Why Constant Changes Kill Growth | Ep 893 - podcast episode cover

Why Constant Changes Kill Growth | Ep 893

May 26, 202537 minEp. 893
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Summary

Alex Hormozi explains how constant changes hinder business growth, introducing the concept of a guaranteed 20% revenue decrease from implementing changes. He discusses using the ICE framework to prioritize impactful changes and emphasizes confronting difficult, core problems rather than seeking easy new projects. The episode includes several Q&A sessions where Alex applies these principles to various business owner challenges, offering tactical advice on scaling, business models, sales, and investment decisions.

Episode description

In this tactical episode of The Game, Alex (@AlexHormozi) explains why changing too much too fast kills growth. He unpacks the 20% drop rule, the ICE framework, and how sometimes the most scalable move is doing less.

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast, you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.

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Transcript

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 could give me 10% more, this could 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. So how's this morning?

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 you go to on the plane You're going to open up your laptop, you're going to 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 from. 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 or change 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 could give me 10% more, this could 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 up that 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?

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 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 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 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 the like a two to three percent increase

That happens pretty much no matter what. Because people just get better at their job.

sales guys just get a little 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 tend to do it a little bit better that's what specialization 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 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% dip, no question.

right but there are some changes that just aren't good enough to be even worth the the guaranteed cost does that make sense this took me a really long time to understand and is almost like i'd say like a a step brother 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 gonna have to do it either way

And so you might as well just confront the heart that's in front of you. And so being able to spell that out to myself and be like, this is the heart. The heart 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 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 planet so i i thought this might be a good primer 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 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&As. All right. So you're at $107,000. You're going to get to $1 million. $150,000. $150,000. 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 on 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. I know you're just going to be a middle young white guy.

so my business partner i actually know what you're dealing with because like when i came up i started making a lot of money like 26 27 and they're 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 60-year-old agents do. Okay. So my constraint... 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're still 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 yeah they don't necessarily I want to say to his boomers yeah boomers

so but 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 You care. No one else cares. You even think they're old. I don't think they're old. You a little bit because you're bringing it up. Right? So, 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 will care about your age for the two seconds before you open your mouth And then as soon as you open your mouth, that's like 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 because 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. 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 going to 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 a different market.

i can see two different ways that you could do it or 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 can 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. It's more so like the shots, like learning the correct shots 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 you know pay them four thousand dollars 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.

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 got customer success, you've got IT, you've got recruiting, HR, you've got finance.

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. But you're 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 show your competitor. This is so helpful. That works out great. My name is Justice. I'm a short form content creator. product review space so right now i'm doing about 120 million views a month just short form but 75% of our 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. Okay, 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 i'm gonna pause right there because i think this is really viable yeah 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 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 look back to a question let's say that we have you know a key hire that when this key hire comes in we could add you know five million oh nice green there

five million dollars in profit of the business all right this would be a really five million top line two million dollars in profit of the business but this is somebody we have to pay you know 500k 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 dollars 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 fine this one person for 14 million dollars?

All of a sudden it feels better. You're like, you know, 14 million. right and so i try to think about like what is this going to unlock in the business what does it 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

tech components 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 you know head engineer we'd have to you know bring all these other people and 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 can 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 Basically, why is this not scalable? Why can't you review 500 products of it? 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 at 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.

Yeah, they probably repurpose those ads. Yeah, they run ads behind it. So they usually are paying for like the usage behind that. So it is 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 title yeah that makes sense 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. Two more? Yeah. Sweet. Cool. 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 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 makes my company worth $6 million. Amazing. So I need to make more money. Yeah. That's money too.

So my question is, last year, I dabbled in organic content. I just like crypto. I was like, here we go.

And had some success. I had videos that got like two and a half million views. But, 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 you know 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

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...

Okay. So think about all the problems that moms have, specifically the moms that you're 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 you can the ones that take off you take those make them into 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

yeah super easy it's a really good strategy for anybody like if you if you're like trying to get it like if you're 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 is this person? And they'll look at your account and be like, oh, okay, they're alive. And so, but basically it's just, 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 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 you get stains out of these things or if you're if you're the same person who like sees this is like i'm never gonna do that awesome come to simple threats like i keep saying simple sorry small threats we got you covered Okay. All right. That helps. Thank you. All right. Alex, my name is John Paul and I sell healthcare listing services for.

doctors i guess i work with pi attorneys personal injury attorneys and so i'm 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. Uh-huh. For like car accidents, slip and falls. If someone flips and falls and they need to get it repaired. as a repairman yeah kind of yeah so my the hardest thing is trying to figure out how the PI lawyers are sending referrals to the doctor.

And a lot of the physicians that I work with only want to know how many referrals they're getting versus trying to brand them and doing the full spiel of marketing. they just want to know hey how many leads am i getting or how many you know referrals are ever gonna 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 problem to solve or is this just like overhead? There's a problem to solve. 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.

and what if driverless cars come and then it's like no accidents happen now what are we gonna 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 in the positions right So one is you could just reframe it based on revenue, like basically revenue volume.

So I'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 hahaha of course right but i think if you just reframe instead of lead count to revenue volume which is also what we 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.

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 super gratitude super grateful man we 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 di wires but a lot of our people that saw you 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 young people that maybe don't want to go to college or old people or middle-aged 30 year olds. so we're we're really 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 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 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 to franchise, but if you look at that avatar, they're probably not the hustler who's as hungry as the kid with nothing. 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 which you do now yeah so that kid already has been helped from you if he wants more help from you he can pay and he can save up his shot So instead of 20, if you want to make it 5, you want to make it 10, and you can offer nice financing terms, you can do that. I will just tell you that I get where your heart's coming from.

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. This is my client, yes.

Yeah, otherwise you're just going to have a bunch of freebie seekers who are going to come and then you're also going to get like the enforceability of the back-end contract and them repaying you is probably going to be a little bit of a nightmare. I would, 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 deals or whatever. And then, you know... send the deal to the person.

Got it. And if they're coming from your content and they already have trusty about it, 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 two-year training. They're vetted by us. And also, just think about 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 what was that your kid just won't be screwed up when they leave my school thank you oh yeah my name is max i sell tech and operations consulting to law firms we started about six months ago and

We run price clients and we have our other ones that are 36 to 80K and they have a 300 to 600K 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 off

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? kind of what you've done with gym launch yeah at what point would it be worth doing doing that if at all you said you wanted to sell this eventually right yeah yeah i wouldn't do that okay 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 will create a business that's significantly harder to solve. 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 trait. But if you build a firm like that, you build a very valuable company. And another, just on a side note, again, I don't know what I'm doing. I got...

I got a 500k in investment coming in soon. Why? It's been 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 with that no you don't see any point why do you need money you don't run a capital expensive business like what are you going to use the money for i guess to hire great people. The business model should be able to hire great people. 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 cash flow 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 yeah so why would you like why would i give a chunk of the way 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 because 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 you say products i was just talking about the 36 to 80k price power yeah 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 the different avatars. If the LTV to CAC is literally the example I was just saying, if you have a $100,000 thing that cost me $30,000 and I make $70,000, or something that costs $10,000 that costs $100,000.

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 attention really good gross margin so 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 trying 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 80K is 50,000?

that's not fun yeah okay so let's say 50k is the average price what's the gross margin on that not too sure we okay 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 gotta pay everything else. Yeah, I mean, at the moment, 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 and do that one basically we're just looking at number of units all times gross margin the one that makes the most money Gotcha. So I think it always just comes back to the point of the LTV. Okay. Thanks so much. What's up, Alex? What's up? My name is Wu. First of all, thank you. You helped me turn my senior design project.

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 at one of the schools I talked at?

no okay cool no i just figured it out yeah i would love to be a 500k and uh 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 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 never mind never mind

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, in my mind of that, my options are one, duplicate myself, hire salespeople to do what I do, sponsor events, pitch and sell. 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 a 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 name? 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 card yeah and then that info will go to their crm

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 solve. I just want to make money and to solve more expensive things later. Right now, I'm just using this to make money. To make money. Yes. Yeah, I never heard. Dude, I think if you sold something else, you'd make way more money. I agree. Okay. But it's some hard pack.

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 i just i i just i don't know if this is fun you can sell like you obviously have the skill of sales and so i'd rather just like use that on a better opportunity Got it, okay? Like, this world is just crumbling.

You want to hire me? Well, if you can fast. Yeah, so. Ari, is Ari over there? Oh, there's Stephanie. Stephanie's right there. Stephanie works in our recruiting. 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.

so you 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 this so who had this idea for this digital business well there's your senior whatever thing right yeah in your 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 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 can 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 skill set. Like, you're able to, you know, shake hands and kiss babies and clothes. And so, 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 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. 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? Okay, so would you recommend... I asked him the other one, sir.

would you recommend that i get a like a sales position at another company or just like sell more expenses out here so no i mean fundamentally every entrepreneur is a salesman at heart like we're the promoters and so like you can obviously sell for somebody else 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. Once you have that, then you have Legion in sales.

and said the only thing that you'd really need would be delivery. If you're good at sales, and I'm good at training sales, which is a different scale, 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 because you already know that avatar well and from if we're talking speed to money Thanks, Alex. I'll switch.

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