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I've got three boxes here. One of them contains $1,000. One of them contains $10,000. And one of them contains
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$100,000. And you three are the avengers of entrepreneurship on the internet. So, you're going to tell me what you would
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do with that amount of money to build a scalable business. So, do I get to give the money? Is that how this works?
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Okay. So, I would three highly successful entrepreneurs with three very different perspectives. This is the
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ultimate master class in creating and scaling your businesses to make millions. There's two paths to making
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money quickly if you don't have any. And the first path is go find the best entrepreneur and go work for them. Learn as much as you can.
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Totally agree. Like Kim Kardashian was Harris Hilton's assistant and she learned the playbook for being famous.
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And then she took it to a new level. And then the second way is high risk but highest reward. Go do it yourself.
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And the first business that you start, you're going to be learning the game of business even more than you're learning the business that you're doing. Things
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like if you wait 8 seconds after you ask someone to buy, you close 30% more sales. And there are actual studies now
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that show that if I'm a woman, you make more money if you do one thing. You wear makeup, which is wild.
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And what about making content? Building a content empire that builds your business. This is brand new to a
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lot of people. And so a lot of creators online don't think about how do I monetize on top of this, right? And I can name some Tik Tokers
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with 50 plus million followers that have had failed launches because they have views but they have zero influence. And
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in order to create influence, there's four things. So number one is okay so let's go on to simple actionable
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frameworks. So I have a framework in order to raise money. I have a framework for pitching and I have one that can increase sales
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by 20 to 40%. And then if you want to know if your business is going to make you money or not. We use the moat strategy
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and there's a lot more. So let's go through all of this. I see messages all the time in the
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comment section that some of you didn't realize you didn't subscribe. So if you could do me a favor and double check if you're a subscriber to this channel that
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would be tremendously appreciated. It's the simple, it's the free thing that anybody that watches this show frequently can do to help us here to
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keep everything going in this show in the trajectory it's on. So, please do double check if you've subscribed and uh
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thank you so much because in a strange way you are you're part of our history and you're on this journey with us and I
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appreciate you for that. So, yeah, thank you [Music]
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Daniel, Cody, Alex. I feel like I have waited a long time to have this
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conversation with you three because in my mind you three are the avengers of entrepreneurship on the internet and for
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very different reasons. You do very different things. You have very different perspectives. You run very different businesses. But that is why
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I've been so looking forward to this conversation. Before we get into some of the technical stuff and really specific
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topics, I wanted to start with a more broad question. You're all entrepreneurs. you will speak to and educate millions of entrepreneurs on
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your own channels in your own rights. And the question I wanted to start with is from a psychology perspective and a
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mindset perspective, what does it take to be an entrepreneur?
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And can anyone listening to this right now become an entrepreneur, a successful
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entrepreneur? I'm going to throw that question across the table straight away to Alex. So starting with the second
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question first, can anyone become an entrepreneur? At the basic level, if a kid can go around the neighborhood and
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say, "Hey, I will mow your lawn or I'll rake your leaves or I'll babysit your kid uh in exchange for money."
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Fundamentally, it's entrepreneurship. If we're just taking it at the most basic level and so what prevents someone from doing that, basically, if you can get a
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job, then you can be a self-employed entrepreneur. And so I would say that is like my baseline number one from a
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behaviors perspective. Then you get into, okay, I want to learn about the game of entrepreneurship. And then there
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it's basically a lifelong journey of how much leverage can I apply to this um at all all pieces of the business because
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even going around knocking on a door and saying hey can I be a babysitter you have all levels of business all all
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functions of the business still exist there. They're just done a lot of times simultaneously and at very low leverage. So you have some level of advertising
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you went up you knocked on a door you have some sort of presentation that you give in exchange for money and they agree okay great we have a selling you
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know component to it. Um, then we have some sort of delivery that's going to happen, which is like I might show up with my human body and then take care of
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this other human body and make sure they don't die, right? And probably have a couple other things that I might clean the house while I'm here as a little value ad. And then fundamentally, it's
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like that's a complete that's a complete cycle of exchange. And then, you know, maybe they leave a review because you start have a website, but that starts to
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create leverage and then then you expand from there. But I think fundamentally at the most basic level, that is entrepreneurship. And then everything else is just more.
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Cody, you can be an entrepreneur if you're willing to tolerate pain. I I think being an entrepreneur is largely a
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byproduct of three things. One being how much pain can you tolerate? Two being how consistently and three being can you
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take the consistent pain that you have and find a way to decrease it which just means can you learn from the things that
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you've gone through as an entrepreneur. By and large it is a hard path because
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uh at the end of the day you can't blame anybody else and there's a scoreboard constantly behind you. And so, you know,
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if you if you have a job, it could be the boss. It could be the other decisions. It could be somebody else's fault. But if if you are the
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entrepreneur in charge, there's nobody else. And the thing that I love about entrepreneurship, and I think all
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entrepreneurs love, is you either win or you lose. In a lot of ways, it's a zero- sum game. And it's measured
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predominantly by do I grow my profits and and revenue in the way that we set
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up this the system today. So, yes, I think anybody who is willing to tolerate pain can become an entrepreneur. And I
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think it's actually okay to have pain in your life and you should seek it a little bit. The same thing as the gym.
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We don't go in there and think it's going to feel great to have a workout and have our muscles literally rip apart in order to rebuild. And yet that's what
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it takes in order to get more fit. And so um I think part of the game of
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entrepreneurship is just like can we increase pain tolerance over time consistently? And once you do that, then
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the things that used to be hard today, you'll look back on and you'll sort of chuckle because they will not be hard any longer.
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So there's various types of pain in my life that I'm not willing to tolerate. And there's other types of pain that I've like volunteered to choose over
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long periods of time. So I'm trying to understand, and this is just a question to all of you, we'll get into Daniel straight after is
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how do I know what pain is worth tolerating and over a long period of
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time? Because some pain is not good pain. some pain is not worth it. How do I know what pain is worth it?
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Well, I think that's what comes into that third level of you have to be able to be on a a journey to decrease the
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pain, which is learn. Like that's what learning means. Like you try something, you touch the stove once, you realize that the stove burns you when you touch
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it, you don't do it again. If you continue to touch the stove continuously over time, then you haven't really learned. Um, but you know, I mean,
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there's lots of different types of pain. There's acute pain, which is like you feel it in this moment really, really deeply and intensely. And that in
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entrepreneurship often is things like I've completely run out of money. Nobody is going to fix this problem. I'm the
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last one on the line. And then there's a type of pain that is low-grade pain. So kind of consistent over time. I have to
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work harder. Every single Friday there's a you know a paycheck that I have to give somebody else. That's sort of
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consistent pain. And I think in entrepreneurship we should assume you're always going to have some version of
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lowgrade pain. I had pain when I worked in the call center and I have pain now. Did you have
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acute pain when you worked in the call center? It was just drudgery and boredom and so you are out of alignment. So when you
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have an origin story, a mission and a vision and you feel an alignment between your past, your present, your future and
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you feel excited about the future that this is working towards then the pain becomes meaningful. And what you're looking for is pain that
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is in alignment with origin, mission, and vision. So meaningful pain, meaningful pain. What do you think? What do you think
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about that same question about can everybody be an entrepreneur? And what does it take from a psychology perspective? I'm I'm asking this
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question because there's people at home that are going to wonder. They're they're in a job at the moment. They're pondering a lot. They see people like
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you three who seem like you're a million miles away. Yeah. But you didn't start a million miles away. So, what does it take to be successful
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at the highest level in the comments of every one of these videos is not everyone can be an entrepreneur. Not everyone wants to be
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an entrepreneur. Interestingly, uh the idea of a job is a very recent
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innovation if you take a long view of history. Uh jobs really only came into existence around the 1850s. the idea of
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a wage. Prior to that, people got paid for tasks and essentially you completed a task, you got paid and all sorts of
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levels of society and that gave rise to very entrepreneurial classes of people. Uh you had to be quite entrepreneurial
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prior to the 1800s. So it's definitely built into us. I personally think that the human brain has three kind of
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levels. The base level is very concerned with survival. It's fight, flight, freeze, freak out. The next level up is
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just interested in status quo and it's interested in repeating the past and doing what's safe and just doing what's
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comfortable. And then there's this other part of us that is a visionary and it's interested in exchange. It's interested
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in empathy, strategy, love, compassion, adding value to others and it's it's a
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higher mind. It's a higher way of thinking. Unfortunately, what happens in most of society, especially with a lot
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of um social media and especially with the way we were raised through the schooling system, is that we keep get
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just getting dragged back into the autopilot and the reptile brain. Uh as opposed to being able to have a little
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bit of time for the visionary and it's that visionary mind that makes you feel very entrepreneurial. I have seen people
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who have never had a business. They've never been entrepreneurs and they get around a group of entrepreneurs and the
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buzz and the energy from that group of entrepreneurs becomes contagious and they start opening up this other part of
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their mind and they go, "Oh, wait a second. I've got an idea. I could do this." And they start thinking about what's possible. And I've watched people
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go from I could never do this to I could totally do this in a day.
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Alex, you wrote something down there. It was when you were talking about, you know, what kind of pain, you know, is
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there? And I think there's a a classic, um, example of when do I push and when do I pivot? And so, um, pivoting comes
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from, at least from my perspective where you have an underlying assumption that your original thesis was based on that
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has been disproven. So, if I say, hey, I want to start, you know, um, a doggy toothbrushing business,
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um, you know, there's an underlying assumption that people are willing to pay for their dogs to get their teeth brushed, right? Um and within the
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context of like I have presented this in a way that follow the normal persuasive you know taxes of uh you know this is
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the benefit you know these are the these are the prices that I would need to charge in order to make a profit etc. If I find out that no one cares about this
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then that would be a moment where I would say I don't think you should push harder I think you should consider pivoting. The pushing scenarios is
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typically when your underlying thesis is still is still true. You have not invalidated that and so you just haven't
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figured everything out yet. Um, and most of that is where the pain comes in. Um, that that Cody is referencing. Now, I
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think the third door where it gets really tricky is that there's opportunity cost. And I think this is where most entrepreneurs get trapped.
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And in some ways, rightfully so, because, you know, it's very, very hard to build a successful restaurant that's
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local. And if you want to be a trillionaire, it's probably not the way to do it. And so, what happens is you develop skills, you know, developing
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your first opportunity. You figure out how to do doggy toothbrushing. and you find out that people don't actually care as much about brushing their dog's teeth, but they do care about their dog
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having good breath and being, you know, clean and groomed or whatever. And so, like, so you pivot a little bit and then
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you're doing this thing, but then you have these big aspirations of being a trillionaire. And you're like, I don't know if I can turn this into being a
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trillionaire, but I did learn how to market. I did learn how to sell. I did learn how to manage. And then you think, okay, well, should I start an AI
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startup, you know what I mean, as my next thing because I did develop all these skills. So, now what do I do? Right? And I think
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a lot of people are in uh maybe you know one step later entrepreneurs are in this camp where they're like okay I didn't
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understand the world as well. Now I understand different opportunity vehicles have different returns but also risk associated with them. All of them
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require pain and work. And so if pain is basically I can only interpret pain as 1 to 10 and 10 out of 10 restaurant days
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will still suck as much as 10 out of 10 AI software days. But this one has a billion dollar payout and this one has a
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$2 million payout. Well, if I'm going to suffer either way, I might as well do the thing that gets me the best return, which is good entrepreneurial thinking.
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But then so is focus and so is longevity. And so then what do you do, right? And so um and so I I I just
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thought about that from a pain perspective because you have a lot of times the pain happens from insufficient volume. Like you think that this like
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this business isn't working, but it's realized it's usually because you're not working enough. Um and when I say that, I mean doing enough in it. So it's like,
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hey, I knocked on 20 doors and like no one wants this. It's like, well, obviously with 20 doors, you have no [ __ ] idea if somebody wants it or
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not. It's like knock on 2,000, you'll probably get a better idea. And so, but most people like have never had rejection before. And so, they think 20
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is a sufficient amount. Um, or like, hey, there's no good there's no good engineers in insert city. It's like,
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well, how many did you interview? You'd keep talking and eventually it's three. You're like, okay, well, no [ __ ] I mean, if you're going to marry somebody,
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do you think you'd only go on three days? And then you just say, I guess I have to pick from one of these. So, it's probably not a good idea. And so, I think the same idea of insufficient
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volume is one of the things that can that can create pain, you know, for entrepreneurship. you have opportunity cost of like, okay, well, now there's
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the green, the grass is green over there. Should I stop what I'm doing now, right? And then you have kind of underlying thesis, which absolutely if
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you have your underlying thesis for the business that is disproven, then that's one of those times where it's probably worth pivoting. But for anybody who's
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listening who's a newer entrepreneur, my my big my ask to you would be I probably wouldn't start an AI uh startup caveat
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as my first business. And what I mean by that is like if I as in building an actual tool now if you want to like
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implement AI using other people's tools that's a different thing but the first business that you start you're going to be learning the game of business even
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more than you're learning the business that you're doing. And so then once you learn the game of business then you start to see kind again you start to see
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more clearly the opportunities that exist. The next step for me in what Alex said
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was about how do I know which idea is worth pursuing. Alex was saying there that which I completely agree with is that the first thing you do is actually
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teaches you the fundamentals of how business works, team building, marketing, promotions, customers,
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customer service. But for those people that are sat at home and they have an idea and they're mulling whether that is
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the idea worth pursuing, is there a framework for knowing if it's a good idea or a bad idea?
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What we use that comes from private equity. If you want to know if your business is going to make you money or not or investable or not, we use the
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moat strategy which is basically M stands for margin. So you want a business that actually makes you money,
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doesn't just generate revenue. And so a good business typically has at least 15% net margin. So that's the money you put
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in your your pocket, right? So that's profit. Yeah. Yeah. Exactly. And then uh the O stands for
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operations. So operations being can this thing actually scale over time or will I really have a job not a business?
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And what's the difference there? The difference between the two is if you have a job not a business that might be for instance without AI if my entire
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business was just me talking continuously to camera and I'm an actor it's really hard to turn acting to a
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business right you're trading time right you're still an employee you're just self-employed as opposed to a
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business owner and there's a real difference between a CEO and a self-employed person and then the A stands for advantage which is do I have
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an unfair advantage in my business I think over time all arbitrage windows close so if you don't have some sort of
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advantage antage. It's hard to stay in business over a long time. An advantage might be I have distribution because I have social media so I can get more
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eyeballs. I can figure out how to talk to 2,000 people quickly because I can do it via video as opposed to knocking on
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20 doors. Or it could be logistics or it could be uh 10 years of experience in an
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industry. And then the T stands for TAM, total addressable market, which goes back to the doggy teeth issue, which is,
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you know, is this a real market that enough people are interested in that I can build a business that is big enough
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for me? And, you know, to Alex's point, I don't think everybody should try to play the trillion or billion dollar uh
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game. In fact, I think it can be quite miserable to to strive for billions. And
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so the the total addressable market for your local fruit stand in your community may be a perfect amount of income for
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you, but let's actually know what amount of income is reasonable for you. And the cool thing about entrepreneurship in
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like today's age, the data is available everywhere. And so in private equity, you would take this model like that. So you'd go moat,
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you would I take them and for each one, I rank them one to 10 and businesses. So margin, operations, advantage, total
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addressable market. each one of them. A 10 is perfect. A one is the worst you
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could have. And businesses that are better than 30 across all four, well, that's a fund it. That's a fundable
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business model. Businesses that are less than 30 but more than 20, that's a fix it. You've got some problems in the
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model. And businesses that are less than 20, that's a flee it. This is probably not right for you and a hard business to
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do. I think it's not just the people who are looking for a new opportunity or people who don't currently have a business. I
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personally think at the moment every single person on the planet who has a business should assume that their business is on borrowed time because AI
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is going to disrupt everything and in that disruption everyone has the opportunity to rethink whether they want
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a different opportunity or whether they want to pivot. It's the perfect time. I look at simple things when I'm thinking about is it a good opportunity. I think
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every good business is built upon somebody's case study. So when I look at not just businesses as a thing on their
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own, I think businesses as a thing on their own have to be taken in consideration with who's the entrepreneur. So your entre like
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something that's a great opportunity for Cody may be just a disaster for me and like and likewise. So I'm looking at the background of the
00:17:14
entrepreneur. Do you have a case study to leverage? Do you have knowledge? Do you have a network? Do you have resources? Have you got a reputation in
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something? Because those are the things that we can then leverage. And then I'm just going to have a look at three little things. I'm going to say this
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idea that you've got going forward. Does this address someone's pain? Right?
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Is there some sort of problem that this solves? And that to we could measure that, right? Because people pay to move a metric. They love to move some sort of
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a number. So, is there a pain that we can measure and can I take people out of that pain based on my story?
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The next thing is does that type of person who I'm going to solve that for, do they have money to spend? Because
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ultimately 60% of all the money is in the top 10%. So the top 10% have about
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60% of the available disposable income. So groups that t tend to have money is
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business owners, executives, people who've got accumulated wealth. Um you
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know, so you're looking at like some sort of indication that you're selling to a group of people who have money. Underneath that top 10%, Amazon's
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already got them, McDonald's has already got them. Like that's a saturated part of the market. You looking for that top 10% who've got disposable income. And
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then the final part is passion. Like are you passionate about this? And my definition of passion is a willingness
00:18:29
to suffer. So it's not do you get joy from it, not are you super happy from it. It's are you willing to suffer for
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this? Are you willing to have delayed gratification um would an objective third party who looks at your behavior,
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who looks at the way that you show up in the world, would they agree that you seem to be willing to push through
00:18:47
difficult times in order to have this? So those are some of the conversations I'd have with anyone. And not just people who are starting out, people who
00:18:52
have already got a hundred million dollar business. It's like the adult marshmallow test basically. Yeah. I think Cody had a had a great
00:18:59
framework in terms of thinking about this from an investing perspective for the people who are considering starting their first business. I like the pain
00:19:05
passion profession angle of like typically it'll be something that comes from a personal pain that you overcame whether it's you had an eating disorder
00:19:11
or you have kids who have allergies and you figured out how to pack lunches or you figured out how to store stuff for twice as long because of some unique
00:19:18
thing that that you retrofitted a cooler with. whatever some passion which is just like a hobby that's that's you're
00:19:23
deeply interested in or it's a profession so something that you already currently do like in a way this is I think one of the easiest self-
00:19:29
entrepreneur you know self-employment path is just going from employed to self-employed doing the same thing that somebody already pays you for
00:19:35
so like you don't need to worry about like market risk of like I wonder if if accounting is still going to be desired
00:19:40
by other people like right now because everyone's so interconnected like remote work and being able to be fractional
00:19:46
like many people can start kind of mini consulting businesses doing, you know, because a lot of businesses and
00:19:51
entrepreneurs are very um bad at allocating resources. And so they have a lot of quote full-time employees that
00:19:57
are working 20% of their effort and still keep, you know, keeping their paycheck and at the end of the day like they do enough to keep their job, but
00:20:02
not so much that they are nearly at their full discretionary effort. And so all of a sudden you think, okay, well, I
00:20:08
could probably do the same work for half the price and the entrepreneur be willing to pay it, but I could do that same work for half the price for five
00:20:14
times the people and make three times as much and do it on my own time. And so that becomes I think a great like foray into entrepreneurship. Now what do you
00:20:20
have to learn there? It's like well you already have delivery down because you already do the job. You just have to learn how to promote. It's just like how do you reach out to people and ask them
00:20:26
if they want what you have and then get them to trade you money for it. Um but that like at least takes half of it out of the equation. And almost all three of
00:20:32
those pain, passion, profession, you already have kind of the back end. Like you have the pain, you figured out the thing. Uh the passion, you've already
00:20:38
spent all this time loving this thing. So you've already done a lot of the the work and research. And so really you just need to learn the front end which
00:20:43
is like how do I promote and how do I sell, right? how to get someone to give me money for it. And then in terms of um
00:20:49
how much money you make, I think Dana had a great perspective of like, you know, sell the rich, like they're the ones who have the money. And if you uh
00:20:54
sell rich people, you get to sell at rich people prices, which is more fun. Uh and so I mean, I'll give you a simple
00:21:00
example. Um I have a CRO company that that we do a conversion rate optimization across our sites and our
00:21:06
portfolio. And so if that company go works with an e-commerce business and they, you know, add 10% to, you know,
00:21:12
topline and goes from 1 million to 1.1 million, they make $100,000 of value. If they work with an e-commerce business that's doing $100 million a year and
00:21:18
they do the same exact work and they add 10%, they add $10 million a year. So it's a hundred hundred times more in
00:21:24
terms of value that's being created. And so fundamentally, you have the value they create, your ability to negotiate a slice of that pie, how unique that is.
00:21:31
As in, for example, I could have plenty of sales guys are like, "Hey, Alex, I could sell millions of dollars of stuff for I'm like, "Yeah, but so could every
00:21:37
other salesperson." So, you have significantly less uh you know, negotiating power even if you have the
00:21:42
negotiating skill just because many other people can do it, right? And then the third the the final component is risk. And that's the one that I would
00:21:49
multiply everything by, which is how much risk you take on. People often say this idea of selling to the rich, but as you explained it there,
00:21:54
what what it actually sounded more like is sell to the person who's going to yield the most returns from your skill.
00:22:00
And I I reflect on this because I spent the first half of my career doing social media marketing. Yeah. I think I said this when we sat down that I used to
00:22:07
work with fast fashion companies or fashion and the net return
00:22:14
of me selling them all dresses was tens of thousands. I then left that business and spent two years working in
00:22:19
psychedelics in the biotech industry where if this was around the g the meme stock thing where if they could
00:22:25
galvanize people on social media to care about their stock the upside the swing was billions of dollars. I was the only
00:22:32
employee in this biotech firm that ended up listing on the NASDAQ for $3.2 billion. And so their remuneration to me
00:22:40
for the six months contract was many many many many many millions. Yeah.
00:22:45
Because they they made billions. So for me they they thought they were ripping me off. Yeah. And and I think about funnily enough
00:22:52
when you put the same company on different stock markets the the company is worth wildly different. And I think the same about
00:22:58
our skills where think about the stock market where you're trading your skills.
00:23:03
I've got a I got a small example of that really small example. There was a guy who we worked with who was an occupational health and safety uh
00:23:10
consultant and inside the workplace in a typical office he would charge a couple of grand a day
00:23:15
uh to go in and it was about 10 days so about 20 grand to do an occupational health and safety. And I asked him the
00:23:20
question, "What is the most dangerous workplace you've ever worked in?" And he says, "Well, there's this type of
00:23:26
manufacturing that has lasers, freezing stuff, boiling stuff, lava, you know, the sharks, you know, the whole thing,
00:23:32
right? Whatever it is, and not actual sharks, but you get the idea." And I said, "Do you know how to solve the
00:23:38
problems of that workplace?" And he says, "Yeah, I absolutely know how to fix those problems." I said, "Why don't
00:23:44
you position yourself and why don't you run a campaign that you're one of the best in the world for that and that
00:23:49
you're actually going to just run a campaign around that?" Um, within a year
00:23:54
his day rate had gone to 20,000 a day from 2,000 a day and a typical engagement had gone up to 400 grand.
00:24:00
Mhm. Mainly because he went from, you know, the same skill set, but he applied it to
00:24:06
a a much, you know, more valuable environment. Podcasting is somewhat similar, you know, because if I podcast
00:24:11
in the UK, the amount of money I get per view from YouTube is half versus if I do
00:24:18
the same activity, the same amount of effort, the same amount of hours in the United States, the platforms pay me
00:24:24
double for the same amount of views. And I think many of us are like trying to get a pay rise from our boss or whatever, but actually thinking about
00:24:30
are you trading your skills on the highest return market is a great way. We I used to hire writers at my old company
00:24:36
and those writers would be paid you know 30 $40 $50,000 whatever it was in the UK
00:24:42
when when I was working in biotech and we were looking for someone that could write about biotech it was a quarter of
00:24:47
a million the salary it was five times more for the same fundamental skill of writing. I think that I think that a lot of times
00:24:53
when you're starting out as a brand new entrepreneur it's scarier to sell to rich people. You're like I don't know rich people. I'm not a rich person. I'm
00:24:59
going to sell to my friends. That is very normal. That's the people that you have the closest proximity to. But the problem is is that means you have to
00:25:05
play the volume game. And the volume game is actually really hard. It's hard to get a lot of people to buy your thing. Incredibly difficult. It's
00:25:12
actually much easier to get a few rich people to buy your thing. And so, you know, we had this home inspection
00:25:17
company and I didn't know it at the time, but he was telling me they were having like major cash issues in their business. And
00:25:24
uh and I could kind of tell because when an entrepreneur is under stress, like you can sort of see it, you know, it's a it's a a visual thing, too. and he was
00:25:31
about 45 days away from uh running out of cash. And when I was sitting down and talking to him, I was trying to understand his business. Home inspection
00:25:37
has been around forever. It's a normalized business. This business works. It functions. It has good margins. It's a rollup for private
00:25:43
equity. The business model is not the issue. So, what was the issue? The issue was their clients and their pricing. So,
00:25:50
he was trying to be the home inspector for everyone at a lower price point. And
00:25:55
what does that mean? It means it was actually really hard for him to advertise because he wasn't niching down. He was competing with all of the
00:26:00
major players and he had very little margin because he was competing for
00:26:06
people who couldn't afford very much in their home inspection costs. We made one change which is we just said in front of
00:26:12
his business name and in all of his ads luxury home inspections instead of just
00:26:17
San, you know, San Diego home inspections or whatever city he was in previously. And that one change
00:26:22
increased his margins by 45% and they saved his business. He didn't do more volume. He didn't hire more people. He
00:26:29
didn't get smarter. He didn't get better. He just sold to rich people instead. And because that increased the
00:26:35
surface area that he was covering, so each house was like, I don't know, thousands of dollars instead of a couple hundred bucks to inspect, his business
00:26:41
was saved forever. And so I I think protecting your profit is so crucial
00:26:47
when you start a business. And nobody tells you that because it feels safer to sell things cheaply to people who don't
00:26:53
have very much money. But there's that old adage which is, you know, try to work with a $50 client and they will
00:26:59
say, "I need everything under the sun for this $50 I'm going to give you." And then go to a $50,000 client and they'll say, "Why are scent?" And so, you know,
00:27:06
so in the beginning, go for the $50,000. And the last thing I'll say on that is also when you're a young gun
00:27:12
entrepreneur, a lot of times people who have money, they got there through business nine times out of 10. They see
00:27:18
themselves in you as a young hard worker. You can often get away with things when you are young working for
00:27:24
somebody who is rich and sees themselves in you, especially in service businesses that you just can't at volume when
00:27:30
you're selling to people that really need that last dollar. And so I think that's why most businesses go
00:27:35
servicebased business. You trade your time for money in some sort of way. Then you productize the service. So now you
00:27:41
make the service so other people can run it too. And then finally you turn it in technology software as a service. you
00:27:47
increase your margin at every single one or your profit at every single one, but they're the same business. You're just
00:27:52
smarter. You're you're a higher level entrepreneur when you're able to create tech around it. And but really all tech
00:27:58
is is process at scale. And so it sounds scary when you're just starting out, but it it's it's really just the difference
00:28:04
between 10 years in entrepreneurship and learning and not I think when you um when you're starting out, you a lot of times you sell out of
00:28:10
your own wallet to to Cody's point. So, it's like you have no dollars in your wallet, so you assume everyone else has no dollars in their wallets either.
00:28:17
And you're so afraid of getting rejection that you continue to lower the price until you get here. You hear people say yes. But just as like a
00:28:24
benchmark for people who are starting out is that like usually you're appropriately priced when seven out of 10 people are saying no. Um that's like
00:28:30
about the appropriate price. So if you have like if I you know see a business and they're doing 80% close rates as in like 80% of uh the people they talk to
00:28:37
say yes, they usually have a double or triple in pricing just sitting there. If they're at like 60% close rates, they
00:28:42
usually have a one and a half to 2x price increase that's sitting there. If they're at, you know, 40 to 50, they've
00:28:48
got a 50% price raise in there. And if they're right at that, you know, 30-ish 35%, then they're usually appropriately priced. And if they're at 20, they just
00:28:55
need to learn how to sell better. But and so, but fundamentally, I say this because usually, you know, in the beginning of entrepreneurship, you're so
00:29:01
afraid of hearing no. Um, but the reality of it is that you need to be
00:29:06
hearing no more than you hear yes to know that you're being appropriately priced because you like I way back in the day I
00:29:12
had a gym. Um, and I had I can't remember how many members it was, but uh I I said that's it. And I decided to
00:29:19
triple my prices, which is a pretty big move. Uh, we have a recurring membership base. And so I gave everyone a trial of
00:29:24
the new level of service I wanted to give. I wanted to go from large group to semi-private. And um, I tripled the
00:29:30
price alongside that. and I lost one-third of my customers. Um, but I had twothirds of the people at three times the price. And so I made um two times
00:29:37
the revenue and I cut my costs by twothirds. And so I made a lot more money.
00:29:44
And it was probably better for your clients as well. More exclusive experience. 100%. And it was like right as I was
00:29:49
beginning to learn how like pricing uh worked with profit in a business. And so it and by doing that tripling in price,
00:29:55
it didn't like triple my profit. It did way more than that. And so like when you have a 10% or 15% margin business, like
00:30:01
Cody saying, if you actually can pull off a double in your pricing, it'd be a 6x or 7x increase in profits.
00:30:07
So there's a lot more sensitivity to that price number. What's interesting is that it's really just like, you know, a lot of like, how do I raise my price?
00:30:13
It's like you do the exact same thing you normally do and then right when you're about to say the number, you just add a zero and then and then you just
00:30:19
act the same. Dan Kenny had this great quote. He said, um, go as high as you can without cracking a smile. Uh, and I
00:30:25
think that's usually a pretty a pretty decent place to start. Yeah. And if nobody is giving you push back on pricing, that means you're too cheap
00:30:30
immediately. Like I mean value metrics I think are so un listen the thing is like if you're a serious business person, you
00:30:36
want to make more money, pricing is going to be really interesting to you. If you're not a serious person wanting to make a lot of money, pricing seems
00:30:43
like such a boring conversation. This will never go viral on the internet except for people who actually are in the game of business and they understand
00:30:50
that pricing save saves businesses. And the the thing that I learned that I thought was like wrong at first, and I'd
00:30:56
be curious if you guys were the same. I thought it was wrong to charge different people different prices. I was like, "No, no, everybody gets the same price.
00:31:03
That's the right way to do business." And then I realized there's something called value metrics, which is basically
00:31:08
your prices should be a representative of three things. Usage, so does somebody use this service a ton? Then you should
00:31:14
charge them more. Do they have a lot of users? Do lots of people use it on their behalf. Or then finally, uh, value. How
00:31:22
much value do they derive from it? Do they make a ton of money? Um, you know, can they have some sort of quantifiable return? And if you're charging everybody
00:31:29
90 bucks a month for whatever your service is, you are wasting a ton of money from a segment of your clients
00:31:35
that would pay you way more. Like Typeform is a good example. I I started using Type Form, started using
00:31:40
it myself. They charge me $50 a month. Then I started running tens of thousands of surveys through there and I put my
00:31:46
whole team on there. Now I'm paying $1,000 a month. It's the same [ __ ] tool. Yes, it is. But I'm using it way more
00:31:52
and I've got more of my team using my account as well. So they're charging me a thousand just over $1,000 a month and they only had to acquire you which
00:31:58
is amazing. So from acquiring one person and you're like you know your cost of good or their cost of goods don't
00:32:04
escalate at the same rate at all. So that's how these SAS companies get this 80% margins. That's it. When you look at uh this this
00:32:11
little pyramid of customer segmentation, you get 1% of people who have 15% of the budget, 9% of people have 45% of the
00:32:18
budget. 90% of people combined 40%. Right? So when you actually break that
00:32:23
down, you have one person willing to pay 15 grand, you have nine people willing to pay 5 grand each, and you have 90
00:32:30
people willing to pay 445 each. So you are almost always better off going I
00:32:36
think the best place for most small businesses to go is that 9%. And the reason is the top 1% typically shop on
00:32:43
pedigree. They want to work with the best businesses out there. They want to win work with the ones who have won awards and the ones that have been
00:32:49
around for a long time. Relationships and and through trusted relationships. The 90% they shop on price. They have a
00:32:55
fixed price and they only want to shop on that price. The 9% shop on passion. They want to follow someone who's an
00:33:01
interesting uh who has an interesting new take on things who's putting together a group who's done some education or entertainment around it. So
00:33:08
the this 9% I would call that the affluent niche. And that affluent niche is really good place to start. And that
00:33:14
9% are the ones that are closest to moving into the 1%. So you can grow with a client over time, which we saw a lot.
00:33:19
You could help get them up to the 1% and then then they'll take you and introduce you to all the others. This was one of the really fascinating
00:33:25
things for me when I was running a marketing business, which is I think you you referenced this Cody, which is when I started the company, I was working
00:33:31
with founders who had a 10K budget and the amount of times they would call me because of that 10k budget because that
00:33:37
was do or die for them. And then when we signed Uber and Coca-Cola and Samsung,
00:33:43
the budgets are massive and they they call me less. They sign things off quicker.
00:33:49
The meetings are easier, life is easier. And that's just one of these sort of interesting phenomenons with um with
00:33:55
client services, I guess, and service businesses generally is the bigger the budget, it typically it requires the
00:34:00
same or less units of effort to keep them happy than someone whose life is on the line because it's their five grand
00:34:06
out of their own pocket. I think part of that you earn too as an entrepreneur. I think I mean I'll speak
00:34:12
for myself. I uh you start out selling way too cheap. Um because you also need the money
00:34:18
because as much as it's like a nice it's very comfortable for me to say like yeah you need to add a zero to your price tag. If I don't get paid for the rest of
00:34:24
my life it doesn't matter. And so I have a lot of leverage and people can feel that. That's really
00:34:29
interesting, right? Whereas I mean this is also like if you behave as if, right? If I behave
00:34:35
as if I have a significant amount of money, then I tend to attract people who are going or basically somebody else who also has a lot of money will recognize
00:34:40
that behavior and say, "Okay, this guy's a player." And so then they'll be more willing to do business with me. Now, it's tougher when you don't have that
00:34:46
and you present that way, right? Which is so I think that a lot of this kind of does become earned because like either
00:34:51
you're faking it, which is not my not my recommendation, or you just do a decent amount of volume and you realize you're like, "You know what? can't charge $99 a
00:34:58
month for this. It doesn't make sense for me. And then you have a different level of confidence going into this where you just look at someone, you're like, I just can't do it for that price.
00:35:04
That's the word confidence, isn't it? Yeah. Well, that's how I how does one build that confidence or
00:35:10
portray that confidence when really they don't believe it themselves. You outwork yourself, right? You do you do so much volume that um you get bored
00:35:17
of it. Like when you can basically train out your your affective response or your emotional response to a given activity,
00:35:22
then at that point I would say like you are ready. And so whenever I hear someone, he's like, "How do you get rid of nerves?" I was like, "You're just not you haven't done it enough times like
00:35:29
until you're bored and you hate it." At that point, I'm like, "Okay, now you're ready." Is that what like self-belief is to you?
00:35:36
To me, yeah. There's two two types of confidence. There's a confidence that comes from repetition. And I think it takes courage
00:35:42
the first 30 times and then you get a little bit of confidence and then it takes courage and then you get confidence. But I think it's like 30
00:35:48
block little blocks of 30 repetitions and then you get rewarded with a little bit of confidence upgrade. That's one
00:35:53
type of confidence. There's another type of confidence which is an abundance of options. So, let's say you run a lead
00:36:00
generation campaign and you want to get 10 clients and you're hoping to sign up 10 clients and a thousand people
00:36:06
respond. You end up with this with or without you energy. And the with or without you energy is I'm going to be fine with or without you. I'm going to
00:36:12
definitely make my 10 sales. I've got a thousand leads. I've got 10 sales I can make. So, therefore, it's out of
00:36:18
balance. Mhm. I I go back and forth on this because the good thing about today actually is I
00:36:23
think people do less than ever but think that they do more than ever in entrepreneurship. And so we have a lot
00:36:30
of mental masturbation that goes on. I've thought about this a lot. I've really pondered it. I've wondered about this. I've worried about it, etc. Right?
00:36:37
I've watched all these videos. I've consumed all this stuff, but I've actually done nothing. Keep watching the videos.
00:36:43
Like and subscribe. But you know I if if if I if you take
00:36:50
the quantity advice then what you do when you try to go get a job let's say whether it's it's a job uh that that you
00:36:56
have in your business or you're trying to get an actual job then you just go and you apply to 15,000 of them. I actually think you'd be much better off
00:37:03
by applying to five and doing as much work as it would take to reach out to 15,000 to obsess on those five. And so
00:37:11
even if you haven't done 10,000 hours of painting uh somebody's house, if you go and sit down and you sit down with uh
00:37:17
AI, get in front of Perplexity and you write down, okay, what is the average painting job cost? What are the problems
00:37:22
that come up with painting jobs? Uh who are who is the most expensive? Um how do I upsell them? And you put together a
00:37:28
package that is like here is everything that you think you need to know data-wise on this job that I want. Like
00:37:34
you will be the 1%. Nobody preps for anything anymore to the degree that you
00:37:39
need to execute. And so I don't think you always have to do the job if you do the preparation to show that you care
00:37:45
about the job. And just think about it like how many times have we all had people reach out to us and they're like, I want to come work for you or I want to
00:37:52
come get this job and they're like, hey, can I send you a video of XYZ and if I do it then then you'll hire me or can I
00:37:59
do a sales pitch for you? You know what you should actually do? Make the video. Make the video. Put together an entire
00:38:06
prep document. Put together a strategy document on why I should hire you. And make it so that it is almost impossible
00:38:12
for somebody to say no to you because it shows how obsessed you are in a world of super curious, uninterested, not that
00:38:18
deep obsession. And I've hired God, I probably hired 15, 20 people solely because obsession is rare and competence
00:38:26
is rare. And if you can show those two things, you can be people who have been doing it for 20 years. Because I know
00:38:31
many painters. We we own one of the bigger painting franchises in the country and I know very many painters
00:38:37
that have all the experience but they don't know how to properly communicate it and show the preparation that they've
00:38:43
already done. Let's talk about that because that's a a function of really sales. I guess that's sales that's marketing. Um, I was
00:38:49
mulling the other day because I've I've just hired someone called Harry who's our new head of happiness in our in Flight Story. And she and she didn't
00:38:56
just make a seven-minute video. She also sent the video via unsaturated, less
00:39:02
noisy channels. And it made me think about this framework of the resonance of the message and the high signalness of
00:39:10
the medium because as you all know, you're getting DMs from people that say, "Any jobs going?" that's like low emotional
00:39:17
resonance and a terrible medium. So I think of it as like this four sort of um
00:39:23
square quadrant where in the top right of the quadrant you have message the 7-inute video but then figuring out how
00:39:28
to get it round back past the PAS not into the saturated inboxes maybe into the post. I think post is so like
00:39:35
unbelievably unappreciated as a medium in a world of like laziness where nobody wants to like go to the post box. you
00:39:42
you're all on the receiving ends of thousands of DMs and messages a month and sometimes some of them get through.
00:39:48
Sometimes some of them result in someone being offered a job or you investing in their company. So if I'm listening at home and I'm thinking, okay, I've got
00:39:54
four people here who get thousands of DMs. What is the secret that penetrates your your fortresses?
00:40:00
I would be careful reaching out to people who get who have millions of followers because it's hard for you if
00:40:05
you've never had millions of followers um or even hundreds of thousands of followers. It's it would blow most
00:40:10
people's minds just how much traffic is moving on in the background on any given
00:40:16
day. There are plenty of people who have 10,000 followers or 20,000 followers or they've got a very successful business.
00:40:21
They don't get a,000 emails a day. They get maybe a thousand emails a year. So
00:40:26
there's a there's something that you can reach out with which is called a proof story which you mentioned. And the format that I like to use is I did
00:40:33
something special. I recently worked with a extremely famous uh YouTuber
00:40:39
um who has over 22 million followers and we were able to spin out a new business
00:40:45
um which became very very successful and exitable um and that business uh got you know 10
00:40:52
million worth of revenue in the first six months uh and I project managed the whole thing and I can explain exactly how we did that step by step. So that
00:40:59
the format is I did something special with a certain type of person. We got a great result. Here's what the result was
00:41:05
and here's how I can explain it step by step. And what's in that for me or am I making the the link? So I'm reaching out to you with my proof
00:41:11
story. Yeah. So I'm telling you this is this is what I've done and are you asking me for something? I'm saying would you like to know how we
00:41:16
did it step by step? Now the other way we can do this that works pretty well is to do this in the public domain. So, for
00:41:23
example, you could reach out by actually posting a video or a or a post on LinkedIn or on Instagram or um or on uh
00:41:31
X. And what you can do is have five, six, seven, eight friends who then jump in and start commenting on it. Now, for
00:41:38
me personally, if you've tagged me in something in the public domain and people are now commenting it, so that the the the the thing might be I've got
00:41:45
a little bit of advice for Daniel Priestley and I go, oo, what's going on here? Right? And then I see that there's a
00:41:51
public video and I see several people commenting on it. And then I look at the video and it's a proof story and it's
00:41:56
really complimentary. I really like your stuff and here's what here's going and here's the here's my proof story. And by the way, Daniel, I'd love to get in
00:42:03
touch. Drop me a DM. I'm I'm going to check that out because it's in the public domain
00:42:08
because well because it could be negative. It could be like I don't know.
00:42:14
I want to know what the heck's what what's being said there, right? I I think the real thing is don't confuse
00:42:20
famous with rich. Like you guys shouldn't care about us and reaching out to us. There are people that are richer
00:42:27
than all of us even though we all have some means as far as I understand. There are people that are way richer than us that nobody knows that nobody's reaching
00:42:34
out to that want to give you their money. And so I think a lot of people spend time focusing on fame as opposed
00:42:40
to rich. And when you're young, who cares? Like you can't eat fame. Fame is not lasting. We will all be totally
00:42:46
irrelevant probably sooner than we even want to speak for some
00:42:51
like and subscribe. Alex will be remembered in 500. So like it, you know, for young people,
00:42:59
I do think sometimes uh because we get DMs, we think that it's important, but if you're watching this, you should
00:43:04
really be obsessed with just making money and then you can be sitting at a table like this and not worry about, you
00:43:09
know, slipping into our DMs. I mean, the richest guy that you know probably started a sprinkler head company, lives
00:43:15
down your street in a big house, and if you went and asked knocked on his door and asked him how he made it, and if you
00:43:20
could do a service for him, he would probably let you. So true. I wouldn't mess around with famous people. The people that gave me my first leg up
00:43:27
in the world of business were no one. They didn't have followers. They were some guy who had built a business similar in the city and was now
00:43:33
living out in Monaco, living an isolated life. It was someone who'd sold some kind of company was running uh you know some kind of marketing business but and
00:43:40
they were at that level. They were probably at the $50 million level in terms of net worth and they were
00:43:45
delighted to have an email from me tickling their ego of course and saying that I was reading their blog etc.
00:43:51
Yeah. It's very exhausting to do the very deep level of work that you do in order to get a high level client and then have no
00:43:56
response. Right. That can be that can be really you know extinguishing from a behavior perspective. But if you do that
00:44:01
work for, you know, Steven Bartlett and then you make the post and you say, "Hey, this is this like I'm a XYZ, you
00:44:08
know, whatever designer and I've worked with these types of clients and let me just show you my breakdown of what I would do. I think his stuff's awesome.
00:44:14
This is just some stuff I would do." And then I tag you, then I'll probably like
00:44:19
things is enough people will see that that you'll get it sent to you from somebody else who you will answer the response from messenger messaging type
00:44:25
perspective. like somebody whose DMs you will open will be like, "Hey, I don't know if you saw this team member." Right. Exactly. Um and you do respond to
00:44:32
them. I do. Yeah. And so all of a sudden it's like that's actually how you can get in, but you also get all the free exposure of the
00:44:38
work that you're doing. And then another person who might not be you and it might be me and saying, "Hey, I like Stephen
00:44:43
stuff too and I thought this was a pretty good breakdown. Um hey, do you have services?" Uh you know, in exchange
00:44:48
for money. Yeah. I'm I'm nab that [ __ ] Um, and so and so yeah, I actually actually really
00:44:54
like that perspective because it doubles it allows the work that you do for your lead magnets to basically double as content and so doubles as promotion. And
00:45:01
so you get you kind of get multiple bites of the app, which I think is really uh good. And I think if you do do it though, be sure you're good because
00:45:08
because you know the truth of this happens all the time with you and I. I mean there we go back and forth because
00:45:13
people will say online like, I built everything that Alex Formoszi owns. Can I come work for you, Cody? Yeah, you
00:45:19
know, I received those emails, too. I built He'll have this. He has the same people.
00:45:25
You know, I built everything Cody has. How? And then, you know, kind of funnily, I'll be like, "God, I don't remember that person ever working for
00:45:31
me." Like, did did this actually happen? And so, I do think this is just a little listen, you
00:45:37
got to hustle when you're young. You got to do things you're going to cringe about later. I am so on board for all of that. But also remember that the world
00:45:43
is small, especially with people. pause on that cuz I think this is an important point is all the people that have had
00:45:48
the biggest net impact on my success, my career in my team, they don't they don't seem to have time to be telling the
00:45:54
world that they did everything. Yeah. I mean, Jack is a good example. Jack is Jack was here from episode one of the
00:45:59
podcast, but Jack in my view is doing the like least personal branding,
00:46:04
milking the cow, and he's in my view arguably the most responsible Yeah. for all of this stuff. And there's
00:46:10
almost this inverse correlation between someone that works for you for three months and then builds a personal brand off the back of that
00:46:16
and is on stage claiming, you know, the success versus the people in the in the trenches in the circle. Yeah,
00:46:21
it's a it's a bit of a side point, but um one of the things people are so fascinated by is this idea of passive income.
00:46:27
And I think I think they're fascinated by it because it's a promise of big returns for no work. And that's you talk
00:46:34
about offers a lot. That's like the perfect offer. Yeah. What what's your what's your thoughts on
00:46:40
passive income, Alex, and is it something we should be aspiring for? So, um, first I think it'd be helpful
00:46:46
for everyone to even define in terms of how to think about passive income versus active income. So, one is that people
00:46:52
often discuss it in binary terms, passive versus actum, when it's really more of a continuum of how passive is it versus how active is it? And that way it
00:46:59
becomes way less black and white. When I think about passive versus active, um, when people are starting out, I
00:47:04
generally just discard it entirely because they typically don't have sufficient capital in order to actually make meaningful passive income and they
00:47:10
would get significantly higher returns on increasing their active income. And virtually every extremely rich person who self-made as my asterisk generally
00:47:17
has gigantic active income and only begins to look at passive when they have so much money from reinvesting in their
00:47:22
higher return things, which is what got them this very large active income that they're like, where else should I put it? And then at that point it's really a
00:47:28
question of diversification which is like how much more do I not want to double down on the main thing and that's a completely personal question and I
00:47:34
don't there is no in my opinion there's no right answer to that um of because that's a fundamental like how much risk do I want to take um which I see is
00:47:41
entirely personal but I'll give you a very a real example of like an investment I made you know 5 years ago
00:47:47
which was um we did ex exited the business um and I had more time on my
00:47:52
hands and I was like okay well why don't I just start spending you a couple million bucks a year on making content.
00:48:00
Now, that had basically zero return in that time period, but if I were to look at the return on capital for that, you
00:48:05
know, $2 million a year I did for the first few years compared to today was probably the highest return capital that I made. But is that was that a passive?
00:48:12
No, it's definitely not passive. It was 100% active in from an investing perspective. And so, this is when people are like, what do you mean by investing
00:48:17
yourself? I mean that right like you're investing in either the skills that you're acquiring the businesses that that you have and a very simple
00:48:24
investment a lot of times uh can get you ideally leverage on your time and so I would rather think for the person who's
00:48:30
starting out not like how do I make this passive I would say how do I get more leverage on my active and so like I
00:48:35
could start by shoveling snow in the beginning and then once I save up enough of my shekels then I'll buy a snow
00:48:41
blower and all of a sudden I can go from doing you know one driveway an hour to doing three driveways an hour and then
00:48:46
boom I tripled my income. Now, for that one week that my cash flow is down because I had to buy the equipment, I'll I'll have made less money, but then I'll
00:48:52
very quickly recoup it. Now, to the same degree, that's in a capital expense from an equipment perspective, but you can do the same thing from a skills perspective
00:48:58
of I give a classic example of a phabotamist as somebody who draws blood. Um, in the US, I think they make
00:49:04
somewhere in the neighbor of like $25 an hour or something like that. It doesn't take very long in order to become a phabotamist and it doesn't take a lot of money. And so, you know, a couple weeks
00:49:10
you do the studies, you get your cert, and then all of a sudden you take minimum wage and as long as you're not in San Francisco, you will have double
00:49:15
or tripled your earning capacity in just a very short period of time. And so, that's a very good return on capital. And so, that's where I think about the
00:49:22
best investments for people who are starting out who have call it sub $10,000, sub maybe $25,000. It's like I
00:49:27
put all my money into how I get more leverage on my active, which is either going to be more skills or or more actual physical equipment in order to
00:49:33
get returns on the skills I already have. Interesting. more leverage on my time.
00:49:40
I I personally like the idea of asset income versus passive income. So if you actually look at what's really going on
00:49:45
with passive income, it's that there is a an asset and that asset is in some way generating income. So for example, you
00:49:52
own a house and you get rental income or you write a book and you've got intellectual property and that intellectual property generates a
00:49:57
royalty income. So first there's an asset. Income follows assets. So the first thing you need is an asset and
00:50:03
then you get the yield from the asset. And there's traditional assets which are
00:50:08
very very good if you've already made money or you already have money and you want to park it somewhere and you want to stay ahead of inflation.
00:50:15
Traditional assets are terrible for trying to make money. Give me an example of a traditional asset in this definition. Um I think of something like art, wine
00:50:22
and watches as more like a speculation but or or perhaps a store of value. But
00:50:27
then there's something else which is called a performance asset. And a performance asset is typically
00:50:33
intellectual property, media, code, or data. And when you have these performance assets, if you can build
00:50:39
these, these are ones you don't have to buy, you build them. So, for example, you could write a book, and now you've got intellectual property. You could
00:50:46
build a system like a a SAS platform. Uh, and now that SAS platform is in some
00:50:51
way an asset, and you can rent that out to to more people. uh you could build a database of a thousand people and build
00:50:57
a relationship with those thousand people and then every time you write one email it goes out to a thousand people and they've got a little newsletter. So
00:51:04
that's a performance asset. So typically when you look at um the people around this table we're actually got we we're
00:51:10
very lucky to have a lot of performance assets big followings uh lots of media and content um books that we've written.
00:51:18
So these are kind of like the performance assets that anyone can create. It used to be until very very
00:51:23
recently that you just couldn't build assets like you couldn't. It was very very difficult. But we live in this
00:51:30
magical moment where almost anyone with a phone and a laptop can start creating
00:51:35
performance assets with intellectual property, media, data, and code. And uh and then you can basically start the
00:51:42
process of building those assets and and then those assets produce more income. Here's my conspiracy theory about
00:51:47
passive income. And uh I think that passive income, it's a tax code, right?
00:51:53
It is a real thing. It exists. You pay less money to the government if you have passive income than active income. Like
00:51:59
that's where the word comes from. But I think the reason that it's been so idealized is because there's an entire
00:52:05
industry where people have told all of us for decades that they are better at
00:52:10
managing our money than we are. That's the mutual fund industry, that's the investment industry, that's the real
00:52:15
estate industry, that's the private equity industry. and they have said we are uh professionals and thus we will
00:52:20
charge you 2 and 20. We'll charge you uh an investment fee on top of your assets for you to give us the professionals
00:52:27
your money to beat inflation over time. The problem is is that to your point
00:52:32
they will never make you wealthy. Investing overtime in those assets are are great for beating inflation or
00:52:38
making sure you have downside protection for your cash over time in order to allow it to grow and have diversification. But they're very bad if
00:52:45
you want to get rich. If you want to get rich, you're not going to get rich in mutual funds and sitting it in somebody
00:52:50
else's private equity fund. The people who get rich off those things, they do the active income. They're the ones who
00:52:56
are running the private equity fund. They're the ones that are running the private equity companies and they're the ones that are running the real estate.
00:53:02
And so there's this fascinating world we live in actually where people think that it is better and more sophisticated to
00:53:10
not teach you how to become capable of running your own business and creating active income, but that instead uh
00:53:17
you're more sophisticated if you're on Wall Street. And and so I think that passive income was actually in a lot of
00:53:22
ways a way for the wealthy class to gain a lot of our assets. But people click it. And this is why
00:53:28
there's a generation of younger people as well that are obsessed with trying to figure out how to make passive income.
00:53:34
It's it's it's clickbait, isn't it? I think it's forex trading, but I think it's almost deeper than that. I think it is actually that um it
00:53:41
sounds, you know, if Alex says this, I say it too, but like invest in yourself. People are like, "What does that mean?
00:53:47
What do of course I'm trying to but how do I invest in myself? That's hard. I don't know exactly how to do it. What are you trying to sell me courses or
00:53:53
tell me to buy your books or whatever?" And that's the the reaction. But the truth of the matter is is that you will
00:54:00
never be able to have the return on investment in somebody else's asset that you will in yourself. You just won't.
00:54:06
Okay. So, let's go on to that then. Investing in yourself. If you were starting out in your career today without the skills that you have,
00:54:13
without the audience that you have, and you had to choose how to invest in yourself, what is that investment you
00:54:19
would make in yourself today in 2025? I'm going to give two answers. So um so
00:54:26
I started at zero once and then I've lost everything twice. And so I have the I have done that three times now. Um
00:54:32
starting from zero without a reputation um or money. And so um what I did in all
00:54:37
three times was the same thing which was the first thing I did was I learned how to advertise which is how to let people know about the stuff I have. The second
00:54:44
thing I did was that I went to people who had an existing business and I said, "Hey, for as little as little money as
00:54:50
possible, what would you do to fulfill your existing services
00:54:55
and then when someone uh I would then use the advertising that I had, so at the time it was Facebook ads. Um, I
00:55:00
would run ads and then I would sell those leads into that business based on the pre-determined price. And so let's
00:55:06
say it's a a chiropractor or for me it was a gym. So I went to a gym owner. I said, "What would you, you know, take for a member?" And they said, you know,
00:55:14
we would actually take them for if you can just bring them, you can keep the money. We just want the customer for free. And so I said, okay, well, the
00:55:20
first six weeks of the time that they spend money with you is mine, and then after that, they're all yours. And they said, "That's fair." And so then I just
00:55:26
spent money and I sold into someone else's business, and I kept everything above the spread, which since the basis was zero, I kept all of the money, and I
00:55:33
had zero cost of delivery. So literally, it was just cash collected minus CAC, all of that was profit. And so when I
00:55:39
started over from zero the third time, um I was able to make $100,000 in the
00:55:45
first month when I needed it because you had that skill of advertising. And so when we say like invest in
00:55:50
yourself, it's just a it's a it's a very uh amorphous term, but fundamentally you have to learn the the the skills of
00:55:56
generating money. And so you're going to have to have some level of promotion. You have to let people know about your stuff, which is either be through content, through paid ads, through
00:56:02
outreach, right? Or it's going to be through affiliates. So somebody already has an audience you negotiate some sort of thing with. Honestly, so many
00:56:08
businesses, like you can go to a chiropractor and say, "Hey, you know, how little will you do 10 sessions for?" And you'd be amazed if I say, "Hey, I
00:56:14
can bring you a hundred people. How little can you do 10 sessions for?" They might say 20 bucks a session. Now, I might sell it for 200, but that's on me.
00:56:20
And I make my 90% spread. I don't have to do anything. I just have to promote and sell. And so, that is an example of something that like I have done and did
00:56:27
do each of the times when I needed to make money in the beginning when I had nothing. What skill that you currently have?
00:56:33
Yeah. would get you back to being a hund00 million entrepreneur.
00:56:38
So, it's a really good question. I think it's actually stacking skills. So, a lot of a lot of times like when this
00:56:44
question gets asked um basically the assumption is that you have to stay in the same vehicle. And so, like the
00:56:49
fastest way to make $100,000 is not the fastest way to make $10 million, but I might make $10 million faster if I
00:56:55
started with $100,000. And so, if I have zero, then I'm going to do something that costs zero capital and is pure
00:57:00
skill, which is exactly what what that was. right now to make let's say to actually start running those ads I might need $1,000. And so it's like I might
00:57:07
drive Uber for a,000 bucks, get my thousand, then spend the,000 on ads to make my 30,000 and during that process I
00:57:13
can reinvest that to get the hundred. Okay, great. Now I've got the hundred. Now with the hundred I can flip that into and the key of each of those is
00:57:19
that none of those are really businesses per se and that like I can just walk away from them whenever. I don't have ongoing delivery or ongoing commitments
00:57:26
and so that gives you a lot of flexibility. And I mean, I think there are a lot of entrepreneurs, at least the
00:57:31
ones that I know, um, have have had these moments where they needed to generate a lot of capital in a short period of time and have a few kind of
00:57:37
like fast money skills that they don't flex normally because there's there's caps to them, right? What
00:57:43
I think is cool about entrepreneurship, too, is we can all do it. You have to find your unfair advantage. One of your unfair advantages is you're very good at
00:57:50
paid promotion and getting to the masses, right? That was never really my unfair advantage. I think there's two
00:57:56
different ways you could do this. One would be promotion. So, are you an incredible salesperson to go direct to a ton of people? The other way is
00:58:02
partnerships. And I think you can think of these different ways. Promotion could be BTOC often, which is like going
00:58:08
direct to consumer. Um, often partnerships is B2B, going to a few big people. Um, I think of partnerships as
00:58:15
employment, which is a very fast way often to make money, too. Like Jack might make way more millions with you
00:58:20
than he does individually. And so, my background when I didn't have any cash, I didn't know how to go to people
00:58:26
directly. I didn't know how to do paid ads. I wasn't sure how to do promotion, which is a volume game that you have to
00:58:32
be good at. So, I went towards partnerships. I said, I can get to fewer, bigger, faster. I can't get to
00:58:37
many fast. And so, I think there's like two paths to making money quickly if you
00:58:42
don't have any. And and the first path has less risk, but perhaps midsize returns. And that is go find the best
00:58:49
entrepreneur, founder, business builder you can find who you can still get to on
00:58:54
a daily basis in some way and go work for them. Learn as much as you can, earn as much as you can. As you learn more,
00:59:00
ask for more continuously over time. This is how I mean Cheryl Sandberg is one of the richest people in the world and she's never had her own business,
00:59:06
right? She's only worked for other people and she's doing just fine. So I think that's the first way and that would be what I would call partnerships
00:59:11
or employment. And then the second way is to go do it yourself, right? which is high risk but probably highest reward.
00:59:18
And in that instance, you have to go and figure out how to get people to buy your things continuously over over time. But
00:59:23
like when I didn't have money in the beginning, um you know, I had just I had gotten out of finance. I didn't want to
00:59:29
work for somebody else again. I was pretty miserable. I had worked for a billion hours for people in investment
00:59:34
banking and asset management. And uh I had massive gold in handcuffs. Like I made a lot of money. And um I had no
00:59:41
brilliant idea. I didn't have a business idea. I had no idea what to do next and I'm pretty riskaverse actually. I was like way too scared to go do do what you
00:59:49
guys all did which is start businesses from scratch. And so instead I partnered up. I went to another company that
00:59:54
needed to raise capital and get a few investments in it. And I went to them and said, "I can raise money from a few
01:00:00
of these people that I know. If I do that, can I negotiate a little bit of equity in the company? Can I negotiate
01:00:05
upside return for the money and dollars that I bring in? And I want to I want to be a partner in the company." And so you
01:00:12
don't always have to start your own thing. If you can negotiate with partnerships, I think sometimes you can skip to the front of the line if you're
01:00:18
not a great natural salesperson, you know, or marketer. And so you really just need to decide which one. And
01:00:24
neither of them are better than any others. They're just better for you. The amount of resources you have access
01:00:30
to is a factor of knowledge, network, and reputation. So you're at all times you're trying to build your knowledge.
01:00:36
You're trying to build your network. You're trying to build your reputation. A lot of people are worried about the knowledge, but they've probably done
01:00:42
interesting things already in their history. They probably if they looked over the last 3, four, five years, they could say, "Actually, I've done all
01:00:47
sorts of things, but I've never told anyone about that, right? I've never actually explain to I've never posted on LinkedIn. I've never posted an update
01:00:54
telling people what I've done. So therefore, I've actually got things that could build a reputation, but I've never
01:00:59
leveraged that reputation." If you're a young person, especially, network is actually you've got a superpower with
01:01:05
network. And I'll tell you why. Because if you go to a private bank that normally banks people with 3 million,
01:01:11
but you say, "I want to be an entrepreneur. I want to come to some of your entrepreneur events that you host, they'll bring you along cuz you're
01:01:17
you're an ambitious young person." If you go to a large accounting firm and say, "Do you ever host big events? Could I attend some? Can I jump on a
01:01:24
newsletter that lets people know about the events?" They'll invite you along. And I'm talking about like Ernston Young and KPMG. Every single week, they've got
01:01:31
some thing that they're doing in their offices. They've got experts, they've got rich people, they got all that sort
01:01:36
of stuff happening there and they'll invite you along. So, you've got this ability to build your network, you got
01:01:42
this ability to leverage uh your reputation. I actually don't think that
01:01:48
you can make good decisions about the knowledge on your own. I think you need someone who's at the higher level to
01:01:54
tell you this is the skills you should go for. These are the things you should do. So, for example, at the time that
01:01:59
Alex did ads, it was a great time for doing ads. But now fast forward to today, it's probably better to study AI
01:02:06
and and to bring that to the table. So sometimes those rep sometimes those things change. So let's say you figure
01:02:13
out what is your reputation? What can you talk about when you're in front of people, you go networking, you go to a
01:02:18
few of these events, you outreach, you get yourself in front of some people, and you actually ask the question, what kind of skills do I need? What what sort
01:02:24
of um I need to build my skills? I need to build my knowledge. What do you think would be a valuable thing uh to do? because people who are at that next
01:02:31
level up, they're they're noticing what they what they need. Uh they're noticing what's hot, what's not. Um so they're
01:02:37
going to be able to teach you or or guide you. And and um to Cody's point, you know, you you want to have a mentor
01:02:43
in your life. You want to have someone who's who's been there, done it. You want to, you know, partner with a bigger
01:02:48
organization and get some of those. Before Kim Kardashian was Kim Kardashian, she was Paris Hilton's uh
01:02:54
assistant and she learned the playbook for being famous for being famous. and then she took it to a new level. Took it
01:03:00
to a new level. So she she uh she did an apprenticeship and then she applied the apprenticeship.
01:03:05
One of the things that all of us have in common is we make content and it's
01:03:11
almost a bit of an elephant in the room that no one's no one's really doubled down on when I asked what what you guys think is the most sort of like
01:03:16
undervalued skill or the best place to invest in yourself. I was actually expecting you all to say start making content for a variety of reasons. Not
01:03:22
just because you want to build an audience so you have more customers, but actually and I can see it on all of you. It's
01:03:27
helped you to think better. It's helped you to communicate better. It's helped you to sell better. When you get that chance to sit down with that
01:03:33
investor or that rich person, you said a second ago, you said earlier that if I'd sat old Alex here, one of the big
01:03:39
differences is this one's much more focused, concise, articulate. So, I'm
01:03:44
wondering what you guys think of that content as a undervalued, underappreciated skill in the world we're heading in. If I'm starting to today rather than
01:03:51
when I had, you know, zero, there's still a huge amount of attention that sits on social media, if not more. And
01:03:56
there's even more demand for content now than there was. And so you can supply
01:04:02
that and get compensated for it. And you'll have to do repetitions for a period of time until eventually you get good. And then you can develop an
01:04:07
audience and then you obviously can sell things to them. I think um content content's a little
01:04:12
bit of an interesting one because content works when you've got intellectual property to leverage. So I remember Alex popped onto my screen the
01:04:19
first time and he says, "I've sold my company for $40 million and I've got nothing to sell you. I'm just going to tell you how I did it." Cody's the same.
01:04:25
She's like, uh, you know, I, uh, I was working at Goldman Sachs, but then I
01:04:30
left Goldman Sachs to earn more money through laundromats. I'm like, that's interesting. That's fascinating. Right.
01:04:36
So, I'm going to watch that content because there's some interesting intellectual property there. Um, my channel took off when I started talking
01:04:41
about I've done seven startups that went zero to a million in the first 12 months. So, it's that ability to have
01:04:48
some intellectual property that people are going to want to get to. I can think of a bunch of examples of creators that
01:04:54
hadn't done anything but their ideas were the value. So if you think of someone like George Mack or even James
01:05:00
CLA or lots of other of these sort of like J Shetty online writers who
01:05:05
J Shetty had a great one which was uh I've got monk wisdom for the modern world and we've got Ali Abdal I left the I
01:05:13
quit being a doctor to be a YouTuber. M so there's these little hooks that work and
01:05:18
does everyone have a you don't have to have sold a business for tens of millions or made millions from I think there's some intellectual
01:05:24
property that you've got but bear in mind that there was a different time where you could just burst onto the
01:05:29
scene and we now have AI generated content so if you imagine like airplanes
01:05:34
and they're at the airport and the fog rolls in and if you're on the ground it's very hard to take off but if you're
01:05:40
already up in the air it's very easy to stay up in the air and it's kind of like the AI content that's coming in is is
01:05:45
that fog Right? There's just going to be thousands of AI generated content pieces just flooding onto everyone's feed. And
01:05:52
if you don't have a really good hook, you're just not going to drown out that noise. You guys must all be thinking about
01:05:57
this. I have I have so much I'm all right. All right. So So one thing I think everyone has to decide
01:06:03
on if they're going to start making content is am I an entertainer or am I an educator? Right. Right off the bat. And so I think AI content for sure will
01:06:08
have tremendous leverage on entertainment more so than education because the big underlying thing that Daniel's hitting at is that you have to
01:06:14
have proof, right? Like like an AI avatar cannot come in and say I sold my company for free. They can't. They
01:06:20
didn't do anything because they don't exist in the real world. Which is why in my opinion like the absolute foolproof method for making educational content is
01:06:26
dop Epic [ __ ] and then talk about the epic [ __ ] you did. Period. And so like I um so yes I'm in you know I'm in LA.
01:06:32
Yesterday we also um we had the school games winners come out schools platform that hosts online communities and the
01:06:37
winner of the last school games. So 90 days he got to like 300 and something thousand a month from a YouTube uh
01:06:42
channel that he started 16 months ago. So he started 16 months ago making videos about AI. Now what was his
01:06:48
interesting thing? So he was just always into AI learned about the tools and then he started helping small businesses for
01:06:55
like $1,500 $2,500 a month where he would just help them implement these automations that would save them money and time. And then people were like well
01:07:00
how did you do that? And so he just basically would just explain each of the automations that he made for each of these businesses on his channel. And he
01:07:06
made one video a day explaining one of the automations. And then he said, "If you want I have a group that's whatever
01:07:11
$300, $400 a month that shows you how to build the same automations." To your point about the education is like you
01:07:16
just need some proof. And it doesn't like you don't have to like the bigger the proof you have the wider basically
01:07:22
the wider TAM you'll be able to reach because more people be I'll just put the words impressed. if you just are in your
01:07:28
20s and to be fair, you just quit Goldman Sachs. It's like that is enough of a thing that because that's it's a 1%
01:07:34
type deal, right? But you can also you can 1% through achievement. But the other side that I think people widely
01:07:39
underestimate is you can 1% through volume of work. So if I said I read 200 books last year,
01:07:46
let me show you the 200. They're all dog, you know, dogeared. Let me tell you what I learned. Like I'd be like, well
01:07:51
shoot. Because I think everybody wants a bargain on time, right? Like I went on a 100 speed dates. this is what I learned.
01:07:57
It's like, well, I don't want to go on 100 dates, but like anyone can do that. So, it's either 1% achievement or 1%
01:08:02
effort, but this one you can do. And even if you have zero outcome, there's still stuff that you'll learn. And then
01:08:07
that will people find interesting that you can build an audience around. And if you do that enough times, eventually you do achieve something that is
01:08:12
interesting. And then that kind of becomes permanent. But at the end of the day, like proof always beats promise. I I also think anybody can go viral online
01:08:19
with one of two things. We've talked a lot about experience. So if you do have experience, if you built a billion dollar and assets under management
01:08:25
business, gone to Goldman, built seven startups, that's incredible. That's not normal. That's totally fine. But that
01:08:31
means that you could just have the everyday other e of starting the
01:08:37
experience. I think we we obsess on expertise. Expertise is the way to make content online and make millions. But
01:08:42
what about just the experience? You could say, "Actually, I've done nothing. I'm a college dropout. I've [ __ ] around a lot. I don't have much figured
01:08:49
out, but over the next year, I'm gonna try to make a million dollars. And you can go just as viral, if not more. I mean, a good example would be like Ryan
01:08:55
Tran, who who I love, who's in Austin, Texas, too. And Ryan is just like, I'm trying stuff, and this might fail and I
01:09:01
have no idea, and you guys can come along. The proof could actually be you just trying a thing and it not working
01:09:06
one way or the other. And so I think the only problem with this type which is experience as opposed to expertise is
01:09:13
that with expertise you have attention and intention aka intent to buy whereas
01:09:18
if you're just experiencing thing you might have attention but what are you going to sell because you don't have like a value derived from it where's
01:09:25
your intent I mean if you think about who are the biggest creators online only fans the Kardashians you know what
01:09:32
are the biggest websites online porn sites that's a lot of attention but the intent to buy is going to be low for any
01:09:39
of those over time at large. And so I think you have to ask yourself, okay, if I get a ton of attention, let's make
01:09:44
sure I'm really thoughtful on what I get attention for. And then let's think about once I have that attention, where
01:09:50
do I actually have some sort of expertise or value that I can trade in order for people to have an intent to
01:09:55
buy? And I think about it like this. Rihanna, huge star, right? Big celebrity, billionaire now because of
01:10:02
Fenty Beauty. Drake, giant celebrity, arguably more views, more hits than
01:10:07
Rihanna, worth one, one six, 1/8 what Rihanna is worth. Why? Because he has
01:10:12
ton of sub attention, but he hasn't actually done much to get intent to buy from him. And so Rihanna's just
01:10:19
categorically better, if we define better as bank account and scoreboard on
01:10:24
uh net worth, than Drake is at monetizing their intention. And so, um,
01:10:30
I think that a lot of creators online think too much about views, likes, subscribes, and don't think very much
01:10:36
about how do I monetize on top of this because nobody stays relevant forever online. And so, I think while you're in
01:10:42
the spotlight, you do have to think about how you going to convert that funnel in some way. That's a really great point. A lot of
01:10:47
the people you see blowing up online, they do have a backend that monetizes it because to your point, it costs money.
01:10:54
you know, I probably spend 40 50,000 a month just on retainers of people who are working on that stuff and
01:11:01
content. Yeah. Content related stuff and you know because I have businesses that can
01:11:06
monetize that then it it worth doing but it's hard to compete with that if you don't have a back end. The the other
01:11:11
option is to work with someone who does have a business and they do have experience. they do have something to
01:11:17
talk about, but they're busy and they need someone to project manage this because one thing that's happened is
01:11:23
that to the traditional business owner, this personal brand thing and this building a content empire uh that builds
01:11:30
your business, this is brand new to a lot of people. So, there are plenty of people who've got a $50 million a year business and they're going, "Oh, should
01:11:37
I show up online at all? Maybe I should." and they're just starting to tiptoe into the water and they've got a
01:11:43
story, they've got a back-end business, they can monetize it, they can allocate budget to it, you could be the person who does that and you'd be, if you did
01:11:50
do that, you would be one of the very special people in their life. Um, I had a guy come to me a couple of years ago
01:11:56
and said, "Daniel, I just cannot believe you've written five books at the time.
01:12:01
You've got seven different companies. You've got all this stuff going on and you've got a few thousand followers and
01:12:07
I've had a look online. You get like 10,000 views a month." And I'm like, "Yeah, but I'm busy. I'm running my
01:12:13
businesses." And he came to me and said, "I will project manage you into the millions per month." And he just
01:12:18
literally picked this up, a guy called Martin, right? And he just said, "I I'm going to do this and I'm going to turn up at your house, do a day of filming
01:12:24
every month. I'm going to edit it. I'm going to chop it all up. I'm going to do all this stuff and I'll project manage
01:12:30
the whole thing." Now, the two of us are very uh close now. We've got a good relationship. And he's now got an idea for an AI startup, and I'm going to back
01:12:37
that. Every single one of you watching this right now has something to offer, whether it's knowledge or skills or
01:12:42
experience. And that means you have value. Stands, the platform I co-own, who are one of the sponsors of this
01:12:48
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believe in. And already $300 million has been earned by creators, coaches, and entrepreneurs just like you have the
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launched something and now they're getting paid to do it. Stan is incredibly simple and incredibly easy. And you can link it with a Shopify store
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business with a free 30-day trial. Visit stephvenbartlet.stan. stan.store and get
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yours set up within minutes. If you guys were starting from zero today with AI in the picture and all of these
01:13:38
platforms and the way things are going, I I spent I've spent a lot of time thinking about the next big opportunity
01:13:44
in content and I think about the next big platform. Where would you be starting today based on who you guys are
01:13:51
and the skills that you have and the things you're interested in is probably a better way of saying it. Would you be on LinkedIn posting once a day? Would
01:13:57
you be on Tik Tok making videos? Would you be on YouTube starting a channel? Would you start a newsletter?
01:14:03
And with AI in the picture, I think it changes the answer because content is going to become very easy to make. So
01:14:09
where does the value acrew to? Like where does the value move to in a world where every kid a kid in Mumbai could
01:14:14
make uh a real or a quote picture now with Chat Gyt? So where is the value
01:14:20
going to acrew and how are you going to milk that cow? How are you going to capitalize? Like what is the one thesis
01:14:26
you have about the future of content that you haven't told anybody yet? Tell me.
01:14:31
Well, I'll tell you mine. I'll tell you mine. I want to ask a question too for everybody at the end of I'll give you my my quick thing. One, I will say like um
01:14:38
and I'd be curious if you all agree. When I first started making content, um most people that I knew thought it was
01:14:44
really cringe. Actually, they're like uh why would you make content? If you've actually had any success that you
01:14:49
supposed to have had, why would you be so idiotic as to be on the internet making content, it can't be true that
01:14:55
you've done these things if you're making Tik Toks all day? And um and I think they totally miss the boat that
01:15:00
like the 21st century concern uh currency is attention and attention could be bought with ads or attention
01:15:07
could be bought in a different way but through organic content creation. And so you go like cringe to content to
01:15:13
conversion. And actually, I think all of us would probably agree it was a pretty good play, but like I'm sure Did you guys all get laughed at when you first
01:15:19
got on the internet? Of course. Yeah. Right. Never. Like still get laughed at now.
01:15:24
I still get I still get laughed at. So like I just want to prepare. If you get online, be prepared. People will think you're idiotic and
01:15:30
and your friends the shedding period where you transition to 100%. And and people who are serious for
01:15:37
whatever reason have not figured out that there is a huge arbitrage opportunity with being known. Even if
01:15:42
even if you don't care about the views and all I have as something that's a differentiator is that if I ping Stephen
01:15:48
you'll respond to me because I am somehow I have some prefence online. Same with Alex, you know, right with all
01:15:54
of us. And so one I just want to say that up front because it will suck. You know, I'm in these creator groups and at some point it just happened yesterday.
01:16:01
I'm in a group with like some of the biggest creators in the world and uh all of them were listening. I mean maybe 50
01:16:06
responses of a moment where um everybody hated them on the internet. it was super dark. You know, they couldn't stop
01:16:13
watching and reading the comments and they felt like there was like a fight orflight situation from a bunch of strangers. And so, I think it's worth
01:16:19
just saying content can have a little bit of a downside and you got to like protect against that, but like also go
01:16:25
full [ __ ] bore into it because who cares? Uh, you'll be forgotten anyways. And, um,
01:16:31
embarrassment is the price of entry as they say. Yeah. And we've all all faced that and had to go through that to get to the other
01:16:36
side. Now, I want your content secret. We talk about social media and I think um there's been a lot of talk about it
01:16:41
shifting really more towards interest media rather than social media. Right. So I think this is extremely important because what what Cody was referencing
01:16:47
earlier is again entertainment versus ed education. And so Rihanna and Drake I
01:16:53
see both as entertainers. Now what's interesting is that where do they have influence? So she used the word intent
01:16:59
but fundamentally I say like how do we increase the likelihood that someone complies with a request or complies with a solicitation. Right? Right? If I tell
01:17:05
you to do something one, I mean, we've all seen some creators who have tiny audiences, but if they say, "Hey, go do this thing." You know, they have 100%,
01:17:11
not really 100, but they have a huge conversion on a very small audience. And then other people, you know, I can name some Tik Tockers right now that have,
01:17:16
you know, 50 plus million uh followers that have had 13 failed launches because
01:17:21
they have views, but they have zero influence. No one listens to them for their advice.
01:17:26
And so, um, in order to create influence, there's four things. So, number one is, and so I just remember
01:17:31
SPCL, right? So, you have status. So somebody who controls scarce resources. So a bartender at a bar, there's alcohol
01:17:38
behind them. It's a scarce resource. In the bar, they have status. When they walk outside of the bar, no one cares about them. But in the bar, they have status, right? So that get so they give
01:17:44
influence. The second is power. And so power is basically um say do
01:17:50
correspondence, meaning if I tell you to do something, follow these instructions, and a good thing happens, then you I
01:17:55
I'll increase the likelihood that you comply with requests in the future. And so like for example, Martha Stewart uh
01:18:00
was the first self-made female billionaire. And I think there's there's a huge amount of reasons for that. And one of the biggest ones is that she literally gave people recipes and they
01:18:08
followed their recipes and they had a good thing happen. And then people told them they were great and this cake was
01:18:13
great and this lasagna was amazing. Their family, their friends, they got they also got status. So a massive good thing happened after following explicit
01:18:19
directions. And so then when she said follow my next directions and by this thing, people said okay the last 10 times I did it, it worked. I'll do this
01:18:26
too. And so that's why she had so much influence. The next is credibility, which is do you have proof? Right? Now,
01:18:32
all of these can um happen at the same time or separately. So, I'm trying to give more isolated examples for each of them, but like one thing can check
01:18:38
multiple boxes. So, if I say, "Hey, I sold a company for $46.2 million." I have money, which is where the status comes from, but I also have credibility
01:18:45
that the stuff that I do works. I wouldn't have power yet though until I say, "Hey, if you take what you're
01:18:50
currently doing and then add a bonus, urgency, scarcity, a guarantee, you know, think about a value equation, all
01:18:56
of a sudden you can sell it for way more money." And then you followed those instructions and then you do make more money. Then you're like now I'll be more
01:19:03
likely to comply with this person's requests in the future. And so then that person gains influence. And then the the fourth L is likeness, right? Do they
01:19:08
look like me, right? Do they act like me? Which is both, you know, physical but also psychographic. Like do they have they share the same values as me?
01:19:14
Are they similar? And so if I have two people that both have SPC, so they have status, they have power, they have credibility, and then one of them just
01:19:20
also looks like me, I'm more likely to listen to that person. So each of these are additives. So if you have all four, you'll be more influential, right? And
01:19:26
so, um, lading this back up to conversion, we think, okay, well, if I'm going to make content with the purpose
01:19:31
of conversion, then I want to make stuff that demonstrates these four things, right? And so, that is why educators
01:19:37
typically have significantly smaller audiences, but can usually generate a lot more money than entertainers can. And entertainers
01:19:43
typically can monetize almost exclusively through sponsorships as the most efficient means or vehicle. Now, where does an entertainer have
01:19:50
influence? Rihanna is beautiful and so she does have credibility in terms of
01:19:58
beauty. She does have um and then especially if she starts making content around that stuff, she takes her
01:20:04
entertainment audience but she's talking about something she has credibility to and then she can add power to that because people start following what she does, right? And then they start looking
01:20:10
a good way and then they say, you know what, she really does know what she's talking about here. And then all of a sudden when she does point people to, you know, to to a thing that that that
01:20:17
they can buy, then they're more likely to do so. And so it's it's it's how do we merge those two things together? And
01:20:22
then when we're making the content, and I think a lot of people we're starting out are very obsessed with views, which I would strongly recommend, especially
01:20:27
in this interest media time, that it's it's so irrelevant. And what I mean by that is if we think, all right, I want
01:20:33
to I want to start a a bait and tackle drop shipping business, whatever, right? You for for fishermen. Well, if I just
01:20:40
start making videos on philosophy, I might get way more views than I do if I
01:20:45
make, you know, videos on bait and tackle stuff. But the likelihood that the people who are watching philosophy
01:20:50
also want bait and tackle is very low. And because the content is now the targeting for social, like if if
01:20:56
anyone's run ads before, you have to select, okay, I think I want 42 year olds and I want, you know, men and I want, you know, whatever, right, as you
01:21:01
go through it. But the thing is is that the algorithms are so good and the AI is so good at understanding what the content is about. And they also know
01:21:07
what type of people consume this type of content, they just do the targeting for you. And so if you want to reach a certain type of person, you just only
01:21:13
make content that that certain type of person wants to consume. It's actually easier now than it was before. And so you can have a 40,000 person audience,
01:21:19
but that 40,000 person audience might be made up entirely of fishermen who buy tackle, which I'll bet you you'll crush.
01:21:25
And so, um, that is how I kind of see the the the quote future of of media at
01:21:30
least, um, is that if you want to have maximum persuasion or conversion power, we want to make content that is
01:21:36
explicitly for a specific audience. And we want to demonstrate the proof that we've done, right? We want to have
01:21:41
things that they want. We want to give them instructions that they follow that good things will happen for them. and we want to look like them. And if you do
01:21:47
that, you have somebody who's gonna make a lot of money from an audience. That last point is super interesting as well. How do I make myself look more
01:21:53
like my audience? And I think relatability and humanizing yourself is one of the
01:21:59
great ways to do that. I think it's a very fair point. I mean, I also think it's not just physical
01:22:05
traits. So, you know, let's say that you don't look like the audience that you
01:22:11
want physically. what are the values that that audience has that you can have them see themselves in you and and you
01:22:17
know it's kind of like whether or not you like the guy who cares but let's say
01:22:22
you know Trump for instance really looks not a lot like his audience predominantly you know in suits and ties
01:22:28
constantly sort of a blueblood billionaire from the east coast how does he associate with this group of people
01:22:34
when really he doesn't look like them on average well it's because they believe that he has a similar moral compass to them they believe that he has similar
01:22:40
ethics to them. And so I don't think that creators have leaned into this enough. And I don't mean to become
01:22:45
clickbaity or political or or divisive or anything like that. I mean that it is rare to see people in business h take a
01:22:53
stance that could hurt their business values, for instance. And Chris and I have a rule which is we don't have close
01:22:58
friends that haven't done something publicly that could be against their best interests. I I just don't want
01:23:04
friends that don't have that that haven't done that because I think that the world is really hard and I want to
01:23:09
see if somebody's going to have like moral fiber before I become quite close with them. Super interesting.
01:23:15
Yeah. And so I I think you could do that as somebody who is a content creator today like be value aligned with your
01:23:22
users and show that and um also to the point about the algorithm becoming about
01:23:27
interest based. It's also becoming value based. We're seeing echo chambers emerge around ways of thinking, right?
01:23:33
Well, I the content that I saw of you that most interested me was when you were talking about um how important
01:23:40
ownership is and you were talking about just the philosophy of ownership and you said there's a group of people who want you to own nothing and be happy about it
01:23:47
and I was like I really resonate with that. I want people to own their businesses and I want them to own their stuff. And I liked the fact that you
01:23:53
were standing in front of a huge audience taking that position and everyone knew that it was a little bit of a a position to take and it wasn't
01:24:00
specifically content about how to build a business, but you were sharing something about yourself. I have a belief you don't actually ever
01:24:06
sell anybody anything. You only find those who are already predisposed to want the thing that you are selling. And if you believe that, then I think
01:24:12
your business gets easier too, easier to target people. That's why I never kind of got off on that content. You know, it's really big online on sales where
01:24:18
it's like here's how you close them, you know, here's how you do this. Here's how you you switch them and you give them a hot dog and then they buy the car
01:24:24
because you gave them the hot dog because of reciprocity and you're like, "Huh, I've never bought a car because somebody gave me a hot dog." But
01:24:30
apparently this is what works on Instagram. And so I don't think that's actually true. I think you just find
01:24:36
people at a trigger moment that they want something and then you give it to them. Mhm. Regarding content, for me personally,
01:24:42
I find that the only reason I'm going to create content is if it's in alignment to a mission that I've got. So I don't
01:24:47
actually want to create content. I don't want to be out there naturally. I would much rather be a way more private
01:24:52
person. Um, and you won't you won't find a lot of stuff about my family or my my
01:24:58
kids, my you know, very rarely do I post anything like any of that sort of stuff. But for me, I do it in alignment with
01:25:04
the mission. I really believe that if you're on a mission, you've got something you want to achieve in the world, you're going to need other people to believe in it. You're going to need
01:25:10
other people to get involved. Um, you're going to want to hire talented people. Those talented people are going to want to, you know, see you online first. And
01:25:16
it's all about the building relationships at scale. And content is just people discovering someone new like
01:25:23
you would a friend and then getting to know someone. And I think the big play in a postAI world is having really deep
01:25:29
relationships with a lot of people using long form content uh where you share who you are, what
01:25:35
you're about, what's your mission, what's your origin story, what's your vision, um what are your values and people then
01:25:41
say in a very noisy world I will pay attention to what Steven says. I agree. And so to give my answer to
01:25:48
this question, my thesis here in the world of AI is actually that if you look
01:25:53
at who has the most loyal engaged fan bases, it's not necessarily podcasters.
01:25:59
We're doing pretty well, but it's not podcasters. Podcasters can sell out arenas and when they go on tour, they can sell out globally. Streamers.
01:26:07
And it's I think it's because of this the depth of the parasocial relationship is the the equity value of the
01:26:13
connection. And I was sat with a streamer who's 18 years old, massive in Europe. And we were on we're playing at Old Trafford for the for the soccer aid.
01:26:20
And I got just got to sit down with him. So I was like, "Explain to me what you do." He goes, "So I wake up in the morning." I go, "Then what?" He goes, "I
01:26:25
sit there." And I go, "For how long?" He goes, "Eight hours." And I go, "What do you do?" He goes, "Like nothing." And I go, "How many people tune in?" He's
01:26:31
like, "100,000." I'm like, "Concurrently 100,000 people sit there with you." He goes, "Yeah, people are quite lonely. I
01:26:36
sit there and what we do is we watch TV together." Now the So when when we got to the the stadium, 70,000 people in the
01:26:43
stadium, we're playing soccer. The stadium when they announced your name, the size of the cheer correlates to the
01:26:51
amount of hours you spend with your audience. The streamers are the celebrities. The podcasters sometimes come in, but
01:26:56
the the actors almost, you know, but the but the streamers own the stadium. When
01:27:02
you play Soccer Aid, it doesn't matter how much money you've got or how big your following is, the streamers are the ones. the streamers have this particular
01:27:08
streamer has less of an audience than me, but he sits with them for 7 to 8 hours a day, deep connection. So, if we think about depth as the as
01:27:15
the metric that you you can you can exchange on, especially if you have authority in a niche and you're educating, as Alex was saying,
01:27:21
that's why I think a lot about my behind thes scenes channel. I think it's when we go on tour, it's so funny. We we do
01:27:26
we did a tour in Australia and remarkably I'd say about 50% of people were talking to me about Dario and then
01:27:32
50% of people were talking to me about behind the diary which is the behind the scenes channel where you get to know me a bit better
01:27:37
and that that channel has a fraction of the viewership and actually that same
01:27:42
thesis is the reason I started podcasting. I was doing Facebook watch videos. They were getting tens of millions of views, which by the way, no
01:27:48
one remembers because no one remembered any of them. And no one came up to me in the street and said, "I love that
01:27:54
two-minute viral philosophical video you made about motivational fluff." No one ever said that. Then I started this
01:27:59
podcast and it got a thousand downloads. And it felt like I was like Oprah Winfrey. Like people were coming up to me and I was like, "Oh, there's this
01:28:05
interesting correlation between like the depth of the medium and the resonance and the memorability and therefore the
01:28:10
value." So just pursue depth as much as you can. the strength of the parasocial relationship
01:28:15
part of the brain that has short-term memory. We've driven a truck through that. You know, we've now got just hundreds of
01:28:22
things a day that hit that. But then there's this other part of the brain where I've spent seven hours with someone and if that's the depth.
01:28:29
Are you guys thinking about that? Because you guys, you all make content which is educational but is less
01:28:35
personal. And I mean you you two podcast, Alex and Cody, you both podcast. You don't podcast yourself.
01:28:41
I'm a guest. You're a guest. but you don't like run your own podcast.
01:28:46
So, are you thinking about a deeper format for for yourselves? What are you thinking about? Yeah. Well, there's two things I want to
01:28:52
talk about there. One, I think it's it's depth, but I would also wonder if it's not rawness like in an era in which we
01:29:00
cannot trust what we see anymore because of AI and anything can be recreated, reproduced, and overproduced.
01:29:06
Increasingly, a stream is interesting because it is raw. it is it is for a thous% whatever is happening on there is
01:29:13
happening in real time and thus we can actually trust it and so I think as I mean we've all seen it content has
01:29:19
gotten so produced and overdone and that actually I think decreases trust because
01:29:25
we can't tell if something is real or not because it's been edited and filtered and overlaid
01:29:31
we say with our 40 person teams yeah great but it's true but think about think
01:29:36
about the content even like this is like sort of tact practical, but um maybe a year ago, the big content uh change in
01:29:44
video on Instagram was that you had a lot of um B-roll and images overlaid on
01:29:49
top of videos. And I don't know if you guys have noted, but that doesn't work very well anymore. Actually, the more that you have third-party assets in your
01:29:55
video and it's been overdone, the less the video works, the more you're just walking along with your handout, right? Because it's it's more real. So,
01:30:02
I think it might actually be like depth and rawness. Rawness. Yeah. Authenticity, I guess.
01:30:08
Yeah. [ __ ] hate that word, but yes. Yeah. It's like 60 minutes versus Joe Rogan, you know? 60 minutes is like just
01:30:13
it's just no cuts. No cuts. Yeah. Yeah. And then when it comes to am I thinking about this for our channel? Yeah. I
01:30:18
mean, I think about it. We we have something that we teach everybody which is like the marketing affinity loop. And and basically it goes like this. I'll
01:30:25
show the graph so you can see it, but you start with awareness, right? And that awareness is what we're all talking about. How do we get more people to just
01:30:31
see us? And then we go to consideration. Okay, I maybe I like this person. Maybe I'll follow them. I'll give them a quick
01:30:37
follow. And then we go, well, I actually I like them. I follow them. And I might buy something from them. Okay, that's
01:30:42
interesting. And then I might not only buy something from them, but advocate for them. Write a testimonial, a review,
01:30:48
something like that. And then finally, I might be loyal to them. Aka, I'll refer a friend. I'll sign up for their
01:30:54
year-long program. I'll buy again and again. And so, we go from awareness to consideration to purchase to advocacy to
01:31:00
loyalty. And like, if you can get most people stop at awareness. Very few people can get somebody to go from
01:31:06
awareness to purchase. Even fewer people can get them to advocate for them, leave a review, and the very very fewest refer
01:31:13
a friend. And so like the holy grail of business is always have your clients tell other people nice things about you.
01:31:19
And so I think in content, what I think about is I don't always care that people buy things from me at this point. Like I
01:31:25
I love money, don't get me wrong. I want to keep making it, but I actually really care that they're loyal and they tell
01:31:31
other people about what we're doing. And that is something we now measure for videos. We can actually now measure with like a little UTM link how many of all
01:31:38
of our videos get shared and how many of those shares actually go to a a purchase or something that goes a little bit
01:31:44
deeper. And so I I am thinking about that. But then I think you also have to decide what's your personal line is. So
01:31:50
for me, I can't imagine wanting to stream all of my life continuously because I'm not sure that's good for the
01:31:56
audience actually. I think they should live not watch. So it's like I just have a line that like I kind of don't want to
01:32:03
cross. Yeah. And Chris and I actually have a rule too. We only post so much about our relationship. We actually because it
01:32:09
always does well. So the team's like just full send Chris shirtless nipples
01:32:14
every day. The internet loves it. And and and Chris has been really good about saying no, we have to keep some things
01:32:19
sacraant. And so I think you have to decide how deep you want to go down the rabbit hole in order to win.
01:32:24
Yeah. I've I've been the same with my kids. it's their decision as to whether they want to build a profile and how they want to build it. So you won't, you
01:32:30
know, I won't put them in that position. The depth that I'm loving is writing
01:32:35
books because someone who reads a book like you really get to go deep with a
01:32:40
book. Um, and also live experiences. So every year for the last four years, I've taken about 80 of my clients to the uh
01:32:47
to the snow and we go skiing. and those 80 clients who if if someone has gone on
01:32:52
my ski trip, the level of loyalty and depth because we've shared fund together, I'm about to take 30 clients
01:32:59
to Neker Island and spend a week with uh Sir Richard. And I' I'm convinced that
01:33:05
just doing that with 30 people will build, you know, lifelong like friendships. So this idea that like
01:33:13
there, you know, that you do stuff in the online and offline world, you know, that you actually figure out who are the
01:33:19
people who are at the core group, those real uh dieh hard fans, and then let's do something together and and and do fun
01:33:25
stuff together. Go skiing, go to islands, go sailing, that sort of stuff. Alex, I see you wrote uh it looked like
01:33:31
you drew the universe or something. Oh, I was thinking about um again, it
01:33:36
was we're just talking about like authenticity. Um, and so with each with each of like SPCL, right, all of them
01:33:42
exist in a continuum, right? And so I can say credibility. I could say, "Hey, I sold a company." But I if you see a PR article, that will increase the
01:33:48
credibility. If you were uh somebody you heard about it from somebody else, that'll increase the credibility of that specific credibility driven event.
01:33:54
Likeness is the same thing. And so I think um like the connection between streamers and having huge influences that they have tremendous likeness and
01:34:01
that because they are quote authentic and that there's very few there's there's very little ability to distort
01:34:07
you have basically when you what you see is what you get. And so if you're the type of person who likes that particular
01:34:12
streamer then you'll have super strong you know affinity towards them and you'll be likely to you know comply with their requests like show up to a stadium
01:34:18
so that you can support me. Um but you know even authenticity is again a term it's like how do you define authenticity
01:34:24
right which I see is how you how you act when you have no risk of punishment and
01:34:29
so different way of saying this is like how do you act when you're alone when no one else is around and so I see the
01:34:35
discrepancy between how you behave when you're alone and how you behave in public as basically your authenticity
01:34:40
you know score right the question is or the problem is that no one really knows how you behave when you're alone and so
01:34:45
unless you're unless you're like streaming all the time right yeah and So, so you're saying authenticity is that
01:34:51
there's not a difference between how you act when there's when there's no risk of punishment and how you act normally. Is
01:34:57
that okay? Got it. Right. And I think that also being like very candid for all of us is like they
01:35:04
were like sure we have audiences that can punish us with their comments I guess but our like we've all built
01:35:12
enough of call it a fortress if you will of currency network relationships etc that like even even within our companies
01:35:19
like if you go into the room like I can be really authentic in my company because no one can fire me right like my
01:35:24
risk of punishment is low is is lower than saying employees is and So, it's a a relatively I'd never use this word,
01:35:30
but it's a relatively privileged, you know, um position to be in to to be more authentic because no one can really
01:35:36
punish you. And I think this is kind of the the essence of the like [ __ ] you money that people want to get to, which is like I just want to be me, but I
01:35:42
can't be me because I have this risk of punishment. And so, um since degrees of freedom basically, um I think your happiness is
01:35:48
is very correlated with your degrees of freedom. So, Elon's authentic.
01:35:53
I mean, I don't think anyone would argue that he's not authentic. They might not agree with him, but I don't think they think that he's he's trying to pull one.
01:36:00
I do think that when like if you're going to go online, one of the ways to inoculate yourself against being
01:36:05
cancelled or to inoculate yourself against caring so much is to do ridiculous things every so often that
01:36:11
are super authentic to who you are out loud because then what happens is the people that hate you, they leave. Uh and
01:36:17
the people that like you kind of like you a little bit more or trust you a little bit more for it. So I think um
01:36:22
you know one of the things that that I do not really on purpose but it it is just like it's like getting a vaccine.
01:36:29
You go out on the internet and you say something that you know other people are not going to like but you believe strongly in. And when you do that kind
01:36:36
of consistently over time I also think that increases your trust because we've all met like other creators that you're
01:36:41
like ah man like you're just never going to say anything that's not PC. Like I can
01:36:48
think of two in my head where I'm like they're never going to say anything and if it could hurt their audience, they're not going to say it. And that just
01:36:54
decreases my trust level. And I think the audience is really smart. People are smart. And so um I think you should
01:37:00
inoculate yourself more often. Before we move on to a little game that I've prepared for us here, um I you're
01:37:06
all very good at pitching and you all have your own frameworks for pitching. So I wanted to to pause on that for a second. What is Daniel? What is your
01:37:13
framework for pitching a business or an idea? There there's two things to start with which I believe that
01:37:18
entrepreneurship is the journey of a thousand pitches. That basically what we do as entrepreneurs is we pitch stuff
01:37:23
into existence. Um and the penalty for an average pitch is that you do a
01:37:29
thousand pitches and you get nothing to show for it at the end of it. And the payoff for a great pitch is that you do
01:37:35
a thousand pitches and you end up with 10 to$100 million. You end up with an amazing team of people and lots of customers and everything everything's
01:37:41
great. I think treat entrepreneurship as the journey of a thousand pitches and also treat pitching as
01:37:49
this magical thing where you get what you pitch for and you can't switch it off. So for example, if you say the
01:37:57
economy is bad, the economy is bad, the economy is bad, as if by magic the economy is going to be bad. Uh if you
01:38:03
say I'm seeing lots of opportunities right now, I'm seeing lots of opportunities right now. You you start conversations where people go, oh I I've
01:38:10
seen an opportunity as well. So, whatever you're out there talking about, you tend to bring those conversations to the surface and then it's a
01:38:16
self-fulfilling loop. With that said, you have to have a framework for pitching. If you're going to do a good
01:38:22
pitch, it's got to be a framework. I've got social pitching framework, scheduled pitching framework, and sales pitching
01:38:28
framework. So, social pitch, name, same, fame, pain, aim, game.
01:38:34
What's a social pitch? Social pitch is on social media. Yeah. or um in a social situation, it's
01:38:41
basically a situation where you've got about 30 seconds before someone thinks that you're being uh too obtuse.
01:38:47
Okay? Right? So, you've got about 30 seconds of people's attention, and you're going to say, "What is your name? What are you
01:38:52
the same as that they already understand? What makes you famous or different? Uh what are you aiming for right now? What's your bigger game? Or
01:38:59
what pain do you solve? What are you aiming for? What's your bigger game?" So, there's a few things you can put in there and it rhymes so you can remember
01:39:04
it in a in a social situation. scheduled pitches, I always do something called
01:39:09
capstone. And it's clarity, authority, problem, solution, traction, or the why,
01:39:15
either way, opportunity, next steps, and an emotional ending. Right? So, that
01:39:22
spells out capstone. Now, is that the best pitching framework? Maybe, maybe not. Maybe there's better frameworks.
01:39:28
But the point is is that you've got a framework that you're not just winging it. You're not just, you know, randomly
01:39:33
spewing words. you've actually gone through the process of thinking through your pitch uh in a framework approach.
01:39:39
One thing that's really fascinating is the three of us have a framework for everything like we we're just like very
01:39:45
framework thinkers and I've noticed that with a lot of entrepreneurs. Um do you guys have pitching frameworks? Be
01:39:50
shocked if you didn't. Yeah, I do. I mean I think I'm like lazy intellectually and frameworks help you remember things and so if you don't have
01:39:56
very good memory then it's just easy to put it in something that can make sure that you remember it. It's why when we
01:40:02
were in school, you know, they used to make us sing songs about how to remember the varian states. If if if I wanted to
01:40:08
raise a bunch of money from other people that didn't know me and I wanted to never have a problem raising money
01:40:14
again, I didn't want to use any of my money ever, I would use what I learned in venture capital, which is the
01:40:19
mightest touch. And and basically, I think you need one of these four in
01:40:24
order to raise money. You don't have to have all four, but if you do, that makes it really, really easy. The easiest one
01:40:29
is profit, right? If you have a business right now that's making money profit in your pocket, you can raise capital. You
01:40:35
can raise money from people as long as that amount that you're raising is reasonable to the amount of profit. If
01:40:41
you don't have any profit, but you have growth, let's say like Replet, we were talking about a big AI company, great.
01:40:47
You can raise a bunch of money if you got growth, too. The third thing, if you don't have either one of those, you
01:40:52
don't have profit, you don't have growth, but you have a history. I've sold a company before. I've built this
01:40:57
before. you can raise purely on the fact that you've done this before. And if you haven't done any of those three, you've
01:41:02
done nothing in life, then you need a really good story. And the story is something that you can often raise money off of. So I believe that we are going
01:41:09
to create the next XYZ. And if we do this thing, then you will all make money, I will make money, and we will change the world together. And so I call
01:41:16
it the touch because I think people who accum if you can accumulate this over your life, it's not that hard, right? So
01:41:22
eventually at some point you'll have a a history which is your proof. Then you can craft a story. You'll get better at
01:41:28
it as you continue to grow. You will learn how to get profit in some way. And because you've driven profit before,
01:41:34
you'll know how to get growth. So I think like almost any entrepreneur over time, if you focus on those four things,
01:41:39
can raise money. And you start with only the story when you have nothing.
01:41:45
Alex, I have a lot of pitching. Yeah. Um I I I'll say first and foremost like
01:41:51
if you're trying to sell anyone anything, um proof will always be promised. And I can say that, you know, a thousand times in a row. Like you
01:41:56
could literally say nothing, get on stage and then just hit next on testimonials for 60 minutes and you will
01:42:02
close a percent. Like literally the last slide just says like go over there to go buy something and you could say nothing
01:42:07
and you will you will sell. Why? Because I think um proof acts as a as a
01:42:12
as a an an approximation of something that would happen uh for the prospect. And so like the only reason that like
01:42:18
that proof works is that they think, oh, some element of this is like me. And so if I do the same thing that this person
01:42:24
did, and the closer the proof is to the prospect, the more compelling it is for that specific prospect, which is like
01:42:30
when we used to um, you know, run ads for different markets, we'd go into like, you know, an entirely black market and surprise surprise, if we had black
01:42:36
testimonials, the pages would convert better than if we had white testimonials and then flip-flop in the other direction, too. And so, right, and so we
01:42:42
want to show as many different types of proof as we possibly can. And obviously, not all proof is created equal. You can have live proof versus recorded proof.
01:42:48
You can have a demonstration of something that like us using the thing is going to be more compelling uh than
01:42:53
than than not using and just describing it, right? If I have a um like and so there's there's a bunch of things on proof. But that's just like big thing
01:43:00
number one. And so that's why for me if somebody's going to sell something, I recommend most people just get five or 10 clients for free up front with the
01:43:07
primary purpose of getting proof because you're going to make more money on the proof than you will have trying to, you know, just get the the tiny amount that
01:43:13
you can charge with absolutely no proof. Mhm. So, it's like, don't do that. Just get 10 and on your 11th, you'll be able to
01:43:18
charge 10 times more because you'll be able to say, "Hey, look at the 10 people that I helped." And realistically, you'll get more out of that than they will because you probably suck.
01:43:25
Yeah. So, so it's probably for everyone's best interest that you don't charge anything. Um, but from an actual like closing
01:43:31
perspective, and I'll talk about this from a from appointments, I think to use uh Daniel's language, I've taught the closer framework for a very long time.
01:43:37
Um, which is C L O S E R. Uh, and so C is clarify why they're there, which is, and typically anybody who's going to be
01:43:43
in that appointment has taken some action. So whether that's they responded, you know, to a post, they commented, they liked, they actually, I
01:43:50
mean, if someone's already set an appointment or they walked in the door, like there's always some like why'd you pick up the phone? Like there's always
01:43:55
some reason like, "Why'd you give me 5 seconds?" There's always something they've done that you could say, "Hey, so tell me why, right?" And so then
01:44:00
you're you're you're clarifying why they're there, why they're still listening. So you listen to them because we often think about sales as me just
01:44:06
hitting you with [ __ ] So the perfect salesman says nothing and only ask questions because there's nothing to disagree
01:44:12
with. And fundamentally they're going to believe way more of what they say than what you say. So you want them to say
01:44:18
it, not you. And so you clarify whether they're there. See, it reminds me of spies. I've interviewed a couple of CIA spies now and every
01:44:24
single one of them, I was expecting some like incredible technique or whatever. They all say, "No, we just spend six to
01:44:30
eight weeks in the back of the cab listening to the Iranian taxi driver to figure out what that his son has a
01:44:36
health issue that we can then leverage later to get him to turn against his country." For the first eight weeks,
01:44:41
you're just listening to him offload. And they're like, "It's crazy how people will just offload if you let them. Everyone wants to talk."
01:44:47
Oh, 100%. So, one is, you know, clarify where they're l is label them with a problem that you can solve. So it's like
01:44:53
okay so it sounds like you're here you respond to my ad you DM me thing or you you whatever it because of this reason is that right? Right. So you get
01:44:59
confirmation on the problem uh which is L. Then you O which is overview past experiences or past pain. So it's like
01:45:04
what have you done so far to try and solve this? And this is important because uh motivation is the equal opposite of deprivation. So the more
01:45:09
deprive someone is of something the more motivated they are to solve it. And so like if you haven't eaten in an hour you're probably not that motivated. If
01:45:14
you haven't eaten in two days you're very motivated. If you haven't slept in, you know a day or you're normal motivated. I guess that was a bad one.
01:45:20
But if you haven't slept in 3 days, you'll be incredibly motivated to sleep. And so we want to find we want to find
01:45:26
what they're deprived of and then try to increase that deprivation uh in the conversation. Basically, uh make them
01:45:31
more aware of the deprivation, the things that they don't have, right? Then once we have, you know, enough
01:45:36
deprivation that it's very clear it's like, okay, this is this is what why you're here. This is you agreed with
01:45:41
this is the problem that you want to solve. You've tried all these things and it hasn't worked for you. I can imagine how frustrating that would be. Um S,
01:45:47
which is then you sell, right? you sell the vacation, which typically is just three points. Um I I usually keep it to three cuz most people can't remember
01:45:53
more than that anyways. And the three points are usually you can always find three. And if you need two, you can
01:45:58
chunk up if you've got five. And if you've got, you know, two chunk down as in like break into smaller pieces. But like when I was in the fitness world, it
01:46:04
was fitness, nutrition, accountability. If when I was selling, you know, mortgage leads, it's like you want the leads to be unique, you want them to be timely, and you want them to be
01:46:10
exclusive, right? And so like or qualified. And so it's like there's always three things that you can usually triangulate. But when you say the three
01:46:16
points, you don't then feature, you know, Jarble about the the points. You then just usually put like a one
01:46:21
sentence analogy of of what that thing is. So, it's kind of like this. And so, these are like little 30 secondond sound
01:46:28
bites to make the three points. That should never last longer than 90 seconds cuz um most people waste all this time
01:46:33
on the selling part and that doesn't really matter because the more we can talk about them, the more they're going to want to buy. Um and then E, like at
01:46:39
the end of that, you say, "Cool, ready to get started, ready to rock and roll, ready to start on Monday, whatever it is." And then E, E and R around what
01:46:45
happens if they say no, right? You explain it with their concerns. E, and then R is you reinforce the decision. And so R was actually something I added
01:46:51
much later when I was teaching, you know, many sales people because um after they would like explain away and then close, they would just like see you
01:46:57
later. I got the credit card. It's like you're dead to me. Um but the R is like no, no, like reinforce the decision like
01:47:03
I think it's a great decision. I'm going to introduce you to Polly. Paulie's going to get you onboarded. And then Polly also continues the R and being
01:47:08
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And I'm so honored that once again, a company I own can sponsor my podcast. A lot of people say that 70 60 80% of our
01:49:31
communication is body language. Do you think much about that, Alex? You have a with or without you energy body
01:49:37
language. It's a casual It's a very casual body language, which in fact reinforces your authority in a way. So
01:49:44
do you think about if people are right that 60 or 70% of our communication is the things we don't say. Do you think
01:49:49
about training people on how to hold themselves, how to be you kind of alluded to something there which I think people don't think about which is
01:49:55
actually the less you say sometimes the higher conviction and the more I believe you. Yeah. And some people can oversell because
01:50:02
Yeah. So, I'll So, I'll because I think getting So, I'll just There's so many variables here, but I'll just try and
01:50:08
focus on the ones that um a lot of people sell over the phone and even via Zoom, it's harder to see body language as well, which nowadays I think a lot of
01:50:14
selling happens in those two environments, even more than in person, even though that's where I came from, which I actually think is the best place
01:50:20
to learn because you have to control every variable. And then you have far more leeway on the phone or on Zoom than
01:50:25
you do in person. And so, to that extent, um there's basically five things you can control about how you talk. And so you have your
01:50:31
speed of talking, like how t how fast you talk. You have your cadence. You have your um basically your um your
01:50:38
annunciation, like do I pronounce every letter in the words that I'm saying? You have the volume that you speak at
01:50:43
because if I talk too low like you on a phone, it doesn't really matter because they're just going to increase the volume. But if I lower what I'm saying
01:50:50
right now, it sounds more important in person. It's more important to volume is more important in person. And so those
01:50:55
first three I consider there's kind of a persuasive tone which all three are constant. And the only point of those is
01:51:01
to maximize comprehension. It's just that they can hear you, that they can understand what you're saying because
01:51:06
you're talking in a speed that they can understand. Like I'm somebody who talks fast and I have to I have to pull back
01:51:11
how fast I talk when I'm in like a selling situation. There's only two that you that I teach sales people to try and
01:51:17
actively control, which is going to be pauses
01:51:23
to draw attention and when do I raise my voice.
01:51:28
And the reason that those are the only two things you really need to teach a salesperson outside of the persuasive tone, which is that that you're going to
01:51:33
talk at a certain speed, which usually about 150 to 170 words a minute, because that's the amount of speed that most people can understand. You're going to
01:51:39
enunciate the words, which is going to force you to actually speak at that speed. Um, and you're going to talk loud enough
01:51:45
they can understand you. This sounds very simple, right? Like this sounds like so simple, like I can't believe
01:51:50
people don't do this. Except they don't and they don't close. And so the only things that you have to teach a
01:51:55
salesperson and these are so important. Like there's been three independent studies that are like massive metaanalyses of sales people,
01:52:03
the sales people who one speak less close more. And number two, the sales people who know when to shut up most
01:52:08
importantly after you ask for the sale, like if you wait 8 seconds after you ask someone to buy, you close 30% more sales
01:52:14
if you wait 8 seconds. Yeah. So you ready to start?
01:52:21
Okay. So Mhm. And so people they'll like they'll close themselves but the sales people
01:52:27
are so afraid of that silence that they then jump back in. It's like you had the sale just shut up. And so I used to talk
01:52:34
about how emphasis was super important. And so like a very easy example to demonstrate this in terms of communication is that if I say I didn't
01:52:42
say he hit his wife. I didn't say he hit his wife. I didn't say he hit his wife. I didn't say hit his wife. Those all
01:52:48
mean very different things. But fundamentally it's just cuz I change where I pause. Right. Mhm. What word? So, I'm emphasizing a
01:52:53
different word. And so, I used to talk about emphasis a lot, but I've I've trained more and more and more and more sales people over time. I just say, when
01:52:58
do you shut up and when do you raise your voice? That's it. The rest of this we we speak in the exact same tone. And
01:53:04
the reason that I feel very confident about this is that AI is doing increasingly good job at ads. If I don't
01:53:09
know if you you've noticed this, but like a lot of ads are just being voiced over AI and they convert higher because people can understand them.
01:53:15
I think a huge part of it is just they can comprehend it. they can actually hear all the words and it's set in a tone that's loud enough and there's
01:53:21
annunciation and they actually get it cuz most like it's like one of the easiest ways you can improve copy on a website is just get it below third grade
01:53:28
reading level like 50% of people can't read above sixth grade in the US
01:53:33
it's crazy so you're you're alienating 50% of the market now you might think oh well those are the idiots no I know plenty of
01:53:39
people I mean like I've got two friends who dropped out of high school and are super super successful entrepreneurs
01:53:45
barely can write their names and they like they make fun of it, but like they're smart. They just didn't weren't educated. Those are different things,
01:53:50
right? And so I say this to say like if if you're if you're in these selling situations and you're like because what happens is you get nervous, right? You
01:53:56
get this fight, flight, freak out, the ones that Daniel was saying earlier. And so your adrenaline kicks up and so you want to talk faster, you want to talk
01:54:01
louder, uh you interrupt the other person. And all those things are antithetical to closing. And so just
01:54:07
teaching someone to be okay with pauses can increase the likelihood that people
01:54:12
pay attention to the words that they say. Because all we do is we draw attention when we pause. You have short
01:54:17
pauses that draw attention. And then you have long pauses that solicit response. If I pause long enough, what do people
01:54:23
do? They talk. And I just think of someone as being higher value if they if they're taking pauses. Mhm.
01:54:28
Um, one of my one of my great mentors early in my career, he there's something about the way that he
01:54:34
spoke, he was incredibly slow with the way he sp he was like that. And the
01:54:40
minute he started speaking when when my company were over there and having these men mentorship sessions with him, everybody would stop and just like was
01:54:46
fixated on him. And then I remember this girl who worked in my New York office, he was
01:54:51
opposite. And it's just it's just the use of your this instrument. Yeah. Um, do you think much about that? Do you
01:54:57
think much about how you present yourself? Do you think much about your body language? I think it it's natural. I think more
01:55:03
important is the distinction between are you coming across as a newbie? Are you coming across as a standard worker be or
01:55:10
are you coming across as high status, key person of influence level? And each one of those has body language
01:55:16
associated. It has different ways of presenting yourself. But it's a self-identity thing. And if you can shift that selfidentity, you can
01:55:24
naturally become more of a key person of influence. When we meet someone, we within a few seconds, we evaluate their
01:55:29
status level relative to us. And you can't switch it off. And there's plenty of evidence to say that like unfortunately, you just do it
01:55:35
automatically. I've seen people completely change their life by just simply changing the way that they pitch
01:55:41
from a a newbie worker B to a key person of influence. I can think of an example. There's this woman who I asked her,
01:55:48
"What do you do?" And she said, "I'm a financial planner. I can help anyone with their financial planning. If anyone
01:55:53
wants to talk about their wills or any of those sorts of things, then that's what I can help people with, right? And it sounds workery. And her her body
01:56:00
language was kind of like this. Uh I asked her a question. I said, "When did you do something special that was
01:56:07
really transformational, something something important?" She said, "Last month, I went out to the countryside. I worked on a farm and I worked with the
01:56:13
owner of the farm and their kids and their grandkids to get alignment between the three generations. the farm was
01:56:19
going to be sold off to private equity and instead I helped them to get alignment as to how they're going to keep the family farm. And I said, "How
01:56:26
did you do that?" And she said, "Well, I used to be a city girl and then I married a country boy and I I learned how to do it." I got her to change her
01:56:32
pitch and I said, "Pitch yourself as a key person of influence at that." So she stood up in front of the group and she
01:56:38
said, "For the last 20 years, I've been working with rural families who own farms and I help them with their
01:56:44
financial planning and I secure their family farm for the next two generations." And her body language just went like
01:56:52
like key person of influence and everyone just responded differently. And when I asked the audience, in the first
01:56:57
instance, what do you think her day rate was? Everyone said $500. I said, in the second instance, what do you think she charges per day? 10 grand. And it was
01:57:04
just the ability to pitch yourself as that key person of influence in the room. You know what's fascinating is there are
01:57:10
actual studies now that show for women in particular that you make more money if you do one thing which is you wear
01:57:16
makeup which is wild. So they did there's three studies that have been done totally different groups one by Harvard one by Stanford and I can't
01:57:22
remember it was either Oxford or Cambridge and the studies showed that women who there was no attractiveness
01:57:29
differential between them but one wore makeup consistently uh at work and one didn't. They made anywhere from 20 to
01:57:36
40% more money inside of this study. What I thought was really interesting about that, because I'm not really
01:57:41
historically a makeup girl, although being fully face painted for this, is that that actually makes sense in a lot
01:57:46
of ways because we do have this initial reaction that we always have uh with people. You know, we judge somebody like you talked about almost immediately. And
01:57:53
so when I saw that study, I thought, well, first of all, that's interesting. You don't have to be smarter, better looking uh or anything else, and you can
01:58:00
make more money just by the way you present yourself. And so I thought thought, well, what about the way that you dress? Is is that also the same? And
01:58:06
there are studies that back this as well that in fact you can make more money as a man for dressing one way and as a
01:58:12
woman and women are interesting because you are not the norm.
01:58:17
What am I missing? You got the lumberjack. I've got 20% sitting on the table right now.
01:58:23
But what's fascinating is, you know, I like things where you don't have to you
01:58:28
don't have to be better than anybody else. You can just use human psychology to make more money. And so if I'm a
01:58:34
woman, I know that the way that I dress, so when I pay attention to my dress and dress professionally, whatever that
01:58:39
means in this instance, in the study that I saw, it was like, you know, what what I would have on a blouse, a suit,
01:58:44
something like that, women make two times more than men when they dress when they dress better. Men, it actually is
01:58:49
less important. Still more important though, if you dress professionally in a suit and you don't have all the other
01:58:54
proof and things you have, you have this sort of interesting thing that's like a you have sort of um diametric
01:59:00
opposition. I make a lot of money and yet I care so little about money that I dress in a wife theater. Yeah. Exactly.
01:59:06
And so and so men make somewhere between 15 and 18% more when they dress in suits. So I think there's a a real um
01:59:13
argument to be made for if you're going to pay attention to the way your voice sounds. That takes some training. Doesn't take much training to change the
01:59:20
way that you look professionally and and how you dress. And the only other thing that I would talk about on sales and
01:59:26
pitching is we tell all of our company people. Um the line is show don't tell. We increasingly do not believe the
01:59:32
things that were heard. So like think about a sales pitch that goes like this. Um you know uh we for instance have a
01:59:39
lot of home service companies. So these home service companies are selling a homeowner on let's say landscaping. And
01:59:45
so I'm going to come and we're going to clean up your lawn and here's what we're going to do and this is how much it's going to charge. I'm going to charge and
01:59:51
this is how long it's going to take. And you can tell the client that we're an
01:59:56
expert at this. I've been in business for 42 years. We have, you know, 1,000 reviews on Trustpilot, etc. Or you could
02:00:02
do something that'll double your conversion, which is simply bring a phone or an iPad with you and say, "Can
02:00:08
I show you what we did for your neighbors down the street?" And just show them the image of it. Just go, "We
02:00:13
do have a thousand Trust Pilot views. I don't right here. We could see what the last one said. Click on it. Show them the Trust Pilot review." You don't have
02:00:19
to train that. And I really like my salespeople to not have to become experts but to be enabled by what's
02:00:26
called sales enablement or technology just to show because we are a visual species. And so wherever possible if you
02:00:33
want to increase your conversions I tell my team you are not allowed to close a sale without showing something.
02:00:39
Some visuals you have to have a visual because it's just a trust transfer and a higher signal. What's wild now is that in that
02:00:46
same business, you could take a photo just right there in chat GBT say do the landscape gardening and then show them
02:00:52
this is your house. Exactly. Fully landscaped. People are vis 70% of the brain is visual processing.
02:00:58
Exactly. And then you believe it and then you've already seen it happen. I work with a lot of entrepreneurs and I
02:01:03
get them to create a brochure like a physical brochure for their business and people are like what on
02:01:08
earth am I creating a brochure for in 2025? I because the the act of creating a brochure gets what's in your head, out
02:01:16
of your head, and into a document we can all explore. And I I still think a brochure is actually one of the coolest
02:01:21
things that an entrepreneur can do as an activity to really just solidify what they do.
02:01:28
I saw you scribbling again, Daniel. Oh, I have lots of things, but yeah. No, I was thinking about like uh makeup versus suits and whatnot. And so, you
02:01:34
know, one it's like if you have if you have zero status, you have no credit, like SPCL like we went through, then
02:01:40
it's like, well, then what are the smallest versions of that that you can demonstrate? And so, I would also bet that if the girls did makeup like hooker
02:01:45
makeup and then you also do like professional makeup, I'll bet you there's a very different outcome that happens because if you have like
02:01:50
understated business makeup, then that probably signals a certain level of status and they will treat you like other people that they have treated in
02:01:56
the past because that associates with the status people had. Same thing with a man in a suit. Like literally fancy pants, right? Um, it's like this guy's
02:02:03
got fancy pants, therefore he is must be 15 18% better on average. Now, to to to comment on on on Cody's point earlier,
02:02:09
it's like I have other statusinducing points that are superior to a suit and so I don't need one, right? So, like how how do I get away
02:02:16
with that? It's like, yeah, like having a suit only means that you have $500, right? But billionaires don't wear Louis
02:02:21
Vuitton because in the status game they're playing that would be an inverse signal of wealth. Exactly. Yeah. Who you're trying to And
02:02:27
then um to Cody's point about proof, like proof is always number one, right? And so like
02:02:32
trust pilot reviews is a kind of proof. Somebody down the street is a closer approximation which is a higher form of
02:02:40
proof. And so proof is always going to be number one what you can lead with. You can almost immediately in any sales
02:02:45
process if they don't have one of these just implement a video sales letter and increase sales by 20 to 40% with like
02:02:51
really doing nothing else. Um sometimes more. And so that typically is like,
02:02:56
okay, what's the what's the promise that we're gonna, you know, what do we do? What's the pain that we're solving? What
02:03:02
is the uh plan or sorry, what is the proof that we have that we can solve it? And then what is the plan for the rest
02:03:08
of this video? And then typically after you have you've demonstrated each of those P's, you then say great picture number five. Uh which then gives you
02:03:15
kind of the visual road map. And then after that, I typically like to have people just respond to the all of the
02:03:20
biggest objections that people have around whatever the specific service is um as the main points of the video. And
02:03:27
then after that, you just make your call to action or you just reinforce the appointment. Say, "Hey, like if you like this video, text me this keyword. That
02:03:32
way, I know you watched it and we'll give you an extra 5% on whatever." And that way the salesperson knows the person watched it. Um and it gives them
02:03:38
incentive to do so. So it's like, "Hey, if you watch the video, you get 5%." It's like, "Oh [ __ ] that's amazing." Um but then that way they know that they
02:03:44
actually watched it. The one other thing that I've found that is the most powerful sales closer
02:03:49
is to pitch the assessment. And to pitch the assessment is, I don't know if I can help you, but if we answer these 40
02:03:56
questions and we go through this assessment, then we'll figure out whether we can help you or not. So, it's
02:04:02
kind of like if you went to the doctor and said, I don't know whether you need anything, but we'll put you through a blood test and and an X-ray and then
02:04:08
we'll see. So one of the biggest way I I've scaled multiple companies where you
02:04:14
pitch the assessment. You just you don't tell people whether you can can or can't help them. You just simply say the next
02:04:19
step is to take an assessment and when we do the assessment it will tell us whether I can help you or not. And it's one of the best sales closing
02:04:26
techniques. There's a lot of psychology around that. They did that the study where they had the boring focus group and they had one
02:04:31
group of people who were allowed straight into the boring f community group and then they had the other group of people who had to take a survey to
02:04:37
get in and the group of people that took the survey to get into the boring community group all said that it was
02:04:43
great in there. So much better. And there's something about how friction upon entry makes you value the thing
02:04:48
more bazillion%. Like I can't I cannot I c I can't emphasize this more. Like in every
02:04:55
single CRO split test that we increase friction or increase the quality of leads, we make more money. CRO split test.
02:05:01
So conversion optimization test that you'd run across a a landing page or funnel or sales sales motion. Um like
02:05:07
when you add more friction and it's good friction ideally, meaning you're not getting out bad people, you're getting
02:05:12
sorry, getting out good people, which is bad friction. You want good friction which gets out bad people. Yeah. um you will typically always
02:05:20
increase the cost per action. So your lead cost will go up, your cost per call will go up, but your show rates will go
02:05:26
up and your close rates will go up and your cash collected will go up. And it seems counterintuitive to apply friction to a process, but
02:05:32
and I can almost promise that like it I I have so few examples where it didn't
02:05:37
work that I almost believe that it's law at this point. And I think it's law because it's so counterintuitive because
02:05:42
it's scary to add friction because you know that you're actively decreasing your lead flow and increasing your cost
02:05:47
per lead. You're decreasing your calls, you're increasing your cost per call. Like that is frightening for just about every business, which is usually why it
02:05:53
works. At the Louis Vuitton store, they put a security guard to keep you out and then it pushes the prices up.
02:05:59
Yeah. Like they they after co none of them stopped doing because they're like, "Oh, wow. We made more sales during CO
02:06:04
because we had people wait in line and showed scarcity." It's like, isn't it? You don't even get to pick the bag you get and you have to
02:06:10
join a waiting list. Then they interview you to buy the bag and then they decide whether they should
02:06:15
let you have what do you bring to the table. That's how Ferrari works. You're not allowed to buy Ferraris unless you go
02:06:21
through this list. And if you're ever so shown to to flip them or sell them, you'll never buy another Ferrari again.
02:06:26
So I've got three boxes here and these three suitcases contain different
02:06:32
amounts of money. One of them contains $1,000. one of them contains $10,000 and
02:06:37
one of them contains $100,000. You're going to pick a suitcase and you're going to tell me what you would do with
02:06:43
that amount of money if you were starting with that amount of money today to build a scalable business.
02:06:49
So, do we keep the money? He wants to buy a watch. I'm like, I'm feeling 100,000.
02:06:57
All right. What do we got? Oh, I have $1,000.
02:07:03
So, do I get to keep the money? Is that how this works? Yeah, you can keep it. It smells smells like money. Okay, so I have $1,000. So I
02:07:09
would um take the $1,000, put it in my pocket, do nothing with it, and I would watch YouTube videos on AI integration
02:07:15
into small businesses. And then I would go to small businesses, and once I had a specific integration that I would do,
02:07:21
which I would probably bet would be around likely email list activation because that's typically like fastest,
02:07:27
easiest money that most business owners have, is their contact list. They've got, you know, they've been in business 10 years. They've got, you know, 8,000
02:07:34
customers they've sold over that whole time period and maybe a list of, you know, call it 20,000 leads that they've had. They never email them ever. If they
02:07:41
do, it's just like, here's our random discount that we send once a quarter for Christmas or whatever. And I would say, hey, um, I will email those people and I
02:07:47
will uh get everything approved by you and don't pay me anything. Just pay me a percentage of the sales that we generate
02:07:53
afterwards. How's that sound? And that offer tends to do well. And I know that because I've done it. So, that's what I
02:07:58
would do. in the thousand dollars, I would, you know, go buy Leila something for a little bit of time so that she can
02:08:04
stay with me until uh I make the money for my my email reactivation campaign.
02:08:10
See what I get? I got the 10K.
02:08:16
Ah, all right. We're going around the circle here. Um, I like it.
02:08:22
I would find the person who would buy what I was selling for the highest dollar amount humanly possible, which
02:08:27
means I would probably go to private equity companies. So, Alex gave me the
02:08:33
idea for Main Street. I I know that Main Street businesses are like often cash crunched, right? They don't have a lot
02:08:38
of money and they often cannot extract enough value from a lead that I need
02:08:44
them to. So, Alex would need to find the perfect company to do that and there's lots of them or he would build his own which would be great. I think in my
02:08:50
specific instance, I want to go to the people who are already good at extracting the most value humanly possible. So, I'd probably try to go to
02:08:56
a private equity firm. And I would What's a private equity firm? It's basically a fancy way for saying that people use their own money to buy
02:09:02
businesses as opposed to public equity where people use the stock markets dollars to buy businesses. And so,
02:09:08
examples would be like u you know KKR, Carile, uh Cberus are some of the
02:09:13
biggest in the world. So, they go around buying people's businesses with their own money. That's right. Yeah. Yeah. they find entrepreneurs right about the point
02:09:19
where they cannot take it anymore and they buy those businesses and then they they grow them hugely and and and again
02:09:25
because I'm better at partnerships I would want to go to them and I would want to say and it really what's interesting is I bet all of us are going
02:09:31
to be really similar the money actually doesn't matter and so even though I have
02:09:36
$10,000 10x what Alex has it doesn't actually matter because what I would do still $10,000 is not enough for me to
02:09:43
make a couple million which is what I would want to do with this so what actually is the differentiator what is
02:09:48
the business model I choose? Who do I go to sell it to so that I can get the most value out of it? And with these PE
02:09:54
companies, what I would do is I would go to them and they're buying companies all the time. And so there's two ways to
02:10:00
sell to a PE company and I'd see which ones I could get them to sign up for. On one hand, there's something called a deal sourcing fee, which is if you can
02:10:06
find companies that are in the niche that PE companies want to buy, they will pay you for sourcing the company. Um,
02:10:12
and I know this because I pay deals fees. And so I would go to private local private equity companies. You're not
02:10:18
going to be able to get to Cberus or the big guys. So I would go to the ones in my local neighborhood that you could find by searching on AI to say local
02:10:24
private equity companies buying these types of companies. I would reach out to the GPS. Those are the general partners
02:10:29
of the company, the guys who run it. And I would say what type of companies are you actively purchasing right now? What's your investment thesis and
02:10:35
dealbox? And if I could get them to respond to me, great. If not, I'd search, what do private equity companies
02:10:41
typically want to buy? what what is the deal box or investment thesis of a private equity company? I would find that dealbox and then I'd play the game
02:10:47
of doornocking. I'd go to a bunch of these businesses and try to find companies that wanted to sell and then when they tell me they want to sell and
02:10:54
I have a buyer, which is the private equity uh company, the private equity company will pay me either a percentage
02:10:59
of the sale or a flat fee for sourcing it. What might that look like in terms of a percentage and dollar number? Yeah, I
02:11:05
mean, if you're like a a non-institutional player doing this, I think you would go to them and say, "Can
02:11:10
I get like 10k for every company that I source you that's over a million dollars in revenue that's profitable and within your dealbox?" They'd probably say yes.
02:11:17
The normal sourcing fee is somewhere between 3 and 5%. But you're not going to get that when you're brand new. So,
02:11:22
but I like the idea of making 10K on one deal to start. Then, what else am I learning while I'm doing this? I'm also
02:11:28
learning simultaneously how do you buy businesses? What type of businesses? How do you find businesses for sale? I think
02:11:33
this is the highest leverage activity I know how to do. Like I just I know more how to buy a business that's already
02:11:39
making money and make it make more money with a higher degree of certainty because if it's already profitable, it
02:11:44
gets out of the valley of death, which is where a company starts and never actually makes any profit. And so I
02:11:50
would start there and then what would I do for that? Well, the second that they see that I'm good at sourcing deals, there's going to be they're going to be throwing offers at me. But what I might
02:11:57
do instead is go to those GPS and say, "Hey, I'm pretty good at doing the hardest part of private equity, which is
02:12:02
finding the deals. Why don't you guys back me for me to find the deals for you?" Maybe they'll invest in my company
02:12:08
for me to then run a private equity firm. Or maybe they'll say, "Come work for me, and then I can make a couple hundred,000. I can learn what I think is
02:12:14
the best uh skill out there to learn, which is dealm. And I can use my leverage, which is knowing what a
02:12:20
company's worth and how to buy it using other people's money in order to increase uh my earnings. And that's
02:12:26
interesting. You'd both use the money for personal things, probably just pay your rent or take your doesn't make a difference at that level.
02:12:32
And I mean, no, even the hundred is close to I mean, it's more than 10 in one, but
02:12:37
yeah. And and this is just one idea. I think there's so many things you could do with one and but they're all very similar in their
02:12:43
fundamentals where you go to find some like the leverage comes from going tapping into existing networks. You find an existing
02:12:48
business and either you're selling the business as the product or you're selling the product of that business. Right. Exactly. So you're selling either
02:12:54
way and all of it is promotion. You're selling and you're trying to get a percentage of upside. I'm getting a
02:13:00
percentage of because like to Cody's point, a lot of mainstream businesses don't have money and you're like, "Cool, pay me on money that I make you and
02:13:05
they're usually very very generous with money they don't have yet." Um, same same for, you know, a deal that
02:13:12
we haven't made yet, I'll give you, you know, a fee for those things. Again, it depends on the timeline. If I have 30 days, then like
02:13:18
getting a deal done in 30 days will be tough. Um, but like getting a brick and mortar, it's like probably do that in 48 hours
02:13:24
to get somebody to say yes to free money for like no risk and I do all the work. It's an easy offer. So again, I think it
02:13:30
dep that's where like the constraints of the initial prompt is like how much money and how much time. If it's a year,
02:13:35
it's like all of this changes. If it's 30 days and I have nothing, it's like well then we want to generate as much cash as we can in little time as
02:13:40
possible with no risk. Yeah. Daniel's about to invest in the S&P 500. Right. Because he's like, I take your your $10,000 and
02:13:47
I raise you. Yeah. So I have 100,000. So he's leaving with it.
02:13:54
This this is a dangerous amount of money. Yeah. This is the worst case scenario for most people because if you have a
02:14:01
thousand, you know, you don't have money. If you have 10,000, okay, you might get a cleaner, you might get an
02:14:07
assistant, you might do a few little things with it. The danger of a h 100,000 is you can kid yourself into
02:14:12
thinking that you've got money. And it will make your head spin how fast you can blow through $100,000 if if you
02:14:18
don't know what you're doing. If you give me a Formula One car and ask, "What am I gonna do with it?" I'm gonna crash
02:14:24
it, right? if I can get it even started in the first place. So, I've got to come up with something that the first problem
02:14:29
that I have is I don't have the knowledge. I don't have the network. I don't have the reputation. So, here's what I'm going to do. I'm going to
02:14:35
leverage Cody's. I'm going to go to Cody and I'm going to say, "Cody, can I do a deal with you? I would like to start a
02:14:40
business. I know you've got lots of ideas that you just don't have time for. I'm going to invest $100,000 as debt for
02:14:46
equity for 10%. So, I'm going to put 100 grand in and that'll come out of the business at some point, but debt for equity on 10%. and I'm going to do sweat
02:14:53
equity for 10% and you keep 80%. And it's your idea and it's your network and
02:14:59
it's your reputation, but I'll be the person who's heavily invested in this. And the only condition is that as the
02:15:06
business becomes profitable, we can repay the 100 grand. Um, and then once it's repaid the 100 grand, either you
02:15:11
buy it or we can sell the business. Now, what I'm doing there is I'm basically acknowledging I don't know
02:15:17
what I'm doing. I'm acknowledging I don't have the reputation. I don't have the knowledge. um all I have is this 100
02:15:22
grand and I have a very strong desire or will to be an entrepreneur. Now, what's going to happen is that probably with an
02:15:28
hour of Cody's time per month, she's going to be able to say, "Here's the idea. Here's here's my CFO. Talk to my
02:15:34
CFO. Here's my head of marketing. Talk to my head of marketing. Here's my friend who's actually got even more
02:15:39
money and wants to invest." And she's just going to like fire off a few emails and she's going to love the idea because
02:15:45
it's her idea. And I'm going to I'm going to work hard, right? And what's cool is that when the time comes that
02:15:51
that business becomes valuable, I've got one buyer on the table. Cody's either going to say, "Hey, look, I'll buy you out because it's only 20% and now I own
02:15:58
the whole thing." Uh, or we go to market and Cody will know someone who can buy the business and I get 20% of the exit.
02:16:05
So, but the key here is that just that acknowledgement that the it's really it's the knowledge, the network, and the
02:16:11
reputation that is the valuable bit. And the money is a bit of a red herring. And you're going to get Cody's skills because you're going to be in her
02:16:17
proximity. you're going to get a little bit of her reputation at the end of that deal. I will then have knowledge. I'll then have
02:16:23
reputation. I'll then have uh all of those things will have leveled up for me. You know what else is interesting too?
02:16:29
It's really what you're proposing is is something that I used to not like and since have think and since think that
02:16:36
when you find the right ones, it's it's really fascinating which it's a franchise model. You're essentially saying which is what you do when you
02:16:42
come to a franchise. If you come to Resibrands, you go, "Okay, I have $75,000. I don't know anything about window cleaning. I don't know anything
02:16:48
about running a business. But I do know that you know how to do it. And I know that you have all these case studies,
02:16:54
aka proof of other people just like me that have done it. So, I'm actually going to pay you for this business for
02:17:01
the right for you to take a percentage of my ownership forever in perpetuity. Um, but I will teach you how to or you
02:17:07
will teach me how to run the business. And so I think that's actually I I think I used to think that franchises weren't
02:17:13
good for entrepreneurs because I am relatively unemployable and I don't like to be told what to do. But for people
02:17:19
that have never run a business before like what you're saying is like I'm paying you for the right to learn
02:17:25
because you have a proven system that if I use it over time I have a lower likelihood of failure because we know
02:17:31
the truth which is 90% of startups fail. Most startups never make any money. you pay for the right to maybe potentially
02:17:38
one day make money. And so I do think stealing other people's homework is is real and valuable. I
02:17:43
I wanted to ask you all a question which I have an answer to. So I assumed you would but maybe you don't, which is what
02:17:49
is the one thing about entrepreneurship, wealth creation, finance that you think
02:17:55
most people undervalue that you you put a a disproportionate amount of weight
02:18:00
on. So like for me, I can think of a game in business. I think of business as a set of games we're playing. I can think of a particular game in business
02:18:07
that I don't think other entrepreneurs understand the value of and I'm wondering if you all have an answer to that as well. Is there one game in this
02:18:14
game of business, one fundamental game that you think most entrepreneurs listening now don't appreciate and they
02:18:19
should from the entrepreneurs you've worked and invested in and being one yourself? Well, I think I'll say one that everyone here at the table will agree with. But I
02:18:25
think that brand and distribution is still wildly undervalued. M I mean I think that's the reason that all of us decided to get into it is
02:18:31
because you just I mean at least I saw just the wild discrepancy between cost of of building brand and building
02:18:38
distribution versus the value of that distribution and you know the the primes the lunches the you know some of these
02:18:45
in insane zero to many billion dollar case studies uh term huda beauty proper
02:18:51
proper uh whatever it is for yeah like there's there's so many examples at this point that it's almost trite um I still
02:18:57
think it's undervalued distribution, which is building an audience that you own that has a high likelihood of of
02:19:03
complying with requests, aka brand. Yeah. I mean, well, I think that's a
02:19:08
very good one. And and the reason that we know that it's so undervalued is we're all offered things all the time
02:19:14
that do not I mean, I remember talking to my president of my company, and I was the former president of Mr. Beast. It
02:19:20
was interesting is he said like every deal we looked at, we almost regretted doing it. Like we
02:19:25
couldn't I think you and I talked about this. We we we couldn't do a deal that the other party fully understood the
02:19:31
power of our distribution upfront. We almost had to like prove it, put in a bunch of milestones on a later date
02:19:36
because the deal is so good. And I found the same thing in the deals that I did. Like we've talked about like I mean I
02:19:41
did a bunch of deals early on where I bought businesses and they couldn't benefit from distribution. All my
02:19:46
laundromats, my car washes, like it doesn't matter that I have a big audience online and so the leverage
02:19:51
wasn't there for me. So I think um I think distribution and brand are huge. Uh the secondary thing that I do not
02:19:58
think most entrepreneurs understand is financial engineering. The richest people in the world are rich if if they
02:20:05
didn't get it from daddy and mommy and they didn't get it from uh investing in
02:20:10
third party companies. They got it from um they got it from owning companies and
02:20:15
buying them over time. Like every billion there is not a billion dollar company that exists that hasn't bought other companies. It doesn't exist. When
02:20:22
you say financial engineering, how do you simplify that for someone that's 16 years old? Man, understanding how to get other
02:20:28
people's money, to say it really simply, like how to get other people's money, which sounds a little scammy, except
02:20:33
it's not. You know, most businesses are bought with the SBA loans, loans from the government that allow you to buy a
02:20:39
business. Businesses need lines of credit. That's just money from the bank for future state. So, like if you
02:20:45
actually understood how money and finance works in your business, it's harder to die because cash flow is what
02:20:50
keeps your company alive. And also, it's easier to buy your competitors because whoever is most funded wins typically.
02:20:58
Um, and so I think I think more entrepreneurs need to obsess on the thing that uh isn't the
02:21:04
magic. Like the magic is coming up with an idea, having the grit, doing the brand, doing the distribution. That
02:21:09
stuff's actually really really hard. financial engineering is is modelable.
02:21:14
It's just it's the same every single time. It's just been gatekept by by Wall Street money games. I I had this I had such an
02:21:21
epiphany moment when I was like 20 23 24 years old when my um a German group had
02:21:27
basically bought the majority of my company out and I got to spend a lot of time because we now had this German office. So, I was there a lot and I just
02:21:33
observed this one individual who I shan and I I I'm there building this business and pitching to clients and doing all
02:21:38
this hard work and I met him and he says, "I don't want to do any hard work. I just want to do deals." And I was like, "Tell me more." And I
02:21:44
lent in. I'm like, "What do you mean deals?" Cuz I'm like, "I'm not sleeping here." And this guy looks like he's sleeping like tremendous amounts of
02:21:50
hours. And he was like, "I just want to play money games. I want to be in the middle of the transaction of the deal and taking
02:21:56
some." But then he's also when he says money games is like leverage and arbitrage
02:22:02
raising money against an asset, overvaluing that asset and buying lots of cheaper assets with the value of the
02:22:07
expensive asset. And he made a lot of money doing exactly that and almost never working cuz he
02:22:13
understood exactly what you're saying is that really really rich people understand money games.
02:22:18
Just how to use money leverage to make more money. Look at the Forbes 100 list. It's all comprised of people who do financial
02:22:24
arbitrage in one way or another. How do I go learn that skill? Do I have to go work in finance? No, you don't have to work in finance.
02:22:30
But I mean, the best business school is always be in business. So, get into business and then obsess on one like I think it's like tiered. Bottom level is
02:22:37
like understand a P&L. Most entrepreneurs don't have a profit and loss statement. They don't actually track their profit and loss statement. I
02:22:44
mean, we invested at a $60 million a year year business. The guy didn't have an up-to-date profit and loss statement.
02:22:49
It's incredibly common. I'm sure you see it. you look at a bunch of businesses too. Second level after a profit and
02:22:54
loss statement is do I understand where my financing is coming from? All you need to do to understand that is talk to
02:23:00
your bankers like do you have a bank that will lend you money? Understand why. Uh explain to them what you do and
02:23:07
see if they understand it and how much money they'll give you. And then the third level of the game is go and talk.
02:23:13
Every like learning that needs to be done is just getting in the room with other people who have their Tuesdays are
02:23:18
like your dream days. So I think you know you want to get in a room with a bunch of people who are doing deals. That's how you do more deals.
02:23:24
When I um I told you earlier we were talking about psychedelics before we started recording. Yeah. Um when I left my last company I had
02:23:30
that year and a half where I invested in this massive psychedelics company and it was the pandemic. So we're working from
02:23:35
everyone was working from home. I was working from the billionaire's apartment in London. And I got to see in the
02:23:40
leadup to the IPO he did 10 IPOs a year. So I got to sit in his kitchen and he we used to work over there and I just got
02:23:46
to see what was going on. And all he was doing was making phone calls to people with lots and lots of money and he was
02:23:52
giving them access to the IPO before it IPOed at a valuation which we all knew was going to 10x. And I just thought, oh
02:23:59
my god, like this is how rich people make money. They have some kind of access or arbitrage and they move money
02:24:04
around to capitalize on on these multiples. And I thought, [ __ ] hell, like that's that's the game.
02:24:09
Get around billionaires. I know it's a crazy thing, but you started a podcast. I've done a podcast. Well,
02:24:16
I'm slightly older than you guys. Like, I remember before the internet, before YouTube, before all of this sort of
02:24:23
stuff. There was no access to the this information. You couldn't get this information. And now you can you can
02:24:28
listen to podcasts. You can chat to chat GBT. You don't even have to get in the room and like it's it's all on the
02:24:34
internet. And it blows my mind because I remember a time before that. I I love what you said. I totally agree with what
02:24:40
you said. I'm going to go with um the one game that most people don't understand is bananas.
02:24:45
That's the end of the podcast. In lesson one of every economics class, they say if you've got 10 bananas and a
02:24:52
100 people want a banana, you're going to have high prices and profit. Demand outstrips supply. If you've got 10
02:24:59
bananas and only one person wants banana, you're going to drop the price of those bananas and you're going to make a loss and your business is going
02:25:04
to go badly. And what most people do not understand is that the whole game relates to constrained supply and excess
02:25:11
demand. And if you can't constrain the supply and create excess demand, you won't get a profit. You can take
02:25:17
something like Google Maps, which probably costs 500 million to set up and and launch satellites and everything,
02:25:22
they have to give it away for free because they have infinite supply. They have they can supply everyone on the
02:25:28
planet with Google Maps. So, because there's infinite supply, they just give it away for free. But Google Ads,
02:25:34
there's a limited number of people who can advertise on every search. So because that's limited, the the price
02:25:41
goes up. So I have a client who saves lives and they do first aid training and
02:25:46
they're an amazing person and they literally save children's lives and all this sort of stuff. And she's telling me, you know, why aren't I able to
02:25:52
trade, you know, charge more money? I'm literally saving lives. I'm a really good person and I'm very valuable. I say
02:25:59
because the whole game, no one that that's not the game. The game is demand outstrip supply. So you need to
02:26:05
constrain the supply of something and you need to manufacture excess demand and unfortunately as as much as you
02:26:12
might be the most amazing human being if you can't manufacture demand and supply tension you can't make a profit.
02:26:19
I was hoping and thinking someone might say hiring because for me my answer is hiring.
02:26:24
That's the first thing I go to. I remember Richard Branson sitting me down when we spoke in New York and saying listen I built one of the biggest groups
02:26:30
in Europe and my CFO had pulled me out of the room and said I don't know what net profit is and he says my CFO got
02:26:36
crayons and a piece of paper and drew fishes in a net in an ocean and said Richard that's your net profit and then
02:26:41
they walked back in the room and he was at the time running one of the biggest groups in Europe. When he said that to me, I was like, "Wow." He was like, "You don't really
02:26:46
need to know much if you're a really masterful delegator." And he said I was a dyslexic thinker. So, I was always forced from the very
02:26:53
beginning to just find someone to do it. That was exceptional. And actually, the further I've gone in my career, the more
02:26:58
just like you figure out like the game, this game, that it's actually just a couple of fundamental things that sway the outcomes. Like most of the
02:27:05
returns come from like a couple of things. In business, I've just come to learn the further I've got that my returns come from truly exceptional
02:27:12
people, binding them with a culture and then setting them the sort of strategy or more technical things that
02:27:17
I would agree with that. And the reason you can find such amazing talented people and so could Richard Branson is
02:27:24
because first he could create excess demand for that role and then you could
02:27:29
choose from that list. So I go back to when I was 18. I was 18, broke, drop out of university, parents aren't speaking to me, shoplifting food.
02:27:36
I managed to get a guy called Chris who was running a business to um stop his business. He was he was
02:27:43
double my age and successful to stop his business and to decide to come and build a social network with a kid who was
02:27:49
stealing Chicago town pizzas in Manchester who had never built a technology company before in exch I didn't pay him in exchange for 30% of
02:27:56
the company. And this goes back to this whole thing about offers. My pitch, my offer at that time, I was trading in
02:28:01
future money, equity, and he believed in the value of the future money. So I say to kids all the time, actually, you
02:28:07
don't need to be in my position now. You've all got future money. And the future money is determined by how good your pitch is. Yeah.
02:28:13
Your sell is. But I think that goes back to that like how I talk about pitching for money. That's your mightest touch. You didn't
02:28:18
have profit. You didn't have growth. You didn't have a track record. What did you have? An incredible [ __ ] story. Yeah. So if
02:28:24
you got nothing else but a story, then you can hire people much smarter. Exactly. This actually brings me to a point that
02:28:30
I haven't told the world about yet. I've just built something called culture test. You can find it at culture
02:28:35
test.com. Essentially, the thinking is that one bad hire, as I'm sure all of my guests here will agree, can ruin your
02:28:42
business. It can ruin your idea. So, culture test helps you figure out and spot red flags and people you're
02:28:48
thinking of working with or currently do work with by making a personalized culture test survey and it scores that
02:28:55
person in terms of how aligned they are to you and your mission. It has been a gamecher for my business. We've culture
02:29:01
tested about 40,000 people. I just wish I was doing this before. Check it out.
02:29:07
Cultureest.com. Make your own culture test. Use it and thank me later. Alex,
02:29:13
you you've got this book about to drop called 100 million money models. What is
02:29:18
the one money model in this book that's added the most to your net worth? So, it's more the concept. So, like each
02:29:24
of the the so offers had the value equation which is kind of the core concept that the book was built around. Uh the lead's book was about the core
02:29:30
four um the ways to promote anything. And so, $100 million money models is about client finance acquisition which
02:29:36
is fundamentally how you get customers to fund your own expansion. And so Cody said this earlier, but depending on the
02:29:43
source, it's roughly like 80% of businesses fail because of uh poor cash flow or they they just don't have enough
02:29:48
money, right? And the other 20 is probably just people just give up. And so as long as you don't give up, the reason you go to business is you just don't have cash flow. And so that book
02:29:55
solves cash flow, which is why the sub headline is how to make money, which is pretty pretty on the nose. But fundamentally like each of the examples
02:30:02
that I had in my business um and I define that within client fun acquisition as I define it when you have
02:30:07
like a $100 million money model is that you're able to get a customer to pay you twice as much as you spend on them in
02:30:14
the first 30 days. And by doing that the the more specific equation would be that
02:30:19
your 30-day gross profit from a customer exceeds two times CAC plus COGS meaning CAC is in cost of car customer plus cost
02:30:26
uh COGS which is cost of goods sold. So, how much does it cost me to get them? How much does it cost me to deliver them? Times two. If I can get that from
02:30:33
one person, then for the rest of my expansion, all the customers finance the acquisition of the next customer and
02:30:39
then cash flow is no longer a constraint of the business. You'll still have constraints, you'll still have supply constraints, you still have hiring constraints, you'll still have other constraints, but cash won't be one of
02:30:45
them. And so, as a result, you can grow B pretty much as fast as you can handle. And so, that is how I've grown all the
02:30:50
companies that I've started without funding and been able to grow very fast in each of them um is with that core
02:30:57
concept. Thank you. Thank you for uh choosing to be here today. And I invited you here
02:31:02
because you're the three people that guide me, that I listen to, that I think have the most credible, important
02:31:08
information that can guide my audience. And I know who they are. They're people that want to improve their lives in some subjective medium to that the northstar
02:31:14
that they have. And you all represent different perspectives and also different strategies. But there's so much so many overlaps that I think
02:31:21
actually getting three people like you around the table to understand where we overlap and where you think the same is
02:31:26
incredibly powerful. Um, I highly recommend everybody goes and reads Cody Sanchez's book, Main Street Millionaire,
02:31:32
how to make extraordinary wealth buying ordinary businesses, which is really what, you know, one of the things Cody
02:31:37
has pioneered the idea of um, and made accessible to the masses because most people didn't think you could do that.
02:31:42
So many of my friends are now buying boring businesses, as Cody says, because Cody has laid out a framework to do that
02:31:48
and to create wealth in this book. And my favorite book of Daniel, if I was over subscribed, how to get people lining up to do business with you. And
02:31:53
there's so many that I could have chose from, but also you all have YouTube channels and your YouTube channels are amazing. So, I'd ask my audience, I'm
02:31:59
going to link them all below, to go and check out your YouTube channels. Um, Daniel, you're just starting out on YouTube. You're getting you're getting
02:32:04
your your feet wet in YouTube. But, but Cody and Alex have been making so much incredible actionable content. I
02:32:12
love one of your new your new formats where you sit with someone and you sort of redesign their business with them.
02:32:18
and Cody's been making some of the most entertaining and informative content on on how to get going with with simple um
02:32:24
companies and businesses for the longest time. So, please go check out their their work and go follow them on social media. These are the people that I
02:32:31
admire the most in this space. And if you like what we do here on the Darvisio, you're going to love what they do. So, thank you so much everybody for
02:32:36
being here, for being so generous with your time and hopefully we'll do this again sometime soon. This has always blown my mind a little
02:32:42
bit. 53% of you that listen to this show regularly haven't yet subscribed to the show. So, could I ask you for a favor
02:32:48
before we start? If you like the show and you like what we do here and you want to support us, the free simple way that you can do just that is by hitting
02:32:54
the subscribe button. And my commitment to you is if you do that, then I'll do everything in my power, me and my team,
02:32:59
to make sure that this show is better for you every single week. We'll listen to your feedback. We'll find the guests
02:33:04
that you want me to speak to and we'll continue to do what we do. Thank you so much.
02:33:10
[Music]
