"What If My Product Works Too Well?"

0:00Hey, Alex. >> Yes, ma'am. >> My name is Julia. >> Hello, Julia. >> And I'm an online fitness coach for women over 50. >> Cool. >> Because I do my job so well. Yeah. >> Okay. >> Yeah. There's a >> I would have thought over 30, but okay, that's fine. [laughter] >> Anyway, because women have so much success in my program after 12 months, 18 months, they're gone. >> I don't know what to offer them after that. But I also have a huge opportunity to tap a high- netw worth individual community where instead of paying $1,000 a month for six months or 12 months, 24K to 100k a year.

0:38>> I and one of the reasons I came this weekend was to figure out what direction I should go and I got a whole lot of other valuable content that I wasn't expecting. So, thank you. >> But where should I focus my energy? because really when my clients reach their goal, they're gone. >> I wouldn't worry about the revenue retention piece for your business. So, um, so this is a really good exercise for anybody is like I I try and think of like what are the what are the biggest people in the space do? Like what are what are those what do those businesses look like? And so like Weight Watchers, Jenny, I'm not I'm not saying you're the same thing, but just like in the space of weight loss, which is the space you're in, um, almost none of them have revenue retention. And so like Tinder for example, I I don't know if it was them, but one of them was like the point of this app is to get deleted, right? And so not all businesses have to have re revenue retention, but this is where because people get single again and then they come back or they get fat again and come back, right? So there's there's the it becomes more reoccurring than recurring um in terms of revenue.

1:42But I think all of this comes down to um or bubbles up to what your goal is. >> To have an impact and make lots of money. >> Well, you already have the impact when you're already making lots of money, so it has to be different than that. >> No, it's not enough. But anyway, >> me neither. >> Yeah. >> I I guess my goal is to reach as many people as I can with >> Well, then make it free. >> Say again. >> Then just make it all free. >> I can't. No. >> Okay. So then what's the goal?

2:08>> To make money. >> Okay, fine. So, do you want to make money by selling it or do you want to make money by growing the revenue of the business? >> Growing the revenue, but okay. In a model that that I love doing. >> Well, I was pushing back on the impact whatever thing because I also talk to business owners all day. I'm like, I hear that [ __ ] all the time. The because if that were true, then you wouldn't be like, "Okay, I want to sell even fewer people at a higher price, right? That would I don't care to be clear. Make money. I'm all for it. I just I want the if we can't clearly state our goal, we certainly won't hit it.

2:40Right? You're not going to hit it by accident for sure. So, if you just said, "Hey, Alex, I want to triple the profit of this business." I'd be like, "Cool. Well, now we can actually like pull this apart and actually and and take this." Now, you might have your own things around that, but like it's just much easier for me. So, what's revenue right now? What's bottom line? >> Um, the topline revenue in the last two years is like 700K. >> Okay. >> What's bottom? You know, when we did all that stuff, I was like,

3:08>> "You're good. Can I just say it's not my numbers? I'll admit it right now." >> You're good. That's fine. So, you have something that's working, right? So, people are They're paying you $1,000 a month. Okay. So, the issue that you have, I'm guessing, is marketing. >> Market. >> Yeah. No. Advertising. You're not like not enough people know you exist. >> Yeah. That's definitely a constraint, >> right? So, I certainly would not advise you to do anything new right now. I think you need to sell more.

3:38>> Can you handle more customers? >> Uh, yeah. >> Okay. Then I would I would be trying to sell more >> and sell more at what's making money now or to focus also. >> Do you have decent margins on what what you sell now? >> Oh, absolutely. I have zero ad spend. I don't have any employee. I do have consultants that I pay, but >> Yeah. So you actually have the classic small influencer issue, which is anybody who's organic typically wants to create many products because they only have one base of customers. And so the only way they can think to make more money is to sell them something else. But it's you should really just see your organic audience as the jump start to then continuing to sell to colder and colder traffic because otherwise you start five businesses and every single person here has probably seen the influence that has five different revenue streams. They all add up to in total a million dollars a year, but they're like, "You know what I should do? Add a sixth." And so this will be different, right? So it's just that you only know one way to advertise.

4:33And so you're looking at all these things I need to change about my business, but you just need to advertise more. >> Okay, good. >> Yeah, that's honest. Like I wouldn't add any complexity to the business that you already have. Now, if you want to add an anchor product that's 100 grand, I'm all for adding super high anchors. Why not? But it's really like So, when you add an anchor, by the way, the way this worked is you have or I'll tell you I'll tell you a story that'll make it make it simpler. So, I learned this technique when I went to a suit shop and I was poor and I was told that I needed a nice suit. And so, I went there and I said, I'm going to pay $500.

5:12That's my max for getting a suit. And I go in and a friend of mine set up the connection. So, he's like, "This guy's awesome." Blah blah blah blah. So, I get there and he line, you know, he does my measurements and he lines up this big rack of suits. And so, he puts the first one on and I was like, "Man, feel like a boss." Uh, and he's like, "So, you like that one?" I was like, "Yeah." And so, I pull, you know, I look at the tag and it says $16,000. And I was like, "Oh, sh." I like my the blood just drained from my face and I was like, "This is a car."

5:37[laughter] And so, I was like, "Uh." And he saw that I like [ __ ] my pants [laughter] in his nice new pants that I was wearing. and and uh and and so and so he said he said do you care about the the brand and I was like no don't care about the brand and he was like I got you sport like took he like took one off and put another one on me in like one move and at this point I didn't even look in the mirror I just like looked at the tag so I was like and it was two grand and I was like okay I can I can swing this at least I'm not going to you know cuz my friend made the intro I didn't want to you know be an idiot um which now I would give zero [ __ ] about but anyways uh and so I ended up spending like $500 $00 on like socks and handkerchiefs at this place. And I walked out spending $2,500. And only after I walked out did I realize that I spent five times what my budgeted amount was. And this guy was a fourth generation tailor. He knew exactly what he was doing [laughter]

6:30>> because he had the the one that was 1/8 the price already there. >> Yeah. >> And so when you have an anchor upsell, the way you want to do it is there is something called primary and secondary features. And so the primary feature of the suit for me is to look cool. The secondary features of the suit would be what's the material, what's the brand, like all of those things. And so what you do is you have your anchor at 25,000, 50,000, whatever you want. And then you get the gasp and people [ __ ] themselves. And one out of 10 people are like, "Awesome, that sounds great." And you're like, "Holy [ __ ] this guy just spent 50 grand on this." And he probably would have been like, "Holy [ __ ] this guy, this kid just spent 16 grand." I was like 24. Of course, I didn't have 16 grand, right? But he still put it on me.

7:09And so the secondary features are the things that are not material to most people. So that what you can do is basically deliver 90% of the same product for onetenth the price. And then people are like this is like I'm pulling one on this guy. He doesn't know he sold me a suit that's almost the same as his $100,000 suit. And you're like this guy's about to buy a $5,000 suit that's really a $500 suit because I showed him a $100,000 one first. And so you just change the things that aren't material to most people and you want to come to the rescue. It's like, "Hey, do you care if you have my cell phone or you good just with Slack?" It's like, "Oh, Slack's fine." Yeah. It's like, "Okay, cool. Well, then we can still pretty much get you there. Vacation, plane, flight, just a slightly differently."

7:46So, I think if you if you add the anchor upsell in and then all of the cash that you get from the few people who take that, pour it all into advertising. >> Perfect. Thank you so much. >> You bet. [clears throat] Hey, man. So, we are an early stage sports tech startup. Uh, so pretty much >> what sports tech? >> Sports tech. Yeah. We help sports entities like clubs, leagues, sports books accelerate AI development. Okay,

8:11>> instead of them having internally, they use our AI to accelerate this this type of use cases. So by its own nature, it's really flexible. It's API. So they can build on top of our tech. Uh and I'm having a hard time to define the product, one product and one avatar and even like selling the vacation, you know, how can we frame this >> to be able to yeah, find a lot of a lot of leads. Okay. So, what type of organizations are buying it?

8:38>> Uh, right now we have good leads and uh closed with some sports clubs. So, that's the first entry that we got some uh success. >> But could >> what do you deliver to them? >> Sorry. >> What do you deliver to them? Like what's the benefit? >> Oh, so instead of them having in-house AI developers, >> I'm saying that part, but what is what is what do they would have in house development to do what? Uh so for example if they want to create uh let's say always fresh sports data for with AI they need to hire and build

9:08>> data >> uh yeah but then at the end of the day they deliver to their fan for example these use cases for clubs is fan engagement so okay uh >> well that makes sense sport clubs make money off fans >> yeah so it's like a chat GPT for for the the football match you know during the match you can ask what's going on and it's live statistics for the fans that's one of the use cases But because we are flexible SDK like a lot of different APIs a lot of stuff can be built there.

9:34So >> we can just go all in with this use case that we see works but uh I just wonder if there's any >> Yeah, I heard. No, I think it's it's a so just so you know like what you what you're going through is the very normal stage which is like you just sell anyone that gives you money. I'm not saying it's bad. That's what you do in the beginning because you're like got to see what happens, right? And then over time you're like, "Okay, of all the seven projects or whatever that you did, which one was like this clearly was the one that they were the happiest, it provided the most ROI, and are there a lot of other people like them that have a big uh budget?" And so if the fan use case one is like, "Hey, we we we developed this thing. it generates this much more uh revenue directly or indirectly for the clubs, then you have a really strong kind of value proposition that you're going in rather than kind of coming in and being like, hey, we can do whatever you want. Uh it's way easier to be like, hey, you're here, you want this, we can bridge this gap, and that's what we specialize in. And I think that that that will turn this into a business because otherwise you're not going to you're you're not going to win by doing everything. You're just not. And so it's like you just have to pick. Even though you could do all of them, you can't do all of them. So you just got to pick one. So you pick the one that you think you're going to get the that's the biggest bet that most people would buy from you. So if you looked at your other six uh projects to do with sports clubs, they might have bought something different. But the question I would ask myself is, could they have bought this thing, my favorite thing, if I had just sold that to them? And they might have.

10:59And if they had, then I should have just sold that to the beginning because then I would have been more efficient on it. I would have like I would have converted higher percentage leads, etc. Does that make sense? >> Yeah. >> If you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so we broke it into these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstrain the business and you're trying to scale, we'd love to help you out on the thank you page. You just book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.