$25m CEO Coaches me on How to Grow our Business - Ravi Abuvala: Scaling with Systems
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All right, Ravi, welcome to the podcast. Thank you very much. Excited to be here. Yeah, this is so cool. So this is kind of random. So we're in Paris at the moment. And I discovered your YouTube channel about three weeks ago and binged the shit out of a lot of your videos. And then I commented on a bunch of them and felt like a bit of a groupie to be like, just like commenting on like, this is a really good video, really good video. And I was sending your videos across to various members of my team.

And then you DM to me on Instagram, but I didn't see it. But you DM Angus as well. And Angus was like, do you know this Ravi guy? And then you very kindly invited us to Paris to hang out at your mastermind. So thanks for having us. Thank you for having me on here. Yeah, it's pretty funny. I've been following your stuff for a while, like we were just talking about before here. And then you were feeling like a fangirl when you messaged me. But it's so funny when you messaged me.

My girlfriend and I were like fangirling, like, Ali, message us. We're like, oh, we're doing something right. And because I was coming here, it's just funny how the universe works. I was coming here a week later. I was even more of a fangirl at that point. And I was like, I emailed you. I Instagram messaged you. I was like, I want to meet up with you in person. And then you weren't answering. So then I was just like, you know.

I started my whole business doing cold outreach to total strangers. So I was like, all right, if you can't get the CEO, get the next person in line. So then I found Angus's Instagram and I liked like 10 of his photos. I sent him a message and I was like, Ali, Ali should know who I am. Just tell him it's Ravi and then here we are. So I'm so glad you messaged Angus because I'm actually in between assistants and we're doing an email, email handoff. And so it probably slipped through the cracks there. And obviously I never checked

you probably also get like hundreds of messages of people like oh ollie i want to hang out so i also i figured i could slip through the cracks so for people who might not be familiar with who you are can we get the quick kind of life story yeah what's the backstory i'll give you like a yeah super simple one um so was always going to be a lawyer that was like the plan similar to obviously with med school i come from an indian background so it was like either a doctor or lawyer or engineer and i chose law because i had watched every episode of law and order and suits and i thought that that was what

being a lawyer was about. And then come I graduate from college and just like the MCATs in law school, you have to take the LSAT. It's the number one determinant of where you go to law school. And that's the number one determinant of like how much money you make in your whole life.

So I decided to take a year off of college to study for the LSAT and then take the test and go to law school. But about five days after I graduated, my dad was diagnosed with stage four lung cancer. He's in remission now, so I'm super grateful. But I ended up having to stop what I was doing, moved in with him in Atlanta, and then spent the next year doing chemo and radiation while I studied for the LSATs. And it was kind of just during this whole experience I realized like –

Actually, up until that point, which I was 23 years old, I had never actually spoken to a lawyer about going to law school. Everybody that was telling me to go to law school were all my family members and none of them were lawyers. And of course, they just wanted the best thing for me. They wanted me to get a safe job. And so I ended up, as I was nearing the LSAT, I decided to talk to a few lawyers and all of them were like, do not be a lawyer. Every single one of them was like, absolutely not. It's like a different world now than it was back then.

And so I ended up taking the LSAT because I had pretty much practiced my whole life for it, scored in the top 13 percentile. So I did well, got in my dream schools, but ultimately came downstairs one day and told my dad I wasn't going to law school, which that kind of created a little bit of rift in our relationship, right? Because he felt like I was throwing my life away. Then I started working at an Italian restaurant. So I went from going to top 10 law school in the nation to literally working at this Italian restaurant down the street.

while I figured my stuff out. And then long story short, bought an online course. That's why I'm so, I'm a big fan of online courses. It was Tai Lopez's SMMA course, the original one. Yeah, so it was like, put the rest of my money on a credit card for that. You were one of those people. I was, yeah. You bought Tai Lopez's course on a credit card. Well, and it took me a while to do it because what I did is I would watch the webinar and then I would screenshot all the testimonials that he was showing in the webinar. And then I would individually message all those people on Instagram and Facebook. And I'd be like,

is this legit? Like, are you really making $10,000 a month? And they would all be like, yeah, yeah, I am. I get on calls with them.

And, you know, it's kind of like that thing where if you see somebody else doing it, it makes you believe that you can do it as well. Yeah. So I went all in, I bought it, uh, took me a year to get my first clients was my girlfriends at the time. Her dad was a plastic surgeon. Uh, and then once I got that first client, it was like, okay, I now know that this is possible and I can do this. And I just went all in. I scaled that, um, to multiple seven figures a year. We were serving real estate agents, but I kind of got a little bit turned off by the real estate, like advertising agency world. Um,

And then I started my company now, Scaling with Systems, which is where we essentially build marketing systems for other companies. And we've worked with over 2,000 businesses in the past three years.

And it's funny because I just, I was having this conversation last night, but even now we're launching our membership, like the community that we were talking about earlier. And that's like subscription revenue. And so I just feel like every single step of the way, I've just been upping my vehicle. I think that people work really hard in life, but I feel like a lot of people miss out on

finding the right vehicle in order to invest our time, energy, and effort into. So it was like, first it was going to be a lawyer and that was a decent vehicle. But then it was like, then it was starting an advertising agency. That was a better vehicle. Then it was starting scaling with systems and that's an even better vehicle. And now I see what's happening with subscription services, membership sites. And I think that's even a better vehicle after that. And my final end goal would be software after that. We're literally working on, are you familiar with Nathan Barry's blog post, The Ladders of Wealth?

Yeah, exactly. We're doing a video about it next week. I love it. And so I've been living and breathing the ladders and turning into a script and working with my team to be like, how do we describe exactly this point about you graduate to different vehicles? Yeah. And at each different stage, at each different ladder, there's a whole new set of skills. Okay, let's rewind. So you're 23. You've spoken to these lawyers. You decide that law school isn't for me. Most people listening to this

have can probably relate to that idea of like you know this is certainly my story where it's like you've got the option of doing like a very sensible thing like what was you what was your psychology that just let you think screw it i'm going to work in an italian restaurant yeah it's actually it's kind of funny because my entire identity up until that point was like i was going to be a lawyer so it wasn't an e i made it seem easy in that quick story but it really wasn't an easy process yeah because like i think human beings the

the number one thing we try to do is be aligned with who we think we are. Like, and so it's always difficult to break from that. And I had told everybody for the past 18 years that this is who I wanted to be. I wanted to be a lawyer. So it's like for me to break for that, it was kind of a big deal. But yeah,

I actually, I always tell people that I think the big breaking point for me was I read a book, The Subtle Art of Not Giving a Fuck by Mark Manson. And I just realized that like, if I did this, I was really doing it for other people. And I could actually end up resenting like, you know, my father or some of these people that were really wanting me to go to law school. Once again, not against them at all. But like, if I didn't know what the best thing was for me, how could somebody else know what the best thing was for me? And I just felt like, okay, I had no girlfriend. I had no...

like house payment. Uh, I had no, essentially the past year I became a ghost because all I did was chemo and radiation with my dad five days a week. And then any free time I had, I was either at the gym or I was, um, I was studying for law school. So, I mean, I didn't, I looked at my phone. I maybe sent 10 text messages that year to other people. I mean, it was like, I was out. So it was very, I realized that I probably would never be in this unique situation again, where the world had kind of forgotten about me somewhat. And like, I could kind of create whoever I wanted to at that point. And, uh,

I knew that law school was like $200,000 plus, at least the law school I was going to go to. So I just decided, you know what? I'm going to give this a go for 12 months. If I can't do it, I can always, especially because I already took the LSAT, I can always go back to law school. I can justify it was a gap year or something like that. And...

Like, I didn't quote-unquote burn the boats. I just was like, took a step in this other direction a little bit. And then when I got my first client, I just realized right then and there, it was like, my first client was $3,000 a month, and I had made $2,000 the previous month working for this restaurant. And it was just right then and there, I was like, all right, I can go all in on that. And that was like, I'm never going to go back to law school. Nice. So then, where did the idea to start a social media marketing agency come from? And so, okay, so my...

I don't know much about this space. Because when I was Googling how to make money online, this was when I was like 15. And it was like niche affiliate sites, and it was paid surveys. And that was about it. And then I learned to code and tried to build websites and stuff. But it seems like the next wave was Amazon FBA dropshipping, social media marketing agency. And now the next wave seems to be start a membership site on school. Yes. Or something to that effect. Yeah. So what was it that took you down the rabbit hole of

I'm going to start a social media marketing agency. I pretty much exactly what you had said. I was getting hit with ads of like, how do you make money online? And the really turning point for me of like me doing the social media marketing agency was I had seen all these ads. Like you said, it was like the thing that was happening at the time. And so you couldn't avoid it. If you were like between the ages of 18 and 28, you were getting hit by these people's ads. And so I was like, oh, maybe I should do it. I talked to all these people. And then one of my fraternity brothers who I went to college with,

I remember him and his dad posting all of these screenshots of all of these social media marketing clients they were getting. There was these trucking companies. And he's a super awesome guy. But did I think that he was the most talented person in the world? No, I didn't think so by any means. I mean, he was just like me. And so I remember that...

specifically, they had made this post. I was thinking about doing the social media marketing agency. I reached out to him and I kept on seeing his dad post about all this stuff. And I said, Hey man, I see your dad owns a social media marketing agency. I see that you work with him. Um, do you mind if I have a call with him so I can ask him some questions about, should I do it for myself, et cetera, et cetera. And he said, Oh no, no, no.

It's my social media marketing agency. My dad works for me. And it was like that hit me. I was just like, oh my God. I was like, if this guy can do it, there's absolutely no reason why I can't do it. And I was attached to no, I could have, I tried drop shipping. You know, I tried everything. I was attached to nothing. But the reason why, and it's actually where I always tell people to kind of start a little bit. Even I don't always recommend starting in like a coaching world as well because I like done for you services.

Because they have no capital to start. It only requires your time. And it's very easy to sell a done-for-you service versus something else, like maybe a coaching along those lines. So it was very easy for me to go to people and say, I'm going to pretty much become your slave. And like, I'll do it. I mean, I was like,

adjusting websites, writing email sequences, posting on their social media content, creating sales funnels, walking their dog, taking their kids to school. It was like anything that I could to get a client. And so I went down that rabbit hole and then I just kept getting positive feedback loops as I signed more and more clients. And I was like, all right, this is what I'm going to do for the next foreseeable future. That's interesting. Yeah, like...

And done-for-you services, like these days, whenever I interview entrepreneurs and ask the question of like, okay, if you had to make 100 grand a year, like, how would you do it? It's always service-based agency that serves other businesses. Which is just not how normal people think, unless you've been hit with all these ads and you've really drunk the Kool-Aid. Because...

I guess whenever I thought about making money, I always seemed to have to sell something to people that were like me. Yeah. Other kids and other consumers and other people in med school. And you can't really make a solid business trying to sell to students who don't have any money. Sure, they don't have any money. And switching from selling to consumers to selling to businesses, suddenly it's like, oh,

oh, okay, that makes a world of difference. And a lot of it is about who is the person you're selling to rather than anything else. Like if you're selling to someone who's a plastic surgeon and has a business and wants to make money, so much easier to charge almost anything for a service that can help them make more money. Yeah, it's definitely, I've always like, even scaling with systems, like I said, we predominantly help people build marketing systems. We'll help with operations and client success and all that stuff. But I'd say 90% of our clients have been in marketing. Yeah, I've always kind of felt in the realm of like, if you can help

other people make more money than you can make more money. And then of course, going back to vehicles, it's like, okay, if I help a med student, um, like for example, let's say I help a med student get into a better medical school. Like I have a client that does that. You can charge some money, uh, for that for sure. Because that med school probably determines where they're going to do residency, where they're, how much money they're going to make, et cetera, et cetera. But it's like, they're not going to really make money for years down the road. And even then they're like, you know, whatever, hundreds of thousands of dollars in debt that they're trying to pay off. They already don't have any money. So, um,

It's like, you know, there's a saying, you can do anything, but you can't do everything. And so I think that not enough people spend...

And this is, I obviously wasn't thinking about this when I did this, right? But now looking back, I think that not enough, people don't spend enough time strategizing. Everyone's like the tactician. I actually did a YouTube video on this, but everyone's more of a tactician than they are a strategist. So a tactician is like trying to win the battle and a strategist is trying to win the war. And so if you're like, okay, if I could do anything, should I serve this medical student that I could help? And my value to them is like, it could be the exact same amount of work, but it's maybe worth $100 or $500. Right?

Or should I help somebody else where if I help them, it's worth $10,000 or $50,000? And that's why even for Scanless Systems, primarily our clients are coaches, agencies, online service providers, influencers, content creators. Because for them, super high margins, usually typically high ticket. Their sales cycle is short. So I think people should spend a little bit more time around that. And then they'll be able to, once again, exact same amount of work, maybe even less work. And you can charge a little bit more for it.

It's interesting you say that. My view on this is that at the start, people spending too much time strategizing, because I know so many people and a lot of people in my audience have been dreaming of starting their own business for years and have done all the research, but have never actually tried to make the first sale or asked for that first dollar.

And I think the zero to one of just getting started, like the thing I tell people is like, just get started with anything. Walk the local dog. Like I couldn't care less. Sure, sell private tutoring to medical students. It's not the business you're going to stay in. Sure. But it's a great, very good business to start in because then you realize, okay, this is how you ask people for money. This is how you make a website.

And then at that point, a mistake I made, I think I was too action focused. And that really served me in the early days because everyone else like didn't even get started. But then I just kept on being too action focused and didn't have enough time or didn't create the time to zoom out and really think about like, what's the goal here? What's the strategy? How am I getting there?

And I mean, I know this in hindsight. So now I spend a lot of time like doing that because that's the thing that needle moves the needle for the business. Yeah, it's you actually made a really great point. I guess like I'm really talking to like the second stage Ravi of after I had started the business. I think if I had been like too much of a strategist in the very beginning, like, oh, am I going to do this business or this business? For me, it was like literally survival. I was like, I have to make money at this point. I can't keep on working at this Italian restaurant. So I think that's super valid. But just like you said, it's like,

You put it perfectly. I'm sure you have a broad swath of people that are in your audience, but it's like in the very beginning, you just do anything you can to make money. But then at some time, we've been rewarded up until that point by just taking immediate action, not thinking, imperfect implementation, and not taking a step back. And you had...

this is all in my YouTube video. I'd said the same thing. I said, actually in the past year, I'd say, or the two years, my biggest mistake is not taking a step back. And there's a famous quote. It's like, you're always building two businesses, the business you have right now and the business you have in the future. And I think that in the past two years, I've been so focused on the business that I had right now that I wasn't thinking about the business in the future. And that's when the landscape starts changing, competitors enter the landscape, et cetera, et cetera. So yeah, I think the order of operations would be like, whatever you need to do to get started. But then, and I'm sure people are like,

okay, how long until I start strategizing? And there's no right answer. But the answer is probably sooner than you think after you get started. Oh, mate, like the last two years of my life has also been move fast, break things like, okay, we've got the book coming out, working on the book. We've just released this YouTube course and now that's doing well. Oh shit, okay, cool. Well, let's start a high ticket thing because I'm gonna switch it to evergreen and let's sort of build the systems and we'll, shit, we've got 300 people in. So we're sort of building the systems while also selling the cruise ship. And it's like everyone, like customer success team is fighting fires all the time. And we're like,

Now, it's like, I was literally having this conversation with Angus like two days ago, because I hadn't seen your latest video. And I was saying to him, you know, he was like, everyone on the team is feeling overwhelmed. It feels like we're doing all these things all at the same time, because our goal is to go from 5 million to 10 million. And I was thinking...

I feel like we need to switch our operation from move fast and break things to go slow to go fast. And actually taking a period of maybe a few months to figure out our systems and our operations and get our client success people not fighting fires and being a bit more proactive. Getting our sales and marketing engine up and running. We're switching from ConvertKit to HubSpot to be able to track leads and stuff. We're doing that same switch right now. All of this shit is just taking time. And then we're like, should we pause sales calls? And it's like...

our sales are down because we haven't been taking sales calls because we've been revamping the offer and the back-end fulfillment and stuff and it's like it's actually okay to pause sales for a little bit yeah so that we can do this because we know we can always drive leads further down the line but let's like the the analogy is i find myself saying is that let's build the cruise ship before we try and sell tickets for the cruise yeah i suppose we can always build a wait list and stuff but like even then yeah yeah it's it's interesting because um

It's like, I think that that's probably, if I had to tell you the biggest difference I see between like a seven and an eight figure entrepreneur, it's probably their ability to prioritize. Like, and because I,

as you like start making more money and you start building a bigger audience, you just have so many opportunities that come at you. And it's just so easy for you to be like, let me do this, this thing over here. I'll make a little bit of money here. Let me do this thing over here. I'll make a little, but pretty soon you kind of have this Frankenstein situation going on. And then you're making a little bit of money in a lot of places versus a lot of money in maybe one or two places. And I also think like people mistake,

a value ladder. They think that they have a value ladder, but in reality, they just have like four different types of businesses. They may play and feed into each other. But in my opinion, a true value ladder is essentially the same thing, which is varying levels of support. That's like, to me, that's a real value ladder. They're like buying, it's the same access, the same stuff, but you're going to get one-on-one help. You're going to get coaching calls versus just like maybe the course itself. And that makes things so much easier when you are

trying to scale and you're dealing with client success and fulfillment because all the things that you're talking about we've gone through or are going through in our end and I think another mistake that people make is when you go back it's kind of going back to prioritization if you're always so focused on like I need to make more cash this month than I did last month which is really what everybody wants to do all the time obviously which is great but at the same time it kind of

sometimes to play these longer term games, like if you want to be here in a year, two years, three years, you kind of do have to like pull up on the reins and maybe fix some of the stuff going on. And it's, it's really difficult in our world, I think to do that. And I think there's things that you can do to like mitigate it a little bit as well. But yeah, like first we talked about it when we first came here, but like now,

I won't start something unless I think it's like a level 10 opportunity. I mean, I have to be able to make at least $10 million a year from it. If I'm going to start a new product, like easily, because I know that I can make $10 million a year, right? I've already done it. So the question is like, okay, if I'm going to start this thing over here, if it's not going to at least maybe $10 million a year, why not just keep on doing the thing that is making me 10 million and then make, you know, 20, 30, $40 million a year as well. And, um,

And I think that once you kind of, it's almost like raising your standards. Once you decide this is, I'm only going to go after level 10 opportunities, then it becomes super hard because you have to say no to maybe like a $2 million a year product or a $3 million a year product. But, and then I'm sure at some point I'm going to have to say no to the $10 million a year to go to like the $100 million a year or the $200 million a year. So yeah, it never gets easier for sure. But I think that prioritization of being like, okay, this is what we should focus on.

at the sacrifice of all these other things over here, all these other ads and opportunities I'm getting hit with. I think that helps propel the business forward to the next level. - Sick. Can you remember what was, how did your revenue trajectory happen like from age 23 to I guess now? - Yeah, I'll roughly give it. So it's like, you know, age 23, I probably took home, I don't know, W-2 income working as a waiter, maybe 20 grand a year. Yeah, something along those.

Then I started the social media marketing agency. The first nine months, we did $3,000 in total sales. So not great at all. So I don't even know. But then after that, within 90 days, we hit our first $100,000 a month because I implemented a few things. So I probably took home, I don't know, let's say somewhere between $50,000 and $100,000. The next year after that was my first $2 million take-home year. Then my first $4 million profit.

Profit. Yeah. Yeah. The directory, then it was 4 million. And so the directory has kind of been up into the right a little bit. Ironically enough, this year, going back to like the long-term vision. So in the SaaS world, they call it swallowing the fish, but it's like, you know, we've been charging upfront 15K, 50K for people to work with us. And we've been doing that for the past three, four years. And it's been very profitable. And every year has been growth since the last. But now what's happening is actually last month was one

one of the lowest months I've had in the last 12 months. And that was because we're migrating a lot of our business to the subscription revenue through the membership site. So like, kind of like you had said, we're taking less sales calls. My sales team's freaking out right now, right? Like everyone's like, we're focusing our audience towards scaling school, which is our membership site as well. So instead of seeing all these like 15K and 50K wires every single day, I'm seeing these like $97 payments come in, right? Yeah.

And it's funny. I did a webinar yesterday and I said, I'm actually more excited about these $97 payments than I have been about the 50K payments because the $97 payments require almost no... You have a course, right? I've never really sold anything that wasn't intense, one-on-one, custom work, a lot of done-for-you services. And so we're swallowing the fish right now. So this year, we might do the same numbers that we did last year, but I'm actually okay with it because...

I have this strong belief that like going back to opportunities that like you should make as much money as you can doing whatever you need to do that makes you a lot of money take home but then once you get enough money I think you can kind of step back and you can kind of look and find an opportunity in front of you right so like I just knew that what I was doing up until this point I loved but I didn't know if it was gonna be the thing that had taken me to what I want to do which is 100 million net worth and eventually a billion dollar net worth and so I was

I was like, okay, instead of like continuously spending 12, 14 hour days trying to keep on growing and forcing this thing here, maybe let me just do four hours a day. And then let me spend the rest of the time trying to identify what's the next opportunity in front of me that can let me jump to the next level. So like, yeah, that, that'll be what we do this year. But, um,

It's a little bit hard as well, because you're just trying to beat last year's numbers. Going back to the opportunity thing we talked a little bit earlier, but I just now I have enough money that all of my personal expenses are taken care of, like my team's taken care of. And so now I can start being like, okay, I can lose money next month or the month after that. I'd be totally okay with it if it was leading to a larger leapfrog down the road. Yeah, that's literally exactly what my thought process is right now. So what was your revenue and profit last year?

Revenue, we did right around $11 million. And profit, we did right around $4.5 million. Nice. Solid. Yeah, we did about $6 million revenue and a profit about $3.5 million. Yeah, last year, the profit was lower. So the year before that, we did...

I think 6 million and profit was three. So we had a lot more revenue last year than we did profit. But man, I learned a lot last year. There was a lot of things that we did. Like I had to shut down my sales and marketing for two months because we couldn't fulfill on the client success side. I also started my first...

few portfolio companies last year. So I took on a few additional companies and that helped increase some of the overall revenue, but I don't get paid out in those profit margins until like probably this year as well. And I also learned a lot more. Once again, it's like I took on a few of these portfolio companies, which added a few million dollars a year to my bank account. But at the same time, it was like,

Like, I'm doing okay, a few million additional dollars isn't going to change my life one iota $30 million, $50 million, that would like actually changed my life. So it goes right back again, like I'm winding down some of the portfolio companies this year, because it's like, okay, sure, I could continue to make this cash play a few million dollars. But what I'm really looking for is like the 100 million to $300 million exit in the next three to five years, and it's not going to be through one of those companies. Nice.

Yeah, I was having a similar conversation with another friend last week. So we're trying to do some software plays where we've got this app called VoicePal, which is like AI voice overcoming writer's block. We're building another one around goal setting and things. I was speaking to this friend of mine being like, yeah, the plan is to have a portfolio of these sort of small micro SaaS apps that could maybe do, I don't know, a few hundred to a couple of million a year. And this friend was like, why are you trying to go for like 10 tiny apps? Why not just make the productivity app to rule them all?

and just focus on that one. And I was like, oh shit. Because in my mind, it's really hard to make the ultimate productivity app. And it's easier to make 10 smaller ones. But is it though? Exactly, but is it? I just never really questioned that. And so journaling on the Eurostar on the way here, I was like, what would the ultimate productivity app, if there was just one app that we were working on, that we could grow to tens of millions or even hundreds in valuation,

that's actually probably more doable than trying to do 10 small ones that are sort of cash flowing each year. Yeah, and I actually very much predict, so...

You know, I would say Sam Ovens came into like the online coaching consulting worlds like seven years ago and came out with Consulting Accelerator. I think that had his peak year. He was doing like 30 million, 35 million a year. And like, I think that we're on the other end of like the high ticket space where if that's your main business high ticket, like I think that you're you're you need to be looking to the future towards the other opportunities. And I personally predict that in the next three to five to seven years, creators are

are going to be much more involved with membership sites, recurring revenue, and SaaS place. Like when I look at SaaS, you know, a membership site is in some way similar to SaaS, right? It's very similar. The product is essentially the course material, whatever else it is. And like when I look at it and when I look at the numbers that we're doing, you know, so we launched our membership site. We did 30K MRR the first 30 days. Oh, wow.

We're going to do 60K. We're on track to do 60K our second 30 days. So it's growing. And we figured out ads and we figured out how to do all that. So it's working well. And it's super interesting because I'm like, okay, in SaaS or a membership site, it's like for every dollar you make,

if you were to exit, it could be $10, right? So if I make a million dollars in monthly recurring revenue, it's really $10 million in evaluation. So going back to the opportunity and the vehicles that we were talking about earlier, I think that like the idea of building the ultimate productivity app is amazing. And you have something that a lot of these huge other productivity companies don't have, which you have this

built-in audience that already knows, likes, and trusts you. And like their biggest problem is typically acquisition. So if you can't, and then for example, let's say people sign up to your YouTube course as well. Like I call it indirect promotion for either your membership site or your software. It's like now you have all the,

these high ticket products or one, two, three, four, $5,000 products over here. And then you have this super low ticket, let's say somewhere between 17 or $97 a month for the Brock TV app over here. You keep on selling all your high ticket stuff, but included in the high ticket is three months, six months, nine months of your SaaS or membership site. Because the biggest problem with SaaS companies when it comes to growth is cost per acquisition. So we have SaaS company clients and

They're okay spending $400 to acquire a $97 a month person because they have venture-backed funds and they're going to liquidate in a few months. But one of the things that we're doing and a company like ClickFunnels has done is you charge this 95% profit margin, $1,000, $2,000, $3,000, $4,000, $5,000 course up front, and then you get people on that subscription service on the back end and

And I think that that's gonna be the future of, I have a few friends that did it. Sam Ovens did it with school. Alex Becker did it with Hyros. I have another friend, he'll probably do 36 million this year. He's doing it with a software as well, high ticket upfront with it. So I just feel like that's gonna be the trend of the future is combining both of those things together.

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So let me treat this as a bit of a coaching session for me. Our plan is, so we're launching something called Productivity Lab next month, which is going to be a

$97 membership. Nice. Membership side? Membership with like daily Zoom co-working and weekly reviews and like goal setting workshops. It's basically helping creators, entrepreneurs and professionals double their productivity by doing a bunch of things which it's attached to a course. So when we launch it, I'm going to do the course as a live cohort for the first four weeks and then we'll record everything, turn it evergreen, etc.,

And we're thinking of doing this as sort of 997 for the year, which works out to $19 a week. So we're thinking $19 a week to double your productivity. If that's worth it to you, then come join Productivity Lab. Okay. And so this is the first proper product that we'll have in the productivity value ladder, because at the moment our only other product is the YouTube value ladder. So we have our YouTuber Academy, which is a $1,000 course. We have YouTube Foundations, which is a $1 course that upsells people to the $1,000, which we might scrap and just put on YouTube for free potentially.

And then we have a $5,000 higher ticket YouTube accelerator, which is basically the same stuff, but with more support. And then we're thinking maybe we'll do a YouTube for businesses, which is like maybe a one-on-one consulting thing for businesses that want to scale their own YouTube media in-house empire. So that's a sort of YouTube value ladder. And I guess we're sort of building a productivity value ladder. One of my... So A, I'd love to get your general thoughts on that philosophy. But B, one of my general questions is that I know a bunch of people who have dabbled with this... Well, who have not dabbled, but who've done...

low-ticket membership sites, $29 to $97 a month-ish. And of the five people that I know, basically all of them have said that three and a bit months is their average churn. And so really what they get is their average, like their LTV is about $300. And so given, if an LTV is $300, you might as well just sell a $300 course. Or like for our productivity lab, we're thinking, do we just sell annual memberships? Because we don't want to deal with monthly churn. But the monthly churn is good because it forces you to improve the product.

Then we're thinking billing quarterly, like smart passive income do, and have quarterly and annual. How do you think about the duration of membership sites as it relates to churn and LTV? Yeah, I guess my quick follow-up question is that the productivity thing, $1,000 for 12 months, are they paying up front for it? Yeah. Okay. And then is it renewing after that at another $1,000 for another 12 months? Yeah. Okay. Okay.

Yeah. So obviously you guys are doing well. You know, my only concern is like you do have this, you essentially are going to build two businesses, right? Like they can feed each other, but the YouTube thing and the productivity thing are not essentially the same thing, right? So that's a little bit of an issue. I like the productivity thing because the market's just so much larger. Like if you built a software for productivity, it could be a billion dollar company, right? If you built one for YouTube, I don't know, right? And so I, going back to opportunity vehicles, like that would probably be where I had to spend my energy on, but you don't want to

kill the golden goose that's making you the money right now. I suspect we'll probably wind down YouTube over time as productivity ramps up. But you can still feed into it, right? So it's like in your YouTube stuff, I would be saying, people ask, how am I able to shoot this many videos every single week? It's because of this productivity thing over here. So I would definitely feed into it, but there is an opportunity cost by doing both.

The membership site people, you know, I can't speak because I don't know who those people are. I personally, so I used to have the chief, I don't know if you know what Mindvalley is, but so I used to have their chief marketing officer was my chief marketing officer for two years. And then I also spoke with a few people on the marketing team of masterclass.com. So like I went straight to a hundred million dollar a year membership site companies, like just to figure out like, okay, they're doing it. What do I need to do? That's different. And I won't,

I'll be respectful for their numbers, but it's definitely longer than three months. They're an average member inside of there. I think that a lot of people do membership sites incorrectly. I think that they throw all the content out there thinking that it'll be providing value, but then people feel overwhelmed and they're not taking advantage of it, so then they hop off. There's a few different things on top of it I won't get into unless you want me to, but in my eyes...

I would personally rather do some kind of membership site. I would make the entry point something like whatever, $35 to $49 a month for this productivity baseline package, right? You can put that as the first link inside of YouTube and then everybody joins that and that's just building solid MRR that you're getting from inside of there. Then you can sell this productivity course for $1,000. I would really stress you to do $2,000 for six months. It includes...

six months of the $49 a month thing. And then after that, it will automatically start renewing them at the $49 a month. So you can get the upfront cash infusion and you can send that. But also for productivity, maybe a lot of people can't afford the $1,000 or $2,000 thing as well. And so they can come in on the $49 base package on top of that. And now...

You have two super solid revenue streams coming in. You have this baseline. And let's say people churn, right? That's the other thing. The course, there's so many more elements of a course that you'd have to give for $1,000. But let's say people join and churn in three months. You can work on that. But what is the cost to you if they churn? There's no work involved in you pretty much at all. So it's like you keep that in, you work on the churn, and then you're

You have this other package here, which is, I would really stress, $2,000 for six months. We just did this. We just launched a webinar yesterday, $2,000 for six months. It includes six months of scaling school. And then after that, it starts renewing in addition to that. And then when you launch the SaaS product, which is what we're planning on doing as well, you can do the exact same thing. And you can say, hey, if you get the SaaS product, it includes six months of scaling.

my membership site community on top of that. And the SaaS product is going to be high-ish ticket? Yeah, it'll probably be like somewhere between $297 and $497 a month. Okay, so like ClickFunnels-y type pricing. Exactly. Somewhere like, I think more like high-ros, B2B. Yeah, it'll be something along those lines.

Interesting. You mentioned there were a few other things that you've seen from membership sites that are doing 100 million plus. So one, they have longer LTVs than just three or longer churn rates. Here's a few things. So first of all is they don't overwhelm their members when they come in. So another huge company that people at membership sites don't really realize is Audible.

So what does Audible do if you buy a membership? They give you credits every single month. And so we are the only platform I know that's on school right now that does a credit system. So when people come in, they get 10 classes included, but then we have 46 classes inside of there and they get one credit every month they renew. If they ever left, they would lose all the credits and all the classes that they have so far. So it leads to people wanting to stay long.

The other thing that I learned from Masterclass, there was someone on their marketing team there, he said, your greatest retention weapon is coming soon. So he says that people will always pay for what they are anticipating is going to happen in the future. So he said, obviously, when people are paying money, if they feel like...

like they've gotten all the value that's going to get out of it, then they're going to cancel it. But for example, there was a, I forgot there was a movie that was coming out recently on Netflix that my girlfriend and I wanted to see. And I really don't like Netflix that much. So I want to cancel it. But I was like, well, let's just wait until this movie comes out. Right. And then, and then I'll cancel the memberships.

So they, I literally was churning and they convinced me to stay because they were coming. So then if you're able to, once a month, we do something we call the scaling scoop. And I just did the March edition of it. And I'm saying like, okay, here's all the things that we have coming up this month. We're doing a short form. I'm having a short form agency come in here and teach a course. We're releasing our diamond level package. We're doing blah, blah, blah. And so all these coming soon things get people excited for what's coming up like in the future. And so they don't want to cancel their membership. The other thing that they said is,

almost the reverse of that, if you can constantly be sharing wins in like an email blast to people, because people won't always log into the community, but they will read their email. So if people feel like, it's almost like people, Planet Fitness, their gym membership,

I think the numbers is like 90% of Planet Fitness members don't actually ever go to the gym, right? But somehow by being a part of a gym membership, you're getting a little bit of the feeling that you're being productive and you're, oh, I have a gym membership. And then by sharing other people's wins and sharing updates to this email list on a constant basis, people feel like they are getting the wins themselves, even though they aren't actually getting the wins themselves. Right.

And then there's other things like the really obvious things like asking people what they want, then putting that in the coming soon in the future thing. And you being engaged in it as well. And yeah, I would say those are like the real major ones in radical transparency. We haven't had ours long enough to know what our turn is going to be. But I have learned from these other companies that have done it like long enough. And

Once again, even if my churn was atrocious, let's say three months, four months, something like that, I will tell you that I'm in the high-ticket space. We serve 2,000 clients. And for us, it's like 70% of our clients aren't renewing for another six months or 12 months on top of that. And we're putting an incredible amount of work in there. If I can...

essentially charge almost nothing and not have to do any real like physical one-on-one work with these people then their bill like their churning isn't going to hurt me too much especially if i'm also selling the one thousand two thousand dollar course so why not then just sell a three hundred dollar course

It's all self-paced. Yeah, so it also depends on what your future, what you want to do with your company. My plan is also to exit the company in the future as well. Ah, fine. So if you have a recurring revenue, and I think everybody should plan on that as well. So if you could make the exact same amount of money from a $300 course as you could for a $97 thing,

conventional wisdom for the high ticket coaching influencer space would be like, get the $300 upfront. But once you start thinking of the longer term, exactly, you're thinking how can I do that? And then of course, the other thing is that if somebody's paying you, so Google came out with a study, it's called the 7-11-4 rule. On average, it takes someone seven hours of content across 11 touch points in four different locations.

to return from a stranger to a buyer. That's why you obviously do well is because you have all this exposure on YouTube, right? The nice thing about a membership site is that they're continuously getting, they're paying, so they're more likely to pay attention. And then you can have additional packages, tiers, high ticket on the back end of your membership site. And you're going to have much more likely active people ascend there than if they just spent the money one time, they don't go through it and they feel like they're not getting value out of it. Nice. How do you think about the investment of your personal time

into all of this stuff. This is something I'm struggling with. Like, how should I be spending my time? I mean, I can always make more YouTube videos and that's the thing that I love and that's fun. I also like the zero to one stage of making products, but I'm not particularly enthused by the maintenance of products. But I also like doing like live webinars and stuff because there's something exciting about live and I love doing in-person events and things like that. And so I'm trying to figure out for me, how can I do productivity stuff and the YouTubing stuff

in a way where the only things I have to do are the things that I just really love doing. How do you think about that? Yeah, I actually think about that a lot, right? I'm like at the point in my life now, like I said before, where, you know, I don't have to work if I didn't want to. So I just want to do the things that give me energy every day. And ironically, those are the things that usually make you a lot of money as well, right? So that's the other reason I kind of like the membership site thing a little bit, because like, instead of building this one static course that you like build, and then you just give away and like,

that's it. The thing I like about the membership sites, I'm exactly like you. I like the creative zero to one product led growth area of like a business. And so with the membership site, I'm coming up with new classes every single month and I can create those new classes, the buzz around the new classes that I can make. Usually what I'll do is

I'll make a YouTube video. That YouTube video will perform well. So I'll make a class to go around that YouTube video. Or I'll make a class. That class goes well. And then I'll pull a video from the class and put it as a YouTube video. So I'm really leveraging up my time a lot when it comes with it. And then I have a full client success team. And I pretty much tell them, once there are members inside of there, all I'm going to be doing is I just want to be posting value,

creating classes and getting new members inside of there. Everything else, answering questions, doing the coaching calls, support, billing, that's delegated to somebody else. But my zone of genius is going to be creating content, creating products, and creating hype and culture around it. And so that's my full-time job. And I would say that was even the case when I had the high-ticket program as well. I wasn't doing any of the coaching calls. I wasn't doing the Slack messages.

I was mainly just improving the product and doing you and I honestly think like for you that's your absolute zone of genius and there's not one thing that you could do else inside that company that would be worth more than improving, creating new products or doing YouTube videos.

Nice. I completely agree. The one thing I sometimes add to that list is being the sort of business coach for the team, having that zoomed out perspective, because the team, as amazing as they are, are so in the weeds with their own thing that they don't have that bird's eye view. And often I'll just be asking a few casual questions, looking at our scorecard, asking a few casual questions about the customer success department to realize, oh, there's this whole thing that we just, it was a bit of a blind spot because everyone's sort of missed the forest from the trees.

And I was saying this to my CEO coach that like, I feel like I should be spending some of my time doing like essentially business coaching the business in inverted commas. And he was like,

I mean, it's probably not your zone of genius, but it feels like no one else in the team is doing that. So how would, yeah, how do you think about that? That's when the first time I hired a director of operations, that's when I realized that's really what the director of operations is for, right? A COO, a general manager, whatever else, they should be spending more of their time on that. And even me, like we were talking about this a little bit earlier, but it's like, you know, you feel like you could maybe even do the job better or you could do it in half the time where you're like,

why aren't you guys doing this already? Like we should already be doing this. Like, and I will say myself, sometimes I just have zero ability to understand other people's capacity. I'm just like, everybody works like me, right? And everybody cares so much. And so I'm also under, like, I also accept the fact that stuff is likely going to be breaking and it's likely still going to be, let's say if I'm not involved in any of this other stuff, like coaching the business or whatever else it is, let's say it's operating 20% less than it could if I was doing it 30% less, right?

I have a strong belief that if I instead just double down on the stuff that I'm incredibly great at, that I could make it a higher increase of output than whatever the loss was over here. And then let's say that you were able to get someone, operations general manager or something like that, over...

to make that 30% gap 15%. So they cover by 50%. And then anytime I'm like, okay, I still need to have my input in here. I just figure out what's the most leveraged way to do this. So an example would be like, okay, once a quarter, you guys decide, okay, Ali, we have this, um, you know, rock or goal that let's say customer success. There's this big thing that's not working over here. So then like the general manager would say, okay, here's what the KPIs are. Here's what the problem is. And then maybe one day out of the quarter, you're

coming up, you're sitting down in a room and it's almost like the creativity of you and the product person of you, you're going to create the solution for it. But the way I like to say it is you have no homework. So it's like people come to you, they present the problem to you, and then literally you say, here's the solution. And then they go out and take care of it and you're not involved in the process anymore. So that would be like the most leveraged way to do that versus like

You doing all the research, you asking people a bunch of questions and getting on conversations, you sing all the way through. It's just like a much more condensed version of your time. And you would, if you did one thing every quarter, four quarters a year, I know it doesn't sound like a lot, but it could be massive for the growth of the business. And once again, you'd be spending the majority of your time on the stuff that has the higher output. Yeah, because if I were to only spend my time just making more YouTube videos and make

making and improving a product. That's like really the thing. You have to like get okay with just like stuff not being as good as it could be. And I'm a little bit, I don't like to say it too much because I don't like speaking the universe, but I am a little OCD. And so like when things aren't perfect, like you should see me trying to build a sales funnel. It like has to like

Like my team gets annoyed. I'm like, no, no, no. You see this image is like an inch below this image. Like I need this to be fixed inside of here. And, uh, and I've just like in the past year, I've been like, okay, to get to the numbers that I want to get to, like, you know, I gotta be okay with some of this stuff not being absolutely a hundred percent perfect. And I think the same thing goes for your team as well. You have to be okay with that not being the case. But I think leadership for the teams is just as important as any work that you'd be doing with them. And, um,

And, you know, a great example is Rob Dierdrick. He has a podcast where he talks about it as well. But like he just spends all of his time coaching his chief of staff. And then his chief of staff goes and talks to the rest of his like department heads and those department heads go down and talk to them. So instead of you dealing with entire departments or huge problems, you're dealing with like one person you're meeting with three times a week. And then they deal with all the other problems. Nice.

Okay, yeah. So Angus is my general manager in that sense. And so Angus and I meet once a week. And like, in fairness, when I notice things, I have gotten much more disciplined at directing them through Angus rather than being like, message someone on the team and be like, hey, why is it that we're getting 300 emails in a help scout each week? Like, that's a bit bizarre. It's like, I'll say to Angus, Angus, why are we getting 300 emails in a help scout? Angus will be like,

I'll figure it out. And then things happen. Yeah, it's also good. Like, I think an even better situation would be, obviously, like you guys are learning and adapting would be like, Angus comes to you and says, Hey, there's we're getting 300 emails a week. This is the reason why we're getting 300 emails a week. This is the solution that we've already implemented. Do you have any feedback you'd like to give to it? Right? That would be the dream world is that you're really just being told of what's going on. And what my conversations with like really high level CEOs were

once again, they're not really leaving with homework and they're not really identifying any of the problems. They're typically solving them. So like we have meetings every Friday, team leader meetings, and I don't run those meetings. I'm just like, I sit there, I'm quiet, and I just like let my department heads talk or whatever. And then if somebody asks me for my feedback and I'll give it, or if I feel like it's valuable, I'll give it. But the more I take over, the more I identify problems and the more I solve problems, ironically enough, the more I'm limiting and handicapping the rest of my team. So even if I feel like they're like,

so many times I'm sitting here quietly and I feel like their solution is the wrong solution. I like obviously know that in my head and I will at this point, I'll let them execute the solution. Like I will let them go through and see so that they can learn from their mistakes. And I know, but...

In full transparency, it's this thing I struggle with the most. And on our annual meeting this year, each of the team leaders gives another team leader critical feedback for them to work on the next year. My number one thing this year is to just speak less on meetings. So like, I'm not perfect at this. I'm still working on myself. But it's just so easy. Like, if I want to solve all these problems, when someone says the problem, and obviously, I'm a business coach as well. So I'm just like, here's the solution. Next question. You know what I mean? And instead, I just want to let them solve it on their own. And if they ask for my input, I give it to them. Nice.

Have you come across a book called Multipliers? I have, yeah. It's exactly what it is. That's literally exactly... Yeah. I actually didn't even think of it in that context. I read it a few years ago, but that's exactly what it is. Yeah, this is something Angus says to me because there's an analogy that the author uses in that book, which is that think of yourself as a poker player. You have a finite number of chips. And every time you speak, you're using some of your chips. Wow. So like hold your chips back. So Angus will say to me, he said to me last week, Ali, I think you played too many chips in that meeting. And I'm like, yeah, but people ask me questions, content, and it's like...

the content's under my name, that was a content meeting, so like, surely I should be involved in a content meeting. I'm actually not sure what the... I think the thing that my director of operations, my ex-director of operations is not with us anymore, but one thing he told me

was the term thought leader and you would use it a moment ago when we talked about the book etc etc and i had never really thought of it inside of a company as well and so um i the first meeting i ever had him come on i hired him and he used to work at crossfit and nike he ran 300 plus person teams and uh the first meeting he came on was a day after he got on boarded and that was our marketing meeting and like i consider myself pretty good at marketing that's like what i've done i've helped thousands of businesses build marketing systems so it was like

after we got done with the meeting, it was just a regular meeting. And so it was just him and I after the meeting was done. And I was like, so give me some critical feedback and honest feedback. How do you think the meeting went? He was like, honestly, I was shocked at how much you were talking during the meeting. And like that,

Kind of hit me with like, yeah, I was just like, well, of course I should be talking. I'm the face of the brand. I'm the marketer. Like I know all this stuff. And it was like from that moment that I realized, oh wait, like I, it goes, if we're to tie this full circle, it goes exactly what we talked about in the beginning, which is you and I are so used to how we got today was doing exactly all the things that we're trying not to do right now.

and our identity is around all this stuff that we talked about right now. So it's like you have to separate that and be willing to let other people fail and be willing to have it not be the right answer and figure it out on their own. And it's like one of the most difficult things to do. But I think the biggest thing that will help you is if you have thought leaders. So like instead of

hiring like just whatever a person that can literally just physically get the job done. If you spend a little bit more money and find somebody who's truly a thought leader, meaning that they bring their own ideas to the table, they're not just like sitting there waiting for you to give an answer to something, then it makes your life a million times easier, I would say.

What's your thought? What's your take on this question of like, at the moment, basically everyone on our team is quite junior and quite young. And they've sort of been with me for the last two plus two to four years and have ascended the ranks as it were and have gotten a lot better. And business coaches have always sort of said to me, you should really consider hiring a seasoned pro for stuff.

And I've always been like, oh, but I believe in growth mindset. And it's like nice to have a young team of people who are sort of my age and a bit younger and sort of growing together. And yeah, how do you think about it? It's a really good point. I'm the exact same way because like you want to reward these people that have gone with you. But it goes right back to what we're saying. It's like what got you to where you are right now is very likely not going to be that gets you to the next level. And yeah.

I've started making hires like the CMO of Mindvalley, right? And these salaries are not cheap, right? So it's like, I'm used to paying like, let's just say X amount of dollars and I'm paying like this amount of money for this. And like every day I'm like doing the math. I'm like, okay, this is like, you know, this many hundreds of dollars a day. Like, you know, I'm just like...

This is freaking me out a little bit, right? But I will say that we've had almost a full turnover in our leadership team in the past 12 months, almost 100% turnover, only because either I let them go or...

the position has changed so much and there was a lot of friction that was happening because I now knew what I was requiring. Like, let's say that you're running the marketing team meeting and in my example, and I'm talking the entire time. And then finally I stopped talking. And then all of a sudden for like four weeks, nobody's saying anything like the head of marketing, whatever, nobody's talking because they've been so reliant on you. And now that you're

not talking, nobody knows what to do at that point. Right. And so that's when it becomes apparent to me like, oh, wow, maybe this is not the right person for this position. But I definitely will say, you know, you have a business coach. You said you're the CEO coach. The way that I kind of justified it in my mind was like, okay, if I pay this person this salary and they have worked in this specific

specific position, Neil Patel says, you should get somebody who's done it three times. Like one time was luck two times. Cause they kind of know what they're doing three times. It's like, there's no doubt that they absolutely can do what you want them to do. And so it's like, when you hire this person that's done it three times, they have years of experience. The way that I look at it is I'm just hiring another coach for that position. So when I hired director operations, I told him, I was like, you know, if this doesn't work in 90 days, I'm just going to justify this as literally me hiring a business coach. Like that's what you're going to be to me.

And I learned more about operations in the last, like in those 90, first 90 days of working with him than I had in the past three years running an eight figure company because like he worked at multiple nine figure, a billion dollar companies, right? And so I think that a business's growth is always limited by the sum of the knowledge of the people that are in the company or running the company. And so if you can take somebody who's already has, let's say five more years of specialized knowledge in this thing and you bring them inside of the company, the jump of the

overall intelligence goes up by obviously multiples. It's tough, you know, and it's tough as well. It's tough as well because these people that I'm like letting go or firing, like,

they're my friends. You know what I mean? Like they're, I'm super close with them. Like the most recent one that I did, it was the probably the most difficult fire I've ever had to do. And like, you know, it got a little emotional on the call and he's like, I kind of feel blindsided. And I just like, as a human being, it just like literally breaks your heart. You know what I mean? To hear something like that. And you also know that they've just committed two years of their life, three years of your life. But once again, maybe it's just me rationalizing, but I just know, I tell them, I'm like, look, I just know that, um, I

I can't, I can't promote you anymore. I can't give you any more money because like, I don't think that you're doing the job the way it needs to get done. So I'm not doing you any favors by keeping you around. You know what I mean? Like you, I'm actually doing you a favor by letting you go so that you can go out there and be, cause maybe they're limiting their own growth because they're just want to work with you and it's safe, blah, blah, blah. And so like, it's, it's super difficult to do because every single time you start a startup, the first people you hire are friends, family, people, you know, like, and then when you go to the next level,

And a great example of that is Leila Hermosi. So she came to my house with Alex a few years ago and I was blown away. This was before they became like who they are today. And they were telling me that like, she was saying that like she realized that

she had to pretty much fire like almost the entire company. I'm paraphrasing. I don't remember the entire thing, but it was like they almost had to fire the entire company. They left all these bad reviews on Glassdoor. Like they like those, oh, these people don't know they're these young entrepreneurs, blah, blah, blah. And then obviously they just exploded after that and they grew as well. So that also like that's a little bit of justification also in my mind to be like, okay, it's very rare that the person that you hired in the very beginning is going to be the person that takes you to whatever the multiple eight or nine figure level. Yeah.

It can be. It definitely can be. It can be, yeah. It's just rare. What about the strategy? This is just me just trying to rationalize this. But what about the strategy of, let's say you've got someone who's in that role and that person just has a good coach.

So that's a great question. The answer to that question is that there's, so I live my life by 43 principles. I got it from the book Ray Dalio's Principles, so I created my own. And one of the principles that he talks about inside of there is essentially you need to make the calculation in your head of, specifically he's talking about team members.

of waiting for them to get it right versus just hiring somebody who already knows how to get it done. So whatever the opportunity costs, let's say you have this person right now, they're performing at 80%, you want to get them to 90%. First of all, what's the cost of this coach that's going to help them? Second of all, what's the time and cost of you trying to find this person? Third of all, what is the lowered output that they're doing while they're changing the way that they're doing their behavior until they migrate over to this new way of living or new way of doing their job? Um,

And then you're paying them the salary that entire time. So what does that cost versus going out and just finding somebody that already has it? And then the next question is like, is this person going to continuously need coaching? Or is it going to be like, they just need this one thing and that problem is solved. So there's no right and wrong answer there. The way that I just look at it is like, okay, what is the opportunity cost of keeping this person and training them up versus simply just finding somebody who's already done that thing that I want to do? It's a good mathematical way to look at it. One of the issues that I sometimes have is

I don't know what good looks like. It's like our, for example, marketing guy who's been with us, been with me for three years, but I've never worked with a CMO. And so like, just even a sense of like, what should Yakub be doing? I mean, he's doing good things. We're making lots of money. It's like our ConvertKit email campaigns on Black Friday was sick. We made 500 grand in like a weekend. That's awesome. That's sick.

But like this, to me, it feels like there's a lot of unknown unknowns in that like, what would Jakob with 20 years more experience have done in that same position? Ironically enough, like, so the exact same thing that happened to me when I went to go hire a CMO. I had never hired a CMO. And like in our industry, it's not like, you know, it's not like you're working in like, I don't know,

retail sales and you're hiring this other person in retail. Our industry is relatively young as well. So trying to find somebody with experience, what does that look like? What do they do? One of the best things I've ever done is when I hired the CMO, I just did 50 interviews with other CMOs. And on those interviews, I asked them exact same questions right here. What does a good CMO do? What are the KPIs of a good CMO?

Based on our numbers right here, what should you predict our growth should look like? What would be your top three priorities? And then one of my favorite questions I ask on every interview, especially if it's a position I don't know, I say, what was your on-track earning expectation that you want to earn? And so when I was hiring the CMO, I had no idea what to pay the CMO. But by the time I had finished 50 interviews, I knew exactly what a CMO should be doing, what they should be getting paid, all of this stuff, what their priorities should be. And so then I can make an offer to somebody and say, this is what I'm expecting out of this person here. And ironically enough...

for my previous CMO, I did 50 interviews. He was the first person I interviewed. And I knew, I was like, I think I'm going to hire this person. But I always hire the first person. I was like, I'm going to do all these other interviews. And then if I still believe in it, I'm going to go back and do it. And it allowed me to also negotiate pricing. So you're right. We never know. We don't know. I think the biggest things that you can do...

the cheapest and easiest thing to do is interview a bunch of people inside of there, right? So like, because it's not going to cost you any money, it's going to cost you time, but then absolute worst case scenario, you're learning things that this person's probably not doing that they need to be doing as well. The other opportunity is like masterminds, coaching programs, talking to other people that are also really good at that stuff as well. That's other ways that I've been like, oh, this is how this person runs their sales team. Like we should be running our sales team this way. Obviously YouTube content as well. But yeah, I guess you can typically do a simple,

Like there's simple logic behind if this person's been doing this thing for two years and this person's been doing this thing for 10 years, all other things being equal, the person doing it for 10 years probably has more knowledge, right? So that's always a safe assumption you can make. Is it 100% accurate? It's like, no, but especially if you do apples to apples. So for example, like I told you, my old CMO came from Mindvalley, you know, they're doing 100 million plus a year.

So I didn't hire a CMO from a company that was doing $10 million a year. I wanted to do the next level up, which is $100 million a year. So they also need to be – it's like, okay, if this company that's doing nine figures a year justified hiring this person and keeping this person, then I likely can do it at $10 million a year. And so there's all these kind of external cues that you take to make a decision if you should hire them.

And then are you using a recruiter to find these people or going with your audience? So I actually have, ironically, a good YouTube video called our talent acquisition system. But it's essentially like everything we're doing in marketing, I do the same thing for talent. So I create ads. We run Facebook ads, LinkedIn ads, Indeed ads. We send them to a sales, a video sales letter. And it's a video of me walking through what I'm expecting out of this position, what the on-track earnings is going to be, what our company's doing, like our vision, mission, and values. Then there's an application process.

Then there's a test. If they pass the test, we get on the first interview. So I just do it honestly. All I do is I build that whole system one time and then I just send traffic there. So I just like turn on all the LinkedIn ads, the Facebook ads, et cetera, et cetera. Like if I was, if I maybe once again, opportunity costs, if I didn't have the skills that I had, I would probably just get a recruiter. But recruiter is going to be expensive. You're hiring someone for 200 grand a year. Typical recruiter is 30%. So you're going to pay this person 60 grand, right? Plus this person's 200 grand salary on top of it. So I,

I kind of like just building it myself. Maybe because I'm a little bit cheaper, but yeah. And so...

Hiring wasn't initially part of our doing content, building products thing. Where does hiring fit into terms of how you use your calendar? Yeah, there's actually a great book called, I think it's In the Cloud by Mark Benoff. He is the founder of Salesforce. And he talked about pretty much, he believed the number one CEO job was talent, finding and recruiting talent. I will agree with that as well, right? Especially in a situation like you or me where we have personal brands. That's another reason I think that

branding is so powerful because, you know, I can get people and pay them a little bit less than they could somewhere else just because they have been following me for a while. They know they like me, they trust me, the mission, et cetera. So, um, I think that the recruiting aspect of things is incredibly important. The way that I do it is super simple, right? So we have a system, a shocker, and it's a recruiting pipeline inside of a sauna. And then what we do is like, let's say that we want to hire for this position, right?

Typically, you're not a SaaS company, so you're probably not hiring 50 people a month, right? You typically need one person here, one person there. So you build a system around it. So that way, in case the person doesn't work out, you can just turn the ads back on. You can get more applicants coming through. And then, yeah, I personally run the system myself, but I use systems and automation to filter out 90% of the people until it's only that final 10%.

And then what I love, I don't hear a lot of people talking about this, but in Asana, imagine I have this Trello board essentially. And it's like application received, application potential, interview requested, first interview scheduled, second interview scheduled, third interview scheduled. And then there's the stage I'm going to get to in a second. And then there's offer extended. And that stage is called offer potential.

And so what I used to do was like as a ceo I'd invite i'd spend all my time and energy We'd go and hire this new client success manager or something like that And then 30 days later, it wouldn't work out and I had to start that entire process all over again And so now what i've realized is if you're doing enough volume There's probably three to five people that you would hire and you're just gonna hire this one person for whatever Maybe it's a little bit cheaper. They're a better fit So what I would do is let's say there's five people I'll extend the offer to the one person and then i'm going to reach out to the other four i'm going to say look

you were very close. I didn't choose you as the first pick for this reason here, but if this person doesn't work, we're very fast afire in this company in the next 14 to 30 days. I'm going to send you another email and I understand if you're not able to, but if you want to, you can come work at the company then. And I can't tell you how many times it's like, okay, now if it doesn't work out, instead of a lot of people will just accept this person as being mediocre because they don't want to go through that whole fucking process all over again. We're now...

And that person knows also that I have this offer potential. So now it's literally just like, okay, cool. This didn't work out. Send an email blast to those next four people. First person accepts the offer and you just kind of keep on going through that process from there. That's good. Two years ago, we spent ages trying to find me an executive assistant. And then we decided to not hire that position because we were making changes in the company. Then I was looking for an EA now.

And we got hundreds of applicants. And Dan, my current name, realized, hang on, we've got the shortlisted person from two years ago, reached out to her. And she was like, I used to know she was like, sure. And she was just better than the other 400. Oh, my God. Yes. So like that works now. But obviously, you want to build a system around it, right? Like, especially if you don't know. Yeah. So and like, as you scale sales, like people that you're always going to need support, salespeople, client success managers, like all of these are appointment centers. These are all high volume positions. Yeah.

and high churn positions. And so if you can just have this, like, if you looked at our offer potential stage, there's like 20 people and it's like media department. Oh, editors, video editors, another great example. Thumbnail designers, that's another. So you just have this full, we literally just let this thumbnail designer go on the Thursday of last week. They weren't responsive enough. Reach back out. Ironically, I actually think they, I think they were used to do thumbnails for you, actually. Yeah. Oh, okay.

We'll talk about it afterwards. Because he showed us some of the thumbnails he did for you. So we let that person go on Thursday. The new person was working with us on Friday. He did his first thumbnail on Monday. So like, you know, it was such a pain in the ass to find, go through the whole process to find the final five. And I was just like, there's no way we're going to do this again. And what I used to do is just accept mediocrity. Because I was like, I don't want to restart this whole process again. And now it's just like, you're out, you're in. And then you just keep on doing that until you find the right fit. Yeah.

What are you looking for in those first 14 to 30 days that just lets you make such an instant decision? Yeah, you know, it's going to sound super cheesy, but you... So I always say that hiring and firing, ironically enough, is the most important skill I think an entrepreneur can have as you scale. But it's the muscle that we use the least, right? It's literally... So it's like the most important thing, but we almost never do it. So I think you got to just fire people just to figure out what it's like. But in my experience...

after you go through enough people, you just know if somebody is the right fit. Like you literally know. And I'm so in tune with like my self-reflection, journaling, all that stuff that like I know when I need to let somebody go. And also if the cost of letting this person go, like, oh God, I got to go out and find this new person. If you don't have any systemized onboarding process, any systemized recruiting process is

you just accept this mediocrity because you're like, oh, there's nothing better or it's going to be so hard for me to find something better. I'd say the vast majority of the time, it's that I know like you'll have a gut feeling. But the second thing is almost always in your hiring, you're hiring for a specific pain that you have right now. So for example, when I hired the director of operations, it was around recruiting. I was like, hey,

I'm director of ops. Sometimes they do recruiting. Sometimes they don't. And I just was like, look, the biggest problem we have right now is that we can't hire fast enough for some of these positions that we need. And so I want this person to take it over. And so all of the questions, the tests, all the interviews, everything I did was around recruiting. And so when I got that person on board, the simple question was like, is our recruiting process fixed? Do I need to be involved in the recruiting process?

And even better, specifically in a position of like an operational role, are they actually taking work away from you? So like instead of like my director of operations, I was going to do the third interview. And he's like, I don't really think it's necessary for you to do the third interview. Why don't I just do the first interview and the third interview? We'll have the department head do the second one. So now he's giving me back my time a little bit as well. But yeah, it sounds cheesy, but I would say you honestly will just know. And it just helps when you have kind of in your back pocket a few backups that you can have as well. Yeah.

Because at the moment for us, for us to even consider hiring someone, it feels like an enormous test. Like, yeah, I'm just like, Oh, God, like, and it's just so easy to be like, Okay, well, I'm sure they can improve. I mean, it's kind of literally, it's what you were talking about earlier. It's like, you know, you just said it, like, you're rationalizing, like, could I coach them up? Should I do this thing here? Like, it's, it's, I think that that's a big benefit of having, um,

an operations role as well if they can be in charge of recruiting like i don't think you and i need like a head of recruiting like we're not hiring that much so it doesn't need to go to somebody to me it makes the most sense to be in an operational position but once again they're obviously probably doing 50 other things as well so like if you can make it systemized and it's streamlined and then they're just spending let's say like for example um my uh

my operations manager, he has a time in his calendar for one hour every Friday, and it's just called a clean out and update recruiting pipeline. So he just spends an hour every Friday. This person has potential. We're just moving them along and keeping people in offer potential. And you can almost ask anybody to do an hour. But if you're like, this person's got to spend 15 hours every single week doing this recruiting process, then you're going to lose out on a lot of other stuff.

For someone listening to this who might not be an entrepreneur and who's thinking, oh my God, these guys are so callous. They're just talking about human beings like the line items on the spreadsheet. What are the factors that make someone an indispensable employee? Yeah, okay, good question. I have a tendency to do that sometimes, to be honest with you. Well, I also feel like people don't say the honest truth sometimes. No, I understand. I really appreciate how kind you can be, because I'm like, damn, this is exactly how I feel.

Because it would be more acceptable if I was just like, oh, train them up and coach them. And you can do it. There's no doubt about it. Like I said, you just have to decide what you value more. To answer your question, what do I feel like as an indispensable employee? So I think that the most underrated thing inside of a company, going back to the CEO, is your vision. I'm sorry, is your values. I think the values is the most underrated thing inside of a company. So in a position, we look for always two things.

We look for a skills fit and a culture fit. And a culture fit is defined by us as a fit inside of our values. So we have five values. And the five values that we have are directly modeled from exactly how I live my life. So because like, I wouldn't want to be outlined with my values because then I couldn't expect somebody else to be outlined with those values. Okay, interesting. So it's not like, hey, let's get everyone on the team together and come up with our shared values. It's like, you decide. When people came on board, like, yeah. That's good. We've done it as like a collective process because traction says you should. And I'm like,

So I love Traction. We actually follow EOS, but there's a few things I disagree with. And so like, I think even one of the videos you commented on, I was talking about how we run our team leader meetings. Yeah, we changed it up. Exactly. So like that was from, but I updated some of the things inside of there. So ironically enough, we did our first quarterly meeting after reading Traction and I was like, all right, let's do the values. And it was like,

We spent so much time trying to figure out the values. And going back to what I had said about the people that are on your team right now may not be the people that you want to be with in the next three or five years. So now people that may not be the right fit are giving you feedback on what their values should be. And now you're making your company around the wrong person inside of there. So it's literally hilarious, right? And then you feel bad. You want to take their input. And if there's one person in your company in the future that will never leave, it's going to be you. It's going to be the CEO.

So I just knew that, okay, what would, and I also want to only work with people that I enjoy spending time with. So I would, I would enjoy spending time with me, right? That's obvious. And so like, okay, if I can just identify the values that I follow in my own life, then I can write those out. And then I can say, now all these other people should share these values. And if you don't, this is what we tell people. The first interview we always do is a culture interview. If you don't share the same values, then we say, look,

you're, it's not that you're a bad person and it's not even that our values are right or wrong. It's just that we're looking for this person with these values. Now, when you asked me originally, what makes the good, a good employee, they need to align with your values. And if they don't align with your values, I will tell you that those are always the hardest to let go people that I've ever fired because like, because they're good at the job, but it's like,

Yeah, they're essentially like your friend. Yeah, they're essentially your friend. If you base your values off of you and then they match your values, they're essentially somebody that you would hang around with. So those are always the hardest people to fire versus somebody that's like obviously underperforming. But it's not their fault if they don't know what the values are in the first place. So like every meeting we have as a company, the first thing I do is go over the values. So everybody on my team, we can call them right now. I guarantee you they'll rip off the values off the top of their head without even speaking. Nice.

And then the second thing that also makes a good employee good, in my opinion, is their problem-solving ability. So going back to prioritization, like...

following traction, we do IDS, identify, discuss and solve. And so when we run these IDS meetings, so we have a team leader IDS meeting every Friday, and then every department has their own IDS as well. And so if you're part of a department, and there's an issue going on, and you're not providing any kind of input or any kind of value, and you're just like sitting back, and you're encouraged to speak and you have nothing of value to add, that's a little bit of a red flag to me, because it's like, okay, let's say just for example, I'll give you a perfect example.

We used to have video editors that, you know, let's say they're based in India or something like that. And they would give zero input on anything. They were just like, we would just tell them, like, edit this video this way and then they would do it.

And that was going back to what you said earlier of like, not knowing what a good, like, I didn't know what a good video editor was. And it wasn't until I hired a new video editor. And he was like, Hey, I really think that you're a little bit off brand with some of these things. Like this editor is editing this way. This editor is editing this way. Like, why don't we create a collective like graphics and colors? And why don't we, and I was the first time I was on an IDS meeting. I was like, Oh my God, that's like the smartest thing I've literally ever heard in my entire life. Like that's. And so even as far down, and this isn't disrespectful to

a video editor, but like that is more of like, let's say a commoditized position. It's like even as far down as that, like going back to what I said earlier about the growth of the business is based on the cumulative knowledge of those people inside of there. If you have the like video editor, uh,

on a 40 person company and they're providing insights like that, then like that company is going to rapidly grow versus it's like out of a 40 person company, there's three thought leaders and they're running the entire, that's what they call key man risk and enterprise. And it's like, they're running the entire show. So yeah. Do they align with my values? Uh, obviously are they a skill fit? And then like how much of a thought leader are they in providing their opinion, even if their opinion is incorrect, I'd rather hear it out, um, and be able to justify it with the rest of the team. Nice.

How big is your team? We're at 48 or 49 people. Yeah, we're, like I said, we're doing an entire rework right now. So like, it's a little bit fluctuating, but yeah, right around that. And what are the roles in the leadership team? So there's obviously the CEO, me. I actually am in between director of operations right now. So I don't have a DOO, but I did have a DOO. So it's me, director of operations. And then I have the rest of the executive team is head of billing and support, client success director, head of sales. They also run the setting team. And

Marketing. Thank you. A head of marketing as well. We used to have the media director on that same level. But then I realized that they weren't really adding a lot of value to the leadership meetings. And it's not their fault. It was just like they wanted to talk about YouTube thumbnails and content. And we're trying to talk about, obviously, sales. So they became underneath marketing. So they became underneath marketing. And then so underneath marketing, it's media buyers, the marketing.

the media director, and then the media director has their team underneath them as well. And then underneath the head of sales, we have the sales team members, the setting team members, underneath client success, campaign manager, client success managers, community manager, underneath the support and billing, like any kind of VA support, help scout responses, Stripe billing admin, and then tech as well. And then the only other two people that report to me is my executive assistant and

I have a house manager. She reports my executive assistant. My executive assistant reports to me. And then my family office for finances. A family office? Yes. How much money do you need to make before it becomes... So you have a minimum of... So this is what they call an outsourced family office. So you don't need to be a billionaire to do it, but they help you with taxes and investments and all that stuff. They're amazing. I love working with them. I think their minimum price is a million dollars a year.

take home that you have to be making and then they have tiers but like it's like 20 grand to get started and then it's like 5k a month so you need to be obviously be making enough money that their tax say like and then not only do the pay them but then you have to have enough money to make the tax plays that are going to cost like x amount of money as well so it doesn't make sense probably until you're like 1.5 to take home what is your what sort of stuff does your ea do

So actually, once again, I have a YouTube video that covers the tasks. The tasks in depth and my house manager. It's also inside of Scaling School. I had her create like all of her tasks inside of this Google Doc for people. But my EA, I would say majority, she scheduled this entire pair of Smash Mine that you're over here at. She also does any kind of...

all my email management, all my calendar management, confirming appointments, organizing my calendar. She also schedules all my personal appointments. So every two weeks, haircut, eyebrow threading, manicure, pedicure, um, uh, no, my house manager does my car wash. Uh, and then she'll do a lot of my, I do a lot of traveling. So all of my trips, traveling, planning around that. Uh, she also, you know, there's a great book called buy back your time. I didn't Martel. Yeah. So, um, I think you come on your podcast or not yet. Okay.

So I just had him on mine. He did this whole podcast tour thing. That's what I was asking. And, uh, and he was like, yeah, don't hire for a position higher for time. And I was doing payroll previously. And I was like, Oh, I got to hire an HR manager. So I hired this HR manager and I was like, this is so silly for what I'm paying them. So then I just had my EA start doing. So now she does payroll for me as well. Um,

I think those are the majority of things. And it's literally just ad hoc things that have going on. So literally anything that's like, it doesn't fall in the typical department. Oh, she's also on the IDS meetings. She runs the agenda for that. She does the task. For the leadership team. Exactly. So that allows both me and the operational director to be thought leaders instead of the person that's like typing the thing down the entire time. So she hops on all of those meetings as well. Nice. How stressful does it feel having a team of 50 people?

I've got a team of like 15 to 20, depending on how you count it. And I'm like, yeah, I would say like, you obviously have a general manager, so that probably helps. Um,

Yeah, I am definitely culling back the amount of people that we have for sure. Like I, I don't want this big of a team, um, or at least like my revenue per employee, I want to be higher. Um, I think it's very easy to justify like hiring a bunch of people and then you feel good because you have this big team and I can say, Oh, I have 50, but are we as efficient as I could be? Absolutely not. And then it becomes more about managing a team member than growing the business. And, um,

Yeah, I don't think it really feels that much different than it did when I had 15 employees. It's not like you're at 15, it is a 3x increase in stress levels. It's a point of diminishing returns, especially if you have a good organizational. I, honest to God, don't really talk to anybody below my leadership team that often. So I've been dealing with the same

five positions for the past two years inside of my business. We could have 100 employees, we could have 50 employees, we could have 10 employees. And even in some departments, when we're doing a reorg, even if there's only two people in that department, I'll still build like, they still have a department, a weekly IDS meeting, they still are part of the organizational chart. Because what I want is just the structure. That way we can add people and build them in there versus like, oh, we're a small company, like, let's just keep the small company vibe. You know what I mean? Like, no, no, no. Even if you're a small company, I think you should have a

organizational chart with direct reports, IDS meetings, like KPIs, scorecards, all that stuff. That way it's so much easier to plug people in and out versus like the small company feeling. Okay. Any final like tips for me? We're trying to go from five to 10. What are the things I should be thinking of? Yeah, I think the easiest thing would be like adjusting the product suite so that one thing leads into the other a little bit better, in my opinion. One of the main things

things I see as a problem as you scale is going to be having this YouTube arm over here and having this productivity arm over here. So like sometimes you have to kill off one thing for the other one to really thrive and scale. So I'd be curious to see how that plays out. But obviously you're doing well inside the YouTube thing. So it's a little bit challenging, but I would mostly like, I guess the bottom line is this, um,

We talked about opportunity vehicles a lot during this conversation. So, you know, I would spend some time identifying what is the one thing that you feel like is going to... Let's say your goal is to 10 million, but really your goal should be like... Because once you get to 10 million, what's your next goal going to be? 20, 30, 50, right? So then... So if you know that that's going to be the next goal, the question I would simply ask myself before I started like...

launching into all this stuff would be like, is this next thing I'm about to launch the thing that can take me not just a 10 million, but a clear path to 30, 50, a hundred million as well? The answer is no, I probably wouldn't start that thing. Right. Cause you could probably just do it by doing more of what you're already doing inside of like the YouTube stuff. Instead, I would take a second and be like, okay, for example, for me, it's scaling school.

That's our membership site. That's what I feel like I can bring that to $100 million in ARR, especially if we tack on the SaaS as well. So like that is my now core. So now that I have that as my solid baseline, I literally told my team, nothing we do or nothing we sell from now on, or I'm sorry, everything we sell has to be

part of scaling school. It has to include scaling school. So you want a VIP day with Ravi? 14-day free trial of scaling school. You come to the Paris Mastermind? 14-day free trial of scaling school. You join Scaling Systems? Scaling school. We just launched a webinar yesterday. You get six months of scaling school. So once you get that vehicle where you have, this is my $100 million a year vehicle, then it becomes so much easier to look at the rest of your products and be like, okay, I could keep on scaling, for example, the YouTube thing here, but

How am I making that jump over here? And so it's just, for me, identifying what that one vehicle is and then using the assets at your disposal, the YouTube channel, the courses, whatever else it is. The only reason those things exist are just to continue to feed and grow that one thing there. Sick. Thank you.

Why can people find out more about you? Yeah. First of all, thank you so much for having me on here. This was a blast. Great conversation. I feel like we're going to talk about this for the next six hours at this mastermind. But I love to have it. Those are great questions. And I just want to say I've been a huge fan of your work for a very long time. I don't know if I get to say that on here, but I love what you guys do on YouTube. Thanks, man.

Yeah, for me, you can go, actually, I've probably all, since I just talked about it, Scaling School, right? So that's our membership site. It's everything I've learned scaling to multiple eight figures, scalingschool.com. Or you can find me on any kind of YouTube, Instagram, any of those other platforms at Ravi Buvala, R-A-V-I-A-B-U-V-A-L-A. Nice. Links all down below in the video description, show notes, wherever people listen to this. Thank you so much. Appreciate you.

All right, so that's it for this week's episode of Deep Dive. Thank you so much for watching or listening. All the links and resources that we mentioned in the podcast are gonna be linked down in the video description or in the show notes, depending on where you're watching or listening to this. If you're listening to this on a podcast platform, then do please leave us a review on the iTunes store. It really helps other people discover the podcast. Or if you're watching this in full HD or 4K on YouTube, then you can leave a comment down below and ask any questions or any insights or any thoughts about the episode. That would be awesome. And if you enjoyed this episode, you might like to check out this episode here as well, which links in with some of the stuff that we talked about in the episode.

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