The 3 Things You Should Never Outsource | 1 Hour of Alex Hormozi on Scaling

0:00My name is Pamela Brewington. I sell residential cleaning business to high-end clients. >> Uh we do 1.5 million in revenue and I want to be at 15 million revenue by open 10 locations in a year. >> Okay. >> Uh what is stopping me right now is I realized that my lead generation system that out was outsourced was very very low quality. So I'm building it inside in house and that's a lot of work and I'm learning from everything from zero.

0:31So I'm doing it from a scratch completely and that's very slow but I think it's worth the investment to do it right so I can serve all the locations that I want to do. >> You want to open 10 or you have? >> I want to. >> Okay, cool. Just make this is going to be really stressful if you just open 10 in a year. Um okay, this makes me feel a little bit better. Okay, so what's the question? Um >> what's holding you back? >> No, I don't have any question.

0:58[laughter] >> If you want >> I mean that what is stopping me. It's like I >> Yeah, >> I guess that is like uh how to build that from >> you know from a scratch. >> So I'll say this um I'm first off I'm a fan of having vendors. I'm okay with having vendors. I want to make sure that no vendor owns how my business works. And so I see attract, convert, deliver as kind of the three elements of business that you do not outsource. How do I get as in like the core elements?

1:27Now I can have assistance from vendors who do specific tasks within that. But if they leave, I should know how to do it because if I don't know how to do it, then I fundamentally missing one of the three legs of the stool that allows a business to be a business or at least the founder to be the person who can actually grow the thing. And so right now you have a lead genen issue, right? Um and what's your plan on getting leads? PPC or is it are you doing um >> uh I'm trying everything. I mean referrals like >> well then let me give you this recommendation

1:55>> pay out >> if you're well you are local so >> I would say that how developed is your sales process? >> How what >> developed is your sales process? Okay. >> Do you like when customers come in right now, how are they coming in >> right now for Google on referrals? >> Google and referrals. >> Google, are you spending money on Google or is are you sure it's from the money you're spending or is it people searching for you that were already searching for you because of

2:26>> local ads? >> It is PPC. Yeah. >> Okay. Got it. What percentage of the businesses come from PPC? >> Right now I will say 80%. >> 80. Okay. Got it. Interesting. Um, and so right now, what is the issue? If 80% of the business come from PPC, what is preventing you from doing more PPC? >> Uh, the thing is low quality. I mean, they're they're very expensive like over 100. >> I'm tell you're missing a sales motion.

2:50>> PBC, just so you know, PBC leads are the best leads >> on the on the hierarchy of shittiness. Uh, PBC are second to least shitty. Uh, the best are obviously referrals, which you love. Everybody loves a referral. Uh but the next best um well there's content and then and then you have uh PPC leads. >> So you're getting the best one. The true worst is like get Google display network like leads and see what happens. Um but the problem is that you just don't have the right friction. Are you working with us after this?

3:22I mean you don't have you can do whatever you want. Uh no because I mean developing sales motion is like kind of what we do. Um and so uh you just you need the right amount of friction. Like if we think about for anything like zooming out um it's kind of like the midwip meme of like I feel like I've had enough marketing and sales in my life that I've like gone from you know just just eat protein and add more weight and all at the end it's eat protein add more weight in the middle it's like sets reps and whip rats periods and all this middle stuff. Um marketing just comes down to adding the sweet spot on friction. It's all it is because we know that at the at one extreme if just say like uh here's my price, call this number or here's this price and then just click and buy doesn't work for most people. On the other extreme, um having someone fill out a 100 forms is probably not going to work either because there's too much friction. And so it's like we just need to find the sweet spot on friction. And so right now if you're getting leads but the quality is not good, as long as they are people who have houses that want cleaning, we just need to add the right amount of selling in between to get them to buy. That's it. Okay. But I want to be in a niche. So

4:25>> you need a what? >> In a niche. I don't want like everybody that want >> Okay. >> So >> I mean you Yeah. >> You want to go highend. That means you add more highend. Yeah. >> Yeah. We just have to have more friction. >> Mhm. >> That's all it is. Again, so one thing this will happen this actually apply to just about everybody. So who here I'm going to guess 25% of the room. um has more than one avatar that you serve, one that makes you a lot of money, and one there's way more of that makes you less money, but you still need them to pay your bills.

4:57Way more than 25%. Nailed it. So, the transition of picking the avatar is a really tough one because you I get it, you have to pay your bills. One of the big shifts that has to happen is that you have to change your product offering and pricing. So, we might also have a pricing issue that we have to look at. But what ends up happening is that when you have two sets of customers called 8020, 20% that are the good ones, 80% that are shitty ones, we end up pricing somewhere in the middle because it's like a stretch for the 80 and the 20% are like, "Well, yeah, I can do that."

5:25And you're like, "Oh man, I love those people." But you might actually be underpriced on these people by like 2x of the correct avatar. So that if you were priced appropriately, none of these people would even get close to saying yes because you have this massive turn issue because these poor people, lack of better term, um can't afford the right prices, but you're still selling them. And so what has to happen is one we have to change the price and the sales motion. But the second one is an expectation change which is that your CAC you'll have to expect it and your cost per lead might go up 2 or 3x. But if we double our price for example our gross margin might go up by like 5x

5:59>> and we're more than good but most business owners will not make that jump which is why most people stay poor. >> Okay >> that makes sense. >> Cool. Thank you. >> Sorry. Now your now next thing I think that would be relevant for >> Thank you. Thank you for clarifying. Um yeah. So I guess that uh leads me the reason I asked you that first question like um you know what would you do? But I just in my head I just kind of something I've been thinking about doing. I haven't done it yet but

6:24>> I guess shutting down the coaching business but I still love teaching what I teach but in a way that is I guess more >> interactive or done for you. So for example instead of people going through a course which some people don't even go through it. >> Yeah. uh giving them like an interactive way of doing it. So like for example, hey, you know, you got to go find a product, but um you know there's a software that I created that actually helps them find the thing.

6:52>> Um so I don't know what do you think of that? Have you ever heard of anything like that where it's like >> I haven't heard of anything like that, but I mean I think you providing more services to increase the likelihood of someone's success is not a bad idea. It just depends on cost, >> right? Well, I mean now with AI you can create softwares pretty quickly, right? So I mean like in my head I'm like okay I have tons of knowledge when how to do all these things you know you put it in a >> so is the question should I add software to my existing offering so that I can increase the likelihood that people will succeed.

7:20>> Yes. >> Yeah. I think that's fine. I mean there's no if there's no real >> sell the courses but sell like uh you know you always say you I give my best stuff for free. Uh Austin over here he gives us best stuff for free and then he has his syllabi AI software. So I'm like this is that's a great idea where it's like he gives all his stuff for free but then >> they have to use your tool. >> They have to use the tool. So that I don't know that >> it's amazing on paper. >> Yeah. >> I have yet to see someone pull it off.

7:46>> I'll be the first. >> Okay. I just I just look at I'm again well hubris aside, right? Or you know ego aside I prefer to take bets where I think that like you it's your life. You can do whatever you want. Um, if I see that no one else has succeeded doing something, then I think there must be some fundamental assumption that I'm unaware of or that I'm making that is not true that is causing all these people to fail. Like what is it?

8:11>> And I'll tell you what my theory on what it is is that it is the wrong type of avatar. >> When you are promoting get-rich quick, get-rich easy, get-rich passive, you are attracting the absolute cesspool of the internet, right? I mean it I mean it is right. Um and so if you do that you have to there's so much effort that has to go in to making a scalable offering. Also if you really do it right it also won't be profitable for a long time. So it I take the position that the best businesses operate on either side of the barbell,

8:47>> which is either you sell extremely expensive things to people who are qualified to buy them and you try and sell them, you know, as many times you can and keep them buying from you as long as you can until eventually you have the cash and the infrastructure to be able to sell to everyone. The middle is where everyone dies. So like my the first part of my career has been all this and obviously we still have the advisory practice which is here but school sells $9 a month. >> How can we make that make money because we have a good business model but like it takes a long time and it burns capital in order to get to a multi-billion dollar decaillion dollar company.

9:21>> And so what happens is people are under capitalized try to pursue this strategy but don't have the product chops and so marketers make terrible product people >> because they only think about what they can sell not what they can deliver. That makes sense. >> Like every marketer that I know, I have yet to meet a marketer that was a pure marketer that still does their marketing stuff and then has a software and then is able to have an exit from it.

9:47And there is a a graveyard full of half-built, semibs, semi-white label, whatever software that never actually accomplished anything. Like you have to in order for software to actually be software, and this is for everyone because I feel like I get this every every [ __ ] day. >> [snorts] >> software is not valuable. Like please write like software is not inherently valuable. What makes software valuable is the fact that it has high gross margins and when it's built right it's sticky and has high revenue retention and when it's built even more right it has virality or some sort of growth loop that's built into it. So if you have a business of any kind that can grow on its own has high incremental or gross gross margins for the product and so I said growing margin what was the third one thank you and high revenue retention you have an incredibly valuable business whether you sell trash or whether you sell software it's just that software tends to be something that can accomplish those things but the amount of marketers who are like I have an info business I'm going to start a software so that I can get a $100 million exit doesn't work that way that's why none of them do it they think that because they don't know how it works you have to build a product that has those components and then in and of itself it will become valuable. But if you need to keep filling it up in order for it to maintain a certain level of revenue, it is not a good product because people are turning out. It has to be sticky.

11:05And when you have the cesspool of the internet, it's very tough because they inherently jump jump around over and over again. And typically the price points of people who come from the infodirect response world is way too high for someone who's a newer person or a beginner to actually be willing to keep paying even if they haven't gotten results yet. >> So I have uh two business uh one a campground resort. Um

11:31>> wait what? You have two businesses. The first one's what? Uh, it's a campground like I rent out cabins on Airbnb and Okay. I >> got it. >> Um, for that it's about $300,000 and uh profit is about 40%ish. >> Okay. 120. Got it. >> Okay. >> Um, and I have a um also a detailing business. Um,

11:59>> like I did detail cars and uh on the main season um I do about um 40,000 a month and um that business I've been running for a year now. >> Okay, congrats. That's pretty good. >> So >> yeah, how many hours a week does the Airbnb thing take from you? >> Uh so right now zero because I have uh three people that is working and running the place.

12:25>> Okay. Um basically I have uh no involvement in that business and the reason I cannot um grow that business is because it is very expensive and I need a lot of capital. >> You mean you have to buy more buy more buildings. >> Buy more buildings. Yes. Exactly. I no problem in demand but uh buying buildings. >> Okay. >> That's fine. So to me I I'll reframe this because normally just for everyone who's listening they're going to be like oh Alex is going to tell him that he should shut down one of his businesses.

12:54I don't really see like the Airbnb is like right in the middle of like is it investment versus is it you know active. That's why I asked how many hours a week you're spending on it. If you were spending five five hours a week or less, I'd be like that's fine. So basically it's like if you had a job and then you did Airbnb on the side, I'd be like fine. So your job is detailing. You do Airbnb is what you do with the money after you get after you take it out. Okay, great. So what's the what do you want to do right now? Do you want to grow like what's what's what's not happening that you want to have happen?

13:21So, uh, the thing is I really want to grow the Airbnb business. Um, and I see a lot of potential in it. We need more money. >> Um, there are like potential in the Airbnb business. Um, but the thing is, as I said, it's very expensive and I don't have the money for it. >> Yeah. >> So, I started detailing. >> Yeah. I started detailing to uh make money so that I could buy >> Yeah.

13:46>> Airbnb properties, right? so that I could buy a campground and or another resort so that I could build uh um build um cabins and stuff. Um but um I I after a year of doing Airbnb I sorry uh detailing I found out that it's very difficult uh you know and it a lot it's a very time consuming business and um

14:11>> yeah welcome to business. Yeah. >> Yeah. I'm not sure if uh um it is something that is worth doing for a very long period of time. >> What would you do if it's not that? >> Cuz the like the the best detailer they do about 2 million a year and that's the best best detailer in like I'm from Canada. That's like that's the >> Yeah, there's no good detailers in Canada. Totally.

14:36Uh so uh like my question would be should I choose a different vehicle because a different business uh to do or should I stick to detailing? >> I mean you've been doing detailing for a year and you're at 500 grand a year man. >> No not 500 because detailing is seasonal so probably about 250 300,000 >> and what's profit? >> Uh so right now because I spend a lot of money on our marketing um because you know it's the first year.

15:03>> Tell me the number. Um, so probably I would say about 50 grand a year. >> Uh, so I'll say this, man. Um, do I think it's the wrong business? No. I think businesses can always be improved. Like we could look at like the offer and all these other things to like try and improve it. But if you like the Airbnb thing and you're good at it, and I normally wouldn't say this, um, but I'm just this is me reading between the lines from, uh, your call. So this is uh me I think answering the question behind your question which is how can I do more AbnB right? Does that sound correct?

15:37>> Yeah. >> Okay. >> Yeah. >> So there's this thing in real estate called raising money >> and you get investors to buy the real estate and then you manage it >> and you give them a return >> for sure. >> So I think you should consider doing that and then make Airbnb your full-time thing. It's like you're spending all like I'm you're spending all your time for $50,000 and you're spending almost none of your time for 120, right?

16:06>> Yeah. Yeah. >> Right. So, I think you just need to raise money. >> Definitely. That makes sense. >> Yeah. Just use other people's money to buy the buildings. Give them a preferred rate of return. After that, you split a certain percentage of the profit with them so that you're super incentivized uh to get them a good return and they'll feel safe. So it's like you know you say everything after you know 6% 8% 10% whatever it is um per year we split you know 8020 my way after that or whatever right and so the blended return is going to be you know my guess is 15 or whatever

16:41>> yeah makes sense >> cool >> yeah because the Airbnb I think I am pretty good at it and >> yeah obviously you spend no time doing it and you're making two times the two and a half times the money of your other thing. I think you're decent at it. So, yeah, I think you just double down on the thing that you're good at. So, we did end up eliminating one of the businesses. Who who would have thought? >> Yeah. >> You're like, I've got this thing that I don't like that makes me no money that takes all my time, and I've got this thing that I do like that I'm pretty good at that takes none of my time.

17:13Cool. So, then let's do more of that. And you're like, I don't know how to do that, so I have to make the money to do that. It's like, or you can use other people's money. >> Interesting. Yeah. Definitely. >> This was a good chat. >> Thank you. Yeah. Thank you, Alex. >> You bet, man. Happy to help. [laughter] >> Congrats, bro. >> Thank Thank you. >> Today is the first day of the rest of your life.

17:39[laughter] >> Thank you, Alex. >> You bet, man. Big mistake that uh people make is they they don't focus. And that's the one that you're talking about, which is the do I start a new business, do I fix the business I'm at? >> And the woman in the red dress is always my my joke. But >> the new opportunity always looks more interesting, which is why it's so compelling as a sales pitch is like most sales pitches are red women in the red dress. And that's you do it that way because that's what convinces the most people.

18:08>> I teach that. >> Of course, that's what convinces most people to switch opportunities because you say, "If you only knew, it's so much easier over here." Right? >> But the reality is that all businesses have difficulty. It's just what difficulty you want. And so different styles of businesses have difficulties at different stages. Like information businesses for example are the easiest businesses to start, hardest to scale. Software businesses are the hardest businesses to start, the easiest to scale. E-commerce is somewhere in the middle, right? You have to have capital, but then there's scale. They have logistic supply chain issues on the back end. So like there's kind of difficulties on both sides. And so every type of business, service, for example, easy to start, harder to scale. You can scale just takes longer because you have to train people and recruit people and people are the business. And so like there's always difficulty with whatever business you have. And what happens is when you switch opportunities, you then start at zero. You quickly get success because you pass the levels you already know, but then you run into the same boss again.

18:58>> Mhm. >> And so what ends up happening is now you have two businesses you're CEO of because you couldn't end the other one because you still need to live. And then you start this other one. And so maybe this is the better opportunity, but you still have this old one. And then you can't give it up because you're like, but I have customers and I have to keep my promises there and I have my what do I do about my team? And there's all these questions that surround that, which is why you can own as many businesses as you want, but you can only run one. >> Mhm. >> And that's the thing that everyone messes up. And especially if you're small, you don't have the resources to run two. So you have to make the hard decision. You have to say, "No, I'm going to continue to fix this because it's my belief that every business can get to $100 million a year. Every business,

19:31>> even solarpreneur." >> Yeah. Well, I mean, I wouldn't say the solarreneur is an organizational structure, not a business. Mhm. >> So, whatever business that solarpreneur is in, if they sell wallets, if they sell paintings, if they I mean, whatever it whatever it is that you sell, you could sell $100 million worth of it for like I can't think of a business. Now, if you're like, well, you can't say that for a local dry cleaners. I'm like, yeah, then you open more, but I consider that still the same business, right? And so,

19:56>> the question then remains, why isn't your business a $100 million business? And whatever the answer to that question is is the problem you need to solve. And if you don't know how to solve it, which is what most entrepreneurs are faced with, they then think, "Oh, it's not me. It's the business, it's the industry, it's the market, it's the vehicle, right?" And sometimes I regret that I talked about how switching opportunity vehicles because like if I had played out the other alternative, I probably have 200, 300 gyms right now and I'd still be just as rich. >> And so,

20:21>> did it like maybe I make less money now than I would if I had stuck with it. I don't know. Like, and we can never know. But I can say that the equal opposite of that is if you do one thing for 50 years and you get better at it, you're probably going to make a lot of money. That is a great permission because I think ever since I heard you first actually talking about opportunity vehicles, I was like I might not be in the right opportunity vehicle. Am I like do everything wrong because I'm just my drawing in a boat and everybody's [laughter] on. >> It's such a compelling visual and it's just cuz it speaks to the pain. It's just the ultimate easy button is if I only had this other vehicle and if I were just doing the same thing I'm doing now, I would get 10 times more than I'm getting or 100 times more. And the thing is is that sometimes it's true, but it's so attractive that nine times out of 10 it isn't true because you're it's only true when the model is the limiter.

21:07>> Mhm. >> But most times it's not. It's just it's a limiter if you if you measure on a one-year time horizon. >> But Mr. Panda has a chicken shop >> and he's worth 10 billion. So >> like is that the is having a Chinese chicken store like the the best opportunity vehicle? No. Did he make it work? Yes. So it's just it's just expanding the horizon of and that's why starting a business that you actually care about the customer is ultimately the thing that matters the most in the long run because if you really care about the customer and the product that you deliver

21:36>> then you don't do it for the opportunity vehicle reason and the making money reason and then making money occurs but because you stick with it it just keeps getting bigger and bigger and bigger because you keep improving it because you love it. It keeps getting bigger and bigger and bigger and you maintain your reputation because the only reason you did it to begin with is because you care. That's actually the unto I think that many people are missing. It's like, oh, what niche do I go in? Is it like >> start wherever one you want, >> but do the one that like it's either some pain you overcame, something you're very passionate about, or it's uh it's a professional skill. But I I I'll say this other thing that I think is worth doing is that people have this fallacy that they're they've made the wrong pick. Like what if I pick wrong, right?

22:11I picked the wrong business, I picked the wrong niche. The the consolation I can give you is that if you stick with it, >> no matter what, all businesses end in the same place. which is you have a team of five to seven people. You have a head of marketing. You have a head of sales. You have head of IT, head of legal, head of ops, head of finance, and they're really all competent people and they run the business. And so your actual day-to-day is the same. >> Whether you're selling, you know, shaving cream or you're selling communities or you're selling private equity, fundamentally, you're going to have a team of people that those functions of the business have to occur and they're probably rolling into you.

22:45And so if you think about that as the natural extreme of any business, then it kind of doesn't matter what you do to get there. If you like the game of business. >> Yeah. >> And so that's kind of how I see it is like if I'm worried about picking the wrong thing, it's like, well, no matter what, I'm going to end up in the same place as long as I stick with it. >> Yes. >> Okay. Yes. [snorts] >> So I will I will speak pretty definitively, which I I rarely do, um about like this model is better than that model.

23:11agencies are exceptionally easy to get to. And you know, caveat caveat for the internet trolls of the world, right? Like exceptionally easy to get to a million, three million, even $10 million a year in almost any version of the model. Beyond that, it becomes exceptionally difficult um because you have human capital. So it becomes really it's more and more difficult to attract, you know, talent to do higher level work. Um, and typically the businesses that go from, you know, 0 to 10 million, they're servicing SMBs and VSMBBS, so very small business owners and small business owners. If you take one of the the way that I like to think about any industry, if I want to get into is I look at what the people who are the biggest in that industry are doing and think, okay, what's different about what they're doing versus what everyone else is doing. And the biggest agencies in the world service the Fortune 100. And so I take that as the natural extreme of like what is the best version of this business is that you deal with businesses that always pay their bills.

24:03They never turn. and they sign 5-year contracts at 5 million a year and they're good for it. And so the process of agency scaling is very much scaling the avatar and you basically have to just keep earning your way up which you're you already on the right track um of how can I get an avatar that actually can keep their word and once you get to there number one and number two you'll have a telltale sign of like am I dealing with an avatar that's too low if you want to start doing more of their business for them. And so if they're like I can't close a door right or like you're like maybe I'll do my sales for them. No, you have to deal with a business who knows how to sell because your services are not I will do acquisition for you. It is I will do this. I will do this. I'll do lead.

24:45Exactly. And so it really comes down to who is the perfect avatar for only this very narrow service that I have I have tremendous margins on. And so that's where we get really clear on like well if they actually like I've been selling people who have over 10 people headcount but if I have over 50 my turn is like 1%. >> Yeah. And so it's like I really should just build that and not have all of this. Now what happens is we we always incur debt. So it's not like there's something wrong. Every business incurs debt when you start 100%. You either incur talent debt, tech debt, financial debt. You incur debt. You want to incur the debt that's the easiest to pay back, right? And so right now and you can also incur reputational debt. Like there's debt. Um you're you're selling some people that you know you shouldn't sell so you can pay the bills. Fine. I'm not going to get on an ethical, you know, whatever with you. Um, but the sooner you can draw the line of saying, I want to, like if you told your team, we're how many sales a month do you do? Sales philosophy,

25:42>> three, four. >> Okay. >> I'm okay with us going to one deal a month. And where this gets more interesting is that when you get that correct, truly correct avatar, the price elasticity uh changes. And so all of a sudden, it's like, if I actually were to price to my correct avatar, I might be able to charge two times as much. And by charging two times as much, I might 5x my profit. And by doing that, I'm actually more than happy to have my quote revenue growth rate be slower than what it was before when I had these people. But the amount of operational drag that you incur also like team morale of like I just onboard this guy and he's already turned out like it just feels like such a pain. Whereas if they know that they're going to be creating long-term relationships with the customers, you will get a sticker business that's more fun to run and way more profitable. So part of this is like a lot of entrepreneur a lot of the correct moves in entrepreneurship are counterintuitive because all the intuitive ones you've already done. You do those naturally. You wouldn't you don't think about it because all the things that are intuitive you already did it and they already worked. Where you get stuck is the counterintuitive solutions or the ones where you're like wait so for me to grow I need to sell fewer people and have higher qualifications. It's hard to do. That's why most people don't do it. It's also why most people don't make money. Phil, what's up man? Can you uh mute me in the background?

26:54>> [snorts] >> Yes, I can. >> All right, >> you are muted. >> All right, rock and roll. Tell me about the business. >> All right, we are a $1.2 million uh pool service and repair company in Raleigh, North Carolina. >> Rock and roll. What's What's profit? >> About 50k after 145 and uh that owner salaries. >> So per So 200 all in.

27:21>> Yeah. Yep. 195. Okay. Right around them. Cool. That's fine. Okay. 200K. Uh bottom line. All right. Uh what's the what's the membership price? What's churn? >> Um we're about it it depends, but average is about 4500 a year um per client. Um >> Okay. >> What's churn though? >> Recurring. What's that? >> What's churn? Yeah. >> Oh, churn. Uh we lost about 12 people this year. So 12 divided by 176, whatever that is. 12.

27:49>> Okay. So you have 90, you know, you have >> Yeah. Okay. Okay. So you have 93% retention annually. Okay. Great. So turn is not an issue. Fantastic. All right. So what do you want to have happen? What's the problem? >> Uh problem for us is we can't hire and retain and train really talented people. Um we find that we can keep people for about a year and then they either >> want to go do something else or they want to go into a different trade that they view as like a higher a higher opportunity like HVAC, plumbing, electrical.

28:19>> Sure. >> Sure. >> Stuff like that. So, we're trying to figure out a way to make it so that people want to stick around and see this as a career that it can be. >> Yeah. I'm gonna I'm gonna we're I'm going to guess right. What's your close rate right now when you meet with people? >> Our close rate when we meet with clients or with Yeah. leads or uh >> Well, leads to, you know, to sell them.

28:41>> Yeah. Selling uh we're about 30%. >> 30%. Interesting. Okay. So, this is me calling the shot. This is my guess here, Phil. is that I'm going to bet we have to fix the sales motion. Number one, once we fix the sales motion, we can increase prices. Step two, once we can increase the prices, which will dramatically increase profit, we can then pay the guys more so they stick.

29:06>> Mhm. Yeah. So, just >> that would be my >> Yeah. >> Yeah. Current paid 25% of labor revenue. Um, so yeah, definitely increasing prices definitely is a way to do that. Um, and that's that's the thing. We're just our close ratio I feel like isn't high enough to warrant price increase. I know we need, >> right? Like I I don't want it to go to 5% close ratio in in order to

29:32>> Well, you I mean, dude, for you to get to 5%, you would have to like 10x the prices. It would it wouldn't even be close. >> Um, so we have to fix the sales motion. So that's my So like this is why like you got to pull the thread, right? So, it's like it starts with like my guys aren't staying long enough, but the reality is that like we're not charging enough, but we can't charge more because our sales process is is screwed. So, let's fix the sales process. All right. So, walk me through the sales process. >> Sales process we have currently um they basically call our office. We we do a lot of inbound. We don't we just word of mouth

30:01>> advertising as we need to. Um so, we we're pretty pretty well uh we show up pretty well on Google. Uh, but we're spending like five 600 bucks a month on actual Google outbound. Um, >> well, you mean Google ads, right? >> I mean Google ads, like Google services. >> Got it. And so you're And it's 500 bucks a month is what you're you're you're putting into PBC. Okay. >> Yep. Um, all right. >> How many leads are coming from that?

30:28>> Any idea? >> Leads a week. Leads a week are about two to three. >> Okay. From that from that 500 that you spend, right? >> Yep. >> Okay. So, I'm gonna say you're getting 12 12 a month. So, let's just say 10 for simple math. So, it cost you 50 bucks a lead right now. Right now, roughly. >> Mhm. >> All right. And you convert what percentage of leads?

30:53>> Uh, convert about 30%. >> Okay. Converting 30% of leads. You can get that to 50 on inbound. Um, just FYI, but you're at 30%. That's fine for for the purposes of our conversation. Okay. Um, so it costs you $150, right? >> Yes. >> To get a customer who's going to pay you $4,500 a year.

31:18>> Yep. >> Not bad. >> Not a bad gig. [laughter] So, let me ask you this. What percentage of your costs are variable versus fixed? >> Uh, it's I don't have an exact figure. Um, >> let me ask you this. What are gross margins? Gross margins are about 50%. >> Okay. So that >> about 25 labor >> and that includes labor. That includes labor, right?

31:44>> Okay. So you're going to make So it cost you $150 one time to make $2,250 per year in gross profit. >> Yep. >> Banger. Banger. Amazing. Okay. >> Killer, dude. >> Do advertising. Yes. >> Hell yeah. [laughter] Like, bro, hey, I've got this amazing investment opportunity. If you give me $150, I'll give you $2250 back just at the end of the year. All right. I'll give you I'll give you 2250 back. How much money you giving me? [snorts]

32:18>> I'm as many as many pennies as I can throw at you. Yeah. >> Okay. Well, how much cash you have on hand? >> Uh, not a lot. Not a lot on >> Okay. >> Um, we basically are That's the thing. Our >> our We have two owners in the business that we're taking out. All right. Pause. Pause. Heard. >> Pause. Heard. So, what you need is a money model. So, what how much your money are you making the first 30 days on $150 customer?

32:45>> Uh, generally, so we we just transitioned to doing a different different type of initial visit model. Um, okay. >> Currently, we're getting about 1,500 per client in the first 30 days. Uh, but it really depends. That's that's our average, >> bro. So you don't even need the money because you're getting 10 to one up front. >> I I know. But then so our on that 1,500 there's a good amount of that which is cost of goods sold because we're sure finding issues. We're repairing things.

33:15>> Let's say you make 500 on on on 1500. Let's say you run 30% on the first one, right? Does that sound Does that sound reasonable? >> Yeah, >> dude. You're still making 500. >> Mhm. on your 150. >> Yep. >> So, why not spend more >> the I don't know. I'm just scared, I guess. [laughter] Scared. >> Don't be scared, dude. >> My money where my mouth is. That's it.

33:40>> Yeah. I mean, I'll say this. I don't know if you were on for the beginning of this, but like this is a super classic issue. This actually happened a ton in gyms. So, gyms have fixed costs like rent and equipment leases and things like that, right? And so the guys would have a vehicle like this that they're getting 10 to one on something really strong. But what they would do is they would only spend enough money to cover all their fixed costs, but never get into the black. They literally would just like spend enough to like they they play business on defense rather than offense.

34:11>> Yeah. >> Yep. >> Right. Like you're playing right now to not be poor rather than to be rich. >> Yep. That sounds familiar. >> Yeah. >> Yeah. And you're and you're willing to make the money for your team. You're willing to make the money for the landlord. You're willing to make the money for the bank, but you're not willing to make the money for you. >> Yeah. >> Real, right? >> Yep. >> Okay. So, >> yeah. >> As much as I would like I'd love to like, you know, dive into a hundred other things, like this is I'll bet you right now this is the core issue is like I want you to go from $500 a month to $5,000 a month to spend because if you went from two to three leads a week to two, three leads a day, would that materially change the business from a casual perspective?

34:48>> Yeah, definitely. But that that's the thing. It's our we could we could do that but then we run into fulfillment issues of we it takes us six weeks to train a guy. So it's like chicken of the egg. Do we >> six weeks is not that long. >> Big picture FYI, right? And I'll bet you could do it in three if you really had to. >> Right. >> Yeah. >> Okay. And that's so >> Yeah, that's that's the thing. >> When you're in equilibrium, this is a rule of thumb for me and for everybody who's listening. If you're in equilibrium where you're like, I can maybe take a little bit more demand, but then I'm going to be supply constrained.

35:17Get the demand, get the cash, then you'll get the resources to take the next move. And if you have to pay some guys one and a half or one and a quarter, you know, overtime to to to fill the slot one, you're going to pay them more anyways, and that's good. Fine. And I'll bet you those guys would work more for more money. >> Yeah. >> So, you have flex. You have you have more capacity. You have capacity that's not stretched. So, if you could stretch it, most people like you'd be amazed at what people can do if you're like incentivized them.

35:46Yeah. Yes. Yeah, definitely. We could I mean our team our team's pretty pretty strapped right now. >> Yeah. And are you are you closing? So, walk me through the sales process real quick. Lead comes in, you immediately call them within 60 seconds or what? >> No. Um it's basically we have um online pricing. All of our prices are online. So, they hit our site, they basically sign up and then once they sign up on the website, >> Yeah.

36:11>> we're contacting them automatically within five minutes. Um, and they're basically >> via text or call. >> Uh, we basically email um, from the signups. Um, we don't do any any calls right now. Not not nothing nothing automated. Nothing. >> So, you could probably double you could double your conversion if you just call the leads immediately. >> Yeah. Yeah.

36:36>> So, let's say let's say let me let me ask you a question. If I paid you another $1.2 $2 million to do one thing, which is to just call your leads in 60 seconds. I give you one $100,000 a month. Would you do it? >> I I suppose I would. Yeah. >> Well, that's what's sitting on the table right now because you're not contacting your leads fast enough. >> Yes. >> You have a double. You can get to 60% when it's PPC inbound. They already know the price. You could you could close 60%. And that's without changing anything about the pricing, the offer, anything. just from contacting him fast

37:11>> then four. Yep. >> Okay. So, we have two changes that are going to be the biggest material changes. Number one is you're going to spend way more on ads. Number two is you're actually going to call your leads really fast. When you do those two things, you have enough gross profit in the first 30 days to cash flow this acquisition anyways. You're then going to be willing to pay some of the guys you have time and change to do more jobs. Some of those guys are hungry, want to make more money. That's why they're leaving, right? Give them the opportunity to make more money. >> Yeah. And then part of that is you can also pay them a little bit more money to to train the guys faster because they're working longer hours. They'll train them faster.

37:41>> Yeah. So incentivize the trainer to to get them get them on the road faster. >> Yeah. >> So we can open up capacity. >> I mean I would say, hey, if you you can do it in six weeks, if you can do it in two, I'll give you a $500 bonus. >> Yeah, I think great idea. >> Yeah. >> Here we go. >> Rock and roll. >> Great. Yeah. Thank you. And I put the incentive is that if you have to go back and fix one of the pl spots that the new trainee went to that that guy's got to do it for free if he takes the commission.

38:09>> Yeah. Yep. Yeah. We do we do call backs on then they're on >> but I would do it on the trainee. If I'm going to if you were to take from six to two and you're going to sign off that this guy's good enough. I'll give you the bonus but you got to basically certify that guy's work for the next month. >> Right. Okay. So the trainee makes a mistake if they're rushing through it. The trainer goes and fixes. >> Yeah. Big Papa's got to come in. Mhm. >> I see what you're saying. Yeah. Yeah. Great. >> Rock and roll. >> Rock and roll, man. Thank you, Phil. I really appreciate

38:36>> Appreciate you, dude. Yeah, you bet. >> Uh my name is Mike Nathan. Um I sell cellular therapy in home to the old, affluent, injured, probably and athletic. >> Um we're new, but we've got a million dollars in revenue, half at Ibida. >> Um we would like to get the 25 million >> in home or >> in home. >> Okay, got it. >> We consider mobile healthcare. >> Okay. Is it like guy drives out or is it you sending machines?

39:01>> RN drives out gives you an IV infusion in your home. >> Okay, got it. >> Um, we like to get to 25 million. We're built to be bought. We want to exit. So, we think we're on the cutting edge of this. What's stopping us is my team is awesome. >> Okay. >> Great from the NFL to a lot of great. We have great business to doctor B2B sales experience, zero BTOC experience. and that playbook we're learning is wildly different. We have no idea what we're doing.

39:30>> Yeah. So, what stops you from just doing way more of the doctor stuff. >> Um it doesn't it doesn't quite pay as well. Meaning uh we have people that knock on doors to uh orthopedic surgeons who are looking for patients with uh alternatives to surgery, PT, chiropractors. It's a lot of effort and there's some that are going to refer to you and some that just will not. >> Yeah. Uh so that's our constraint in a one market we're in the twin cities it's a one market uh play

39:59>> we know there are more people looking for this solution um so we want to understand what the B toc is if we go to then Dallas Philly LA as we try to scale it we're convinced it needs to be a better ROI than maybe what we're doing right now >> what are you do so you're making 50% margins right so what's the cost to acquire a physician >> cost to acquiring a physician Mhm. >> Who refers your business? >> Cost of acquiring affiliate,

40:25>> it's often times just it can be a physician. So, we don't track it that way, but it's um $500. >> Okay. So, it cost you 500. And then what does the average physician refer to you in a year? >> Uh in terms of business, >> $6,000,000. >> So, I mean, you're getting 12 to one there and you already know how that works. So, like what stops you from doing 10 times more of that? Uh, we >> you're saying they don't pay well, but that's the part I'm not sure how you're getting%. >> We've went through the woods and hit all the people that are going to refer us.

40:52The number is not amazing or at least I just know there's more there. I assume there's more. There's got to be more than the, you know, the 200 people we've hit. And the >> like you mean you've only really talked to 200 in terms of like reachouts and and 200 who signed up as affiliates kind of thing? I don't know the number off the top of my head, but it's in it's in the hundreds, less than a thousand of B2B uh PT, chiropractors, orthopedic surgeons. We've done that >> in the Twin Cities

41:19>> and the super small people that have given us has been some give four, five, and six, some give zero. >> Yeah. Do you have an active affiliate manager who's like regularly reminding them? >> Yeah. So, with so the the way that I think about affiliates is um it's basically a second tier of customer. And so you need to have somebody who's regularly kind of like stoking the affiliate fire to keep them activated and continue to get them to continue to refer business. So I'll give you an example. So there was a roofing company for it was a restoration company. Um they had one star star salesman and all he did was he'd go around to other tradesmen and get them to refer them business. And so they would get a,000 bucks to refer the restoration business business. But the sales guy got 500 for every time they referred. And so that guy all day long was knocking on doors, walking to the front door with donuts, asking them how they're doing, bringing coffee to the guys, and then reminding them that they existed. And that's all he did. And so I think you were getting you're getting you're you're doing the hardest part, which is getting them to uh refer. you just didn't have the the consistent referrals because if you had 200 active affiliates who were consistently referring your business and most of these physicians you know especially like GPS things like that like I mean they see thousands of patients

42:35>> and many of them could probably benefit from the services you have and so the activation is both getting them to refer consistently but also uh percentage of customers that they see that they refer to you. It's kind of both sides of it. And so I think that the missing link with what you were already doing was just that the you didn't have basically the continuous affiliate marketing strategy to get them to keep sending you business. >> So that's probably like right now today I would fix that first because you already have the acquisition system, you already have the network. And so for me like reactivating that affiliate base would be the first thing that I did. So this gentleman is using B2B outreach to get uh physicians and therapists to refer him business. Now the part of what he was missing is if you go to 240 in the leads book uh which is the affiliates chapter um I talk about the launch and integrate model and so basically uh right now he actually was missing both of those. So launch is like you want to do some sort of big promotion with them so that you get to all their customers. Now they were giving him like a trial customer and he was basically not getting any customers beyond that. And so if he's acquired 200 affiliates and each of one of them has sent him one customer it's because he's he's basically not following up with the test that they're making. Like imagine if you, you know, if you have a business and you have customers and someone says, "Hey, can you refer me business?" You might be like, "I'll send you one and I'll see what they say, right?" But it's a trial. And so basically, we have to think about getting these affiliates on board is like a trial, but to convert the affiliate into an activated affiliate, right? And so a launch is step one, which is that, okay, maybe you succeed with the trial and then you propose, hey, let's do some big campaign to send a lot of your customers over uh and then you can make money. We can make money, everybody's happy. But the long-term goal is full integration, right? which is at what point in your process can we uh integrate our business so that what you sell is merged with what we sell uh so that we don't have to do any extra work or remind you you just do it on your own. The second thing maybe because you might just reactivate the base and all of a sudden you're like I got 200 guys who referring business.

44:26Holy [ __ ] we're at 10 million. Um but uh the second thing I would consider probably I I would still probably focus most of my time on the B2B because you already have it. Um but for this business I think that it lends itself for what's the price point? $6,000 a treatment >> per treatment. Okay. Wait. So, so the average doctor will send you one $6,000 patient per year. When you said it cost you 500, they'll send you one patient. >> Interesting. So, do you have a process for once the patient get the thing calling the physician up?

44:56>> Sorry. Say that. >> So, like I'm Dr. Smith. I send you Sandy. Sandy goes and gets the Well, you come to Sandy and Sandy gets the treatment. Is there a cycle where you call back me, Dr. Smith, and say, "Hey, we just dealt with Sandy. Here's some of her stuff. Uh, not in a medical term like we're not putting notes back in because it is private. >> For sure. Yeah. Yeah. >> But but we do we ask for more referrals. There's a circle back that way. There's not a a a patient loop back. >> Okay.

45:22>> That's not true. Sometimes that does happen. Excuse me. It does. >> Yeah. >> That's not systematized though. >> Yeah. I would systematize the hell out of that >> because it's like, hey, you just sent me this person. Like, let me close that loop for you. She's awesome. We did this thing. She loved it by the way. And then we have the you know the opening to the to the other like what customers or customers sorry what patients did you see this week who you think it would be a good fit right and rather than saying do you have any it's which ones would be is the question small training stuff but it matters.

45:49>> Um so I feel like there's so much on the B2B side that honestly that's probably where I'd be ripping off. >> So you would not go after a BTOC approach like advertising online going uh pushing in on a strategy on that. It's not that I wouldn't, it's that when I think about So this the difference in like theoretical and actual like I would given given the fact that you like you're already running good margins on this thing basically doing it and take this the way I mean it completely unoptimized like right now right and I again I'm not this is not a a slight um then I'm like there's so much juice left in this thing

46:24>> I don't want to now start something new it's like I barely got this one going I want to like crush this and when when I'm like, "No, we've like we follow up with every single person. I've got a full-time affiliate manager who steps by. Our affiliates, I'm calling them affiliates, but doc, you know, drops by the docs once a week just to remind us, say nice things. Hey, by the way, like that is happening all the time and we've already covered like literally every single physician in the Twin Cities, then I'm like, "Okay, let's go B to C." But if we haven't completely squeezed the hell out of this thing and it's already working at the level it is right now with like zero, like you're only getting one patient per doc, it's like, so yeah. So you getting B2B customer is the same as getting one B TOC customer.

47:00I understand why you'd be frustrated because you'd be like, "Well, [ __ ] it. I'll just [ __ ] I could sell one customer on my own without having to deal with the doc." But the whole point is that like I want them to be sending 20 50 a month and they can because they have the volume. And I think that first one has to be like a beautifully choreographed experience because that first patient's the test run for them for you, right? They'll refer you one and we'll see what happens. >> First one, >> right? And so one, it's like Sandy's got to be blown away, right? She's got to come back and be like, "Oh my god, that place was amazing." And then you also have to go back to the dock and be like, "We blew Sandy away by the way." Um, and so I think you have to tackle it from both sides.

47:36>> Okay, >> that's what I would do. Getting into the ad side, you absolutely could do it and we could walk through some, you know, whole strategy there. But >> I I if if we swap places, that's where I would be focused. >> If you were going to try to expand into other major metros in the next 18 months, >> Yeah. Would you would you have the B TOC sorted out before you went to the next market or would you >> honestly no. If I crush my B2B play, then I just run my B2B playbook in the B2B playbook in the new market. Like once I find something that works, I just want to just

48:05>> do more. >> Yeah. Pillage. >> Right on. Thank you. >> Yeah. No, you bet. Now, if you if there's no way to do that integration, which there always is, but if for some reason you're have limited beliefs about the world, what you can do is basically you have to pay affiliate managers to consistently kind of they're kind of like account reps. And so they manage the relationship with the affiliates who remind them that you exist and remind them to promote your stuff. And so if you have a handful of good affiliates that can be worth their weight in gold because each of these business owners is is advertising on your behalf. And so if he has 200 businesses, which is what he said, imagine harnessing the horsepower of 200 businesses of advertising and forcing it through one. Well, if you have that, he's easily going to hit his $25 million in sales. He just needs to activate and better use the resources that he has at his disposal right now.

48:49And on top of that, he's already really profitable. We know the model works. We just have to call on you for quite a while. So, thank you. Um, I sell digital marketing services and business management application to home service providers. >> Okay. >> We do 580,000 in MR. >> Great. >> Um, >> congrats, man. >> 2% monthly churn, 100% uh net retention revenue. >> I would like to eventually be at 100 million. No rush for that.

49:16biggest thing that's stopping us right now is figuring out the best way to scale. Uh my background, I come from an agency. I was a sales rep. Sure. >> Very high transactions and honestly it seems like it leads to a lot of burnout for those types of sales reps. >> It also seems like the goals aren't aligned. The reps are just doing high volume. >> It's not what's best for the client. So >> what we started at our agency is it's kind of like the insurance model. You sell a client, you work with that client for life.

49:45>> I think it's a lot more fulfilling. >> Um I'm told the best >> they do the delivery. >> No, so we have a W2. >> So they just do like they're the account rep. >> Yeah. >> All right. >> Um but yeah, I'm told like the best way to scale is to differentiate that and just split sales and split account management versus the way we are doing it. uh wanted to get your thoughts on that if that's necessary or particular.

50:10>> So um given the size and the stuff that you have right now I almost want to plead the fifth because I would need more information. If you have 2% monthly churn for agency services that's really good and I really wouldn't want to break that. And so we typically almost always separate customer service from sales, but I would imagine the way that you're running it is that the guys fill up their book and then they're kind of done and then that's all they manage. Is that about right? And they sell if they need.

50:38>> So our top rep has been with us four years and he's in a total of 100,000 MR >> and we're giving them tools to, you know, SDRs so he can continue to grow. Uh-huh. >> Uh, we haven't seen somebody really tap out yet, so we don't really know where he's going to stop. >> So, he keeps selling and he's able to keep the customers. >> Yeah. And his churn is staying below. >> And is it SEO or what are you selling?

51:04>> SEO and paid ads >> and paid. And then you have some sort of tool >> uh >> instead of apps or applications. >> We do have some tools to make that very efficient >> for the sales guys or for the home services >> for the customers or the sales. provide the SEO services for very good costs. So you provide right so you centrally provide the SEO right

51:27>> and then the sales guys sell it and then where does the application fit in >> the what like the business management app >> sure >> that's an optional so some >> so that's not key to why the churn is low >> no >> okay so it's really just that the guys >> just so low because the guys build really good relationships with the clients >> yeah got it and SEO obviously works if you guys are >> Yeah it's very it's 200 300 bucks a month like our Harpoo the last 6 months is 300 but historic it's 200.

51:56>> No, I'm from Yeah. Yeah, I get it now. Uh the price is a big part of it though, just a FYI that like that's why churn is also so low. Like 300 bucks a month is where SMBs um will typically stay. You get up to a,000 1,200 uh you've got like another tier of churn and then above that is like the next kind of point is like 2500 to $3500 a month. Um and then after that you're not selling SMBs anymore or you're selling to bigger businesses, right? Um, so all that to say, your question is how do I scale?

52:25>> Yeah. Do I want to break it out? So it's account managers and sales >> rep. I don't think you break the business. >> Yeah. >> I think you do more what's working. >> Cool. >> If you have 100% revenue retention annually, then just add add more revenue. >> I guess my only question is how do we keep them from getting lazy and becoming turning from hunters to farmers? Is that something we just accept and hire more guys or >> I think so. I think I mean basically there's problems on either model, right?

52:50Um but if you have 2% monthly churn in a in a business model that typically has way higher than that normally, um then you've solved something that many people have struggled to solve. And so that means you have 50-month average LTVs, right? So you have a $15,000 LTV on the product. Um and then how many customers a month are you selling? >> 150. >> Yeah. So are you doing outbound? >> Yep. >> Yeah. So yeah, you just got to scale it up. So, because there was a guy um I think I told a story about this on a short, but uh a guy I know uh well through a mutual friend uh did basically this exact same model. He didn't do the fulfillment piece, but in terms of like it was 299 SEO and social media management for he just did all small businesses and they had a 38-month average LTV and what he would do is he take the first month he'd spend that on Google ads just so they saw some quick wins and then he never spent money on it again but they decided it worked and then that's how he ran it and uh he had like a 400 person call floor and he was doing like 12 million a month and so I uh I say that to Okay. Uh, I think you just need to do more of what's working.

53:54>> Cool. >> Yeah. And then you'll deal with the problem that you'll have some fat and lazy farmers. But like if churn's not really affected, it doesn't really affect you. It affects them. >> One thing we're considering is based on your total book of business. So if your total book of business is smaller, they we have a quota for you. But once your book of business reaches a certain point, there's no longer a quota. >> Well, that would make fatter and lazier though,

54:20>> right? I mean, if you could bring in consistently $100,000, I don't care what you do. Like, you're going to have to >> then you've answered it. If you don't care what they do, then who cares? >> Yeah. >> Just bring more guys in. >> Okay. >> Sweet. >> Alex, thanks for coming down, man. We appreciate it. >> You bet. >> Um, my name is Wter. I run a skincare business. >> What is it? >> My name is Wer. I run a skincare business and we uh sell skincare to women age 55 to 65. So, e-commerce, direct response funnels

54:47>> and then we have a phone sales team on the back end. Okay. >> And so the thing that has stopped us uh last 2 months, excuse me, >> revenue >> revenue 4.5 million a month and we want to get to 25 >> million a month. >> Yeah. >> Okay. >> Yeah. And so in the sales team, we had a big manpower issue because we would then crank up ad spend and then we couldn't call the leads. So now our margins dropped and then we got stuck. Solved that with a recruitment team. And now where the next manpower issue is evident is on the leadership side. And so we have head of this, head of that, channel owners, head of growth, replacing myself, our COO K as well, making sure that we are no longer well, not no longer, but not doing the same thing in the business any longer as we're moving to higher value activities. Mhm.

55:36>> And so talking to your team, I noticed that the amount of people that apply to work at acquisition.com is so high. Um, between Kyle and I, we're not seeing that many people. Uh, and so we're thinking about now taking that same solution of a recruitment team that we had on the sales side and applying it on the leadership sites to solve this issue once and for all. What do you think?

56:00>> Okay, so four and a half million a month trying to get to 25 million a month. skincare to old ladies. >> Yep. >> Backend call team. >> Yep. >> You built the bottom layer. You're missing the top layer, which means you're getting pulled into the day-to-day. >> Yes. >> Fires all the time, which means you can't be strategic and actually run the business. >> Yes. >> Cool. Um, are the roles that are missing one-time hires or are they recurring hires?

56:24>> One time hires. >> So, in in this for something like this and do you guys are you guys a part of like any kind of like networks, groups, things like that? >> Yes. So you probably have pretty strong marketing and sales chops. >> And so you probably like if you spin your own network, you'll probably be able to find a decent sales or marketing leader. >> I think where you might where it might make more sense to like hire an outside firm because you probably don't have as much >> um expertise in let's say finance which is going to be incredibly important for you like right now as you scale.

56:53>> Um I would say tech in general because of data is going to get really compromised like >> is a [ __ ] show. Um uh so you'll need a tech lead. Uh you'll need finance. You'll probably need soon ahead of people who's really like talent management/HR uh which is both sides of it. Sometimes there are people who come in with more kind of recruitment chops. Some people have more like HR payroll etc chops. Um that's going to depend on how you advertise for it.

57:20>> Uh those are those are the type of roles that you probably don't have a network for and I would just pay the money to get the head hunter to go get it for you. >> Mhm. The other ones you probably within your network have people who like already kind of understand the way you do business. >> We do, but all my friends are looking as well if that makes sense. So, it's always, you know, you know, I kind of do, but you know, we're hiring ourselves. >> Yeah. I think um like when Leila and I have like a big hiring constraint like we'll pull ourselves out of the business and say like we're doing a six week sprint and all we're doing is taking interviews

57:51>> um so we can find talent. >> Now, mind you, that depends on the level, right? like I I pro I'm not probably meeting with directors or or managers or anything like that, but if we're hiring a seuite, like I'm going to be involved in the process. Um and so given the fact that you guys have sales and marketing chops, you guys will be able to quickly say like this guy's got game or this g's got game. >> Um and so it probably makes more sense for you to get involved more in the earlier part. And the way you do that is you just do cold reachouts. >> Like when you when you're when you're going to headunt, it's literally it's an outreach game.

58:17>> Mhm. >> And if you are CEO, the response rates are significantly higher. M and you you still use the same intro message, which is like, "Dude, you seem perfect. Your experience is amazing. Do you know anybody who's exactly like you? I have this great business opportunity." Not going to say business opportunity, but like I've got this this great role. You know, it pays this. I'm looking for somebody who's like you. Do you know anyone? >> And then they're like, "Fuck my friends. I'm interested." Um, >> right. >> And so that's that's an easy because that way it's like it's a little bit like low pressure because that way they can say like, "Oh, I don't know anyone."

58:48>> And it's not like as aggressive. My worry is that if I were to do that then the departmental heads that I'm now working with >> that the performance goes down because I'm less out of touch. I've noticed that when I check in with people very regularly and I'm you know involved in the project. >> So this is the second issue. So the issue is not one you want to have somebody but the second thing is that you don't trust the person that doesn't exist yet to do their job. No, it's that if I were to pull myself out of the management of, let's say, the six people that report to me today,

59:21>> now there's a risk of the business going down because I'm doing recruitments full-time. And then if it takes longer than expected, now we've got, you know, new fires that I wasn't aware of and then the business >> and so the people that you're managing right now >> Yeah. >> aren't good enough is what it sounds like. Or you're trying to find >> like you don't have to replace all six roles at once. Mhm. >> You can run in and say, "Okay, of the six, which one's the one that's the most on fire?

59:47>> Let's recruit that first. >> Get that in." I mean, this is growing a business, man. >> Mhm. >> Like, and then the second shittiest thing, well, now go attack that once the first one's fixed. And you just work your way across. I think a big thing that >> dictates how fast you move in business is your ability to recognize patterns with people and talent because like this is not your first business. I'm guessing >> uh first drop shipping you know with VAS of course this is your you know

1:00:11>> you multiple iterations from there right >> and so the thing is is >> like the first business I had I didn't know how to find a sales person until I found my first saleserson I was like oh my god this is what a saleserson looks like and then I was able to duplicate that and I was like I don't know what a sales manager look like so then I have to go through people and like that didn't work that didn't work that and then I found somebody I was like okay that's what a sales manager looks like and you have to keep repeating that process across all departments and across all levels and so you're able to rebuild build businesses much faster because you know what all these people look like and that you reach the level that you don't know and then that's where it gets slowed down again. And so that is where for me like pulling in outside people from other companies where I'm like, "Hey, can you just talk to this person? I'm about to hire them.

1:00:47Do they seem legit to you?" Like I like I don't know [ __ ] about legal, but like like can I pull up some of my attorneys that I currently pay and say, "Can you just like talk to the person? I need this as an in-house counsel." >> So like I try and vet as many of these things where I don't have the context and I just can only go off of like human judgment rather than expertise. This is where the kind of like head hunting firms especially for more technical skills uh come in handy cuz they'll if they're good they're more blue chip they'll do technicals for you. >> So it's like I don't know much about like an AI lead. It's like cool I'll have I'll have our technical lead go do the interview for the skills base and then you can go do cultural and then how would fit within the company.

1:01:21>> The positions that we're hiring for typically are going to be between 100 and 200,000 a year. And the recruiters they charge 20 25% of the annual package. And so there's also a you know money issue there as well where if for these you know six seven rolls if we were going to pay 25k 40k you know for these positions >> per month you mean >> uh no just on a hiring fee to pay the recruiter that would be a significant cash impact which is why as we're talking let's take it in house get some recruiters 10k a month and now that cost isn't you know such a [ __ ] sorry big uh [laughter]

1:01:54>> again if you're doing them all at once it'll be a bigger cash if you do it month over month it'll you'll probably feel it less. >> Mhm. >> But the other way to frame this is uh it's an investment in the business. If this person does their job, they should make you more money. >> And so like would I pay 40 to make 400? Yes. >> Mhm. >> Great. And so you're just again this is a riskreward thing. I'm trading the money today to make 400 tomorrow. >> Mhm. Got it. >> So it's just a reframe and you're like man this feels like I'm risking stuff and you're like correct. Which is why we get compensated when it works.

1:02:21>> And then let's say all these people are starting to come in. We now have overlapping onboarding. Yeah. On Yeah. >> Yeah. work. >> Yeah. >> No, I'm just like you're like business is [ __ ] as I scale. It's like Yeah. It's just always sucks. >> Got it. >> And you're like, I solve this problem. Then you like look up and you're like more problems, >> right? It's just always problems. >> Thank you. Appreciate it. Thank you. >> Appreciate it. [applause] I sell mastermind programs and group coaching for professionals that want to run their own mastermind thing. So a doctor that's teaching other doctors, lawyer teaching lawyer, restaurant owner teaching restaurant owner.

1:03:04>> So we are at $3 million. Okay, >> I've done eight figures plus already, but in one year my best year was 4 mil. I want to be at 5 million. So I'm at the swamp. So, it's been very hard to grow in Brazil. Too much complexity. And sometimes I feel like just growing the business to English and doing an extra million, but this time in English, not in Portuguese, so that I can reach the whole world.

1:03:33>> What What's harder about 4 million compared to 3 million in Brazil >> again? >> So, you're at four. I I was at four two years ago because of everyone went online and then I went up. >> So you're three now. >> I'm at three. >> Okay. So what's the difference between 2 million and 3 million in Brazil? >> How how come? >> Because you said that you want to get to five.

1:03:58>> It seems for me that it's easier to make an extra million in dollar than what would be to be in Brazil because I have to scale complexity. >> Why? So why is there so much more complexity for a 20% increase in business? >> I have no idea because >> I'm not sure I buy it is kind of my point. >> Yeah. I I I tried a lot to grow. I'm investing a lot of time and money >> but I don't know how to get out of this swamp at all.

1:04:23>> Yeah. And sometimes growing international and selling dollars seems like a better idea because one Royale would buy I'm sorry $1 would buy one Brazilian Royale and then $1 would buy two and then one by four and now it's one by five point something. So it seems like it doesn't matter how much I I I work hard the monetary disadvantage hits me hard. So when I've >> So you're saying Okay, hold on. So every year are you making more rouse? Is that how you say it? I'm kind of still.

1:04:54>> Are you making more real every year? >> I'm kind of still. >> Okay. So, you're not making less. Like, I'm not going to I'm not going to take acquisition.com's money and then do monetary policy and see if my like dollars have gone up or like, "Oh, Bitcoin's up, therefore I made less money." Like, no. Like, >> are you selling more units now than you were? Are you selling the same units now as you were before? >> No, I I'm going down. >> Okay. You're making less. Fine. Yeah. So, what are the advertising activities that you were doing before that are no longer working?

1:05:25I'm doing whatever I did in the past and a bit more of stuff. So, earlier it was easier to sell and now I just tried several different sales process. So, I used to do four launches a year, now I do five. I'm investing more on evergreen. When I put more money, the ROI goes down. So, I'm really trying whatever I can take out of >> I think you might be trying too many things. >> I am.

1:05:49>> Yeah. I think like each of those ideas are fine. I think doing all of them is where you're getting stuck. >> Yes. >> Um because doing seeing a 20 or 25% lift in a business from an acquisition channel that's already proven and you're not at a revenue level that I'm like, "Oh, your market's capped." Like you're not like one of the big one of the big downsides of being an international entrepreneur is that everyone assumes that if you come to America, you're somehow just going to like get rich and you're going to crush it. But you forget you're also competing against Americans.

1:06:17>> True. >> And I don't say that as a as like a you know beating our chest because the thing is is that if you take everything we do and go to anywhere else in the world, you're five years ahead. [laughter] >> So if people were like, "Dude, deadline funnels are crushing." It's like, yeah, that's five years ago, >> right? like SEO is back, right? You know what I'm saying? So, like there there are >> uh you're wanting the pros without the cons of the US market, whereas like I don't think you've any way hit the saturation point in Brazil

1:06:45>> at $4 million a year. I just don't think that's happening. So, I would rather you just like focus on growing the business within the constraints of what you already know and operate rather than trying to get American customers, get American talent. And the tactics that you teach probably might not work in America. they work better there, things like that. Um, because they might be not as advanced as what we're doing here. Again, not a slight, I'm just saying. >> Yes. Yes. >> Big picture.

1:07:10>> So, why can't we do more? >> No. No. Like, seriously, walk through it. So, do you have the metrics around it? >> Everything is a bit messed up. >> So, we crossed out market. We're going to ignore market. Okay. >> So, metrics. Do you have metrics? >> Not as clear as I wish. >> Okay. Well, then >> Okay. like you're trying a lot of stuff because you don't know what's working and you don't know if it worked.

1:07:35>> Everything is working a bit >> and that's just poor attribution. Most of the times most of it's not working at all and one thing's working a lot and so you just figure out what it is and then put all the resources towards that thing. So let's assume you get the metrics do which you should. There's tons of software that can get attribution tracking better. It's not going to be perfect and never will be but you'll get at least directional data that can help inform the decision. So you were doing four launches a year, then you did five, and then you started doing an evergreen thing, right?

1:08:03>> Yeah. >> The evergreen starts taking away from the launches though because the people who would have come to the launches, blah blah blah, right? >> Not to Drew. >> Yeah. So um what I was talking about earlier with Jonathan for his affiliate marketing piece about the like you you're not being you running paid ads as your primary way of getting customers. >> Yes. And a lot of content. I have 600,000 followers on Instagram, 200,000 on YouTube. >> I feel like you should be making more money. Um, >> actually, what's the content you make about?

1:08:30>> I talk about how to package your knowledge into a digital product, courses, mentorship. >> Are they legit followers? >> Yeah. >> Okay. >> Here's the thing. Because of the monetary thing in Brazil is 20 million and there's no 10 players doing more than that in Brazil on my space. So, I'm one of the top 10 players in there. >> Yeah. Yeah. >> Maybe top five. >> Yeah. So, you're doing 20 million real. >> Yeah. Re eyes. >> Really? >> Re eyes. >> Re eyes. >> Re eyes. >> Reis.

1:08:55>> Yeah. In English it's >> real. >> Yeah. >> Brazil dollars. >> So, [laughter] so um how many units are you selling a month right now? >> I have 100 people at my mastermind and 200 people on my mentorship program. Okay. Mastermind goes for 20K and mentorship program at 10K. >> Brazil dollars.

1:09:19>> No, no, Brazil. >> So that you understand it's like Yeah. >> Yeah. Yeah. Okay. I mean those price points seem fine. >> Yeah. >> Um so 200 at 10 and then 100 at 20. >> Yeah. >> And a lot of lower ticket stuff so that it feeds into that. >> Okay. Um I I think you have an advertising issue like you're not cons like you could take more customers, right? >> Yes. >> Yeah. So you are making So when you're making your ads, what do you pro you promote your launches and you promote your evergreen thing. You're not sure how those are working. Okay. Um, what else do you promote?

1:09:54>> I promote people following me on Instagram. So, I do some reals and then I boost them and then whenever they start following me, I reply back. I DM them if they have a verified account. >> So, is it a DM funnel? >> Yes. >> Okay. >> And it works very well. >> Yeah. Yeah. Great. Okay. So, you do boosted posts, DMFunnel, DMFunnel to low ticket product? No, I I send them straight to an application page where it pitch them on the 20k if they doing seven figure plus or the 10k if they're doing seven figure less.

1:10:27>> Okay? >> And if they feel the application, I review the price in there. And if they say they're good and they say yes to the price, I send them an audio message saying, "Hey, I saw your application. You want to do this, this, this, and that. The program is a nice fit. Do you have any questions? Are you ready to start?" Some people say they're ready to start. I wrote them straight away on the DM. If they need some more help, I let them ask there and then I answer. If they need more convincing or they are not that that sure, I send them to my team to close them on the call.

1:10:56>> Okay. I still think it's an advertising issue. >> So basically, what stops you from spending more money on advertising? >> Whenever I increase the ad spend, the rows go down in a way that is not worth it. >> Yeah. So I will give you my theory. Okay, >> which is that you're predominantly advertising to your existing audience when you run ads. >> So essentially you're running a retargeting campaign that feels like it's cold traffic but it's not. And you're doing boosted as your primary way of running ads or you're doing also you're doing ads with conversions.

1:11:29>> My main way of getting new leads is through the launches. So when I do a launch I I focus on on on cold traffic. >> Yeah. >> But I also have >> the launches work. >> They they do. Last time I invested 50,000 REI, got 500,000 RII. So 10x 10x. >> Yeah. >> Yeah. But I didn't know I would get this result, right? Last time I did this, it didn't work that well. >> What changed? >> It seems like when I do a launch, I'm not converting those that are coming from this launch. Sometimes they watch two launches, three launches, as happens with you. Sometimes people are following me like for one year or two years or so

1:12:03>> and then they convert. So it's very hard to attribute to something because I'm I'm doing so much stuff. >> Yeah. So, I really think it just comes down to the advertising. >> Okay. >> And I'm and I'm bringing this up because like you have zero supply constraints. You can handle more customers. Totally. >> Right. And so we have and your sales process seems like it works. Okay. So, I'm not going to like touch that.

1:12:33>> So, it's really just pure advertising, which is >> sell more for the lowhanging fruits, though. >> Yeah. Yeah. >> Yeah. So, we might need like I think the launches is a a fine idea. Um, you can do them four times a year. That's fine. I think that the evergreen process that you do in between, we want to have more reasons for someone who doesn't know who you are to engage with your stuff.

1:12:58And so, you need to have more assets to expand. We need to expand this. >> And so you I mean you're making more content. Can we make the content better? Can we do it across platform? I know it sounds like uh more better, but like I mean I'm in that game too. I make more better content. Can I write another book? Can I make a scaling road map?

1:13:25>> Um and depending on the lead magnet that you put out, you will dramat have dramatically different lead quality. So for example, 20% of people who go through the scaling road map are marketing qualified leads for us. >> 5% of people who buy a book. >> So that gives you now also a book purchase is harder to do almost in some ways than getting someone to give me their information on a lead magnet. >> So this is where I think you're missing on the metrics. I will bet you that you can see from the various funnels you have. You might have leads coming from all over, but your sales might be coming from one and it might be more expensive than some of the others, but the rorowaz is still superior. And so it's like it cost me $1,000 to get this, but I make a hundred on it versus it costing me uh you know $5 and I make 20. It's like well for sure I'll give you guys a fun stat. So in the launch uh we had uh campaigns that were for lead genen and we had campaigns that were uh targeted for rorowaz. So optimized for oz optimized for lead genen. On the lead genen campaigns our average lead cost was $5 and we got four to one on those campaigns. So every $4 $5 lead was worth 20 to us on our rorowaz based campaigns.

1:14:29Our average lead cost $17 and our rorowaz and the average lead was worth 189. That was 17. So it was an 11 plus rorowaz on the paid side for the rorowaz driven campaigns. And so most people, most business owners will look at this and say, "Well, this one's getting $5 leads. This one's getting $17 leads." shut off the 17 and get the five, >> right? And that's why most business problems are counterintuitive because the intuitive answer is usually wrong because you've already tried it.

1:14:59>> Yeah. >> And so for your business, I think that you need a superior lead magnet that is made for the avatar that you're talking to. >> Okay. >> And running that as your top of funnel because what you're what we're talking about right now is that you need to have so you're graduating. This is me graduating you to another level of marketing. >> All right? And so the current level you're at is you're only advertising to the small dot here. >> Yeah, >> you're advertising to the people who are product aware and right at the bottom ready to buy and you're shifting them over.

1:15:27>> We have to extend the time horizon which you're already noticing some of the people who buy come on their second and third. But we don't have products here and we don't have um advertising that really sits here besides your content. >> The launches actually they focus on the opportunity. >> Yeah. Well, the launches convert cold traffic because you take someone from no information all the way to here in 5 days or whatever it is, >> right? But every time you're not doing a launch, you have no strategy for how to get those people. This is what I'm trying to this is what I'm trying to talk about. So, think, okay, here's a good visual for you. You have your five days of launches, right?

1:16:01>> Yes. >> Take that and accordion it out for the time in between in terms of the stuff you cover. So all the information that someone gets from you during a launch is enough information to make a purchasing decision. >> Yes. >> So we need to take that content and distribute it in as many different ways as possible across all channels in both paid and organic and then make sure that the lead magnets that you're giving there match and then all your lead magnets that you do include a ticket to your next launch.

1:16:27>> Okay, >> that's perfect. >> Okay. And the international expansion, do you think it's a distraction or something? I should >> distraction. Okay, thanks. >> 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.