This Mistake Cost Me $50 Million

0:00Unternehmer/Gast You will never go out of business focusing on the customer. And I I'll tell you a quick story. So, the biggest business mistake that I I've made, the two most costly business mistakes I've made, um, one of them has nothing to do with this. This is the other one, [laughter] which has everything to do with this. Um, I had a competitor that ended up taking a bunch of my top testimonials that were that we kind of converted to semi-employees because they were big evangelists back in the gym launch days.

0:28And as soon as they took them and they were they were big ads for me, all of a sudden they were running ads for this other guy. So it's kind of like when the Verizon guy went to the AT&T, remember that that that switch over that actor? It was kind of like that. And this guy was offering one-on-one coaching um to help people out. I never did that. And so and they were cheaper. So they were cheaper, they were doing one-on-one. And they had some of my top, you know, customers uh becoming advocates. And they said that the 10 of them had come.

0:55They partnered. he partnered with these 10 people or something like that. And when that happened, I got r my feathers got all ruffled and I was like, it's war time. We gota, you know, we got to go to the mattresses. We got to really, you know, change change the business up. And so I did this big kind of like relaunch internally to my existing customer base. And um I said, we're I did this big value stack and I said, you're going to get all this extra stuff, not for the same price you're paying me, but for less. And so I took my existing recurring base and I reduced my revenue by $500,000 topline per month. And so that translated because we didn't take it off topline and and the cost went up.

1:36So I increased my costs and I took my topline down by 6 million. And I ended up losing in profit somewhere in the neighborhood of $6 to7 million a year for that business at the time. I then ended up selling that business obviously and the business never recovered that profit. It stayed there. And when I did make that move, the first comment in the chat after I dropped that it was less was a complaint that I had not done it earlier.

2:07So, it was not, "Thank you so much for lowering the price and giving us more shit." It was, "I can't believe I was paying more." And I was like, "I want to [ __ ] kill myself." [laughter] And and here was the best part of all. My churn changed zero. So I just cut my top line by 20%. Churn remained the same because the willingness to pay change that I made. I basically reduced it from call it 3,000 a month to $2,500 a month. It actually made no real difference in whether someone would cancel or not. It was past a threshold that this is a lot of money.

2:42And so it changed nothing. I just made less money. And then when I sold the company, that six got multiplied by a lot. And so that probably cost me in the neighborhood of probably $50 mill million. And so the big lesson that I learned there was that I shouldn't and that that competitor ended up killing that business because it wasn't [ __ ] profitable. And so I I was the market leader and someone came in to undercut me and then I said, "Oh, I'll copy the moron."

3:13>> It's easy to let happen. Yes. Yeah. >> And so don't lose $50 million. Let him let him figure that out for himself. You just focus on the customer and you'll win. >> Yeah. Good answer. Thank you. >> Appreciate you. [applause]