Info Business vs. Dienstleistungsbusiness

0:00Which one's info? Which one's the service business? >> Left is info. Right's service. >> Right. I mean to say anything else. You already know. >> Yeah. >> Right. And so the difficulty with the quote information education world is that it's very it's it's one of the easiest businesses to make some money on. It is one of the hardest to make a tremendous amount of money on >> them. What do you think that like ballpark numbers just so everyone knows?

0:25Like what when you say like some amount of money, are we talking like >> I mean let's let's look at like there's there's a handful of $30 million a year businesses you know in the quote information space there's tons in the one to three tons and tons and tons because that's about like if you just reverse engineer price points it's it's so I I like to reverse things to like to the human capacity because that's a constant and so some of you guys are familiar with Dumbar's number um between 120 150 is the amount people that someone can like kind of manage in their heads, right? And so businesses will typically cap with no systems, which are the vast majority of businesses don't actually have systems. They say they have systems, but they don't. Um, caps around 150 people to manage. And so most of those businesses b if you reverse engineer price point um for any kind of ser you know information plus services um gets you somewhere in the neighborhood of three million maybe $5 million a year and then they kind of cap around there. Now, the difficulty is that if someone is good enough, okay, here's my analogy. So, let's say that I have the best tasting milk in the world. All right, that sounds weird. I have the best Let's say I have the best I have the best coffee. Thank you. I have the best tasting coffee in the world. Okay. Um, actually, coffee is a bad analogy for this one. So, let's go back to milk. So, I have the best tasting milk in the world. Okay. Um, if I give you two options, option one is I can take this glass, full glass of milk, which is what you're used to paying for, and I say, I'm going to pour shot glasses of the best milk in the world, and you can have a shot of that milk. Or I can take this milk and pour it into the same size glasses, same number, but I'm going to fill the rest up with water. Which would you rather have? The the full amount, but more diluted milk, or a shot glass of the right kind? Which one would you rather have?

2:18>> Shot glass. That in and of itself is why the quote coaching business does not scale. So the idea that somebody will if if what you do is so special and so valuable that you can teach someone how to do it in a weekend and be a coach for you, how valuable is it? Now it might be valuable, but the likelihood that you can actually teach someone to be good in a weekend is low.

2:44And so the only quote co coaching models that I have seen scale are one of two permutations. Permutation one is you take people from the audience that have been you for a very long time and you give them away uh where they they're getting a significant rev share. I'm not talking 10%. I'm talking they make half or more of the revenue where it makes more sense for them to continue working with you because you generate deal flow for them to grow their own business underneath of your umbrella. That's option one. Option two is you run a large event style business. You look at Tony Robbins, you look at, you know, whatever. Like there's a handful and there's not many. Um, and that's the Tony Robbins version of that in my opinion is best milk in the world. Shot glass. You're getting it's a you have smaller volume of that access or that interaction, but it's so good you're still willing to pay for it. Now, how well does Tony Robbins coaching do? And this is I love Tony. I'm a big like he's an awesome guy. Um, but I think most people I would bet I have I don't know the stats on this. I would bet that the NPS scores and the customer satisfaction scores of people going to an event with Tony for 5 days is higher than people spending 5 days with his coaching staff. That would be my bet.

3:53And so that's because you got a full dose of diluted milk or would you rather have the shot of the best stuff? And so most of those businesses do cap because you end up so the cap ends up being you can still scale it but the milk has to be so [ __ ] good that you actually have to be able to be diluted like sorry the the volume of what they get is still good at a tiny tiny amount of access.

4:17Most people aren't that good and so instead they cap at 1 to 3 millionish. Sometimes they sell something that's super expensive because the space they're in. um they're selling something related to you know the real estate t tends to have higher things anything investment related tends to have higher um LTVs things like that um and then those people can can get to maybe 10 20ish um but then again it becomes difficult rorowaz continues to drop margins continue to compress as you try to go to colder and colder audiences and then you end up in one of these machines where you like I have to keep selling people in order to pay my bills and then all of a sudden you have a $20 million a year nonprofit and you hate your life

4:54>> so stick with services. So, >> it's it just depends on what you want. If you're like, I want to make a few million dollars a year, you absolutely like it's it is one of the fastest ways of making a few million. >> But if in contextualizing to myself, like I feel like I've kind of jumped a lot of that hurdle. Like if I'm already doing like this run, >> you're doing great, man. Yeah. Stick with what you're doing. I I'll I'll spell this out though. Like I want to be clear. I don't think there's a problem with it like at all. I'm just saying that it depends on what we're solving for. If you're like, I want to build a billion-dollar company, it's probably not going to be in information. It's probably not. Um, if you want to if you wanted to have and like you probably won't even have an exit because it's so it's so keyman driven, but some people don't want to like a friend of mine PC, he was at the launch. He he he I think it was 11 years or 12 years he lived on $70,000 a year for him and his wife and then he sold for $ 250 million.

5:47Some people don't want to live on 70,000 a year for all of their 20s and their 30s and then make 250s. Some people would prefer to make a few million dollars a year for their 20s and their 30s and not have the exit. I don't think there's anything wrong with that. It's just when people try to have both where it becomes a problem. And so people just unwilling to make trades and I just see that as just a human problem, not like a, you know, this versus that problem. Like I want everything. Okay, cool. So does everyone. But like it doesn't tend to work that way. I want to have a super profitable business that grows really fast and also has tons of enterprise value.

6:17>> Pick two.