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0:00Unternehmer/Gast Uh, I'm a dentist, so we have dental offices in four locations and we open the fifth one next month. >> Right. We're doing right now on 15 million. >> Amazing. And we would like to go when I went to pre-workshop, I thought I wrote 25, now I want to go 35 after the two days. >> I heard I'm so sorry. Say the >> pre-workshop I got up like something we had to fill in how much do you want to be at? >> Uh-huh. So, I wrote 25, but the last two days >> want to be at 50. >> Now, yes. Yes. >> Cool. Okay, you want to triple instead of double. All

0:27>> Yeah. So, uh what's stopping me is uh manpower because dental offices need doctors Yeah. who are trained and they have to work in the same culture and the way that we do it. Yeah. That takes time. Mhm. And second, if you go to like 50 locations to to reach that number, then we will also need more leads. Yeah. Well, let's solve the constraint we have right now, which is that you don't Right now, do you need more technicians or more leads now? Uh I think we'll go first for doctors and then the lead That is going parallel. It has to be together, yes.

0:58>> Well, you can't sell doctor time you don't have. So, yes. >> So, let's assume it's doctors for the sake of this. Um So, uh I'll give you a fun little framework that will apply to Who here's home services? Okay, this will apply to a bunch of you guys. Um so, basically a lot of home services are supply constrained. You can't find good technicians, can't find good HVAC, you know, techs, whatever. Uh it's actually the same thing despite it being a dentist. It's just specialized labor. Okay. So, what are you making gross profit per year on a dentist?

1:25Alex Gross profit per dentist? >> Per year, yeah. Per year on on the 15 million is it or per doctor? >> is each year? How much is each dentist creating gross profit per >> different because they are different specialties, so it's not just one doctor doing surgery more. >> do you need right now? Uh I would need orthodontists more. Okay. So, what is the gross profit per year of an orthodontist? Uh I would say 400,000. Gross profit. Okay. >> Yes.

1:53Okay. Um what are you paying right now to acquire an orthodontist? Uh we don't pay anything because it's generally recommendations from other doctors coming to come to us. >> Mhm. What would you be willing to pay to make 400,000 extra gross profit per year? Um 50k. Okay. So, an 8x, you're like eight to one. You're like if I if I'm investing in the S&P, you're like if I put this 80 grand or if I put this 50 grand in, if I don't get 400 grand this year

2:22>> I I can do 100k. >> then next year I'm also going to get 400 grand, too. Right? Right? >> So, let's do 200, yes. >> Okay. So, 100 100 is good. >> [laughter] >> Yes. So, you guys should hopefully be familiar with uh LTV to CAC ratios. For the love of God, if you were here and you don't know it yet, I'm going to I'll kill myself, so we won't, you know, and then the building will go down and they'll be upset and it'll be a whole thing. Anyways. So, hopefully everyone knows what the LTV to CAC is. Um a So, if a more advanced way of thinking about business that took me a while to like figure out and I kind of referenced it with the um Mosey six here, right? Is that in in one way or another, all businesses are demand constrained. Even your business. It's demand constrained on the talent side. Right.

3:06And so, in thinking about it like that, we have our LTV to CAC on our customer side, but there's an equivalent metric on the talent side, which is what is our lifetime gross profit per employee to our cost of acquiring talent. Now, I did lifetime, but it's really annual based on what you just said. If we did lifetime and the average stick of a dentist, let's say six years >> Six years. then we look at this and it would be 2.4 million. And then the numbers get even crazier, right? Would I be willing to break even on the best orthodontist of all time if I spent 400,000 dollars to get him? If I knew I was going to get six more years out of him? Probably. If I knew that.

3:37Now, you don't know that, so we have to factor in risk, right? And so if you're willing to pay 50,000 dollars for sure or 100, you can absolutely go to headhunters, agencies, you can go to forums for orthodontists, pay the person who owns the community, what would it take for me to make posts in here to go recruit orthodontists. There's a lot of ways to get them.

4:03Okay. It's just that everyone's like, "Well, I mean, it cost me nothing at this point." And I'm like, "Yeah, and that's why you are stuck." So, to give you guys an idea, um one of the portfolio companies we had an outsourced sales team cuz the the the the um company grew so fast. Um Like to put in context, we went from two million dollars a year to uh 10 million a month in like 18 months. So, like a lot. Very very fast. Um and we decided to take the outsourced sales team and bring it in house. It took us 90 days and we stood up a 50-person sales team.

4:35Um we hired 80, kept 50 to put in context. Um and in order to do that, like many of you guys are supply constrained in some way. Maybe it's you need more editors, maybe you need more sales people, maybe you need more whatevers, right? Or developers. Um we just look at this math and say what are we willing to pay and said that sales team, as soon as we plugged it in, added five million a month to the business.

5:00And so, we paid 10 different recruiting agencies to uh 10 10,000 a head per sales guy uh to bring those in. So, we paid 500 grand to bring to make five million a month after [snorts] the fact. Great trade. But a lot of people are like, "Well, I just don't have enough recruits." It's like, "Dude, like let's use like again, it's like that's the constraint. Let's bomb the hell out of it, right?" Shoot. So, my question [clears throat] would be because we're looking at multiple locations, so we need to find all these doctors at the same time.

5:31Yeah. And that means Do more. Spend more. Yeah, and and then that means we have to invest right now in the beginning a big number. Yeah. But the 400k will come later on. It's not going to come in the first month. >> Yeah. So, like we have to invest more. Actually, the CAC is very high compared to the LTV which will come a year later. Yeah. So, that's okay. Yeah. Okay. >> Well, I'll say it differently. You either pay in profit or in growth rate.

5:57Growth rate. So, if you want it to happen slower, pay less. Yes. We want to do it in two years, not in seven years. >> Okay. So, if you're Yeah, if that if that's worth it to you and then you think, "Well, I'd rather start making an extra you said let's say it's five five orthodontists that you want. I'd rather make an extra two million dollars." Well, that's not going to be net net. That Let's call it um let's say you run good margins on the whatever. Let's say you make 200,000 extra per, right? So, you're making an extra million in EBITDA per. Where this gets really sexy is that dentists probably trade if you have a group, probably trade at 10x somewhere in there. And so, like you making the 250,000 dollar investment of five times 50 to get those five orthos, you make 10 million on that enterprise value notwithstanding the cash. Yes.

6:43>> The cash is just gravy. Yeah, but that's come that comes in once we have the leads to give them the patients, also. So, they have to >> What's profit on 15 right now? 4.5. Okay. So, are you willing to make 4.25 to pull the future forward? Yes. Yes. Right? >> [laughter] >> Thank you. Yeah, you Thank you. 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 dollar 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 de-constrain the business and you're trying to scale, we'd love to help you out. On the thank you page, you can 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.