Why Constant Changes Kill Growth | Ep 893
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There are probably a hundred things that you have on those notes and each of them you're like this could give me five percent more this give me ten percent more this give me whatever. If I know them and have a twenty percent guaranteed cost that whether it works or not I'm going to have this happen it changes what things I'm willing to take a bet on. So how's this morning? Good? Yes?

Tactical. Okay, good. That is the objective. And hopefully it puts a little more context on what I was talking about yesterday, which is, all right, there's probably a hundred questions you could have potentially asked, but ideally, or hopefully you ask the questions that you think could get you the highest return. And that's fundamentally why we laid out that way. To frame this Q&A, I

I want to go over a couple small things and then we'll kind of dive into it. So one of the big ones is everyone here probably has a lot of notes from this morning and yesterday. And when you get back in your car or you go to on the plane, you're gonna open up your laptop, you open up your notes, and you'll probably open up some sort of fresh document and be like, okay,

What am I actually going to do? Right. Because you have all these ideas and kind of the objective for me when I think about how to prioritize within a business, aka strategy, it's making sure that we get those one to three things that we're going to change correct. And I want to introduce a little bit of a concept that's taken me too long to understand. And it's really, really hard, which is this. There's a lot of things that you can do to grow the business. You have a lot of ideas that you're coming off on.

And so let's imagine that this line represents your current revenue level. Whenever you make a change in the business, my estimation is that we see about a 20% decrease in revenue as a result of a change, especially if it's a manual change. We're changing a sales process. We're changing a customer service process, something that involves humans. We're changing something that they're doing. We'll typically see a 20% decrease guaranteed simply because of the cost of change.

But once I kind of like realized this, it changed what things I decided to choose to change to begin with. Meaning there are probably a hundred things that you have on those notes and each of them you're like, this could give me 5% more, this give me 10% more, this give me whatever. If I know them and have a 20% guaranteed cost that whether it works or not, I'm going to have this happen. It changes what things I'm willing to take a bet on.

And so for me, my kind of minimum litmus test for this is I need to see at least a 20% bump or believe I can see a 20% bump from any implementation that I'm going to run, or I'm not going to take the guaranteed 20% loss. And so part of this comes into something called ICE, which is kind of an investor terminology, but basically of impact, confidence, how likely, like how big of a difference is it going to make? How likely is that to happen? And then you've got ease, which is basically the value equation without speed.

And so if we're looking at any of the implementation that you're thinking about putting in the business, I'd be like, okay, how big of an impact do I think this could have?

How likely do I think this is to occur? And then how fast and how easy do I think I can make it happen? And so typically we'll organize it in that way. And you'll probably figure out pretty quickly, if I were to implement two things at once, what do you think would happen, right? And so you'd have two negative 20% decreases. And so the end result of like basically taking this ideology to its natural extreme means that you basically can't change that many things in the business and expect it to grow. And so that end result for me has been

and I'm going to be crude on purpose is that some shit stays fucked. And so like, there's a lot of things that I would love to do to improve this experience for everyone here. I've got a list like many pages long, but every time I do implement a change, it negatively impacts the next, the next group, because it was a change. Now, the next one after that, it starts to recover and come back up because the team learns whatever that process was, they get better at it. And then maybe the one after that, it goes even higher. And that's great. And so what happens is like,

I've gotten addicted to not changing things because people tend to, because the flip side is if you change nothing, so let's say you have no change that occurs, you'll have something usually that's in like a 2% to 3% increase

That happens pretty much no matter what, because people just get better at their jobs. Sales guys just get a little bit more comfortable. Customer service guys get into a rhythm. Like it just works and it just works a little bit better because most people like to make their jobs easier. And so they tended to do it a little bit better. That's what specialization of labor is all about. And so I would encourage you that when you have this list,

that you're going to have for, you know, your one, two, and three that you're going to go home with. Think about ice when you're putting that together and make sure that you're going to make your biggest swing worth it. If you have a change that can get 2x the business, then yeah, take the 20% tip, no question, right? But there are some changes that just aren't good enough to be even worth the guaranteed cost.

Does that make sense? This took me a really long time to understand and is almost like, I would say like a stepbrother to the focus on the macro scale of business model focus. Let's not start a second business, which probably a third of you have. But even within the business, it's staying focused on keeping the main thing, the main thing. And the hard part is, is it's hard.

Because the thing that's often limiting you in the business are hard problems. New things are easy problems because you can always just whip something up and promote it and make money. But the hard problem is like, okay, I can't scale past this current level because I need to recruit like three really niche employees. Well, you're going to have to do it either way.

And so you might as well just confront the hard that's in front of you. And so being able to spell that out to myself and be like, this is the hard, the hard is the not knowing how to do this thing. And I have to figure it out and not knowing where to find these people, but I'm going to have to figure it out. And so it's like taking all that energy where you're like, I don't know how to do this. So I'm just going to do the thing I know how to do, which is I say this and I see like all the smiles and like nods in the audience right now, but you have to keep fighting that muscle because in a lot of ways, it's almost like an addiction for entrepreneurship. It's like, we like to do new things and

And also like addiction, you just have to fight it every day. This is just because a lot of you guys are going to be implementing some of the things that you walk away from here. I just want to make sure, number one, that the few things that you choose to do, that they're absolutely worth it. And that many of the things on that list, I'd rather you just forget about. Because after you do the first three things, all the pieces on the board are going to change. You're going to have new resources, new problems. And number, you know, five, four, five, six, seven, eight might not be, like once you do one through three, number four might not be number one. You'll have another thing that'll be number one.

that you didn't even think about, which is why I'm not super obsessed with very long-term planning. So I thought this might be a good timer before we get into this as a good way of thinking through this. And this is like, I wish I could transfer this to you because this is probably from a skill perspective, one of the things that has made me the most money.

Is basically just saying i'm not going to do new things and if i'm going to do it It better be worth it because i'm going to pay a price immediately with my team being confused feeling whiplash saying what is this thing? I didn't feel like it was communicated. Well, it doesn't matter how well you communicate It's not communicated well enough because they don't just immediately know it. Okay, cool. Let's do q and a's All right, so you had a hundred and seven thousand you went to get to a million 150 150, excuse me

You want to get to a million. Yeah. And your biggest issue is hiring. Yeah. What do you sell? I sell content. So content. Yeah. So we do videos like marketing materials for real estate agents looking to market their personal brands and properties. Okay. So personal branding for them. Correct. Okay. Got it. So what stops you from doing a lot more of that?

So I'm a young entrepreneur and I basically based my own brand off of being a young entrepreneur. My, and now you're just going to be a middle young white guy. So my business partner, I assume you know what you're dealing with because like when I came up, I started making a lot of money at like 26, 27 and they were like, Alex is so young. And now I'm just like 36 and no one really gives a fuck.

Yeah. Sorry. Keep going. The only problem is like clients find out my real age and I use my, I technically use my age as a leverage to what I sell. So social media, I grew up with social media. So, you know, I know social media better than six year old agents do. Okay. So my constraint, what's up? What's the issue? Just the pitch is wrong. No.

People don't trust necessarily older people in my business. We based our brand off of being young. All right. So, you know, young. Yes. But when I hire someone like a new shooter or a director of operations, who's 25 and above, they don't necessarily look. Yeah. They don't necessarily. I want to say too is boomers. Yeah. Yeah. Boomers. Boomers.

So what are you saying, though? Like it's it's more of a trust issue with clientele. You know, like totally in your head, man. Really? Yeah. 100 percent. You care. No one else cares. You even think they're old. Hey, I don't think I don't think they're old. I'll be like you a little bit because you're bringing it up. Right. So like like no one cares. Did you guys care that Jacob Hopkins is 22 at the same time? We have people who are in their late 30s and 40s.

People just care about how good you are. So like people care about your age for the two seconds before you open your mouth. And then as soon as you open your mouth, all of it's like, that's like the, the, the, the absolute thinnest surface level of judgment that someone will make in general, younger people know less than older people in general. Yeah. But there are also Mark Zuckerberg, who's a billionaire at 21. So there's obviously people who know more at a younger age. So you just have to demonstrate expertise. Okay. Can I follow up with another question?

So on a scaling aspect, we have a lot of realtors, you know, asking us in different areas like Texas, California to come produce the work out there. Cause our content is kind of one of one it's different and it's providing a lot of value.

I'm looking at it as more of like a 1099, you know, contracting videographers and teaching them, you know, in that state or region to shoot that kind of property. Okay. But I'm also looking at it as kind of like a franchise. What would you do in that situation? For a franchise to be something that you'd really want, it's simply you're gonna have some sort of like franchising is just a model for raising money and you dilute.

selling the most expensive version of it, which is that you're going to give all of the upside away except for a small royalty and you're going to do a huge amount of the work. And so in your business, you don't require really any capital to expand. Right. So we wouldn't franchise. So that doesn't make sense. If you wanted to have revenue retention for these people who are in different markets, I can see two different ways that you could do it. Well, really three. So one is they fly to you.

And then you just book, you do like one day of recording and you get 90 days or six months worth of content for them. And I think that would be a very strong value prop. And you could probably charge 25 grand for that. That's number one. The other way is that you could fly out. You can find somebody out to do that. That's the second version. Also still charging a lot of money.

The third way is you can, I guess, find people, basically run ads locally to find videographers to go capture the footage and then do what? Edit centrally? We have a team in-house to edit. And we're still like the shots, like learning the correct shots and go for us to edit. So you edit centrally, they capture locally, right? So I think I would just consider hiring those people on behalf of the client and then just charging an upcharge on the rate that you're, like if you pay them,

$4,000 a month, you charge five. But they're paying you five, you pay the person four. And then that way you'll have built-in revenue retention because it's much harder to fire an employee than it is to fire a vendor. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale

and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

but you would just basically fractionally own a lot of these relationships. So look at it more as like a vendor. Yeah. And as soon as someone says they're going to cancel, it's like, oh, that's great. I had such a waiting list in your area. I'm just going to have that guy shoot your competitor. This is so helpful. That works out great. My name is Justice. I'm a short form content creator in the

product review space. So right now I'm doing about 120 million views a month, just short form, but 75% of my revenue comes from brand sponsorships. Okay. So you review products? Yeah. Okay. So you are UGC? Pretty much UGC. I'm more faceless as well. So it's like not really a personal brand type of thing. Cool. I'm realizing the current business model isn't as like scalable and sustainable long-term just for me. Wow.

What would be a good roadmap for someone like me? Who's a client? It's just, I think like a little part of it's like unfulfilling and a lot of it is like. All right. I'm going to pause you right there. Cause I think this is really valuable for everybody. I hear that sentence all the time. I have this business. It's working. I don't think it's scalable. I should do a different business. If we reframe this as I'm doing her business, it's working and now it's hard. And so I'd like to do something easy. Can you tell me something easy? That's, that's what I hear.

And so I'm bringing this up because it kind of hits to kind of what I was talking about earlier. Like you have to confront the problem, but like the other side of that problem. So the way that I, the way that I talk about this to our founders within the portfolio is like, let's say that,

I'll just give a simple example. Let's say that we have to, I'll, I'll look back to your question. Let's say that we have, you know, a key hire that when this key hire comes in, we could add, you know, 5 million. Ooh, nice screen. There we go. $5 million in profit of the business. All right. So it'd be a really, I said five, five million titles, top line, $2 million in profit of the business. But this is somebody we're gonna have to pay, you know, 500 K a year to unlock this. Okay. So this is gonna be a pretty specialized role that we're looking for. Now a founder might say, Hey, can we just like figure out a way to not have this role?

No, I think it's a worthwhile question to pursue, but sometimes you just need the role, right? And so this $2 million, let's say at a 7X enterprise valuation is going to be an increase in $14 million in enterprise value, which if you own the business goes straight to your net worth tax-free. And so if I say back to the founder, hey, do you think you could find this one person for $14 million?

All of a sudden it feels better. You're like, you know, 14 million, I could find it. Right. And so I try to think about like, what is this going to unlock in the business? What does this create to enterprise value? And then I try and put a ticket to kind of the hard that I'm trying to go through. Like we had a different portfolio company where we had to put in this, I talked about them yesterday. We had to put in this tech portfolio.

tech component to it. And I was like, well, currently the company's probably valued at like 80. If we can get this fully integrated, we can be valued in the 200s. It's like, man, but building a whole developer team, we'd have to recruit a head engineer. We'd have to bring all these other people in. I was like, yeah, I mean, we'll also get paid $150 million to do it. So, you know, worth it. So it's like, it's hard and worth it. So anyways, please continue. So it's not scalable.

Yeah, I appreciate that. Sometimes I'm struggling to figure out like what to optimize for because just like chasing views as a content creator isn't always like the best thing to do, especially because I don't have a product to sell. And since I review 50 products a month, if I make one product, there's only so many times I could post a video about it. Right. So there's so many products. Yeah. I mean, are you saying like, why do I review so many products? No, I understand why you review so many products, but there's so many more products to review.

Sure. Basically, why is this not scalable? Why can't you review 500 products? I can. I think that's a possibility. It would be like figuring out if the business model is going to be served towards brands because that is the driver of the business. It's 75% of the revenue. Or if I'm approaching it from the wrong way and I'm just like, I should just double down on like long form YouTube because I haven't even posted a long form YouTube video. But you get paid on the short form products.

that they probably repurpose as ads yeah they run ads behind it so they usually are paying for like the usage rush it's behind that so it is a you know a possibility and then another thing is just me getting in my head about creating a bunch of me's who is just doing the same thing because it's basically like a formula because i'm not a type you do a lot of faceless though yeah that makes sense yeah i mean yeah it's just like i i do 50 and i do majority faceless why can't we do 500

I mean, do you run good margins? Yeah, we have 80% margins. Right, yeah. Let's do more of that. Do more? Yeah. Sweet. Thank you. This was a good talk.

Simple threads, four locations. Oh, small threads. Sorry. Small threads, four locations, three are new. One is the old one you had for 16 years. Yeah. Yes. And one of the big issues is we don't have enough data and we have to have a better CRM so we can track. And you were right. Last night I went home and dug into the data I do have. Just by raising my revenue to $5 million instead of $3 million and getting rid of the data challenge, it's...

it makes my company worth six million dollars amazing so that would be so that's more money yeah that's my need to so my question is last year i dabbled in organic content they're usually like crypto i was like here we go all right and uh had some success i had videos that got like two and a half million views basic button you know brought me people that

weren't necessarily in my market, which I'm okay with because the ultimate goal is to have stores everywhere. So it could be okay. But my current thought is time-wise, because I like working, but I work a lot. I work like 90 hours a week, is if I were to kind of go down this path

a little more time and energy into organic content creation to then use it to do paid local ads. What should I be making content about? That's where I got stuck. So I was doing like two kinds of content, like kind of like thrift content, which isn't really what I do. Instead of thinking about what type of content, think about what will be valuable for the person that I'm trying to attract.

Okay. So think about all the problems that moms have, specifically the moms that you were talking to. So maybe single child or single sex child, whatever moms. And the nice thing is that they have lots of problems. And so you just make your content around that and then you just try and tie in the product. Okay. And then run targeted local. You post as many of those as you can. The ones that take off, you take those, make them into ads. Yeah. And if you don't want to even put a CTA in the organic, you can

just make the organic content. When you have the winner, you take that one and then stitch on five seconds of a CTA at the end and then run that as the ad. Okay. Yeah, super easy. It's a really good strategy for anybody. Like if you're like trying to get it, like if you right now are predominantly paid and you want to start doing a little bit more content,

I do think it's a good idea in general, just because you'll get more conversions on a lead nurture perspective because people get on the phone. They're like, what is this person or who's this person? Then they'll look at your account. They're like, oh, okay, they're alive. And so, but basically it's just free. I just see it as free testing. So you just get, you post as many times you want. You can just see relative to the other, other, other pieces that you have. These ones outperformed. Great. Now I'll make these into ads. So just provide value.

Here's other, like, here's three ways that you can, you know, save on repairs for, you know, kids torn clothes. Or here's how to get stains out of these things. Or if you're the type of person who like sees this and is like, I'm never going to do that. Awesome. Come to Simple Threads. I keep saying simple. Sorry. Small Threads. We got you covered. Okay. That help? All right. That helps. Thank you. Easy. All right. Yes, sir. Hey, Alex. My name is Jean-Paul. Jean-Paul. And I sell healthcare listing services for...

doctors. I guess I work with PI attorneys, personal injury attorneys. And so what I'm trying to figure out, like I'm trying to figure out my bottlenecks in the business. I think one of the biggest ones is that a lot of work with personal injury attorneys. So my clients, my paying clients are physicians like healthcare providers. Okay. Okay. And then the reason why they hire us is because we're trying to get leads from personal injury lawyers for like car accidents, slip and fall. So when someone slips and falls, then they need to get repaired.

It's like you're the repairman. Yeah, kind of. Being a doctor. Except I don't repairmen. Yeah, but I lost the bill of repairmen. Got it. So the hardest thing is trying to figure out how the PI lawyers are sending referrals to the doctors. And a lot of the physicians that I work with only want to know how many referrals they're getting versus, you know, like trying to brand them and doing like, you know, the full spiel of marketing. Yeah. They just want to know, hey, how many leads am I getting? Or how many, you know, referrals?

referrals are ever going to get. A lot of these referrals are worth a lot of money. It's not like, yeah. All right. So that's where I'm at. I don't know, like we're expanding into Arizona and Texas and I'm planning on hiring somebody there in each state. Is this a, is this a problem to solve or is this just like overhead? This is a problem solve. Okay. So what I'm trying to figure out, is it limiting your ability to grow? Yes. Why?

because a lot of the physicians expect a certain amount of leads per month. And so it's obviously it's hard because accidents don't just happen in the same city, right? Over and over.

What if driverless cars come? And then it's like no accidents happen. Now what are we going to do? Right? Okay. Okay. Okay. So let me just, let me pause you real quick. So I think, so part of this is probably how it's being framed with the positions. Right? So one is you could just reframe it based on revenue, like basically revenue volume. Hmm.

So it'd be like, cool, we're going to usually send you around $20,000 worth of revenue volume. Sometimes it's going to be from two or three cases. Sometimes it's going to be from, you know, five or six. It'll depend. Obviously, we can't make sure that everyone's going to be paralyzed. I'm sorry. Ha ha ha ha. Of course. Right? But I think if you just reframe instead of lead count to revenue volume, which is ultimately what you care about anyways, like leads translate to revenue. And if you're saying that there is some variability there, I think that the lead number will no longer matter nearly as much based on how you're just framing it. Mm-hmm.

And in terms of the whole branding and all the other stuff, I think that's a different business. And so I either you would start that as an additional service that you charge separately for based on its own value proposition or my preferred method. Don't do that and just continue to do the main thing that's working. Got it. Cool. My name is Mike. My wife and I are here. We started a company with your content. Yeah.

super gratitude, super grateful, man. We exited for over 20 million. Amazing. Appreciate what you've done. Your books are worth the weight in gold, bro. Thanks, man. Anyhow, we're at a crossroads because we're building a new company based on our passion project. We started a company that taught do-it-yourselfers how to remodel their kitchen and bathroom using epoxy over old countertops to make them look like natural stone. So with that idea, we found that

you know, we, we really hit home with the DIYers, but a lot of our people that saw our YouTube, we built over 1.5 million YouTube subscribers and a lot of them didn't want to do it themselves, but we couldn't serve those customers. And so there's a shortage of contractors in the U S so we're really going to reach out to, to young people that maybe don't want to go to college or old people or middle-aged 30 year olds. Yeah.

So we're, we're really, we're, we're going to, we're building a trade school right now. We're going to teach these, these people how to do the trade, how to, I've already proven the lead gen so that I can give them all the leads they can handle because that's really the harder part of the business for them to learn. My question is we can either charge up front for this school.

Cost about 20 grand for us to train somebody. Okay. Or we could, we could, we have a big following. We could attract the people to apply, train them on our dime, maybe lock them in with a, you know, if you leave before two years or whatever, but would, and then we own the businesses in all these different areas. Or should we, should we,

They would own it. We supply leads and cut the liability. That's really the crossroads we're at. Yeah. There's a lot of different models from the position that you're in right now, which is probably why you feel the heartburn. The first thought that I had was just like, and instead of or, like maybe I want them to pay $20,000 to make sure that they're legit. And I'm going to get a percentage of all the business that I send them.

My concern with that is if you look at a franchisee, which we're not going franchise, but if you look at that avatar, they're probably not the hustler who's as hungry as the kid with nothing who want that. That's just, that's my passion. I want to help the kid that has nothing. Okay. Well, I can't finance it. You know, we could finance it and help him earn it back. But. Well, to help the kid who has nothing, you can just make all the content free. Right.

Right. Which you do now. Yeah. So that kid already has been helped from you. If he wants more help from you, you can pay and you can save up his shekels. So if instead of 20, if you want to make it five, you want to make it 10 and you can offer, you know, nice financing terms, you could do that. I will just tell you that there's, I get where your heart's coming from. It's, it's, it's very tough to go free and deliver a lot to people expecting that they're going to do something.

They typically will need to have some skin in the game. If you're going to put skin in the game, you're going to want them to put skin in the game. Still own it, charge for the school? Yeah. I think you can play with the price. Okay, great. Mrs. Myclaw, yes.

Yeah. It's otherwise you're just gonna have a bunch of freebie seekers who are going to come. And then you're also like the enforceability of the backend contract and then we're paying you is probably going to be a little bit of a nightmare. I would prop, like if it were me, I would control the sales and then hand them the deals so that I could collect the payment and then distribute payment to them rather than expecting them to pay me for the leads. Yeah. Got it. So I was like, I'd rather just basically build a centralized phone team that could close the, close the deals or whatever. And then, you know, it's,

send the deal to the person. Got it. And if they're coming from your content and they already have trust, so you probably like, it makes sense that they would buy from you. They'd be like, cool. One of our licensed contractors would go out there. Licensed contractors go through to your training. You know, they're vetted by us. And also just like, think of it like Harvard, you pay to go, you don't get guaranteed a graduation. So it's like, I would just let them know. It's like, we will not graduate you if you're not good. Right. So yeah. Or we kick you out just like a school.

Like real schools have standards and you pay and you might not graduate like normal school. So just do the same thing.

Just your kid won't be screwed up when they leave my school. Was that? Your kid just won't be screwed up when they leave my school. Yeah, sure. Yeah. Thank you. Oh yeah. You bet. My name is Max. I sell tech and operations consulting to law firms. We started about six months ago and we have our enterprise clients and we have our other ones that are 36 to 80 K and they have a 300 to 600 K packages. And we need to figure out which one has the highest LTV to CAC ratio and which one you can convert most easily. So what is the issue?

That's correct. Essentially, well, first of all, I have no idea what I'm doing. I started about six months ago. First step. Thank you.

Second thing, I think we just have a fulfillment issue. And so my question is, at what point do we consider productizing the service? From what I understand, it's kind of what you've done with gym launch. Yeah. At what point would it be worth doing that, if at all? You said you wanted to sell this eventually, right? Yeah. Yeah, I wouldn't do that. Okay. Yeah. Yeah.

So you have the same issue that justice has, which is like, I have this hard thing in front of me. Can you tell me there's an easy way? The easy way we'll create a business that's significantly harder to sell. And so then you'll be at that point and be like, how can I sell this business? I'll be like, you can go back in time and not do this. Right. So like basically you're in a high, you're in a high skill service business. It's a professional services business. Most professional services businesses are supply constrained. It is easy to sell.

high-end professional services if you are good at what you do. It is hard to find other people who are good. This is the trade.

But if you build a firm like that, you build a very valuable company. And, and another, just on a side note, again, I don't know what I'm doing. I got, I got a 500K in, in investment coming in soon. Why? It's been my, my boss just. No, but why are you taking investment? I don't. So we haven't finalized this yet, but I'm considering whether to do it or not. Yeah. But that. No. You don't see any point in. Why do you need money? You, you don't run a capital expensive business. Like what are you going to use the money for? I guess. Yeah.

to hire great people. The business model should be able to hire great people. Like you're not a tech, like it's very rare that you need to bring on outside capital. Far rarer than most people expect. If you want to build a platform, you want to build school, yeah, you got to do that because you need to get zillions and zillions of users and you have to build this exceptional product before you monetize. So yeah, someone's going to front the money on the bet that it's going to be worth a lot more later. Your business makes money today on work it does today. And if anything, you can sell the work before you even have the person. And so like,

You have a negative cashflow cycle. You don't have to front inventory for months ahead of time. You don't have to do any of that. So you have a service business. So you just need to make the business make money. You're already profitable, I'm assuming. Right. So you don't need the 500 grand. You have deals that are worth 500 grand. Right? Yep. From what you told me. Yeah. So why would I give a chunk of the way of the company to have somebody who's permanently going to be involved in my business for the cost of one deal?

It's like, just sell another deal. Gotcha. Work a little extra on your own time and then not, don't take that guy's money and just have the money. Okay. You know what I mean? And, and you, you absolutely think then it shouldn't be, you know, cause I feel like I'm creating extra problem that I otherwise wouldn't have to have being the whole high skill talent thing. If I just went down the productized route, you think it's really. When you say productized, you're talking about the 36 to 80 K price point. Yes. That's fine. I'm okay with that.

But again, it's going to go back to what I originally said, which is we just have to look at the LTV to CAC between those with the different avatars. If the LTV to CAC is literally the example I was just saying, if you have a $100,000 thing that costs me 30 and I make 70 or something that costs $10,000 that costs 100, I'd rather just sell six more of the 10K things provided I have the ability to sell that. So it's like I want to find something that has really good revenue retention, really good gross margins. If I have that, then I can just sell the shit out of it. And then I'd rather just sell five times more of that than try to come up with the

you know, high touch one that's going to like is a more immediate ticket today, but it's going to quickly, I'm going to quickly get constrained. So I'm basically pushing out my constraint based on what problem I'd rather solve today. So the question back to you is, do you think you can, so what are the gross margins on, let's say the average on the 36 to 80 K is 50,000. That sound fine. Okay. So let's say 50 K is the average price. What's the gross margin on that? Not too sure. We, yeah, we're quite early on. So yes. Half of that. Okay.

And then with the 200K thing that you do, what's the gross margin on that? 50%. That's gross margin? So you're running thin net margins because that means you're starting at 50 and then you got to pay everything else.

Yeah. I mean, at the moment we, we are getting this fulfilled by really expensive, highly certified guy that's been in the outside of the business. You're basically white label selling his stuff. We do what we can on the inside, but we, we accepted quite a few projects. So, okay. Then the follow-up question is, can you more easily sell four times as many of the low touch as the high touch? Yes. Then do that one.

If your gross margin is the same and you can sell more than four times as many on that one, then do that one. Basically, we're just looking at number of units sold times gross margin, the one that makes the most money.

got you so i think it always just comes back to the point of the the ltv yeah the calculation okay thank you so much yeah you bet sup alex what's up my name is woo first of all thank you you helped me turn my senior design project name of the day it's woohoo without the who so yeah no that works right thank you you helped me turn my senior design project at college into my business last year it's my second year in business last year we did 150 amazing and i want to get to 500 were you one of the schools i talked at

No. Okay, cool. Now I just figured out. Yeah, I would love to be a 500k. And the one thing that's stopping me is right now it's just me selling. So 90% of our sales come from in-person presentation. What do you sell? We do digital business cards for primarily in real estate. Digital business cards for real estate. Yeah. I know somebody else who's in real estate. How old are you? Me? I'm 27. 27? Yeah, I'm old. Nevermind. Nevermind.

Yeah, but it's digital business cards though. It's an NFT. There you go. Web3. I'm the only salesperson. I have a few vendors. So more better new with an alignment of that. My options are one, duplicate myself, hire salespeople to do what I do. Sponsor events, pitch and so on. Or number two,

basically transcribe my sales process online and I wanted to hear what you think is the better move. What's the value prop of the digital business card? So essentially we connect to, it's like a, I don't know if I'm, am I allowed to say like brand names? Linktree? Sure. Okay. It's like Linktree on steroids. Linktree, your phone and your CRM all connected. It builds your CRM on like an automate. Okay. So people opt in when they scan the QR code? Yeah. And then that info will go to their CRM essentially. Okay.

And it's got other features like business card scanner. You scan your business card, that info goes to your CRM. You want to grow this? So just to be sure, I'm not trying to sell. I just want to make money and to sell more expensive things later. Right now, I'm just using this to make money. To make money? Yes. Yeah, yeah. No, heard. Dude, I think if you sold something else, you'd make way more money. I agree. Okay. But it's a hard pitch. Like what you have is a hard pitch.

Because I'd be like, your digital business card is, here's my Instagram. That's my digital business card. If you want to find out more about me, watch some content. You know? What else are you into selling, man? Like, it's just, I just, I don't know if this is, fundamentally, you can sell, like, you obviously have the skill of sales. And so I'd rather just, like, use that on a better opportunity vehicle. Got it. Okay. It's like, this world is just crumbling.

You want to hire me? Well, if you confess. Yeah, so else. Ari, is Ari over there? Oh, there's Stephanie. Stephanie's right there. Stephanie works in our recruiting. You can talk to her. Hey, Stephanie, we'll talk about it on the real note, though. Oh, that was the real? That's not a real offer. All right. Neither was mine.

Two can play that game. On a real note though, like, I don't know what I'm doing. What do I do in the meantime to make money? Yeah. So you're selling, so who had this idea for this digital business? Well, there's your senior whatever thing, right? Yeah. Senior project. Yeah. One of the big issues I take with, and when I do my entrepreneur talks at like colleges and stuff, the big thing that I, that I hate about those classes is that they try and make seniors invent something.

It's like, it's very like invention heavy. Like everyone thinks it's shark tank. Like I have to invent something that doesn't exist when you can pretty much just like go look at any business that exists and just do that and probably make way more money. Like you start a lawn care business tomorrow, like knocking door to door and probably get to two or $3 million a year just with your existing skillset. Like you're able to, you know, shake hands and kiss babies and clothes. And so like, like you could sell solar and make, you know, 800 grand a year on your own income.

so i was like i'm just saying like there's there's like i think i would be looking at so when i was when i was doing the presentation yesterday i talked about how like now i look for products that people don't cancel i would look for products that people don't cancel probably the people that are similar to who you already sell to i would look for that product and then i would use all my sales skills on that rather than trying to explain to them why they need a digital business card got it basically for your current pitch to work you have to

You have to create a problem and then solve a problem all within one presentation. Right. And also explain some stuff that they don't understand how it works. Right. So it's kind of like three things. I'd rather just like talk to somebody who immediately already knows the problem that they have. And I'd be like, I can solve that. And I know from the history of that industry that they don't cancel and that they're just going to buy from me because they like me better.

Awesome. Well, can I have a follow-up question to that? Sure. Okay, so would you recommend... We asked on the other one, so yeah. Would you recommend that I get a sales position at another company or just sell more expensive? That's not here. No, I mean, fundamentally, every entrepreneur is a salesman at heart. We're the promoters. And so...

Like you can obviously sell for somebody else or you can sell for yourself. A good way to learn a new industry is to sell within that industry, kind of learn the ropes and then try to basically just figure out lead gen for it. Once you have that, then you'll have lead gen in sales. And so the only thing that you'd really need would be delivery. If you're good at sales and good at training sales, which is a different skill, then it comes down to like,

Can I like, this is where like insurance sales are incredibly profitable. Like there's really no delivery. You just sell the product, right? And then there's these massive behemoths that deliver the risk. Essentially. There's so many businesses that are basically demand constrained where people stick. You just want to find one of those that you like that caters to the existing avatar you currently sell to. Cause you already know that avatar well. And from, if we're talking speed to money and then sell that. Got it. Thank you Alex. I'll switch vehicles. All right.