like, "Hey, I just want to let you know, you agreed to 50, I'm going to still pay you the 100." >> Yeah. Right. >> I'm going to pay you the full boat, but I wanted to set this up because are you going to be upset if I go sell people at a thousand? And then if they push back, how do you overcome that? I would say, "Well, wouldn't you want somebody who paid a thousand dollars rather than a hundred dollar customer?" Because what do you think a thousand dollar customer can do? They can spend more money. And so you're going to be able to get all the LTV after this from this customer for life as long as you do a good job. Right? And so from there, that's how I made my That's how I made my split. Now, I went to businesses, obviously gyms is what when I literally did this.

18:46Um they had basically no incremental cost uh to add a add a customer to a a training session, right? And so what I mean by that is if you've got a semi-private training studio and you've got one trainer and they can go up to six people in a session, and you've got three there, you're still paying the trainer the same amount. >> Right. >> And so me putting two, three more people in there changes basically nothing for the cost basis of business. And so most of those guys, if I said, "Hey, if I sell six weeks or eight weeks up front, can I sell that for whatever I want, and then afterwards, and you should want me to sell that for as much as possible because then they're more likely to stay for as high as possible. And that was my pitch. Now, if I was broke as a joke, I had truly no money, then I would go and make a thousand dollars. I would do that first. Like I'm just being real. I would do that first and then I would take that small amount of money and then I would put it into advertising so that I can then say, "Hey, you don't even have to pay a dollar." Because if you have to ask the business owner to front the ad spend, they get way more leverage for the work and so I'd rather just come to the table with like five grand

19:40>> Yeah. >> and then do that. But I have done it from zero. So, I just That's what I would actually do. And it's cuz I That's what I actually did. >> Is there a framework for knowing when to quit? >> Mhm. So, I think there's the there's like the math behind it. And the math I think is pretty straightforward. So, like when do you quit your business? I like you've saved up three to six months of personal savings, number one. Number two is that you have started something because nowadays in the digital age, you can begin a business on the side that can generate income. And that income um in the small amount of time that you're not working uh replaces or at least matches the existing income you have from your your current job. And you've been able to do that or demonstrate that income for like three to six months. If you do that, that's a very like math way of approaching it.

20:25That also is basically never the reason that people are quitting their job. [laughter] All right, like that's a really like I have I have I have backlog. I have matched my current income with my part-time work and if I just put my full-time work, I would probably make more. Very reasonable, but never actually the reason that people don't do it. >> I was I was thinking about the two sort of reasons why someone might quit something or feel like they want to quit. And one of them is clearly because it's hard. And that's obviously not reason enough to quit. And then there's another one which you were speaking to there, which is it's not moving me towards a meaningful goal, irrespective of how hard it is. Like a marathon, you're raising money for a charity you care about. It's hard, but you don't quit.

21:02>> Yeah. >> And then there's maybe if you're running a marathon for no apparent reason, >> [laughter] >> you know, there was no charity, there was no one watching, there was no like fitness benefit, then that's a a good I guess moment to consider quitting. Um my story mimics yours in a way that I didn't realize. >> Mhm. >> I didn't realize you went through a similar thing in terms of call the the parents disownment ship. >> Yeah. >> Um no real great option to to flee to, but feeling like the current path that would have led me to be, I don't know, business management student was significantly worse on balance than taking the risk, but I think maybe a point of distinction is it didn't I was so naive that it didn't feel like a risk.

21:40>> Yeah. So, what's really interesting about that is um the guarantee. And so, a lot of times we don't we don't look at what I call the don't, which is like the the alternate path. And so, if I had played out my existing path, I had a guarantee of outcome I didn't want. It was just out of delay. Whereas here, there's a chance that I can make it. And so, one of the final kind of framework for making the decision was guarantee bad, chance at good.

22:12And I was like, well, I might as well take a chance. And I I strongly um encourage thinking about uh playing it out. And so, what I mean by that is like, I think fear exists in the vague, not in the specific. And so, when you say, I'm going to quit my job, and then what if this doesn't work, I'm going to failure, tons of fear.

22:37If I say, I'm going to quit my job, and then I'm going to try and start a business, and if the business doesn't work, I'll probably have a compelling story that I could tell for business school if I wanted to to show that I had some entrepreneurial slant. In the meantime, I could use that experience plus my job experience to probably get another or maybe even better job in the meantime and match or or supersede my existing income, and the actual loss would be maybe the savings that I'd saved up. But if I'm younger or I haven't made as much money as I want, then that's never been the amount of money that would be material anyways on the grand scheme of what I would like to make.

23:12Um and in terms of living situation, I will worst case go back to my parents house with my tail between my legs or sleep at a friend's couch because I have enough people that would be willing to put me up in a garage if I had to. And so it's like, "Okay. So my actual worst case scenario is just like I have a cool story and maybe some shame that I is self-inflicted cuz it's not like no one else cares really. But it's self-inflicted shame and maybe a detour or a different story that I have to tell later on in my career."

23:42Not as much fear there, right? But like the first one like I'll fail, everyone will hate me, and I'll die. >> The first one sounded like it was written by your like amygdala, like a fear [laughter] center. And the second one was pure like prefrontal cortex. It was all logic. >> Yeah. >> And I'm wondering, you know, as you're going into that decision, obviously fear is going to lead it. So of course you're going to go for option one where you just think about the downside. >> Yeah. >> Maybe there's a a practice that allows you to get into your prefrontal cortex into logic. >> I think that's I actually So I think you nailed it and said it way better than I did. [laughter] But I think that's I think going from vague to specific basically disengages your amygdala because it it's it can't reason the logic chain of causation causality of what's going to happen next in chain of events. And so when you get into the specific of it, all of a sudden you're like, "Okay.

24:28I'm not going to be homeless and then shamed and die. Um I might live in inferior living conditions for a short period, which by the way, when you're later on in your life, you'll look back and think of as the good old days cuz I can't believe I was couch surfing, I was pursuing my dreams, right? It's it's only like in the moment that it feels bad. When you look back, like even I I find this hilarious. Like like how long after you do something embarrassing is it funny? >> [laughter]

24:53>> Right? Like at at some point for most all of us with enough time, the shameful experience becomes funny. And so, if it is going to become funny eventually, it might as well become funny now. >> Yeah. [laughter] >> And so, it's just like pulling the time horizon up. But, all of that's prefrontal cortex decision-making. And so, um no, but I think that's exactly like I think that that nailed it. Because when I thought about this this decision, obviously I had my very, you know, emotional statement around like his dream has to die for mine to live.

25:18Yes. Also, logic downside risk here. I'll have a story, and I can always get my job back. >> Mhm. >> Okay. And if I can't get that job back, I'll have other ones that will be available. Fine. And if I have a downgrading, and some people think that I'm not as successful as them, okay. I'll not stop, though. >> Mhm. >> And so, I think that that that demystifies a lot of the fears. I think that applies not just for entrepreneurial fears. I think it applies for any fear. Like, I'm going to talk like I can't tell this person this bad news. All right, let's play it out.

25:45I say something, and then they're going to kill me? Probably not. So, what's going to happen? I'll say these words, and then there's they'll they'll they'll flip the table, they'll they'll flick me off, they'll maybe just feel hurt, and maybe they'll cry, maybe they'll shout. Okay. Okay, if they shouted at me, what I do? Like, and you just kind of play it out, and you're like, okay, I think I have like most of these conditions prepared for. And then all of a sudden, you can like have those things.

26:09>> What you also said is that in the face of guaranteed misery, any option is better. >> Yeah. >> And like >> It's real. >> You get to live once. Yeah. So, like, why would guaranteed misery be better than any available option? >> It's the latest counting. That's What's crazy is the latest counting happens both ways. Like, um so, like, you set your alarm for 5:00 a.m. at night, and you're like, I'm going to wake up at 5:00. But, that's because you're delaying the pain of waking up, and when it's immediate, when I have to quit the job, like, I'll quit my job tomorrow for 20 years.

26:40>> [laughter] >> And so, it's just like we always we we we delay the fact that we're going to be miserable into the present uh to it like a like we we massively discount what a whole lifetime of misery would be. >> Amen. >> I own a design-build ADU company based out of the of San Diego. >> Design-build? >> Uh design-build. So, we're general contractors. >> Yeah. General contractor. And we use those verticals for our own infill development deals that we we just hold. So, we just hold them long-term. Use the depreciation to offset that income. My wife's a real estate professional, so it works.

27:08>> Good old reps. Yeah. >> Yeah, thanks. So, we [snorts] do $5 million a year. Looking to go to 10. >> Okay. >> Incredibly supply constrained. I work with my dad. That's one thing I didn't mention. >> Isn't talent tradesman? >> Absolutely. Absolutely. So, the design So, we the the margins are quite different on both. >> Yeah. >> But in the design the the margins are like 80%. >> Yeah. >> It's ridiculous. On the construction we're about 30%. We do fine. Um the One of the constraints is I work with my pops. Sorry, dad, if you ever see this.

27:35>> Yeah. >> Um he's yellow pad of paper guy, and there's just no way around it. So, um we do good job. He has. We've never marketed once. We've never paid a dollar for anything. >> 80 or is he 60? >> He's 68. >> Uh >> Yeah. >> He's got some years. He's got some years left. Yeah, yeah. >> He's the man. He's >> 80 or like, "Hi, you can tough it out." >> [laughter] >> Yeah, right. So, uh this is what's stopping me. There's a there's a uniqueness to this. So, I'm actually professional firefighter and have been for the past 18 years. >> Okay.

28:02>> And so, I have yet to go all in on this company because that's what >> Yeah, bro. All in. >> That's that's kind of like what we do. And I work 10 days a month. I'm a servant. I have a servant's heart. That's what I enjoy doing. There's It's a selfish endeavor, right? Like I I help people because it makes me feel good about myself. >> That's why everyone does everything. >> Right. So, um I'm I've At this point 3 years ago I should've been I should've been retired. Should've left the fire department, but I haven't. >> Okay. >> So, that's what's stopping me. My question is what objective criteria should I use um to figure out when it's the, you know, the right time to leave the fire department?

28:30>> What are you making right now? >> At fire department? >> No, I >> Yeah. [snorts] I make $168,000 a year. >> I can [laughter] >> right. Um so, our our margins are are pretty good. We make net about 1.2 million a year. >> Are you you're 50/50 with your pops? >> Uh no. He wants to go 50/50, but there's there's a lot that goes back into it. The reason why I got involved because he got sick. He was diagnosed with cancer. So, this was to make sure that his jobs weren't losing money. For a long time I looked at my pops you you paid $20 or you paid $20,000 to do their job. >> Yeah.

28:57>> So, they now saved a million dollars in the bank and yeah, so we're not we're we're 70/30, but any point we can go 50/50 and I do everything. >> Okay. What is margin on the five again? >> Uh overall 1.2 which is split between like 80 and 30. We're on the on the planning side of it and I work with other developers as well. So, I do their plans on the front end and they >> Okay. >> So, let me just let me just so 1.2, let's assume that if you pull the lever you'd be a 50/50.

29:21>> Yeah, for sure. >> So, the question is I make $168,000 a year. And in one thing. And I make $600,000 a year in another thing. And I would like to know when I am secure enough with my $600,000 a year to make up for 168. >> Yeah, so to reframe it actually the reason >> [laughter] >> The catalyst Yeah, no no no absolutely and I love where this is going. The catalyst for this question was me listening to your podcast this morning that you just did.

29:49Um and that's I don't want to get it's not about money. Like I have I have more than I could ever have dreamed for. Like ever ever. It would it doesn't matter, right? So, you're going to get to the other side of this I've left and I'm I've created another job. I'm going to have to quit another job that I don't like, right? So, it's it just seems like you know, you having done that gone to the other side of it where are you going to find meaning? What do you do on the other side of this thing? Look for something else to do, right? So, I'm just >> Well, I think I'm a big believer that a man must have a quest.

30:15>> Sure. >> And I I am not religious, but I was once and one of my favorite parts about this is that before God gave man a wife, he gave him a job. And so, I see work is inextricable to how we live. Right? And so, you I mean fundamentally you started helping your pops out with this business and running this business because you had 20 days a month on your hands cuz you had to do something, right?

30:45>> For sure. >> And so this seems much more like a what do I do with my life question overall. And so if you were to leave the fire department, what like I guess funnily like why is there a problem? Because I think the premise of this was I'm at 168. I've got 600k a year waiting for me here and if I actually spent more time on it, I'm sure I could grow it, which I'm sure you could cuz you'd have the time back. Um but I don't want to quit. And so that was the premise of our discussion.

31:14And to me that's like then don't quit. It like you're like I don't want to quit. And if you tell me to quit, I'm going to tell you that I don't want to quit. And I'm like all right, then don't quit. >> [laughter] >> Yeah, but no I I do want to quit and to be honest I was And I would ask a question about like all this but then when they were going over all the things key man risk I just circled all of them. Yeah. And we're supply constrained. It's ridiculous. >> It's business and if you had 10 more full days a month back, you could probably figure out some of these things. >> I think so too.

31:40>> Yeah. So what are you going to do? >> That's a good question. >> Yeah. >> I got a 45 minute flight tonight to figure it out. >> [laughter] >> Like what I like well let's do it. Let's do it. Why wouldn't you quit? Cuz the money's not a thing. So the money's gone. So because you obviously numbers wise obviously you quit and do the business. Okay. So why not?

32:06>> And forgive me cuz you got to all pay taxes. So I work for the most one of the most affluent fire departments in the nation. We work Rancho Santa Fe is a super affluent area in in San Diego. Um I used to work for a department that ran 20 calls a day. We run three calls a day. Yeah. I work 48 hour shifts and I get more done at work than I do at home because of that I've created key man risk because I can just do it all work. >> Yeah. >> And so to be honest, I go home and I have two young children and so I get all that work done when I go home. I am I am there. I coach >> You're like honey I got to go to work.

32:32[laughter] >> No, and she laughs. She's like all right, for sure. Whatever. I'm so tired and it's like well we all night. So it's like it would be insane to walk away from that and I have a a super like high seniority position as a captain. >> Yeah. Well, it sounds like you're getting paid for study hall. >> I mean I hope my chief doesn't see this but yeah. >> Yeah. All right. Um Well, fundamentally if if you're working 100% of the time that you're if you're if like if you become less productive as a result of leaving the job, I see that as a double net negative.

33:03>> For sure. >> So if you quit the job, would you get more done in the other business? Don't just ask. Let me just ask cuz like the math equation is can I make $168,000 more dollars of profit times two cuz you got to split it, right? So 300 and whatever $40,000 of profit and you guys are running 1215, right? And so 25-ish percent margins. So multiply that by four. So 350 by four per So probably like you know another 1.2 to 1.5 million dollars a year, whatever the math is of top line. If you quit the fire fireman job, that would be your break-even. Can you do that?

33:43>> Yeah, for sure. >> For sure? >> Yeah. >> But I thought the time you get back would be less productive. >> I mean I say that because I'm doing other [ __ ] during the day, right? I'm doing whatever [snorts] I'm right? So if I would you know dove all in remain focused and and and went for it and and you cut the parachute you have no choice. I would have no choice I would like to think that it's in my nature to make it happen. >> So you'd like to quit. >> [snorts] >> You're comfortable. You think you can grow this thing more. >> Yeah. >> And you're afraid to do it. >> There you go. >> And you rationalize why because of the other reasons but you know that's not really true.

34:11>> It's like a therapy session, yeah. >> So does that Does that give you the answer? >> It does. >> Cool. >> Appreciate it. >> Rock and roll. Appreciate you. Zach, we've got five minutes on Hermosi Hotline and I want to help you with the business. So the timer has begun. You bet, dude. >> [laughter] >> The timer has begun. Okay, so talk Talk me. What's Yeah, what are we looking at? >> Okay. So, I'm actually in a client meeting. I'm stepping out right now. >> It's only 5 minutes. You can tell them that.

34:39>> Perfect. >> Okay. >> Uh we own a local architecture firm >> Okay. Got it. >> We niche down unintentionally, but it's worked to our favor >> Fine. >> of we only do assisted living facilities that are converting. So, it's people that are taking a single-family home with five or less veterans and converting it to an assisted living facility. They need to get licensed architecture plans from the state or for the state. >> Uh-huh. >> So, that's where we came in.

35:05>> Uh-huh. >> Our problem is >> Deal with >> everyone's really cheap. Well, we actually we do 80 of those just off of referrals every year. >> Okay. >> So, it's pretty solid where it just sustains itself by our service. >> Can I can I make a guess at what you need to do? Cuz I pattern recognition. I got promise you. Okay. So, you're in a you're in a space that it's it's super price driven, right? Cuz you've got it's construction they're looking at cost blah blah blah blah, right? >> Yep.

35:30>> Okay. You have three vectors of winning. You have to pick one. Ideally, you can have more than one, but one is what I like to lead with. So, you either got speed, you've got risk, or you've got ease, right? And so, in your business, time is money. If you can do things faster, right? There's also a risk component of like what kind of costs are going to come down the road if you do it the wrong way or do it differently. And then it's like is there a way that we can throw some sort of verbage or guarantees or some sort of like clawbacks that a customer can get where we say, "Listen, we'll put our skin in the game to make sure that we'll you know, we'll be on time and on budget." Um so that you can build your thing faster so you can get faster returns on capital. Because I'm assuming these like you quote sell to an investor or you sell to a GC?

36:15>> So, they're all the they're individual business owners. That's the hard part is we're going to small business owners. It's likely their first business, right? So, they're cheap, too. >> Okay. I mean, who are Who are best who are the best business owners that you deal with? >> People that don't question the price, that understand the process. >> my favorite, right? >> Yeah, exactly. It's a process. >> Okay, so then what stops us from getting only those people or focusing almost exclusively like can we get Deal Flow that has higher percentage of those people so we can command the prices we want?

36:46>> Oh, I would love that. And part of it is I've tried to expand so that we give one faster speed like you mentioned. So we get our plans back to you within a week. >> Yeah. >> So that's faster than most everyone. And then we on the back end no one understands the process. So I've learned it really well. So that's where I come in and I can give them that guidance versus just someone that's giving them a commodity of just a single plan. >> Yeah. >> So that's where we've been able to get our price up some, but I need to get it up higher. >> So >> wondering if I need to get it up higher or what.

37:13>> I'm telling you right now, you need stats. So this is a logical sale, right? This is not an emotional, you know, thing for most of these guys, I would imagine. Right? This is a pure like dollars and cents thing. And so you need to line up and come in with that frame, which is like, "Listen, let's be clear here. You and I are both business people. You need to make this make sense, you know, make sense from a dollars and cents standpoint." They're going to say yes. It's like, "Cool. So, there's there's a concept called, you know, save a dollar a day, cost you four tomorrow, or pay two today and it saves you four tomorrow. Which one do you like Would you rather pay two and save four or pay one and have it cost you four?"

37:45And they're like, "Well, obviously the save one." It's like, "Right. I want to establish that cuz if someone says, 'No, I'd rather just save as little as possible,' then we all know that's not going to work for either of us, right? Okay, cool. So then it's like this is where the stats come in. Like I'd look at Statista, look at I'd ask, you know, GPT. I'd be like, 'Hey, find me all the stats of average unforeseen costs that can occur.' And so then now we took the frame of the fact that it's just going to be a logical sale. We're all dollars and cents here. But in the reality is now we go fear, uncertainty, and doubt, right? So now it's like, "Well, these are the top four things that occur. This occurs in 22% of circumstances. This occurs in 15. This occurs in 38." Right?

38:19And these are all the different things that can go wrong, right? And so, what we've done is that we try to minimize this thing, which is going to cost you way more money than what I cost. Okay. And so, now we're anking or anchoring around all these way more expensive things. And then basically that's how we can basically nudge our way into a completely different price cuz we're we've we've we've changed the context around the conversation. >> Okay. Would you think about any way to get recurring revenue, or would you just double down on this and try to get as many people as possible?

38:48>> So, the only way that I would see recurring revenue in your specific business is going to be people who do regular business, more so than like subscription, anything like that. It's more like who are the nodes of referrals? Those are my quote reoccurring more than recurring business. Like Coca-Cola, super amazing business, not recurring, but reoccurring. And so, I put your hat on. So, what you need to do is chunk up in terms of how you think through your business. I'll give you an example. So, when I had Alan, which was a software company, we had, you know, the first thing we did is we went to market for a small business owners, right? And that sucked because they'd be like, "Oh, this is great. It works our leads, but we don't have any leads." And I was like, "Oh, darn. That I didn't think through that." And so, then all of a sudden the people who did really well were the ones who already had agencies that were working with them generating leads, and then our thing just did the lead flow.

39:33So, then all of a sudden I was like, "Okay, well, I'm going to go after agency owners and say, 'Hey, we can improve the results of your your services and decrease churn and increase, you know, like basically make more money, etc., using our software.'" And so, all of a sudden what happened is instead of having, you know, trying to go one-sy, two-sy after business owners, we just went after agency owners, and I knew that let's say a chiropractor agency comes in, he only does chiropractors, he comes in and he pays, you know, he onboards his 50 clients at a time. And I was like, "Oh, that was [ __ ] great, right?" And for you it's like somebody might have a portfolio, but he onboards 50 clients, but then after that I could rely on the fact that 10 of his people would churn every month, and then he would sign 10 more up every month.

40:07Right? And so, he so, our churn at the agency level was almost zero. Our churn at the SMB level was whatever the churn of the agency was, which is not really our issue. And so, when we redefined our business as oh, we're actually in the agency servicing business, not in the SMB servicing business, that's when it really started stacking. And so, translating this back to you, you said you've got these referrals that are coming in, right? >> Yeah, we typically get three to four referrals every week that we'll then try to book.

40:35>> Amazing. And so then, I'll bet you have a list, or hopefully you do, of all the top referrers that refer you business, right? >> 100%. >> Right. And so then, the whole the whole paradigm around this for me is how do I how do I partner with the referral partner so that they can frame the conversation with their introduction to me in the way that maximizes the likelihood of a close and the framing around pricing that I want.

41:01>> Okay. >> That's how I approach this. And so your business, if I'm thinking through this, right? Like if I'm you, my business is I'm really in those centers of influence, right? Those affiliate partners, those referral partners that you have, those are the quote customers. And so I want to see like, what's my sales guy for those guys to get them to consistently, you know, bring me more in, and how can I acquire more of them? Because each one of them is a node that over the years, if I go from having a base of 20 guys who refer me business to 200, that becomes reoccurring by nature rather than recurring.

41:34>> Okay. >> But still stable. >> on a referral bonus for those people? >> Are you allowed to do kickbacks legally? >> I think so. >> Okay, great. Well, if you're allowed to do >> I'll just double check. >> Yeah, yeah, if you're allowed able to do kickbacks legally, um there's there's three different affiliate structures that I like like you'll immediately know I'll say all three of them and you'll you'll know which one's right for you. So, version one is that you peel off some element of your particular service, a very small element, and then you allow them to sell it for whatever it whatever they want. They keep all the money, and then you deliver on that as step one of a multi-step process.

42:08That's V1. So, an An of that is, hey, uh new business owner gets an LLC set up. We'll do the LLC set up. You can charge whatever you want for that. Let's say they sell for $300. We do the LLC set up, but then we upsell uh tax and bookkeeping, right? From there. But, they keep 100% of the upfront. That's option one. Option two is that they just straight-up sell your thing, right? Uh and then they get to keep whatever percentage, right? They keep You give them 10% or 20% or whatever number makes sense for you um for them to actually just legit, you know, cradle to grave. They All they got to do is just acquire the business and then just send it to you and then you deliver. That's the second, right? And then the third is more of a um more of a lead gen version of this, right? Which is kind of what you're doing right now, it sounds like. Um and then you can go and give them kickbacks later. And that's And then they basically factor it in uh to how much they're Every three referrals I send, I get, you know, one sale or whatever.

42:57>> A lot of ours come from consultants that are on the actual application. >> Dude, 100%. Then consult Like, you need to basically build out like Think of this Like, you need a customer journey for the consultants. >> Okay. >> Like and then that's >> No problem. >> Yes, exactly. And then they're the ones who are going to consistently be sending you business month over month over month. >> Okay. >> Got it? >> Yeah, thank you so much. >> Dude, you bet. I know you got You got your guy. I went over five five minutes, so I'm I'm so sorry. Uh but, hopefully you're good to go.

43:24>> [laughter] >> Thank you so much. I appreciate it. >> Dude, you bet. I see there's basically four steps to starting a business. It's like you have to get an LLC, you take the LLC to a bank, and then you get a bank account, and then you connect that bank account to a payment processor. And then you go ask a stranger if you can do something in exchange for money. If you do all four of those things, you have a business. That's it, right? [laughter] And so, a lot of people like spend years being like, "I'm going to start a business one day." It's like, "You can do it tomorrow." You can literally do all of this tomorrow. And then it's like, "Okay, well, then how do I get the person to exchange money?" It's like, "Well, you reach out to the people you know, right?" You open your phone, you look at the 400 contacts you have there, you open up your Facebook profile, you have 300 friends, you you look at those friends, and then you just say, "Hey."

44:05You send a personal video, send a personal text, and say, 'Hey, I am starting this thing. Um this is what we're doing. This is what I'm solving. Uh do you know anybody?" That's it. And so, it's not even like you're asking your friends to buy something from you. What's interesting though is that 90% of the time the person who responds is "Oh, you know, you could do that for me if you want." But that just gives you the easiest way that costs $0. And because we're all connected with the internet and phones, it's like the barrier to entry has never been lower than it is now. It's just the problem is that um the barrier to distraction is even lower.

44:33>> [snorts] >> What what stood out to me there is the personal text, the video, and the email. And then the fact that you're asking your friends to introduce you to people who may want to not asking them directly. That first part, the amount of emails I get, and I'm sure you get as well, of people pitching their services to you, but none of them are personalized. >> Yeah. >> Walk me through the difference of that personal video, that personal because it's it's it's life-changing like when it's done right.

44:58>> So, I mean, these are your friends or at least your contacts that you've met at some point in your life. And so, trying to recall when you met that person, literally just stating their name, and asking that it's "Hey, I'm going to be doing this." And I would say consistency is the currency of credibility. So, what people don't want to do is refer a friend to somebody who's fly-by-night. But if you can actually just demonstrate that "Hey, he's still doing that." The likelihood that they're going to refer someone goes way up because the relational capital is not nearly at risk. Because if I'm going to introduce somebody to somebody else, I'm risking my social capital on the hope that the third party, or whoever's sending this original text, is actually going to do a good job. And so, you can also include a little bit of risk reversal in that, which is like "Hey, I'm doing the first 10 for free. And the reason I'm doing it is because I just want to get some testimonials, get some reviews, and also just so that I can learn, too." Um and I think just being really up front and really being really honest about it makes the stakes feel a lot easier. And so, then first 10 people, you do exactly that. And the thing is is that you're going to be better off than they will.

45:54For those who are like "I don't want to work for free." It's like you're not working for free. You're earning and then you're Sorry, you're learning and then you're earning. And so, So, to go through the learn phase first. And the best way to do it is be people who aren't direct connections of yours, maybe one step step removed, and then at that point they're going to give you very real feedback. And if you do a good job, then after a certain point, my goal is to get people to basically shift supply to men in their favor. Like I said, the two the two laws of business that I am the most moved by are supply and demand, which is this act right here, and then leverage. So, that's a fulcrum for leverage. And so, I see those as the two biggest forces in business. And so, I want to create artificial demand for somebody who's starting out by just saying, "We'll do a lot of stuff for free." And then what happens is when you have more no more time to give, and if people still want you to do stuff, and you say, "Hey, I can't take any more people. If you want, you can pay." And they're like, "Yeah, that's fine." And then boom. And then you make your first sale. And so, and you'll have confidence because you're like, "Well, I just did it 20 other times, and look at the results from those people." And and but and the first one you'll be embarrassed about. The 19th one you're like, "Wow, you're going to already pay down 60 70% of all the mess-ups that you were going to do."

46:58And then at that point, you're going to start feeling good. And then from there, my way of doing it is just you just keep bumping the price by 20% every five people until eventually people start stop saying yes. And then they're like, "Okay, this is the price I can do for now." And that's basically a very seamless transition into how do I go from nothing to making my first dollar? >> How do you get over the block of I don't want to work for free? >> I actually think it's entitlement. I think it's believing that you deserve something for nothing. Like to to flip the flip the roles in reverse, imagine somebody comes to you, they've never done anything ever in this particular space, and they say, "Hey, will you pay me to do this thing?"

47:35Would you immediately Now, maybe some people would be like, "Sure." Then it's a charity thing, which is different. But would you be like, "You know what? I I really believe that this guy is the best person that I can get this problem solved from?" Probably not. And so, to carry some of that risk for yourself, you say, "I'm going to front this, but if you want to not do it for free, thing number one is that you're getting educated." So, like you're you're getting free education, which I see as absolutely valuable. The second thing is that you can make terms that don't necessarily mean that it's free. Like, there's the price and then there's the terms. The terms of the agreement can be if you do this with me, you have to give me feedback uh throughout the entire process. And at the end, if I do a good job, you leave a review, right? And on three different formats and leave me a video and leave me a you know, a a text version of it. That's now absolute Like, I'll say it differently. A business owner, they do it legally and and so that therefore they're very willing to pay people to leave them testimonials. And so if you'd be willing to pay $500 to get an amazing testimonial, then they're basically you're they've paid you that $500. But I promise you, those first five, 10 reviews will make you so much more than they could ever have paid you and not given you a testimonial. So if we if we flip it and say, "Hey, would you rather get a $1,000 from this person and have them not leave a review versus free and a glowing review?" I promise you, you will make so much more from one glowing review than you will from the $1,000 long term. So you're just building up the stockpile, the foundation to then build whatever you want to build on top of it.

48:58>> Yeah. It's really It's really strong advice. It's I I hope everyone who's listening watching right now is like going, "This is what I'm going to do right now, like 10 hours for free." Because that's where we're blocking ourselves. We don't have the experience. >> Yeah. >> And therefore we don't feel comfortable selling more because we don't even know how the service will look. >> Yeah. >> Right? So you're trying to sell a service and maybe you sold one, but you haven't been through the full life cycle of what it feels like to deliver that service. >> Yeah.

49:23>> Now you don't know how many website revisions or edits there's going to be. You don't know how many app updates there going to be. You have no idea. >> Yeah. >> And now you're actually less likely to go sell another one because you're scared that you don't even know if you can do it. And I feel under that entitlement is an insecurity >> Totally. >> of I don't actually even know how to do this. Like, I've got a lot of friends who are like really talented, really skilled. They they actually would do a great job. >> Yeah. >> But because they've never just done 10 clients for free, they don't know how it's going to be if they went and got 100 clients tomorrow. So, they're scared of getting 100 clients.

49:54>> Yeah. >> Not because they're not capable, but because they haven't taken 10 clients through the process. >> So, I want to give you something super tactical for the audience. >> Yes, please. >> Just 10 by 10. So, give 10 people 10 hours. And so, you can say, "Hey, I'm going to do 10 hours of work for free." That is a really compelling offer, and you're going to do it one-on-one and ideally with them. And so, if you want to build the website, build it in front of them for the 10 hours so they can give you real-time feedback. If you want to uh you know, write email copy, you still meet with them once a week or not ideally multiple times a week during that so you can pay down that 10 hours faster. And if you're worried, you can do you can do five people for five hours. That matters less, but it's more that one-on-one, so the least scalable thing possible, and it's free labor that they can track. The reason that's such a compelling offer is that everyone even at in in every country even minimum wage has value. Anybody can understand that five hours of work is a material amount of work that you're choosing to give away for free. And so, even if you have no expertise, labor at base price is still worth something. And so, if you add on expertise, it becomes a very compelling offer. But the beauty of that setup of having five or 10 hours that you choose to spend is that there's basically if you're doing it one-on-one, there's almost no technical, you know, component to it. You don't have to like build all these calendaring and and schedule it's just like you're just going to text these five people, "Hey, you want to do same time tomorrow?" Very simple. And then for each of those, you know, calls that you'll take with them, um by the in the very first call, you're just say, "Hey, I want to be clear, what's the problem? What do you want to you know, what do you want to solve? And do you mind at the end of the five hours we spend together, if this was good, if I can tell you about what I do?" If you just set that that that pre-frame up front, and then you do the hours on the fifth call or the fifth hour or the 10th hour, you can say, "Hey, remember I said at the beginning I was like, has this been good so far?" It's like, "Awesome.

51:33Let me just recap what we've done over what we've covered and the progress we've made. Do you feel happy about that? Great. So, this is what I think it would look like." Cuz also, you spent those five or 10 hours getting as much information or ammunition from them of all the other problems that you could potentially solve. And then at that point, you say, "Hey, I think that I can solve problem one, two, and three. It'll take me maybe 6 months, but this is what kind of an engagement would look like. How does that sound to you?" That's all you have to do. And the thing is is that after you give someone 5 or 10 hours, there's so much reciprocity that's built up. They're like, "Well, shoot. I mean, sure." Now, if somebody on the first call says, "No, I don't want to." then it's like, you don't you don't even need to get to like continue. And so, one of the big things that I I'm a big proponent of is absolutely give stuff away for free to people who are qualified.

52:12>> Yes. >> And so, we're like, "I don't want a lot of tire kickers." is like, "For sure, neither do I." But if I had a room of 100 of the most qualified people, which if you're like, "What are a qualified person?" It's it's BANT. So, IBM made this figured this out like 70 years ago and it's really never changed. So, BANT is budget, authority, need, timing. Do they have the money to spend, the ability to make the decision, they need the thing right now, and is now is is it now a priority? And so, if we had a room of 100 people who met all four of those criteria, wouldn't you want to do something and spend five or 10 hours for free? I mean, my god. Like if you had if you could sign like the reason they sell timeshares over 6-hour blocks of time is because it just takes time to build trust for a higher ticket sale. So, if anything, it's like you're choosing to say that I'm going to give you five hours, but they're giving you five hours to influence them to ultimately prove that you're good at whatever you do.

53:00>> Yeah. >> And so, I think that is the easiest way to get started. You can make that your front-end offer. You can put that in the video. And I think there the beauty of that specific offer is that you don't need to even figure out what you're going to sell because you'll figure it out during the time you spend with them. And so, you can figure out the offer in real time with them. And also, because you're doing it one-on-one, you can basically you can you can permute it. You can you can tweak it every single time you you you pitch it to somebody on the fifth or eighth call or whatever that ultimately gets you so many faster iterations that are low risk.

53:27>> Yeah. When you're thinking about what to pursue, so say you've left the job, you've quit the thing. When you're thinking about what to pursue, how much of that is a decision derived from self-awareness? Because, you know, they'll someone will look at you now and be like, "Oh, no, Alex did this, so I'm going to start a acquisition.com." You know, or they'll say, um, "I want to I saw Steve Jobs did that thing with the computers. I'm going to start Apple."

53:53>> Yeah, right. >> Or Elon, I'm going to do the spaceships. How much do you have to know thyself to know what to pursue? >> I mean, that's a really good question. So, um, there's a tweet that I love by Andrew Wilkinson, which is, um, "Every entrepreneur ever, colon, here's the winning number for my lottery ticket." And so, it's like every entrepreneur will say, "Here's the winning lottery ticket." But it's like that game already that drawing already happened. >> Ah, okay, yeah.

54:19>> Right? And so, like you can't cash that ticket in. It's already done. And so, people say the word first principles, no one really knows what it means. Uh, I mean, some people do, but the I think far more people say it than know what it means. And so, basically, there are foundational truths of business that that exist. And the conditions of the environment will change. And so, you have to apply those truths to whatever the current condition is. And so, that's what I try and tease out with the books and the stuff that I that I put out in content. But at the end of the day, you have an input of time. Like zooming all the way out, if the goal, assuming that your goal is to make money, okay? Like and this is just a purely economic business goal, then you have time, which is the primary currency that you trade it, and you make dollars over a period of time. And so, I tend to reject the idea of like, never, you know, never trade time for dollars or anything like that, because everyone trades time for dollars. It's just some of us are more efficient at it than others. But even exchanges that occur that just are not denominated in time still occur over time.

55:18And so, uh, you have this foundational unit of time, which you're going to give in. What we're seeking is the highest return on that time. And so, there, you know, within a business context, there's kind of three levels of, uh, things that have to occur in a business. You have to, you know, attract attention, you have to convert attention, then you have to deliver something, uh, for that attention. And in each of those things, you want as much leverage as possible. So, you want as little time as possible required to get the most output. And so, I have built acquisition.com on basically two primary theses, uh which are in the logo, which is this is a fulcrum for leverage.

55:53>> For people that can't see, it's like a triangle. >> Yeah, so it's like a triangle, or the Illuminati, cuz that always gets brought up. Um yeah, right. So, we've got a the fulcrum for leverage, and then inside of it, you have supply and demand. And I see those as the two foundational principles of business. And so, which is you need supply and demand to have a business, and then leverage to get as much out of it as you possibly can. And so, um when you're looking at the assets that you have, assets can also be skills, resources, what you have available to you. Now, if you have nothing, then all you have is your brain, your hands, and the time that you have that you can put towards learning something, which is why I'm a big fan of skill acquisition is one of the the primary things that you can do is educating yourself. And not formally educating, but informally or or alternatively educating yourself on super tactical things. Uh once you get over the fear, then you start asking, "Okay, how do I let people know about my stuff? And what do I let them know?"

56:45>> [laughter] >> Right? And so, you have to have something to sell, which is the offer, and ideally you want the offer to have as much leverage as possible. Like, so if you sold software, or you sold media, those are things that you can uh cut once, sell sell a thousand times. Um if you have a conversion mechanism, it's like you can't have it be automated, like a checkout page, or some sort of video sales letter, or something like that, where people just buy without a a phone sales person. If you add a phone sales person, there's less leverage, not to say that's wrong, but you want to you want to have the highest leverage opportunity. And then from a um from the deliverability expect uh perspective, um I kind of talked about deliverability first, but uh from the advertising perspective, uh if you reach out to people one-on-one, that's lower leverage than being able to make one piece of content that a million people see. Right? And so, over time, you go from low leverage to high leverage, uh where you have the same inputs, but you just get significantly more for your output.

57:36And that fundamentally is like, if we're reasoning up from first principles, how do I get the Said differently, the question that someone I think is really asking is, how do I get the most for what I put in? And you have to reason within your current context of your skills and your resources and your assets in order to derive that solution for you. >> So, what is very interesting though about the agency? If it did Maybe this will excite you a little bit, is that the agency model has perennially sucked.

58:01It's been a undefeated heavyweight champion of suckage uh for a very long time. But, as of recently, it's becoming a significantly better opportunity because of AI. Because fundamentally, agencies are always in demand, right? Half the people here are using agencies. Like, think about what services business owners, half of them are Like, it's just there's there's such huge uh demand for it. The issue is that it's not sticky. That's why there's so many of them. Whereas, how many payment processors are there? Not even close as many agencies are. How many banks are there? Not that many. Every business uses them, but they're not [snorts] nearly as varied because they're sticky, right?

58:32Agencies aren't. And so, part of the reason they're not sticky is one because customers can suck cuz they don't know how to do all these other things, but the other reason is because they're just mispriced, right? And because the operations around delivery is really tough. And so, with AI, so many like there the bottom end of the market, that $500, you know, $700 a month, $400 a month price point, there's a lot that these agents can now do. And [snorts] I think that could make something very, very interesting. Like, the reason why Combinator right now is looking for vertically integrated um marketing agencies is because the demand for them, you don't need to test is there product market fit for getting customers. Every business owner wants customers.

59:11It's literally just a pricing consistency question to you. And so, it's all about ops. And with AI, a lot of that can be automated now. >> So, you're basically talking about volume as opposed to value. >> Yeah, well, I mean, even if you want up up market, I've got a a good friend that's got a a multi-centimillion-dollar agency. He sold Fortune 100, but he he cut of his his payroll by just putting AI automation in place. >> Yeah, there's a lot of AI solutions out there right now. They're not very good as it turns out.

59:41>> Right. >> They can master the funnel. >> I'll say they are I would not use that. They are not good out of the box. >> Right. >> And if you like right now we're doing 20 sales a day with a No human. Pretty slick. And that'll scale. And so like like it's it's like say like Facebook ads don't work, it's like they don't work if you're not doing them well.

1:00:10AI doesn't work if you're not doing it well. I would say that you have an opportunity, which is the point is like the fact that there is more friction for you means there's more friction for everyone, which is where the where the opportunity lies. As soon as it's easy for everyone, the opportunity will be gone. >> Yeah. >> And so this is why I'm saying I think there there is an interesting opportunity right now for the next one to two years. Uh where if you get ahead of it, you could actually make a lot of money. I had this tweet that went like super viral, but it was like uh first time founder, "Hey, I need you to sign an NDA before I tell you my business idea. I know you've got it. I know you I know you have."

1:00:42>> [laughter] >> Third time founder, uh here's everything I have. Here's all the documents. Here's all the projections. It's probably all wrong and this probably won't work. Um but I have a couple smart people and I think we'll be able to figure it out. It'll probably cost longer and take longer as cost more and take longer than we think, but we think it's worth a shot. >> [laughter] >> Cuz everyone who who who's been on both sides of that understand like the entrepreneurs got it cuz they're like, "Oh my god, I was that guy." Um and all the investors get it cuz they're like, "Oh my god, I deal with this guy all the time."

1:01:13But actually what you just said with the many many iterations that from your original idea until what actually happens is yet again one of those um demonstrations of the difference between a beginner and expert. A beginner has binary thinking. So, they think this worked or didn't work. And if it didn't work, then I need a new idea. Rather than having the nuanced thinking of a master or an expert or advanced person who says, "What about this? If I click into it, I break it into its component parts. What about this didn't work? Okay, it's not that meta ads don't work or advertising doesn't work. It's that we didn't nail the hook in our ad.

1:01:48Or that we didn't make our our offer clear enough on the landing page or it was not congruent with the advertisement. Or um, you know, it was the offer itself wasn't very compelling or it didn't have it didn't like it was just this we everyone's coming in and saying, yeah, yeah, I kind of want that but this is actually my issue. We're not solving the core problem. So, it's it's always in the in the details. It's always in the sifting through the many small things that you find the kernel that ends up fixing uh, the business. I mean, I know that uh, Facebook was trying to fix their virality issue. And they were locked in a room for days trying to figure out how they could get more users to retain on the platform, right? People would sign up and then they wouldn't do anything and then they would they'd drop out. And so finally, um, Zuck just said, "Okay, we have some belief that if people have more friends that they will engage."

1:02:41And so, they didn't And here's the thing like with the uncertainty, they couldn't prove it. He just was like, "I feel like that's better than them not having friends." And so, he said, "All right, the new goal is 10 friends in 14 days." That's the goal. So, we have to create the experience so that we can get it to introduce them to 10 people or connect them with 10 people that they already know on the platform within 14 days. And as soon as that happened, then obviously Facebook took off or continued to grow. And so, he wasn't like, "Oh, Facebook doesn't work anymore or social networks aren't going to be a thing." It's it's usually way smaller and way the adjustment you need to make is much more nuanced than what you originally expect. If the foundational principle of like cutting hair, mowing lawns, whatever, it's like this problem exists and I can charge a certain amount and make a profit on it, then there's nothing wrong with the business. It's just what is the constraint that's holding us back and then usually zooming into the constraint and realizing there's 20 things that are contributing to the outcome, not one.

1:03:38And that's where expertise and that and you develop that expertise by trying and failing. >> Yeah. >> And that's and that's just the name of the game. And so I think you have to have an incredibly high tolerance for failure without internalizing it and feeling like you yourself are a failure as a result of failure. If you like this video and you're business owner who wants to break through your current revenue ceiling, I just filled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling road map that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out. Again, absolutely free and since you're business owner, I appreciate you and enjoy.