You Can't Ignore the First Lie

0:00If I want to judge how good someone is at a job, I want to ask them or I'll ask them like, "So, what metrics do you track to know that you're doing a good job?" First question. And if someone has no metrics, it's going to be tough. Let's say they have decent metrics. All right? They they name five things. I'm thinking of seven, but they've got five of them. Okay, that's fine. The next question is, how does what you do change them?

0:25Because if you I mean the first level of understanding is like these are the outcomes. These are the variables that create the outcome. Great. How does your behavior affect the variables? If you can describe that you'll likely be very competent at your job. It's very simple but most people cannot do that. Which is why most people are not competent. Like competence is incredibly rare. Are you I feel like he was waiting. Why did [laughter] Why did he stare at me for so long after saying that dude? He says incompetence is extremely rare.

0:57[laughter] >> I was like >> it is rare. You know what else is rare? >> Common sense. >> So um >> yes. [laughter] >> Yeah. Super interesting. So when you say common sense that I've actually thought I' I've given some thought to this like so when you say common sense what do you think that means? >> Oh lord. I pulled myself there. I pulled myself. >> You deserved it. I didn't. I was just staring at him like this. >> And I and I say this in no way to try. do it because but this is a perfect example of

1:25>> so two things. One is >> I'm sure you've heard someone say like does that make sense? >> Yeah. >> We are rewarded for immediately saying yeah totally. >> Mhm. >> It has nothing to do with whether we actually understand it. We just know that when that sound comes out of someone else's mouth we need to nod and say yes. >> That doesn't make sense. >> Yeah. >> Right. [laughter] >> Exactly. >> Dude, he hits us with some silence dog [laughter] and I'm just like what do I do? I've never been here before. What do I do? Do I answer? Do I see you doing violin? [laughter] No idea.

1:54>> And so with common sense, of course, it's like common sense isn't that common. It's a it's a it's a it's a you know, it's it's a funny it's a funny term, but I would translate common sense for most people as um behaving the way that I would behave in the same condition. It's common sense. Behave the way that I would behave in that condition. >> Yeah. Cuz you're saying like you're saying >> be like me. Do what >> truth like Yeah. Like truth is subjective in a way like Right. Like somebody is they're

2:23>> I wouldn't say truth is subjective. >> Their belief system. >> Yeah. >> Their behaviors that they've been rewarded for doing so. They had a condition. >> So their common sense is >> they acted differently in this condition. You would act they do A in this situation. You would do B. You say they have no common sense. >> You just learned a different lesson. >> Yeah. >> Than they did in those same circumstances. I'll tell you a different story. I had um a teammate um who uh I've spent a lot of time with. I've mentored a lot and amazing amazing person in terms of their work as a human being everything.

2:59And one day they I realized that they had made a gigantic mistake like huge mistake. Um like a 10, you know, not 10 figures, uh like a $10 million plus mistake, like real cost mistake. >> Yeah. and it was a younger person on the team and I found out about it and I, you know, confronted them and I was angry cuz it's like, how could you not know this? This is ridiculous. Blah blah blah.

3:29>> And I could see how hurt, you know, the person was by this attack. And he, you know, was just like, I was just trying to do a good job. And I remember in that moment I was like, I cannot hold you accountable to not knowing something that I should have taught you.

3:59It is my mistake, not yours. And so because I was the one who had taught him a lot of the role because I', you know, >> you built >> Yeah. Exactly. I take him under my wing, etc. And so, but it was a it was a great example of like he had no common sense, but it wasn't common sense. It was extremely rare sense, a rare sense that I have because I'm very good at whatever the thing is, right? And so, it's so unfair for me to say, "You should have lived every single experience of my life and behaved exactly as I would have behaved, except never having taught them that."

4:28>> What's up, Alex? >> What up? >> Hey, so uh we my brothers and I own a designer handbag resale company. >> Oh, interesting. Okay. a pawn shop specializing in gold, silver, jewelry, and luxury approval. >> Okay. >> And then I have a hyper specific question. >> Okay. >> Um I recently caught one of our main employees kind of skimming off the top stealing.

4:56What would you do in that scenario? >> It's uh is it the guy or is it like what guy is? I mean, it's not really going to change my answer, but I'm just curious. It's It's someone who is replaceable, but it would be a huge hit. >> What is it? What is a hit? >> Like we would have to

5:20>> Well, the the financials are worse because they're stealing. Correct. >> Not sign. So, it's it's it's like it's small. It's not >> Well, let me give you the TLDDR on this. Ruin the company. >> Let me give you the TLDDR on this. >> When you're 85 looking back, you're going to want to have been honest. >> Period. Also, you expose yourself to liability because as soon as you as soon as you know or it's demonstrated anyway that you knew about something, all of the reps and warranties that you're doing in the sale are going to be flipped. And so, if you basically are knowingly giving somebody an organization that has some liability that you have not um came forth with, um you take on that liability and they could basically take off basically take back not take back the money. We sue you. It would suck, right?

6:03The good news is this is I think that all of this is going to be how you frame it when you're going like when you're telling the the the buyer, right? Um I would just say, hey, like you know the business you're getting into, right? Like we deal with some nefarious characters. That being said, it's a very profitable business and it's a good business. I've got good news and bad news. The good news is we're slightly more profitable than we've let you know and we're willing to honor the existing price. The bad news is I have to replace one of the people because I found out he was skimming.

6:32Mhm. >> But fundamentally, you have to be upfront, state the facts, and tell the truth. I don't think it's going to blow the sale up. >> Yeah. No, I agree. I agree. And truth be told, I already did talk to this person. I'm more interested in what you would do because I spoke to them, met a middle ground, didn't ask for any money back. We changed the

6:58>> Oh, I mean, I would kick him out >> moving forward. Dude, they they they stole >> before the sale. >> Yeah, they stole, man. Oh, >> that's interesting. >> They stole. >> Okay. >> Would you say that for if it was a like a $100 versus 10,000? >> Have you seen your Yeah. Have you seen [sighs]

7:23>> Have you seen Hold on. Hold on. What What show am I? I'm trying to figure out the show. Have you seen Ozarks? >> The show? No. >> Okay, I'll give you the scene. I'll give you the scene. >> So, drug lord finds out the main character and his partner are skimming in some way, right? So, drug lord shows up. The guy, the main character is an accountant. His partner is also an accountant. They have a legit accounting firm. They also do this drug cartel stuff on the side. Um, the main character doesn't know what's going on because he's not the one skimming. The drug lord tells a story about when he was growing up they ran a grocery store and uh he says his father called Lupita.

8:08Everybody loved Lupita. Lupita was amazing, right? And he caught her pocketing like a $5 bill on her way out the door. And so the drug lord then goes to uh you know the secretary of the of the accountant who's the main character and says, "What would you do?" And you know, the secretary says, "Yo, it's just $5. Not a huge deal." Um, and so then he kills her. And then he goes to the next one and says, "What would you do?" And he's like, "Well, I mean, hey, you know, there's we got to understand the situation, blah blah blah blah blah."

8:44And so finally he goes to Marty, who's the main character, and he says, "What would you do, Marty?" And he says, "Why'd get rid of her?" He says, "Why?" He said, "Because it's not the first time she stole. It's the first time you caught her." >> Gotcha. >> I would not want a snake in my business. Whether it's $100, $1,000, they stole.

9:10>> Mhm. >> To be fair, that's how I do business. >> Yeah. >> It's just like, what kind of signal does that I mean, it's like, what signal do I send to my team? What signal I send to myself? It's just like there's no reason. >> Well, I can tell you I can tell you what happened is I got tremendous push back

9:30>> on a different person on the gold side >> because this was an inherited business, >> which is one of the reasons for selling. >> Yeah. >> And that was kind of the way things were. >> Yeah. >> That was the status quo >> that people skimmed >> and I can't I Yeah. I was like, I I do this. I make your company this much money. This is the way we do. [laughter]

9:56>> I know. I'm looking at you. I I did the same thing. I did the same ex I almost I couldn't believe it. >> But we're selling the company and I don't know how much to push back to how much to and to be lenient on it. And so that's the scenario that >> I mean my I stand by 100% what I said originally which is like I think the game is long and reputation is something the only thing that you defend with your life and like when you do a deal in the future because hopefully you will they will call your last acquirer and say how was it.

10:36So I think state the facts tell the truth be upfront about it. I don't think it's going to blow the deal up. I think that you get it bas basically putting things on the right foot the right way like you will feel better about it. There is a short like this is I mean these are real these are real you know I mean there's many people who wouldn't do this. This is a judgment call. This is an ethics call not a business call. But I will tell you 100% that is what we would do. And it would pain me to be clear. I'm not saying I would be happy about it. I'd be pissed. I'd be like why did you have to do this? Right?

11:07Sometimes I'd be like why did I have to catch you? Why couldn't you have been better at stealing? Right? But like when you know, you know, right? The best day to catch someone stealing was 20 years ago. The second best day is today. >> Copy. >> I do think that the people who you do business with will respect you for bringing it to them. And I would, again, when I have these hard conversations, I'm going to go longer on this because I think it's going to affect more than one person here. Um, is when I say state the facts and tell the truth, it's stating the whole facts and the whole truth. And that's what actually gets you through these things. It's the half-truths and the half facts that get you that get you [ __ ] So basically, it's like saying, "Listen, I had a big like I'm talking I'm talking to the buyer, right? Listen, I had a big internal debate about whether to even bring this up. All right, Paul, as you guys have met, he's one of the four leaders that we have here. I caught him pocketing 200 bucks."

11:58All right. I in with integrity, I do not want to I don't want to res represent something that isn't. Now, the good news is, you know, it wasn't a huge amount of money. Um, the bad news is I did let him go because of it because it's not something that I stand for. And so, that being said, I don't think it's going to affect the operations. I think there's a potential the profit goes up. You know, when you remove cancer, that's usually a good thing. Um, but I want to be upfront with you guys and at least at the very like at the very least, you will know that this is I'm the type of person that you're doing business with and that what I said the numbers are is what the numbers are.

12:33If somebody did that to me, I'd be like, "Fuck, I love this guy. I would I I wish I could do more business with this guy. Yeah, I figured there's always going to be skeletons. I know that. I'm a buyer. >> Yeah. No, I I hear you. >> It's tricky. >> No, I mean it is. It is, but like that's why they are ethical dilemmas. And it's it's way more a question of what type of business person, what type of reputation you want to have uh than it is

13:01>> like again this is a values question. more than a business question. >> Copy. Yeah, I already I I saw the Q&A before was all psych based and this was something that happened literally a week ago. Yeah. >> And then you already answered my question earlier in the chat. So >> Oh, good. [laughter] >> That's all for me. >> All right. Rock and roll, man. Appreciate you. Sorry that this had to happen, but I'll say this. You will always be proud of how you acted in this in this moment. And the real real is that the business seems like it's solid.

13:36You were able obviously to get a buyer. If this actually does fall through, you'll be able to get another one, and you'll have time to improve the business, get a higher multiple. >> Hope so. Appreciate it. >> Appreciate you, man. Thanks for calling in. >> We sell a paid ads and growth advisory to eight and nine figure ecom brands. >> Sweet. >> We do three and a half. >> Okay. >> We'd like to be at 10, then 20. >> Okay.

14:02feel super clear on our top priority against our supply constraint. >> Oh, talent. >> Yeah. Talent acquisition and first getting LTGP on talent. >> Um, something that's unclear is >> we've just established this past 12 months our leadership team. >> So, we have two team leaders, a head of growth and a head of strategy. >> Mhm. >> They're all just on salary at the moment. Um but putting together or building an incentive a great incentive plan for them as a group

14:32>> to carry us as we two and 3x headcount. >> Um I would just go profit share pool 10 to 20% and then they get slices of that slice. So it caps. So basically it's like if you say like simple math $100 a year profit $20 is always going to be allocated or 20% is always going to be allocated to all leaders. Um, and so they get slices of that pool, but then you always have 80. And then they think like you do, which is like if we're going to bring this leader in, we got to give up some of this pie, but they should be able to grow the pie, which is the exact same math that all of us do when we bring someone in. Yeah.

15:07>> And so it gets them thinking more like owners. >> That's the simplest way I could break it down. Are you planning on trying to sell the business anytime soon? >> Uh, potentially. Yeah. Okay. Um, >> if you want, you can include a profit's interest in the in the sale, which you can have be proportional uh to their interest. Yeah. >> And then if they leave, comes back to you. >> Yep. How would you aortion that percentage split against those different roles?

15:32>> It's going to be So, first off, you're going to want to leave probably twothirds for future talent if you want to go big. And so, do not be like, okay, I'm going to blow my whole like slice of pie on these people because the best talent is in the future. It's not right now. But I'll give you the the pitch or the walkthrough that I have with um with somebody who's in this in this position is that and this will probably apply to half of you. Um who here has somebody that they were considering tying into your business? Okay, so I'll give you quick quick big picture advice. Um if you never want to sell the business, don't give shares away.

16:11The only thing that is guaranteed 10 years from now is that you will still be in the business. That's it. Everything else is not guaranteed. I would not encourage you to give real shares away. Thing one. Thing two, there are four things that equity provides. One is cash flow. The second is sale bonus, sale dollars. The third is risk. And the fourth is control. And so when I have a conversation like this, I'd be like, "Okay, cool. So, do you want any risk?"

16:42And they're like, "No, I don't want any risk." And you're like, "Okay, cool. So, we don't want that. uh I'm not going to give you control. So that's off the table. So all we have left are cash flow and the chance that we sell and that's what we're going to do. And so um I'm sure in Melbourne I don't know the legal situation but like there's a version of we'll give you a profit share which comes off bottom line and uh in the event of a sale you'll get a sale bonus. Now the issue with that is it's going to be taxed as income at least it is in the US if they have a sale bonus um rather than capital gains. But there is no real other alternative because either they have to take on risk and not get control and pay taxes um on you gifting it to them or they have to buy it and give you money. Most people don't want to do either of those things and you have to agree on evaluation. It's a whole [ __ ] mess. And so it's easier to say I'll give you some money today and if we sell you get money tomorrow and if you leave you get neither.

17:33>> And then that sale you might have just said that the sale number is that predetermined. There's a zillion ways to slice this, but the simple way is like if you have a 10% profit share like for the whole company, right? And somebody let's say gets 10% of that. So they have 1% of the profit. You could say when we sell you will get a proportional amount relative to the total uh for that 1%. So they get 1% of the sale. >> Sure.

18:00>> Yeah. >> And when you write that, make sure that it's the percentage of cash, not calculated on the total value of the sale. >> Yeah. Sorry, lost thing. I got [ __ ] on that one before. So, there you go. >> Stoked. Um, the head of growth >> is pretty much the sole sales guy. >> Uhhuh. >> Um, or our first sales guy, nonfounder. >> He'd be at this table >> commission on Clipper sales plus this percentage of profit share or it's one or the other.

18:28>> Is he a founder? >> No. >> It just sounds like he's your sales guy. >> Correct. Yeah. >> I don't New role for us. Yeah. >> Well, he gets commission. >> Yeah. He already >> at the leadership table. >> Uhhuh. >> The other guys at the leadership table. >> Does he do marketing? >> He started to. Yeah. >> He's developing into he's backfilling that head of growth role. >> Giving equity to sales guy is like kind of like one of those day one mistakes that I'd prefer you avoid.

18:54>> Yeah. >> So I if that guy's like really ambitious and really hungry and smart and you think that he's going to be there long term, I would say I want you at the leadership table. I don't think you're ready there yet. This is what I would need to see. and just make it quantifiable. >> Yeah, >> you need to get like you need a master demand gen which creates five deals a week, five deals a month, whatever that number is that you'd like if he actually did this, you'd be like you earned it. >> So, whatever that is. >> Sweet. Thank you. >> Rock and roll. Yeah, you bet.

19:20>> I have an 18-year-old who's on the team right now on my team. 18. and he emailed every single person in my company and reached out to them and had a personalized like cover letter for every single person about why he would be an excellent add-on to our sales team. And the day he turned 18, he officially applied. And then I was like, >> "How's this kid not going to be here? He beats me into the office, >> right? >> He's he's here at 600, he leaves at 6, and he does it seven days a week." And I'm like, "Dude, you should take the day off." And he's like, "Wow, he's just he's here. He's here to win." And so like when you have that culture like that everybody all the other guys are like [ __ ] I got I got to step my game up because and the thing is the hardest part this is this is my my belief on this is that the first three to five hires that you have for sales are so important because they solidify the culture and I define culture as the series of rules spoken or unspoken in an organization. So this is how we behave.

20:12If this then that. These are the rules that we have. Like if it's Saturday, we we still show up. That's a rule. If uh if a prospect like if we get a lead, we always do the steps of lead nurture. We like what do you mean you didn't like >> like you didn't understand? Like what do you mean you didn't? Like you just chose not to. I don't think he's going to be here month. Like it just immediately. And then they start black sheeping. Like they police themselves because they're like it's an honor to be on this team. >> Correct.

20:37>> Right. And I want that culture honestly on all the teams of the company that we have. But sales because we're talking about sales like sales team six man like you are the best of the best to be here. >> And I think that's part of like where brand stuff starts to come into play where like this will be like acquisition.com will be on your resume you can get a job wherever you want after that. >> Right. Right. And so they know especially if they come on Alex's sales team that people are going to be like what are all the secrets but the secrets are all the fundamentals. And I'm such a big advocate of this is like there is no such thing as quote advanced sales. It's advanced sales people literally never don't do the basics, right? It's the consistency of doing the basic and the way. So I we have isms but like simple scales, fancy fails. That's one of our little internal isms. And so like in order to have a sales system, the reason we delete so much is because we can only pay attention to a handful of things like just from the attention of the team, the attention of the manager. And so we just want to make sure that the things that we are focusing on that everyone does always all the time every day are the things that matter.

21:32>> And that's it. And so it's like did you follow the script? Did you follow up? Did you work the lead? Did you make the offer if they were qualified? >> That's it, >> right? >> And then we can see the metrics across the whole team. And if something's off, we know what the like we can usually quickly identify what the problem is. But I love a team where everyone's performing very very high >> and people get a ramp up, but like you get a couple weeks, but like after that, if you're not because we know this system works

21:57>> and so if you're if it isn't working for you, you are not working it. You don't try to say, "Oh, this is just our top 10% and the other 90% should suck." No, no, >> you're saying it should be the opposite. [ __ ] The 90 80% should be the standard of people doing it right. And then the 20% is like you have some time to [ __ ] catch up. But this is the standard of winning right here, right? >> If you know how to properly train, and I think I just think the vast majority of people don't know how to train. I just think I think it's it's

22:22>> 95% of organizations don't know how to train anything. And so they basically just roll a dice when they hire somebody and they have no idea whether to judge if somebody's a good salesperson or not and they throw them in and if they close they say awesome this guy's a good salesperson which means he had all the building blocks already which means it had nothing to do with you right and your sales system is you gave them a PDF and you said please learn the script and then they kind of disregard it because they had an experience that might have been better. They might be better at sales than you are, but unless like the worst thing that can happen for us, for example, not the worst thing, but like if someone comes in, he's like, "I'm an absolute hardcore whatever closer."

22:57Maybe he does have a really high closing rate, but if you come into our system, I prefer to be like the Patriots. Like we have a system. This is what we run here. This is how we do things. And if you come in, you go off script, you're not going to work here. That's all it is. Now, there's a hundred other companies that will take you and you can go mess up their sales teams, but you're not going to mess up mine. Right? If that guy's a team player and he says, "I will do your script. I have a handful of suggestions that I want to do." I'd be like, "Replicate before you iterate." That's one of my rules. Like, >> if you can meet everyone else's standards, then you can tell me your suggestion. Yeah. So, and and so if they do that, then they say, "I think if we if we change this question, I think it would frame things." Then I'd be like, "Awesome. You change it. I'm going to keep the rest of the team the same. And if your close rates higher, I'll put it teamwide."

23:38>> And that's how we iterate. So, like we'll still keep the whole like because you have to test. I mean, I always like to test things in scale, scripting, whatever. And so, it's like, we're still going to keep the block of the team the same because we know the system works, and we'll change this one thing for you, and then we'll see if it works better, and if it doesn't, and most times there's just no change, in which case, get back on the script. >> Got it. >> Hey, my name is Dominique, and I'm definitely a little starruck right now. >> You and me both, bro. >> Uh, I'm here with my four partners.

24:03>> Where are you at? >> Over here. And we do omni channel digital marketing for dental offices. [gasps] and [laughter] >> the plot thickens. Yeah, >> we actually just a couple months ago we merged our two companies. So we're at about 10 million in toplineing >> at 5 to 8% margins. >> Okay. >> Our goal is to be at 20 20 million 20%.

24:28>> Real quick on the 5 to8% are you guys all taking salaries? >> Yes. >> Okay. So that's probably what would it be if you added all salaries back? Not saying you should do that. Just so I understand. >> Probably 15ish. >> Okay. Still low, but okay. Keep going. >> Um, so I think what's holding us back is lead flow for our business, right? >> And consistent results for our clients, which >> I would say are both constraints, but Tim Kim might kick my ass.

24:55>> Um, I'm not going to comment on the irony of marketing companies not having leads. Um, so from an omni channel approach, what do you what different channels are you guys advertising on for your customers? So all socials, all all main socials. >> What size? So it's dentist of what size? >> Two two millionish, but we also do >> and up or 2 million is the average. >> Like 1 million to 5 million. >> Okay. Got it.

25:20>> We do like multi- locations, DSOs as well. >> Got it. >> But we do we do websites obviously, SEO, paid ads, social. >> What's costing you so much money? >> Our team. >> Okay. >> We have about 85. It >> feels like a lot. >> Yeah. I think realistically, like if I were in y'all's shoes, I would probably take the next 6 months and walk through this process. So, so right now you have people who report to people, right? And this is how the structure of the organization works. But the reality is that this is actually a very inefficient structure for information to transfer and for decisions to get made. It's just the only way we've done it. Jack Dorsey had an awesome piece about this, but it actually comes back from the Roman Empire of how they organize legions.

26:17That's why organizational structures exist like that. We haven't evolved anything new and it's because humans have the same level of competence which we can manage three to eight people underneath of us and you just ladder all the way up which means at every level everything gets compressed which is why there's so many bad decisions get made from the top because they're so far away from it. And so what you need to do is instead of having what I would consider role-based thinking from an organizational structure perspective, you need to shift to workflowbased thinking.

26:46And so no longer is the work of the company bound by the people's titles. So when we hire a role, we put this title up and we have some sort of description of what we think they're supposed to do. But more realistically, this person is going to do, you know, step two of this six-step process. They're going to do step one of this other three-step process. And so, they just do these couple of things uh on a day-to-day basis. This is the ones that they're responsible for. And so, you have to get incredibly granular to figuring out what every role in the company is doing right now, doing doing. And you'll find out, it'll make you sick because I can almost guarantee you that of the 85 people that you have right now, there's probably like 10 that are really running the ship, right? And so lots of the people that are in the company are not that productive. And honestly, a lot of those roles can and I don't want to say be automated away and more so I'd rather have those people learn the tools and then find more valuable things to do.

27:44And so I said earlier, the next trillion dollar company is a technology company that is masquerading as a services business. You can keep all your pricing the same. You can sell to the same customers, but if your operational complexity inside dropped, like if you had a team of 10 that was running this, you'd probably love this business. >> Mhm. >> Right. And the thing is, the team at 10 can run this business with more tech. And so I would look really hard at the team and see who's leaning into AI versus who's not. The people who are leaning in, lean into them. that people are leaning away, I would lean away from. And you'll probably need to be bringing in, I don't know, three to five development like engineering hires that are actually going to help you like take every workflow in the business because right now there's a lot of [ __ ] that gets done, but you should be able to map the entire business if you were to erase all of these circles into one continuous workflow. I mean, fundamentally, a customer sees an ad of some kind. They click, they go through a funnel, they get to a sales call and each one like then they get onboarded and from onboarding they get data collection.

28:43Data collection they have, you know, they meet with an account manager, creative gets gets made, funnels get spun up, they get their logos up, like literally it's just an endless checklist until eventually they get a customer that shows up at their at their facility, right? And so every single person that's touching that process, most of that can be automated now. And so we want to allow people to do much more valuable work. So, we have to get them to stop doing the less valuable work that technology's already replaced. So, I think for you guys, I would not be like, "Hey, let's scale this thing."

29:10Your margins are too thin. It's too volatile right now. Because I mean, 5%'s a hiccup away from losing money, especially for a service business. That being said, it's my position that like you should always be able to keep a service business alive because like the costs are variable, right, for the most part. And so, does that help? >> Build an AI agency basically >> if you want to win. Yeah,

29:36>> thanks. [applause] >> Any other marketing agencies here? >> Was that helpful? All that applies to you, too. >> Yes. >> Okay. Thank you. [laughter] >> Good afternoon, Alex. >> Good afternoon. >> I'm pretty new to this actually. I only came across you about three months ago. So >> Oh, awesome. >> Key man. I might think we might get to that. [laughter] So, you recently had a podcast where you outlined a

30:06>> Oh, there you go. >> You recently had a podcast where you [laughter] had a podcast where you outlined a change in hiring strategy where you focus less on experience and even skills and focus more on like raw processing power. How fast can someone learn something new? Mhm. >> I've really been struggling with hiring >> and um during an interview process, it's very difficult to identify if someone can learn quickly if they can solve problems independently and I hire them and then after the first two weeks I basically there are these small things that I notice and I have to let them go and this has happened many times.

30:47>> Yeah. So >> what what are tactical things that you can how how how can I better identify if someone is smart as defined as like how how quick they can learn. >> I'm super stimulated [laughter] just so if I uh talk fast uh listen fast. So, so there's there's the need of the business, which is what you have.

31:16You have some need that you're trying to fill, right? Some clear function that you need to to fill the gap for. And so there's a person who's going to come in and they're going to come in with a learning potential and skills that are actual, right? Now, within skills, you have the hard skills and soft skills. >> I I spent a weird amount of time trying to trying to reconcile this idea of like, do you hire for attitude, not aptitude? You guys have heard I'm sure you've heard some of these things, right? And it really bugged me because I was like, sometimes it's better to do this, sometimes it's better to do that.

31:45And I was just trying to figure it out. And so I did come to a conclusion, which is that you always hire for the smallest skill deficiency. It's just that being kind is also a skill. It's just that it's probably a harder skill to teach than setting calls for a sales team. I can teach someone to set calls in about 48 hours. teaching someone to be kind takes a lot longer mostly because kind is a single word but it has 30 subs skills underneath of it which is how what are all the different conditions that I need to train someone to behave right does that make sense in terms of the bucket of like the word kind lots of skills setting fewer skills and so the actual skill deficiency it makes sense to hire someone if setting is the skill deficiency to hire someone who has all these soft traits and then you just train up the hard traits now to give you an opposite example if I want to have a transaction ctional uh CFO who's done multiple uh M&A deals above 100 million and specializes in healthcare, I'm not going to have that many guys that I can pick from, number one. And so if I go find some nice guy on the street, for me to go teach the skill deficiency of all of that would be too big. It's not that it's impossible, it's just that my return on resources is not ideal. And so we're still always making the investment of what is the highest return I can make per hire. So, we always solve for the first small skill deficiency. And depending on the role, sometimes it'll be soft skills, sometimes it'll be hard skills. So, it'd be easier for me to take the guy who's got that all that experience, who's just the least big dick and then say, "Hey, here's how to not be a douche with my team, and if you just do these six things, I can at least attenuate some of the downside."

33:29Now, the second piece is if I we we're there's always going to be some deficiency in terms of skills, right? like no one comes in 100% and I think Frank talked about that today or yesterday. um you always have to be willing to have a little bit of a bridge, right? It's very rare to have perfect fits. And so then if we have this gap from the skills that are current, what is my rate of learning?

33:51And so that's where the raw intelligence comes in. And so I have looked more for raw intelligence and what's been interesting for me is that if I look at the some of the most successful businesses in the world, right? You look at the Googles, the Facebooks, the the the Baines, the Goldman Sachs, like the the the most successful businesses out there. What do they have? They have a machine for raw talent. They just pick the smartest [ __ ] people out of Harvard and they're just like, "Okay, we will make you into something. You just have raw raw talent. You have raw learning potential." And so they put them through an eightweek boot camp and then they're an analyst. And so I bring this up because I have more over time I've been putting more and more uh weight on someone's learning potential because we've also gotten better and better at training. And so with that I can actually take people and so if I have somebody, let's say if I have two candidates I have to make this decision between. I've got somebody who's a 10-year HR vet and somebody who's threeyear uh a three-year person. This person has more hard skills for HR because they're 10 years experienced. um maybe let's say they both have the same soft skills. So I would rather get the really intelligent hardworking HR person rather than just the hardworking HR person who has more experience because I know that it'll take me four months to get this person to be the same as this but every month after that this one's going to keep growing and so I still get a better return overall. Does that make sense? Now how do I identify this?

35:17Right? So part of it I think is um this is going to sound douchy, but we'll do I'll see what I see what comes out. I think I think to a large degree you can tell if someone's smarter than you and the goal is to find people who are smarter and the hard part is getting someone smarter to work for you if they're smarter than you.

35:44And so I actually think this is one of the biggest limiters of businesses, just being real. Like the more I've thought about this is that I think um and that's where I think having all of these other skills where like if you look at Jeff Bezos, who I do think is brilliant, I think part of the reason that Jeff Bezos was able to bring people even smarter than him in is because he is such an admirable leader. If you've ever watched like the few interviews of Bezos, he just seems like such a solid guy, like unshakable. And um that's where I think having character traits that people find admirable and a mission that they believe in. They're like, you're like, "Listen, you're way smarter than I am, but we're trying to do this thing and will you come with me?" And I think that's how you can attract some of that top talent. Um but a big part of it comes down to the opportunity that you're bringing them in on. And so I can tell you, you know, very transparently that the talent that I could bring in for gym launch is significantly different than the talent I can bring in for acquisition.com. And part of that's also building the external brand. Is this something that's going to add to their career? Because the kid who's graduating from Harvard has unlimited options. He doesn't need to go to you.

36:45And so the best candidates, you have to sell. And so I think um in the early days, I used to think that I'm giving this person the opportunity of working at my working at my business. And nowadays, we have to spend these very long processes of courting very intelligent people to convince them to work for us rather than the 10 other very good options they have. And I think that's what now again this depends on level so I'm trying to give a contextual answer which is people right um but like a lowle role might not you know like you might not have to court as hard but if you're bringing in the higher basically the level is the more it goes from them coming to you and it goes to more you going to them that's kind of the shift that happens over time

37:27>> thank you >> I sell corporate training to B2B B TOC we do right under about 2 million revenue revenue per year like to be at 10 million with about >> you said B2B and B TOC you mean companies >> so so corporate training >> yeah to businesses >> oh B2B then yeah okay got it okay so B2B okay got it >> and then B TOC consumers just individuals >> Oh

37:50>> so we do both we do we do we do corporate training for for companies and we do open enrollments across the country that individuals can sign up >> interesting okay got it >> and the corporate training is uh around What? >> Communication, public speaking, presentations, >> how to employee. >> Yeah, >> heard. Okay. >> We'd like to be at 10 million here in about two and a half years. >> And what's stopping me is our really our sales process. >> Okay.

38:14>> And my question is >> as a growing company with limited upfront cash. >> Yeah. How do you hire top A talent >> to attract and and bring somebody on that can >> drive sales and but expecting, you know, a good good revenue? I want somebody to make a lot of money, but how do you do that with with really a limited cash flow? What in models or things that you've seen work?

38:42>> I can give you the answer you want or the answer that's true. Um the answer that's true is if you hear like John Paul Deoria you talk you know you hear Elon Musk you talk you hear you hear Basos talk about the early days um it's it's I mean the reason that founders get disproportionately compensated is because we have to do more jobs better than most people for an extended period of time to make up for the debt that the business has to incur. So basically every business always incurs that period. The question is what type of debt you want to incur and so you can incur financial debt in the beginning uh which would be that you take on capital and then you go and find the allstars and then by doing that you don't incur the operational debt, the talent debt, the data debt, the the tech debt that you have to do that you have to make up later. And so fundamentally you want to take on the debt that you can most easily pay back.

39:38Now if you're bootstrapped then you're choosing not to take on financial debt but you do actively take on talent debt. you take on infrastructure debt, you take on tech debt, um because you can't do it all as a founder. And the alternative to that is that you can give away equity in the business to attract a better player uh without the necessary cash comp. And then part of that's still going to be levered on your skill set because they're going to be betting on you to a large degree of like I would rather have 10% of this guy's thing than 100% of my own thing because I think this could go places, right? Um, and so the the long the long story short of what's margins right now? 20%.

40:17>> Is okay. So you have 400,000 in free cash flow, which is basically enough to hire like one good person, right? That's a that's a stud. Um, and so you're like, okay, so I can just risk all of my paycheck [laughter] to have one good person and they might not work out. I mean, and this again is why we get disproportionately compensated for when we win is that we make bigger bets and we take bigger risks. And so the choice is you take the bet on the person um who you sell using your skill set um who can help you grow the business or you work third shift.

40:51You increase the revenue and the cash flow so that now you go to 2.5 and you can pay 300 to get somebody who can actually drive growth. And then like you basically work overtime to afford the guy so that he can then work more and then all of a sudden you get liftoff. But the cash flow is kind of like the oxygen for the business. And to be fair, this is actually what the whole money models book is about, which is like is there a way that we can recombine the money-making variables in the business so we can accelerate cash flow. Um get customers for cheaper, get them to pay faster, get them to pay more. Um so that we can deconstrain the business from a cash perspective so that we can grow that means uh a scaling ads or a scaling team or talent or infrastructure. Um if it's you know physical obviously like manufacturing locations etc. So the long story answer you're like I'm still waiting for an answer. Um what should I do? Um I will ask a different question which is why how do you how do you get business right now?

41:47>> Mainly it's it's SEO people calling us from some of the stuff we've done on our website and and customers re just reoping we >> Yeah. >> So right now it's word of mouth and SEO. >> Yeah. and you should probably be a little bit concerned because of >> chat jiba. >> Yeah. >> Um >> yeah, >> that's eating away the SEO pretty rapidly. >> Um >> so right now I think the the real thing that you're lacking is a reliable acquisition channel.

42:16>> And so for me, if I were to switch places with you, my first and primary function would be how do I get a reliable acquisition channel? Once I have that, then you can put all of your eggs like you can basically drive all of your own inputs through that channel. Then get disproportionate return with the additional cash flow. Hire the people to backfill yourself. And then it's like, okay, well then what what am I currently doing that I need to give up in order to get the attention in order to do that? And so it might be less expensive instead of saying, how do I hire that guy who's going to grow my business, which I'm still waiting for that guy. Uh um how do I hire the person to do what I'm already doing so that I can go grow the business is probably the better question. And that guy will probably be less expensive than the guy who can grow because rain makers ain't cheap because they if they actually can grow [ __ ] they don't need you.

43:03>> Yeah. >> Like that's the real like the people who are absolutely the best at growing [ __ ] can do things on their own. And so you have to make the vision for the business so much bigger and so much more compelling that they're willing to come. So I think backfill what you're currently doing, take all the existing resources that you have in terms of time and money, put them towards uh getting the next channel going uh for for a corporate sales motion. I'll bet also that you probably just focus on B2B. I don't know yet. I'd have to look under the hood, but that's that's going to be my bet. Um and that would probably the nice thing for that business is I'll bet you have much higher ticket for the corporate corporate gigs than you do for the individuals.

43:39>> Yeah. And so if as soon as you get a channel there, all of a sudden you can start selling 10 20 engagements a week or whatever and you're like, "Holy shit." Um because there's no there's no reason why like if you can sell 10 B toC people a week, there's no operational constraint on selling 10 businesses a week. It's just the the function is the same, but you just add zeros and so you just got a lot more operating leverage. >> That was my long short answer. >> Cool. Very good.

44:06>> Okay. [laughter] what is taking the most of your time that someone who you can hire who's very good can do. And so I think the biggest thing that happens like as you as you move up the kind of entrepreneurial food chain is your your level of talent that you can attract and the level of mediocrity that you repel just gets more and more extreme. And so like the quality of this team compared to the quality of like the gym launch chain is like night and day. And that's no disrespect to the gym launch team. It's just like this team's just way better.

44:31It's not even close. like we have probably six or seven employees that make over a million dollars a year. Um it's just a different caliber of of people and like and to be fair at that level like you can demand a lot you know. Um and so like if if I'm bringing in who's somebody who's going to be a seuite who's going to run this whole function I shouldn't tell you how to do anything like you should know how to do everything. You should be bringing things I don't know to the table to make this function better. if I have to be giving directives on like what the next thing is or I have to like rep prioritize your SK like you're not you're not a seuite you're barely a director if I have to do that. Um and so it's really it's people who who are exceptional. It's just that it's it's one of the I think it's it's one of the realest things of like your toler your your beliefs about what's possible. One of the biggest ones that changes as you kind of go up is what what you believe good talent looks like. Because like I mean I've said this before, but like when I had my gym, I remember hiring my first $50,000 a year employee and I was like and that was when 50 grand used to mean something. Uh I hired my first $50,000 employee and I was like, "Holy [ __ ] this is what talent looks like."

45:38Um and then I hired my first $75,000 employee and I was like, "Oh my god, 50 is nothing." Like this is the right person. I fired my first six figure employee. I was like 100 grand a year. I was like, "This guy better cure cancer." Um and then and then I hired my first $250,000 years and I was like, "Oh my god, this is like night and day." like completely different level of talent. Then there's $500,000 pro then first million dollar then first multi. And so like at every level there's just you're just like holy c there's just so like the level of intelligence the level of work ethic the level of experience and I would say past call it like past probably a million dollars a year you're basically bringing on people who also have departments. So it's like if I bring someone in who's a sea level and up, they have two, three, four people from the past companies they've worked with that that love them, know them, and they bring teams with them. And so and you want that because they've worked at all these companies, they'll cherrypick the absolute savages. And so they like so if someone were to like say, "Hey, like let's say I was back on like the employee market. If someone said, "Hey, Alex, can you basically stand up the the revenue generating function of this business?" I wouldn't go there. I'd be like, "Well, I'll come." But I want to bring six six people with me like because like for us to do the level of stuff that we want to do like I already know who I need and so that's what that's what it looks like at the higher like the higher up you go is they just bring more and more people with them um because they already have the infrastructure and the network and the rolodex to just bring them in. So they that's how they can come in with like fully built almost like solutions to whatever the problem is like I need you to stand up the whole finance function for this you know these three entities.

47:08Um, and they're like, "Well, I have two controllers that I'll I'll all tap and I already know what system we're going to use and I already have the playbooks built out." So, it's like they can stand it up so much faster and our input is like nothing. And so, you can judge the level of the talent. Like, the easiest way to know is how general is my are my directives uh to the person. So, someone can just say, "Hey, Alex, you just build out acquisition for this business." And I would say, "Sure." If I'm talking to somebody underneath and be like, "Hey, I need you to build out an email campaign.

47:36I need you to build out a paid ads campaign." and they'll be like, "Well, what platform should I start on?" Be like, "I think you should start on Meta." Right? So, it's like I have to keep going down. If I go down to like maybe a a manager or director level, it's like, "Okay, this is the campaign. This is the angle that we want to look at. This is kind of the copy hooks." Like, I have to go even lower. And if it's like a copywriter at the lowest level, I'm just like, "Okay, this is the grade level we're writing at. This is the tone for the L. Like, I have to go all the way down." And so you can tell how advanced someone is by how much how many directives you have to give and the level of the direction you're giving someone which is also a great piece of feedback which is like I shouldn't be telling you this man because a lot of times people like hey I want a promotion and you're like that's fine. I was like, "But that means that all these things that I'm currently doing for you, I shouldn't have to do."

48:18Like, if I'm if I'm having the tough conversations with your team because you're not able to do them, you're not a leader, >> right? And so it's it's like cuz half of especially as people go up in the leadership chain, so much of it is just uh being able to lead um which has many skills underneath of that word. Is 100% of Ramsay in person? Are anybody is anyone remote?

48:43>> No, we all work at work. Yeah. >> So there's no like like you don't have like exceptions where like you know vid uh like editors or for for for social media or you know maybe some of the coaches or something like that could be remote. Everybody moves to um to Tennessee. >> Yes. And the with the exception of the occasional temporary thing. >> Yeah. of course contractors but but in terms of the actual structure and the reason is very simple um our quality of communication in-person communication quality goes way up and so things are actually communicated we all know this anyone that's got walking around sense knows that 85% of communication is uh is body language and tone and p not words and and so um uh when you are sitting besides someone you can feel the spirit of what's going on and you are getting a whole different quality level of quality of communication. What that does is it increases two things. It increases trust and it increases productivity and and then those two things increase speed because organizations move at the speed of trust and and so when I am not sure because I'm using a text uh or I'm even a zoom uh and I'm not really sure what she meant or he meant. I can't really tell if they were being passive aggressive, but if you're sitting with them, you know,

50:17>> right? >> If you're sitting with them, you know. And I I can go just go walk around the building and I can feel the air. I can feel it in the air. I've been leading a long time. And I teach my leaders to do this. There's an old book a thousand years ago, In Search of Excellence. It was the Good to Great book before Good to Great, before Jim Collins did it. It was back in '92. And um you know that they studied great companies. And one of the things the managers did, they did management by walking around. Just walk the floor of the plant if you're in manufacturing. and feel the vibe of the workers. Feel the speed. Feel the energy in the air. Look for u chaos. Look for uh dirt and filth versus organization.

50:59Um and I walk through, I smell food inside of our building. No, that's not cool. We have a cafeteria. You don't eat at your desk. Leave your salmon somewhere else. Nobody wants to smell that crap, right? And so, you know, they're just little stuff, but you just walk through and you can kind of tell uh, you know, I walk past people, they're they're on a they're on a co a coaching call on a Zoom call with somebody. I just pop my head in there, you know, smile, wave, and disrupt the whole call and then leave, spread hate and dissension, right? So, that kind of thing creates a cultural uh uh level of trust and productivity.

51:36Uh, I call them driveby communications. I can just drive. I can walk past and I read through the weekly reports and uh uh so and so's mother's got cancer and I can walk past just touch them on the shoulder and say, "Hey man, I'm praying for your mom. Sorry about that." Third, you know, 6 8 second interaction that does not occur if they're remote. I think you might like this. Um, I think it was either Uber, Airbnb, someone can correct me in the comments, but uh, the they did a research study because I think they were trying to prove or at least definitively know whether in person versus remote, you know, which one is better, etc. And they they found a an it depends answer, which is, and I talk about this because obviously we're in person, we have a big big headquarters here in Vegas. um that especially especially for the first third of someone's career. So basically like call it 18 to 35 is where those people get a disproportionate upside for being in person because of all of the unstructured learning that occurs that's not on your quote career path.

52:42You know like if you're sitting right next to marketing and you're in sales, you know, you you overhear, you know, what what's going on in terms of the organic stuff. you overhear what's going on in the paid side. You start learning a little bit more about funnel, you know, about landing page and conversion rates and things like that. And then all of a sudden when you are on a sales call, you know, with a business owner or whomever and they bring something of that up, you're like, "Oh, I actually know something about that." Because but if you were in an only Zoom environment, uh, you lose out on all of that. And so I'm a big advocate and because I obviously have a um a big, you know, percentage of the audience that I have that's in their early 20s, um, beginning their career. I would encourage you all to to work in person. I really mean that.

53:21>> I did read one I did read one piece of research that you get more uh uh chances at promotion. >> Oh yeah. >> In person than if you're sitting at home and you're only on the calls commensurate to the task assigned to you. And so and you know we can add to this even further. You've been here uh we've got this massive fabulous cafeteria uh restaurant at Ramsay. So, um, and on top of that, we drop several million dollars a year into that to subsidize the food cost. So, you can eat here for about half of what you can drive down the road and, you know, get a fast food burger or whatever. Uh, why do we do that? Because when people eat together, oh, that adds a whole another level. When you break bread with someone else, it changes everything. And so, what happens is people that don't work together end up eating together. and what you're talking about occurs. They learn from each other. They uh you know, they talk about stuff they're working on. Uh sometimes they just talk about personal stuff, but then the next time an issue comes up, they trust that person because they've actually developed a bit of a relationship with them. I look over and our tech guys, and we got a bunch of techies in here, a bunch of programmers and stuff, and they're all over there huddled around some table playing some weird board game thing that I don't even know how it works. Um and and you know that only programmers would play, right? and um or some weird card game, Dungeons and Dragons type stuff or whatever. I don't know. And and but they're having a blast and they're playing together and eating together and that changes the whole vibe of the deal. I will tell you that if you just are only concerned about a task and that's it, a simple tactical do this thing, that's fine for remote. But our stuff is always 100% of the time we want more out of the interaction than the simple task being accomplished. And that's why we've stood firm on this. And we've lost some people to that. They want to go work and have work life balance which or whatever they call it and so that they can work from home. Uh but what that actually means is I'm not planning to work eight hours,

55:31>> right? >> Because if you're working eight hours at home, you're not talking and interacting with your family. So, I don't know how you added ours to your family unless you're cheating the company. And so, uh uh I don't I don't I don't understand it, but I I'm not mad about it. It's just why we've decided to do it. And then, but some people some people jet and that we've lost some good people over that and uh so we've had a lot of discussions about it here, but we're pretty firm on that. >> Thank you. This conference has been amazing.

55:59>> Oh, cool. >> Thank you. I think everyone I've been with feels the same way. Uh my name is Christina. I'm from Austin and uh I sell high-end ranch events and excursions to Fortune 500 companies and so almost like a dude ranch without lodging. Um we do anywhere from 3.8 to 4.5 annually. Um and I'd like to be around eight. Cool. >> Um and we're on track to do that. Uh but what's stopping me is a people problem.

56:25>> Okay. >> What? Give me give me more. Is it you don't have enough people? What is it? Well, as Austin's grown, it's been harder to find cowboys and cowg girls because it's all metro now. >> Yeah. >> But we're solving that by growing our own now and training our own. Um, but a bigger problem is um that I've got some answers from this, but I would love to know as I've grown the company and I'm not able to be in all the different areas and as we've hired more manpower, I feel like I work on one part of the business. I get the SOPs dialed in, have it all ready to go work on another part and then that one gets unwound before I can get back to it and it's just a reoccurring problem in all my companies.

57:07>> So, two issues. Um, well, it's the same core issue. It could be two different reasons for it and it could be both at the same time. Um, the leaders you have have skill deficiencies and so either it means that you're hiring with too low of a bar. You're not hiring smart enough people that have enough batteries and GPS included. Option one. >> Okay. >> Option two is that you're not good enough at training people. >> Okay. >> Either way, the end result is that they do not have the skills in order to continue to do the activities that you do. I'm going to bet that when you turn it go into departments, you probably turn them around pretty quick.

57:38>> When what >> you probably turn when you show up, things work and then when you disappear, it stops working, right? >> Pretty much. Yes. >> And so what that means is that >> work doesn't work as well and it's slow. What have what mean what that means is that you are the trying not to get too behaviorally here but like you are the discriminating stimulus for reinforcement meaning you are the totem that people look to to say good job and what means is that you have to install that um into the leaders who you leave behind. So either so what happens is first you define what you know success looks like. You say, "This is what good is." Then you demonstrate it because you're the leader, right? And then you get them to try to do it, right? And then they do it in front of you. And then uh you watch what they do.

58:23And then you say, "Great job," or "That sucked." And here's what you need to do to fix it. And then you keep repeating that until eventually it sticks and it becomes a cultural norm, which then goes from you giving people kudos and if you do that enough times, they start giving each other kudos. And then if that happens long enough, they start correcting each other in private. That's the process. And so what's happening likely is that you're getting to step five of that. You're doing good job, bad job, do it this way next time. But in the next step, which is repeat it until it sticks, that's the part you're missing.

58:54>> Totally. >> Yeah. >> I think the problem is what when I'm time blocking what when you start adding that on the plate of all the other things that we're doing it, that takes a lot of time to go back and do that. And so the the step that happens in order to transfer reinforcement from a person to the rest of the organization which is what you want to have happen functionally that is what culture is right you build a culture it means that you're establishing rules of reinforcement in organization

59:21>> and so the people who are there do not reinforce each other and so that means that you need to give other people kudos for giving kudos >> okay >> that's the leave behind is that if you can get them basically your signal of like I have done my work here is when they start giving each other kudos for doing the job right. And when someone new comes in, they're like, "Oh, why do you guys do it?" It's like, "This is how we've always done it." That's how and be that's when it becomes a norm when they don't actually have to witness you doing the reinforcement. It's just how everyone behaves here because it's socially safer to model the behavior of the group when you're new in any environment. And so that's what happens when companies have strong cultures. But it starts at the leader. They reinforce the leaders for doing good stuff. Those leaders then have to pass it on. That's the that's the that's the behavioral piss piece that's missing in your leadership style right now which will allow you to scale.

1:00:09>> And so when you've been in business 15 years and that I I don't have any culture cancer right now. You have a lot of great people that may be missing those skills. >> Do you start by bringing somebody in that already knows how to help you create that or do you start grassroots the people you already have? If you like the people you have, it means that they just lack leadership skills, which if we're following through that same framework that I just walked through is like, are they defining or restating what you said is good? Is your are your standards with their standards? We have to make sure they're aligned. If we know that their standards are your standards, are they living those standards? Which is one of the biggest misses that happens with small managers like, well, you know, uh, you know, boss said XYZ, but you know, boss is a little aggressive. You know, they're not here right now. We can take it easy. They're not leading by example. And so this is where like your eyes and this is like to be fair this probably affects everybody who who has employees like these are the tactical things. If they are not doing those behaviors if you want everyone to show up early and they're not showing up early you start with the leader. Why are you not showing up early? Well I mean it's right. You have to be whatever the line is more.

1:01:14>> Okay. And it starts the most extreme with you and then we know the first level is going to be a little bit less extreme and they're gonna it's always going to get diluted down which is why founders tend to be these extreme eccentric crazy people. But part of that is because you have to be because you know that you're you have to be the most concentrated version of what your values are which is just you know boiled down words that are just behaviors. It's all it is. >> Okay. So helpful. >> Okay. Good. >> Thank you very much. But it's it's that's that's how we're operating like because you have an ops issue is what it sounds like. And so I'm giving you ops feedback. But that's what it those are the things you have to do is that the beha the the leaders you have have to lead by example. They have to make sure that their definitions of what you think good is are the same as what they have.

1:01:55They have to have the same reinforcement cycles of great job, bad job, right? And they have to keep repeating it until the behavior sticks. Period. And if they're not doing that, that's a you cycle with them to to teach them that leadership set of skills so that they can do it. >> Awesome. Thank you. >> Cool. Thank you. I appreciate that. >> Thanks, Lena. Appreciate that. Thanks. >> It's It's nice when your own team collapsed for you. Uh [laughter] thanks.

1:02:22>> Okay. My family owns a residential fence company, so we sell fences to homeowners. Uh our current revenue is roughly about 20 million. Um I think a good goal for us would be 50. >> Um I think what is stopping us is leadership and a players within our sales and management and also standardization of our processes and SOP creation. >> Okay, I believe you. >> Okay. [laughter]

1:02:50>> So right now do you need more customers? >> Not necessarily. >> Well, do you need more? You have to figure out right off the bat. Do you need more customers or can you not can not handle the the the stuff you got? >> We can't handle the stuff we have. >> You can. So you need more customers. >> We need more lead people. People to answer the leads and people to close the deals. >> Okay. So you have leads. You have a sales constraint. >> Yes. >> Got it. Okay. So how many sales people do you need? It sounds like a similar.

1:03:15How many sales people do you need in order to deal with the leads issue? >> We currently have five. I would say we at least need to double that. >> Okay. So, what stops you from doubling it? >> I think it's part the nerves that the market might not last and need or require that many people. So, kind of putting all >> would then be a demand issue again.

1:03:41>> Yeah. Well, I mean, it's not like we don't have a current demand issue. We have a plenty of leads coming in. We've got a whole separate staff that >> So, what's the fear from? What are your margins? See, this is where it's hard for me because I'm not the CE CEO. I'm the right-hand woman to kind of the founder. So, I don't know specifically. >> You don't know the margins as the right hand. >> No, because I feel like it's also kind of a data problem that we have of not being able to collect the proper data and know that it's actually correct or accurate as well.

1:04:11>> Well, I'll say it's one of two. So, you said we're afraid to hire these people. I would say why. If it's like it's just between my ears and I have irrational fears for things, I'd be like, "All right, let's get over it." If it's because we have no cash flow, then it's like, "Okay, we have cash flow issues and we have to go down that kind of decision tree." Um, assuming you don't. I mean, have you ever heard of the CEO saying that they have cash flow issues? >> Not necessarily. >> Okay. Well, then I would be like, why don't we hire five more sales guys?

1:04:37>> We're in the process of doing that. >> Okay. There we go. Okay. Great. Got it. >> No, you're good. Yeah. 26% is our kind of you know we're there >> you know we fine the back end >> now it's upgrading the sales >> okay >> we have plenty of leads coming in >> y

1:05:03>> okay >> it's doubling up we're in a market where it's >> it slows down a little bit it's winter fencing Minnesota still [snorts] >> colder [laughter] with her help so everybody knows and yeah we're on that doorway to find the right

1:05:28>> is it all >> not knowing the not knowing the right path of how to bring in the right sales manager all that stuff is kind of >> basically you need to build a recruiting machine for sales because you're getting to the point you have five sales guys now >> yeah um and are do you need do do any selfgen or is it all uh >> all paid? >> It's all paid. Okay. Yeah. So, um the people who who do who do home services at a certain scale, which is right where you're at right now, you start needing to develop basically like a sales academy um that's internal. And so just like, you have you have your lead genen, you've got nurture, you've got sales, you've got, you know, uh onboarding of some sort, and then you've got, you know, retention and ascension for a customer, right?

1:06:20You're going to have appg gen app nurture interviewing works the same way onboarding and then retention and ascension of the sales people. It's just that we have to build a parallel structure within the business always so that we can just like we spend money reliably in our demand genen side, we need to be able to spend money reliably on the supply gen side. And so those just have to be parallel functions that exist within the business. And so just like you probably know, I'll bet you know like what your CTRs are, what your optin rates are, what your, you know, what percentage of leads you close, what percentage show, all that kind of stuff, right? On this side,

1:06:57>> data building. >> What's good? >> Well, just like you know those stats here, you just need to know those stats here. >> Are you guys doing L2 with us? >> Oh, cool. Yeah, I was like because we build these things out like all the time. Yeah, but that's what you need to do. we just have to build out the basically the entire sales the this the pipeline the funnel flow of of and so I was I I'll complete the thought in a second. Um, so when I was talking yesterday, two seconds ago about this, how much does a sales guy make you right now?

1:07:33Gross profit. >> Uh, probably each guy is 7800K maybe. >> So 100K just for simple math. And that's in gross profit. >> Yeah. >> Okay. And then how much >> what you put down there? I'm sorry. >> I said, so what did you say? How much how much gross profit did they make? >> It's a little different because we have five of It's really like a you have your measure outside sales that's kind of okay million. So each guys

1:08:03>> we divide by 10 2 million bucks just be keep we'll keep it simple. And then what do you pay them? >> Uh upwards max about 200. >> Okay. 200 for the best guys. Okay fine. And then gross profit on this >> uh probably >> 50 million >> like what's your gross prof not net gross profit what's cost of goods? >> Uh half that.

1:08:27>> Okay. Yeah. So 1 million. So for me I see this and I see a five to one which by the way like some of the best returns you get in the business are just your cost to acquire talent versus lifetime gross profit per employee. And so if I know that we can generate $1 million in gross profit, if I said, "Hey, you could put 200 grand into the S&P or we can put 200 grand into this machine. >> Yeah, you get a million in gross profit and then you have your enterprise value probably also 8x uh for your business.

1:08:56It's like great. 8 million taxree for 200k. Sounds like a deal." And there was a little honest at the beginning. >> Oh, you're good. >> Yeah. >> Are you guys related? >> He's my dad. >> Oh, there we go. That makes it easier.

1:09:19Okay. I know you're good. Um I mean I I have I have no words of advice there. Um but this is what we need to do the business. Yeah, I limit my scope. [laughter] >> No, I just meant with the the scale. >> Oh, yeah. Yeah, >> that's what I meant. It was kind of a home run for >> Oh, good. Okay, cool. >> In a different way. >> No, I appreciate that. Well, yeah. I mean, the whole point wasn't like hope everybody here didn't have somebody die yesterday. You know what I mean? But, um, but we all have [ __ ] that happens, right? And so, like, um, like if I look at this thing for me, and the reason this is kind of important because I I was I was going to go in one of two directions. I was going to either do that or just I was going to let the spirit move me. Um, but what is limiting most of y'all's businesses, which is the stuff that no one actually wants to talk about, is the fact that like you aren't good enough as entrepreneurs.

1:10:12So, you haven't achieved enough yet. You haven't sustained the success you have long enough. And people don't want to work for you because they don't believe in the vision you have. That's the real thing because business at the highest level can really be boiled down to find world-class people and get out of their way. You've heard Branson talk about it. You've heard Steve Jobs talk about it. And it's true. The problem is they don't want to work for you. Real. Because Steve Jobs is like, "We're going to add another hundred billion to Apple." And people are like, "Wow, that sounds amazing." And when you meet world-class talent like that, those guys are making $20 million bonuses per year, right? Different levels to the game. And so I bring this up to say that if you're a small business, which is the vast majority of people here, um, then you have to win on character. they have to want to work for you. And I think learning how to master these elements of like not being a hotthead, not being somebody who, you know, turns on a dime.

1:11:04Um, if you have a bad day, no one knows about it. I think those are the things that allow you to get way basically punch above your weight class because you basically always have to punch above to get that talent and then that talent pulls the business up. And so I'll tell you the story and then I'll I'll switch the next person which is I um when we sold Gym Launch, some of you guys may have heard this, but when we sold Gym Launch, there was this long table um like the boardroom in there and we had uh my team on this side and we had the private equity team on this side and they had raised $1.2 billion um in funds to do their stuff. And I was doing my back and napkin. I was like, "This guy's going to make 400 million in the next five years." I was like, "That's chill.

1:11:38Taking no risk." Um and I did the math on what he was going to make on Gym Launch. I was like, he's going to make more money on my company than I did. And what was interesting to me though is that I saw his entire team and I saw my team and every single person on his team was better than every single person on my team. And it was this very visual stark contrast between his team and my team and I was like, got it? And so I just vowed that whatever the next business I was going to do, I needed to have a vision that was significantly bigger so I could attract a different level of talent so they could make something bigger happen. So, that's a a slightly softer answer, but um we need to build the talent funnel and put that in place and then not be mean.

1:12:18>> Thank you. >> Yeah. If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled 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 0 to 1, 0 to 10, and 0 to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're a business owner, appreciate you and uh enjoy.