Was tun, wenn der Markt dein Wachstum begrenzt

0:00Some of you guys might have seen that clip where the guy was like, "Hey, I want to make my lounge make more money." And I'm like, "Okay, well, where's your lounge?" And he said, "In the middle of the Sahara Desert." And I was like, "Okay, well, that's probably not a good idea." And he's like, "So, I should advertise more?" It's like, "No, that's just a terrible idea in general." Right? Like, he's like, "So, I shouldn't be in the Sahara Desert." I was like, "Dear God." Okay. Um, I'm kidding. Uh, he was a champ about it. But this is a real constraint rarely. Like if you actually live in bum [ __ ] Kentucky and 100% of the ser the customers you service aren't in bum [ __ ] Kentucky then yes you will be limited by [ __ ] it will absolutely limit you but you could also like do more of that in another market right so it's like sometimes it just takes a one degree of thinking of like okay well I could just duplicate this somewhere else right um this is a you'll see how cool this model is in a second um but we're just talking about from the customer's perspective so uh it's likely that you are not contra I I service chiropractor ractors and we're B2B. Okay, great. How many customers do you have? 100. Okay. Well, there's 50,000 chiropractors. So, do you feel like you're really limited by your market? Do you really feel like you've saturated the market of chiropractors?

1:06No. Just no one knows you exist, right? And so, we need to advertise more. And then we go back to that, right? The next issue is I can't do more because I don't even know what more is because I don't have any metrics. Okay. So, we have a data constraint. So, we have to figure out what you're currently doing before we can do more of it. So, that should be kind of some common sense. So, let's get data. But then that becomes the constraint. Okay, great. Once as soon as we have data, then we can go do more.

1:32The next issue um that'll come up of like why can't I do more? It's like, well, I'm just not sure my current model is really what I want to be doing long term or like if this is the best opportunity vehicle for the skills that I have. And there's a lot of like this like what do I do with my life that right? And the the model issue really comes down to like one of the most common things that that I'll end up responding with is features versus bugs is that like so Suzanne Shifflet who was my CFO um at Gym Launch phenomenal lady phenomenal CFO um she used to say Alex I've been doing this 38 years and all businesses have [ __ ] She was from deep south. Um, she was awesome. And the point was that like every business has something that's hard about it. And so we often want to switch opportunities because the thing that's hard about this business, another business doesn't have that thing that's hard. It just has another thing that right now you didn't realize is easy for you because that's not a component of the business. So said taken differently like at one extreme if you do if you're in the cleaning business cleaning homes finding people to clean houses for is really not hard. People are very happy to not clean and pay someone else to do it. On the other hand, finding talent who want to clean houses and are competent and show up on time and don't steal and speak English and are honest and blah blah blah blah blah, right?

2:59Really hard. Now flip that the other way. finding people who want to talk about fitness and want even you talking about this morning, right? Who want to talk about fitness, who want to talk about helping people. Tons of people will do it and they'll do it for free. The problem is no one wants to sign up for fitness services because no one wants to wake their ass up in the middle in the morning and go to the gym, right? And so like all businesses have components of the business that are difficult. There's going to be some businesses that are more supply constraint, some that are more demand constraint, but they're all going to have constraints. Otherwise, if there were a business that had truly no constraints, then every business would just that of that industry would all just be gazillion dollar businesses. But they're not because sometimes for short periods that is true and then what happens? Lots of competition emerge and then you have a constraint. Now we have pricing pressure etc. And so the idea that like you're going to find the perfect business and it's just like one degree separated from your current one is probably not true. It's just that the hard problem that you have in front of you is the thing that you get compensated for solving. Like that's the game.

3:58And so the way that I frame this is like if I solve this problem, if I have my cleaning business and I figure out how to have a recruiting engine and a training engine that can take somebody who's low skill talent and get them to be proficient in a way that's more efficient than my competitors, then I have an extra 10 or 20 or $50 million of enterprise value that gets added to my business. All of a sudden, that feels like a much more [snorts] desirable problem to solve if I know I have a $50 million pot of gold on the other side.

4:27And so rather than just saying like, "Ah, this sucks." It's like, "Well, for $50 million I'd be willing to solve it." And so for some reason that just tends to perk me up a little bit. Okay. Um, but fundamentally, all all businesses have [ __ ] All businesses suck to a degree. And almost all businesses, if you stick in them for a long period of time, you can become exceptionally wealthy. Like the guy who owns the building that I live in, he's my neighbor. He owns Panda Express. >> [snorts]

4:51>> if he were in this room and he says, "Hey," he got up and said, "Hey, I um I own a fast casual Chinese restaurant. We sell Kungpow chicken and general sauce chicken and spicy pine, you know, sweet sweet, you know, you know that new one, the one that they came out with like five, six years ago." Anyways, um and uh you know, chicken teriyak and you know, we've got five locations and you know, each location does $3 million a year topline. Um we run 27% margins.

5:19Some people in this room would give that guy advice. You should teach other people how to how to sell chicken. And that would be terrible advice for him because what he should do is keep doing it for 45 years and then do 3.7 billion a year in chicken sales with 27% net margins and take home a billion a year in cash every year and do it taxfree because he owns all the dirt and the real estate. It just took him 45 years.

5:45And so I say this because like most of the goals that you have are probably attainable just not on the timeline that you gave yourself. And so like even something like think about how shitty of a shitty right of a business model that is. Who wants to scale brickandmortar fast casual lowskilled labor business? Most people like I don't want to do that right canes decad billionaire owns them all. So like is it a super I don't think you can scale that. Yeah, you can with work and skill and time. And so I think that's the piece that like everyone is so concerned about getting really rich in the next 36 months that almost all vehicles can get you super rich in the next 36 years and many many orders of wealth along the way. Um we just don't think in those time horizons and I think that is maybe one of the bigger things that I can give you around model. So why can't you do more? I don't know if my chicken shop is uh you know the be best opportunity vehicle. Well, if you keep doing it for 10 years, you'll probably be better than most people who do chicken shops and if you keep leveling up in the game of business, the people we compete against. So, if you are in a low opportunity vehicle market, here's the advantage. Your competitors typically not that sophisticated. If you want to go after AI, whatever, then you're competing against the best capitalized, smartest human beings on the [ __ ] earth.

7:05Depends where you want to play, right? All businesses have [ __ ] Okay, the next one is like, why can't I do more? I can't afford to. Now, this is where it gets a little bit hairier. Harrier in that there's more splinters underneath. So, you can't do more because leads cost too much. You can't uh do more because you sell too few. You can't do more um because your LTV is too low, right? LTV is too low, sales is too low or leads are too low. Now, this is where it takes more question answering and kind of pattern recognition to figure out which of the problems is because all you know right now is I can't afford it, but you might not be able to afford it because you don't make enough per customer rather than it being inherently some marketing problem. This happens common where you have a business that has a front end but no backend and they're like, "Man, I'm making sales but I have no," they don't know that they don't have a back end.

7:58they just know that they're not profitable [laughter] um as a business, but it's like, "Oh, dude, you have a you have a break even or slightly break even acquisition process. Now sell the thing to all those people." Oh, and now this is amazing business. It's just like you're just missing a piece of it. That's an LTV issue. Or maybe it's a churn problem. It's like, "Hey, we're acquire customers. I think it cost us too much to get customers." It's like, "No, dude. You turn out in three months. It doesn't like it doesn't matter what the cost of acquisition is. Like, you need to fix churn." Um, which then has lots of hair on. Is it a messaging issues, avatar issues, an onboarding issue? Like there's things underneath of that.

8:28If it's um I can't afford to to to advertise more to get more people um because my leads are too expensive. It's like well are they too expensive? Now there are instances where like we have good like let's say you're in insurance right and so it's like okay our LTVs are already almost given to us by the insurance companies. Uh we close 30% of people we get on the phone with. It's just like our leads just cost too much. Okay in that instance like their leads cost too much. So then there it's like all right we have to increase quality quality of creative increase quantity of creative. we have to look at um CRO within the funnel. All of these things we have to see if we can have better lead magnets from an offer perspective to generate the lead. It's like okay all of a sudden all those things can drive down the lead cost and all of a sudden this business prints and then you have the the middle of the sandwich there.

9:09The lead costs are fine. We're making enough per customer. We just can't close a barn door if we had if it had a handle on it, right? And so then we have to look at messaging. We have to look at scripting. We have to look at um price points if we have to. We have to look at the follow process. We have to look at the training process. with the onboarding and compensation for the sales guys or or if it's a webinar whatever it is right what's the messaging that we're telling to get someone to take their wallet out and give us money but each of these things so if we say okay if I solve all of those things so let's say you're like I can't do more not because I have enough people in my market I have the metrics to know that like what I'm doing is working I'm fine being a plumber I have like the lead costs are fine we closed the amount that we're supposed to our LTV is good I just don't have enough technicians to go and do the HVAC services or do the plumbing or I don't have enough coaches to do my backend or I don't have enough whatevers, right?

9:58Then you have a manpower constraint. Here's the cool part about this model. And by the way, I did the order wrong. These should be like this. Metric should be first, then market. It's a cycle. It goes back to the top. So, I don't have enough manpower. Great. What do you do to get manpower? Okay, why don't you do more of that? Well, I can't do more of that because I don't have metrics around how I recruit talent. Okay, great. So, let's say we solve the metrics. All right. Well, there's not enough talent in my specific market for HVAC [snorts] whatevers. Okay, fine. But maybe there is. Okay. Well, um I'm not sure if the offer that I have for the guys is compelling enough. Okay, I can't afford to. Okay. Well, how much do you make per HVAC rep or per per coach or per whatever? Well, I make this. Okay.

10:53Well, then do we have a issue that we need to change in terms of the business uh to fix our acquisition of talent or the acquisition of talent's fine because the business works? Okay, great. And so this whole thing, you just repeat it again on the other side. So, this is just how you deconstrain anything, whether it's supply or demand. Is that cool? I think it's pretty sweet. Um, but yeah, this is the mental framework that I use. um when I'm looking through my own stuff. And then it's consistently just going once I figure out, okay, this is a a manpower issue. I need to do more.