Keep The Right Culture As You Expand | Ep 237

Summary

Episode Summary: "Keep The Right Culture As You Expand | Ep 237"

Podcast Information:

• Title: Build with Leila Hormozi
• Host/Author: Leila Hormozi
• Description: Exploring strategies to create an unshakeable business, leveraging Leila Hormozi's experience in scaling businesses to a $100M milestone by age 28 and expanding acquisition.com into a billion-dollar portfolio. The podcast delves into lessons learned from scaling large enterprises and assisting portfolio companies in similar endeavors.
• Episode: Keep The Right Culture As You Expand | Ep 237
• Release Date: February 5, 2025

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Introduction

In Episode 237 of "Build with Leila Hormozi," the focus centers on maintaining and nurturing the right company culture amidst business expansion. Leila engages with various entrepreneurs who present challenges related to scaling their businesses while preserving the foundational cultural elements that contributed to their initial success. Through insightful discussions, Leila provides actionable advice to help businesses sustain their ethos during periods of significant growth.

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Key Discussions

1. Managing Culture During Scaling

• Speaker: Nathan, Mortgage Lender and Business Owner
• Timestamp: [00:00] – [03:50]

Discussion Points:

• Nathan shares his experience transitioning from working under others to owning his mortgage company, emphasizing the ease of managing a small team of three with a strong, self-crafted culture.
• As Nathan anticipates scaling his team from 75 to 150 employees, he expresses concerns about maintaining the intimate culture and one-on-one interactions.

Leila's Advice:

• Leila underscores the importance of delegating cultural reinforcement to the team rather than relying solely on the founder.
• Transitioning from one-on-one to one-to-many communication methods, such as memos, team meetings, or written communications, becomes essential.
• Implementing regular meetings that focus on culture, mission, and vision is crucial as the team grows.

Notable Quote:

"Culture is what happens when you are not there." — Leila Hormozi [00:45]

2. Addressing Seasonality in Business

• Speaker: Nicholas Marco, Franchise Owner in Health and Wellness
• Timestamp: [03:54] – [10:45]

Discussion Points:

• Nicholas discusses the challenges of seasonality in his Dry Bar franchise, contrasting it with his other businesses that have steady memberships.
• He seeks strategies to convert one-off customers into consistent members to stabilize revenue streams.

Leila's Advice:

• Emphasizes the importance of optimizing the sales process for memberships by ensuring front-line staff consistently offer membership options.
• Suggests reframing service marketing to focus on lifestyle and long-term benefits rather than one-time events.
• Recommends tying membership offerings to tangible hair health goals, creating a visual and achievable roadmap for customers.

Notable Quote:

"It's about doing it in a way that promotes hair health." — Leila Hormozi [09:48]

3. Maintaining Fulfillment Quality While Scaling

• Speaker: John Mark, Information Seller for Fitness Coaches
• Timestamp: [10:47] – [18:36]

Discussion Points:

• John Mark highlights the struggle of maintaining high-quality fulfillment as his revenue scales from $130k to a projected $400k per month.
• He grapples with balancing time between servicing clients and creating high-leverage content.

Leila's Advice:

• Recommends identifying and targeting the best customers who require less hand-holding and provide the highest value.
• Suggests implementing group calls instead of one-on-one sessions to foster community and reduce time spent on individual calls.
• Advises redefining marketing strategies to attract clients who align with the business's capacity to deliver without extensive personal intervention.

Notable Quote:

"Understand who your best customers are and how to get more of those people rather than, how do I just get more customers." — Leila Hormozi [13:10]

4. Scaling Operations Nationwide

• Speaker: John Jackson, Tech-Centric Short-Term Rental Property Management
• Timestamp: [18:39] – [23:34]

Discussion Points:

• John Jackson seeks guidance on scaling his property management business from three to nationwide locations, emphasizing concerns about operational competency during expansion.

Leila's Advice:

• Advises against overhiring by matching hires with the current scale and future growth steps.
• Suggests hiring individuals with relevant experience in scaling similar businesses, even if not directly within the same industry.
• Emphasizes the importance of recognizing when an operator has reached their limit of competence and the necessity of onboarding additional talent to guide further expansion.

Notable Quote:

"Do not over title this person. [...] leave room above them under title people." — Leila Hormozi [22:01]

5. Bridging Skill Gaps Between Teachers and Students

• Speaker: Dimitri, Learner and Practitioner
• Timestamp: [23:36] – [30:02]

Discussion Points:

• Dimitri discusses the challenges of applying professional relationship-building skills to personal relationships and seeks strategies to bridge the skill gap between teachers (leaders) and students (employees or clients).

Leila's Advice:

• Emphasizes self-awareness in teaching abilities and recognizing personal deficits.
• Advocates for training and coaching employees to enhance their teaching and leadership skills.
• Highlights the necessity of matching team members' capabilities with their roles to ensure effective knowledge transfer and leadership within the organization.

Notable Quote:

"If you hire someone that's highly competent, they can show you what they do and why they do it, making it clear to you." — Leila Hormozi [29:23]

6. Hiring Competent Team Members as Founders Scale

• Speaker: Lily, Founder of LGBG Fashion House
• Timestamp: [30:03] – [35:53]

Discussion Points:

• Lily addresses concerns about hiring team members who are more competent than herself in specific areas, particularly regarding social media content creation.
• She struggles with assessing their performance due to her limited expertise in the area and fears misalignments between effort and business opportunities.

Leila's Advice:

• Recommends evaluating whether underperformance stems from lack of skill or motivation.
• Suggests clear communication of expectations and redefining roles if necessary.
• Encourages trusting founder instincts while being open to making tough decisions to align team capabilities with business growth needs.

Notable Quote:

"If you mess up, and you will, at some point, you're going to learn and just learn from what happens, but you have to do something." — Leila Hormozi [35:53]

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Notable Quotes

1. Leveraging Team Culture:

   "Culture is what happens when you are not there." — Leila Hormozi [00:45]

2. Promoting Productive Marketing:

   "It's about doing it in a way that promotes hair health." — Leila Hormozi [09:48]

3. Targeting Ideal Customers:

   "Understand who your best customers are and how to get more of those people rather than, how do I just get more customers." — Leila Hormozi [13:10]

4. Strategic Hiring:

   "Do not over title this person. [...] leave room above them under title people." — Leila Hormozi [22:01]

5. Effective Leadership:

   "If you hire someone that's highly competent, they can show you what they do and why they do it, making it clear to you." — Leila Hormozi [29:23]

6. Adaptability and Learning:

   "If you mess up, and you will, at some point, you're going to learn and just learn from what happens, but you have to do something." — Leila Hormozi [35:53]

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Insights and Conclusions

In this episode, Leila Hormozi provides a comprehensive exploration of maintaining organizational culture amid scaling processes. Key takeaways include:

• Delegation of Culture: As teams grow, founders must shift from individual mentorship to establishing systems that embed the desired culture within the team.

• Optimizing Communication: Transitioning from one-on-one interactions to broader communication channels ensures consistent cultural reinforcement across a larger workforce.

• Strategic Hiring: Focusing on hiring individuals who align with the business's current and near-future needs prevents overstaffing and ensures operational efficiency.

• Customer Targeting: Identifying and attracting the right customer base reduces resource strain and enhances business sustainability.

• Leadership Development: Investing in training leaders within the organization fosters a self-sustaining environment where culture and expertise are continuously nurtured.

• Adaptive Learning: Embracing mistakes as learning opportunities allows businesses to refine strategies and adapt to evolving challenges effectively.

Leila's guidance empowers entrepreneurs to thoughtfully navigate the complexities of scaling, ensuring that growth does not compromise the foundational values that drive their business success.

Transcript

[Lily]

Hey, Lily.

[Nathan]

Hi, my name is Nathan. I'm a mortgage lender, slash, own my mortgage company and I sell obviously loans to homebuyers. My revenue is at 1.2, profits at 900. Now that I've started my own mortgage company. I used to work under somebody, learned everything, etc. Yeah, I realized I could do it better and train the team better, etc. So right now we have a team of three.

[Alex]

Yeah.

[Nathan]

But culture wise, super easy to manage. And I feel like it's. I've built it the way that I wanted to. My concern is obviously as it scales, you're gonna have less one on one time. I guess. Is there anything that I should continue that's very high value to make sure, you know, we keep the right culture as we expand?

[Alex]

Yeah. So a few things, which is one, you're always gonna be the most potent source of culture, but what you don't want to be is you don't want to be the sole source of it for the people on your team. And so what I really try to do is there's like me to the team. But what the goal is, is to get the team reinforcing the team. So basically culture is what happens when you are not there. So if the reason that people act a certain way and there is a good culture is because you're present, then it actually just means that they just act that way because you're present. And so the goal is that you can continue to create more space between you and the teammates and they continue to uphold those behaviors that you want to be normal in your company. Right. And so as you continue to grow, you will be forced by the growth to be more distant from people anyways. That happens naturally. The thing that you want to continue to do is you want to go from essentially like one on one communication to one to many communication. And you don't want to stop saying the things to people, you just want to say it to more people at the same time. So in the beginning I might have had one on ones with seven people or 10 people, or I still have lots of one on ones. But as I grow, I say, okay, what are the things that I'm continuing to say in these one on ones that are creating a culture that I need to say to the whole team and it's like, okay, what ways can I say these? Is it a memo? Is it a team meeting? Is it a slack message? What is it? And I do think as you grow, having more of those things in written communication is also really important. So that people can reference those things and they can share it with other people. And so like, you know, I would say at this size you don't need it. But like once you get to, you know, between five to 10 people, like there's a weekly meeting that you are reinforcing the culture. You're rewarding people for upholding the values. You're talking about the culture and the mission and the vision. That stuff, as you scale, you continue doing those meetings, the nature of the meetings just changes. You reinforcing the culture would still continue to happen. It just as your audience gets bigger and the amount of people that are going to hear it continues to grow and the amount of people that you can interact one on one with your amount of time you can dedicate per person goes down and the amount of people that you can talk to on a weekly or monthly basis goes down. And so it's like, okay, well if I can't talk to every single individual, then I have to talk to all of them at once. That's really the biggest change that happens. And going with that, I think that it's just like even one of my initiatives, I'll be transparent. I shared with my team, I said like, hey, I, I really need to work on more formal communication from me to the whole team because I'm the kind of person that's like, naturally what I do is I think a sign of my team needs to know. I'm like, I make a podcast or I write something in a few different slack groups or I do something like that versus like, okay, I'm going to have a newsletter every week I send out. So that's one thing I start doing because we're at 75ish people right now and end of year it's going to be at 150. So I'm like, OK, I need to start writing a newsletter again. Because when I had 150 employees before even doing just a call wasn't enough. It's like some people don't are not fucking listening to the call or they're doing something else. They're on calls because not everyone else can make the team meeting every time, every week because you have different time zones. And so I think thinking about continuing to say those things, just saying them in a group setting. If I had to do a tldr. Cause that was long.

[Nathan]

Really good.

[Alex]

Oh good.

[Nathan]

Thank you.

[Alex]

Okay, great.

[Nicholas Marco]

Nicholas Marco here. Portfolio of different franchise brands in health and wellness. We did 28 million last year. About 15% to the bottom line. Most of that is Hand in Stone massage and facial Spa. But my question is specifically with Dry Bar. I'm a franchisee of Dry Bar and so, you know, amazing brand. They basically kind of defined the category for blowouts, right. And with my background with Hand in Stone, that was what attracted me to the brand was they had really good average unit volume per location. They but like barely any membership and barely any gift cards. And so I actually like when I evaluated the brand, didn't wanna see a lot of good, good, good. Cause I wanted to see maybe the potential of like how we can raise the revenue. And so the conversion for membership is like 5% in that brand. And I think luckily a new CMO just came on board and I just feel like it's, you know, there's a lot of seasonality in the business which I'm not used to. Like, I love, like I have a very solid membership in all my other businesses. So I think what membership does is there's really not a lot of seasonality. You know, people are getting their massages and facials every single month and it really doesn't ebb and flow too much in my business. But in Dry Bar it's like you got an amazing month of December and then January. If you don't cut your schedule now all of a sudden you're not profitable. And I really don't have a huge membership base. So like at as the brand hopefully I think shifts in the way they promote the service which I think should be less like one off events, more just lifestyle. I'm curious if you think that's Cause to me I'm the type of franchisee that gets very vocal and is very collaborative with the franchisor and if they're not very willing to collaborate on that level, I'm not really engaged because I like to be very, you know, I want to be like the top performing franchisee and very collaborative whatnot. So I'm curious like do you feel like, you know, how do you make a business less seasonal? I would think membership is a huge answer to that. Just curious of your perspective. And then you know, you may even be, you know, like the demographic I would think as well, you know.

[Alex]

You didn't ask Alex? No. Yeah, yeah. So one question which is do you have an operator above the locations of Drybar or like what's the infrastructure look like?

[Nicholas Marco]

Yeah, it's a great question. So, you know, I think it's really inspiring being here because you guys obviously operate this portfolio and you know, so I only have really one person over top my Portfolio now. Yeah, and I think so.

[Alex]

Who's running the locations?

[Nicholas Marco]

I have the manager in each. Yeah.

[Alex]

Okay. How would you say those managers compare to the managers of like Hand in Stone Massage?

[Nicholas Marco]

Good. You know, honestly, really good. Like the beauty of like my background was I went from more complex to less so. Like running a dry bar is like a cakewalk compared to my, you know, I have 70 employees in just one of my spas.

[Alex]

Got it.

[Nicholas Marco]

You know, and that does 4.3 million in sales. So like a dry bar is one basically service, let alone like the whole menu we have. So yeah, I think they're honestly like, you know, they're lacking leads in certain markets because like New York City or Vegas obviously is different where dry bar thrives versus like a suburb. And I think the suburb of any service business struggles without the recurring revenue, the repeat client. Right. Because you're not going to an event all the time.

[Alex]

Right. I think the membership is obviously a fantastic answer, but it's really getting them, it's nailing the sales process for the membership. So like we, one of our companies is a chain of teeth whitening studios. And it's like people just come in at one time, right. And it's obviously in more astute areas. Like people come more often, but like a lot of them, they come once, like my teeth are white forever. I'm like, what the fuck? That's not how it works. Like, you know what I mean? Do you drink coffee? Like, of course they're going to get yellow again. So. But the biggest area that we saw with that one and with another chain that we have is that we just, it was getting people to stick to the script. So it was getting the front desk and it was getting the people that were doing the service to stick to the scripts, to even remember to offer them the membership. And so we had to make sure that we built incentives in there to incentivize them equally on the membership offer as much as any of the upsells, any of the products, any of that. Because a lot of times what I notice is like with some of those, it's so easy to get any of those one time sales because it makes more sense. The customers think it's a one time and it's like, no, what we realize is like okay, when they come in, for example, for the teeth whitening, it's like, okay, what shade are you at today? Great, you're at this shade. Okay, what shade do you want to get to in this visit? I want to get to this shade. Okay, but what's your goal shade. Right. And that is actually like, okay, well, to get to that goal shade, you're gonna need a membership, because you're probably gonna have to come like, five or six times in order to get there. And you can only come every eight or 12 weeks. And so we have to space those out. And so it makes most sense to get on our membership program. The question is, we have the 30 shades of teeth. Right? Right. What is your 30 shades of hair? And that's what I would be thinking of, which is like, I would be thinking of it more from a lens of taking care of hair, upkeep of hair, quality of hair. Cause think about the things that if people are. It's the harsh water, the chemicals, they're not properly washing their hair. That's what I would be thinking about and seeing how I could weave that into. When they walk in, the person that's going to do their hair says, okay, what do you want today? But also, what's your goals with your hair right now? How healthy is your hair? Is your hair brittle? Is it falling out? All these things that would need to be catered to that process. And then I would have the people before they check out doing the same thing. They're following up. Okay, did you have a great time today? Amazing. Right? But what are your goals? You know, did you get on a membership? Did they let you know about the options we have? You know, we want to make sure that we can get you to your hair goals.

[Nicholas Marco]

Right.

[Alex]

I would be. It's the frame shift you have to give to the customer, which is like, you know, for me, for example, like, before I started getting my hair done, I had no idea that there was anything about their, like, hair health. And all of a sudden I'm like, what the fuck? I don't know. It could be made up for all I fucking know. Because I don't research that shit.

[Nicholas Marco]

Yeah.

[Alex]

But I keep buying it because I'm like, well, what if it's not and I go bald? You know what I mean?

[Nicholas Marco]

Yeah.

[Alex]

I don't want that. Right. Be up here, be like, I need a wig. So. So that's the frame that I would go for, is. It's basically changing the frame for the customer. That this is not about getting it done on time. It's about doing it in a way that promotes hair health. That's the angle I would go for. Now the question is, do your products and the way that they do things support that? That is training that you would have to put in place. But I Think that you could nail that?

[Nicholas Marco]

That's exactly what I think too. And I hope that they agree. But yeah, and I think like educating or planting the seed of the lifestyle before they even walk in. Right. Is important.

[Alex]

Hair transformation.

[Nicholas Marco]

Yeah.

[Alex]

Right. And then like, what level of shine, what level of thickness? Like that's the things that women want and they're thinking about. And so it's like, how can you show them on a visual scale, like the thickness of the hair, the shine of the hair, like that is what people want.

[Nicholas Marco]

Sure, yeah. Thank you.

[Alex]

Absolutely.

[John Mark]

Hi, Layla. Hi, my name is John Mark. I sell info to fitness coaches, help them scale their business on Instagram and YouTube. We're doing 130k a month in revenue. I know we can be at 400k. My question's kind of about upkeeping the quality of fulfillment as I scale. So we have like a bunch of testimonials. Really, really good education. But I find a lot of my time that I should be making content because that's my highest leverage is spent servicing the guys and not even necessarily like giving them more education because it's all there, but like pushing them to post because, like success comes from, you know, posting a lot of stories, posting a lot of YouTube videos. And I'm kind of wondering like, is that a who I'm selling problem or is that like, am I obliged to hold their hand and hey, I gave you this information and constantly be getting on hour long calls just motivating them to do the thing that they bought, like, where am I going wrong? Or like, where's my, my blind spot with that? Because I don't want the results to go down just so I can make more money. I want to make sure that we're continuing to give quality education as I make more money.

[Alex]

Okay, I'll ask you a few questions. Okay, so of all the customers that you sell, how many of them need those phone calls? The extra hand holding, is it most of them or is it some of them? Because sometimes it's most of them, other times it's a small few of them and they're just a huge pain in the ass. And so it makes you feel like you're drowning in them.

[John Mark]

It really, really depends because, you know, sometimes people will do really, really good and like everything's great and then they're making some money and then, you know, they hit some bottleneck. But because I've gotten on three one on one calls with them instead of solving it themselves. And even though I've provided the education, they just want to get on a call and, like, hear me say it again. Like, I find myself repeating information over and over, and I'll be like, hey, just did this with a guy. Go watch this call. But unless it's specific to them, it's almost like they just won't implement it.

[Alex]

That's how persuasion works. So persuasion in general, like, if it's written versus it's a zoom versus it's in person. The more in proximity you get, the better. Like, if I wrote something on a post on social media answering this question, the likelihood you do it is a lot lower than I'm telling you right now. And you're in the same room as me for sure. So that's how it works. So it makes sense that they want to hear that from somebody. The question is this, which is like, do you have people that come in that don't need that kind of help and don't need that kind of assistance that are also buying your product and good customers?

[John Mark]

Yes, we have a lot.

[Alex]

So what do they have in common? Because what this comes down, like, with where you are right now in your business, this is the main issue you have, is you have to understand who your best customers are and how to get more of those people rather than, how do I just get more customers? It's how do I get more of the best customers? The ones that take the least amount of work, they say the best things about us, and they have the most success. So I'll give you an example. So in Gym Launch, there's a period of time where I was like, what the fuck's going on? Like, some of these people, I'm like, yeah, and they just needed so much help. And I was like, yeah, this is great. But, like, why do they need so much help? So I looked at it and I was like, well, let's look at our best customers. Our best customers fit into this box where it was like they had more than 30 clients, they had more than three employees, and they had been in business more than a year, Right? And so what I realized is that if anyone didn't fit that box, they needed an incredible amount of help. Because they're like, oh, my gosh, I have this new gym. I don't even have all the equipment yet. Oh, my gosh, I don't have enough customers to sustain my rent. Oh, my gosh, I don't have enough people to help me. So I don't even have time to implement the stuff you're teaching me. And so I need you to help me more because I feel stressed. And so we said, you know what, we can't accept people who don't fit these qualifications. So what you have in my opinion is a qualification issue, which is the way that you figure out what the qualifications are is you look at the people that are your best customers and then what you want to do is figure out what they have in common and then you can change your marketing to cater to those people. So for example, what we start doing is if you're a gym, you have more than 30 clients and you've got at least three employees, we're here to help you. And then you're just calling out the people that you do want that you know do succeed with the program. And so it's not that you're saying, oh fuck off, I don't want to help you because you know, whatever, you don't have these people, you're poor. Woah, woah, yeah. It's that you're focusing on the people that you do want and you're talking to them so potently that you just kind of repel the other people.

[John Mark]

Okay.

[Alex]

And so I think it's also things that you could weave into the messaging is like for example, when I noticed, another thing I noticed is just like the amount of like one on one support people needed, which they don't need. They don't. It wasn't that, it was therapy. Right? Let's call it what it is. Like you want me to listen to your life's problems, I don't want to do it anymore. And so you know, we also put in a mini vsl and in that mini VSL it talked about, hey, if you're the kind of person who needs one on one support, you want to call somebody at 9pm and tell them about all this shit happening with your dog and your mom. And that's not us. We're here to grow your business and we don't give a fuck about your dog. No, I'm kidding. But I did want to say that some days I'm like, I understand, my cat died too. And so it's the qualification. And if you need to do some more pre framing prior to bringing them in, you could do a mini VSL that just like, hey, this is what I'm about. If you're somebody who needs me to hold your hand and kiss your ass, this is not the program for you. And that's going to get you more of the people you want. And this, it's going to train the people as they come in how to treat you. We train our customers how to treat us. So right now, the fact that you even hop on calls with them that just already there, like, people message me playing be like, can you talk about this? Can you grab coffee? No, that's not how I treat my time. And so, like, you need to realize that how you treat your time is how they're going to treat your time.

[John Mark]

So how can I frame it in a way? Because I feel like it's just. And this is probably my fault, obviously, but I think I've set it up in a way to where I'm like, oh, they have this problem. I will get on a call with them. How do I make it seem where it's like, I'm still delivering, but it's just like, hey, like, you just need to keep posting what we talked about last week. There's no need to get on another call for now because some of that, there's a lot of inconsistencies between, you know, guys who are doing really, really good, who have the same traits as guys who, you know, have a big following, but they're just not posting.

[Alex]

So let me ask you this. How many hours a week do you spend on calls right now?

[John Mark]

I just changed my schedule last week and it gave us a big bottleneck because people were complaining, but I was like seven hours a day, like, five days a week. Okay, that takes so much. Like, I can't even create content because my brain's just.

[Alex]

I know. I did that one point so much to the degree that I took calls when I was in the bathtub because I didn't have time to shower.

[John Mark]

And when I do that, it's like, the happiness is amazing, the success is great and everything.

[Alex]

That's not sustainable, though. Yeah, you're just giving yourself a really shitty job.

[John Mark]

Yeah, it's awful.

[Alex]

Like, I don't want that job. I'm like, oh, fuck it. Keep your money.

[John Mark]

Yeah.

[Alex]

Like, okay, so here's what you want to do. Here's a transition you can make with the current customers you have go to once a day. You have a daily call.

[John Mark]

Okay.

[Alex]

If somebody has a problem, there is a group call that they can hop on that day and you have an hour where you can answer those calls. The same thing happened in gym launch with Alex when he used to hop on calls with people. And I was like, no, no, we're going to go to a daily call. Everyone can hop on. And then you can use that to be like, hey, you choose to connect. You can help with this person with this. Hey, you know Joe, tell us about that thing you did last week. It's going to create a sense of community and if you can create that community, they're going to stop going to you.

[John Mark]

Got it.

[Alex]

So one time a day calls with you and just tell them, hey, in order for me to really stay on the cutting edge and help you guys grow your business, I have to have time to do that. And I don't if I'm hopping on calls all day. And also it's not good for you guys because you need to know how to do this without talking to me every five seconds.

[John Mark]

Yeah, you're chopping them off at the legs like I'm solving all their problems and they're right.

[Alex]

So just tell them that.

[John Mark]

Okay.

[Alex]

Tell them on the daily call when they hop on, not one on one.

[John Mark]

Yeah. Okay. And then should I also like, you know, Cause I feel like some people, oh, I'm not going to hop on the group call because I'll just get on a one on one call with me. They think it's more valuable. It's like if you haven't done this, you can't like make it. They have to achieve things before they get on the call.

[Alex]

You have to tell people that you're not doing the one on one calls.

[John Mark]

Got it.

[Alex]

You're transitioning to group calls. You have to be confident in this and you cannot waiver. You have to, you have to be convicted in telling them like this is best for them and best for the company. And this is the change.

[John Mark]

Okay.

[Alex]

So if you want your questions, come to that call.

[John Mark]

Thank you.

[John Jackson]

My name is John Jackson. First and foremost, I just want to thank you so much. The reason I'm here today is because of some of your content. So just like thank you for all you're doing.

[Nicholas Marco]

Thank you.

[John Jackson]

I have a tech centric short term rental property management company.

[Alex]

Tech centric.

[John Jackson]

Tech centric. No, no, that would suck. But basically we need to nail the model right now before we scale. So we're in three different locations. Still working on nailing the model.

[Alex]

Yep.

[John Jackson]

My main question is at some point it's going to be how do we scale nationwide? And basically do you have a framework for when that tipping point is going to be of bringing someone on that has those capabilities of scaling a company, you know, nationally or just more locations? Because I'm fearful that there's going to be a lot of like, you know, ignorance, tax with that whole process where I'm like, I don't know what I don't know.

[Alex]

Yeah. So here's the key when you're scaling locations and you're scaling like regionally, it's not going to be one person that's going to get you there. You're going to need somebody that knows the next three to five steps and then their tour of duty is going to be done and then you're going to need somebody else that knows the next three to five. So for example, like I placed an operator for one of our physical, they're owner operated but you know, we had 35 locations. When I brought this person in, they had taken a similar type of business from 50 locations to 250 locations. And I said that's fantastic. I don't need them to take us to 1000, I will have to find somebody else that can take us to 1000. And so I would just say like with where you're at right now, three, okay, somebody that's gone from, let's say anywhere from three to seven locations and taken it to you know, 30 to 40. That's going to take you some time. And that finding somebody that's done that even though they don't know all the way to maybe complete nationwide, it's gonna give you it's more relevant experience. Because the person that's gone like, you know, I see this a lot with people is like, and I made this mistake early on for sure is like I overhired. Meaning like I hired somebody that had like experience that's like I'm gonna need in like three to five years and. But they were useless as fuck in today, right? And so like I had this guy, I'm gonna call him Joe and he was so smart and he like knew what to do. But I was like, we're just not there. Help me take some fucking direct reports off my hand, Joe. But he like didn't know how to do that. And so it was just a waste of his talent, it was a waste of my time and a waste of everybody else as well because it was distracting. So find somebody that's with your sweet spot. I would say probably gone to 30. And then what you have to anticipate is that you have to be paying attention to see when that person's gonna hit their level of incompetence and be able to either trade up or bring in somebody above them to mentor. So do not over title this person. It's really important. It's like you don't need to bring in like a C level, bring in somebody, be conservative with their title so that you can leave room above them. I say Anyone that's a fast growing small company, like, leave room above them under title people. Because I have lost really great talent because I've brought in somebody. I've been like, you're gonna be my coo. And then I'm like, fuck, you're like an ops manager. And then I'm like, shit, I can't bring someone above you, so I've gotta fire you. Like, it's awful. So that would be my advice on what type of person to look for. And just know that you're going to have to bring more people than just one in to help with that.

[John Jackson]

Cool. Do you think it has to be industry specific? Like, should I go head hunt like one of the big dogs? Or can it be just like a brick and mortar other business?

[Alex]

I would ask this, which is I don't think. I think smart people can learn the industry quickly. So if you find somebody who's like, intelligent, like, they're sharp, which is important for somebody as an operator, I think they can learn the industry quickly, but I think they need to have still relevant enough experience. So I would say something in the realm, it doesn't need to be exact, but something adjacent would be ideal. Like for example, if I was looking at a med spa, you know, if somebody did, you know, a dry bar or a nail salon, like something in beauty that's adjacent enough that I would be okay with it. I have always tried to headhunt for from competitors, but when I haven't been able to, I look at something adjacent. And I would say what's more important than even the industry is the clientele served. So if I'm looking for somebody, like, why is it the reason that I want to find somebody for dry bar, same person from med spa? Because they serve females between 25 and 55, that's why. Because they know the customer. And so even if they don't know the exact business, if they know the customer, that's really, really helpful. So, for example, like, we have had a few different brick and mortars that have different types of demographics they serve, whether younger, like children or older, like elderly. And so I wasn't looking for something that had done the same model of this elderly one, but I did look for somebody that had served elderly people in like something that you scale locations. It wasn't the exact same business, but it was adjacent enough and they knew so much about the customer that it made the learning curve so much easier to get over. Does that make sense?

[John Jackson]

Absolutely. Yeah.

[Alex]

Okay, thank you. Absolutely.

[Dimitri]

Hey, Layla, I've been watching Your content in the gym, while I've been working out and I've listened to a lot of the stuff, it's like how you build your culture and the relationships and building rapport with people. And I've actually found that that content has been really applicable in my personal life less than in my professional life, where it's really easy to deal with employees or clients and take those skills and apply them. But when you come into personal relationships, it's a lot harder. And one of the things that I've been thinking about for probably five or six weeks is where you say that the skill level of the teacher has to be higher when the skill level of the student is lower. So I was just kind of hoping that you could expand on that and maybe share techniques or ways that you found to address that gap and to kind of narrow that gap in all kinds of different situations.

[Alex]

Do you want to start? Do you mean, like, within the business, specifically?

[Dimitri]

Whatever. Like, however it is that you would address that. You know, like, if the teacher is at this certain level and the student isn't there, how would you address that gap?

[Alex]

It's a little tough because I'll just. I'll be frank with you, which is like, when I first started, when I was first running our first business gym launch, I didn't know how bad of a teacher I was. And so I would apply things that I had learned, and then I would think, oh, this person is stupid, and that's why this isn't working. And it's because I wasn't even aware of what my own deficits were because I didn't know what good looked like to the degree that I thought I did. And so it depends on, I think, first, the level of awareness of the person. Like, a lot of times when I ask somebody, I said, how good of a teacher are you? A lot of people have no idea how to answer that question. Like, teacher. They don't even consider themselves a teacher as somebody running a company. Whereas, like, I look at myself as, like, in every interaction I'm having, I'm thinking, how do I teach this person something, right? And that was a big frame shift for me. So the first is, like, a lot of people don't even think that. The second is that, you know, a lot of the times I'm looking at people within my company, right? I'm like, who's a good teacher and who doesn't have the skill? And so the different ways I would address that are if that person is receptive to feedback and coaching, then I will find somebody who is a good teacher to work with them, to teach them how to think through things, to teach them how to command respect and authority, to teach them how to influence people, all the skills that go into teaching. So it's basically like getting a teacher for the teacher. Right? And then I would say the other way that I handle it is knowing the level of skill or competency a person has to have coming into any team in my company. Like, a team that works under me is going to have to have different skills than a team that works under somebody else. That's two management levels below. Right. Because we have different skill levels. And so it's kind of like you have to hit it from both sides, which is like, I have to be really cognizant of what kind of skill do I need of the person coming in, Because I know that this teacher can't teach them certain things that maybe I could. Right? And then also, how much can I invest in each person to, I would say, like, ascend them as teachers? So it's like, you kind of have to hit it from both angles. And then at any given point in time, you just have to be calibrating to understand when you're hiring, when you're expanding a team, like, which level you need, which lever you need to pull.

[Dimitri]

Essentially, whether it be the student or the teacher.

[Alex]

Right? Because, you know, and for some of it is, like, for certain businesses, for example, because of the opportunity that your business has, you're not going to be able to get Harvard teachers, right? I say that, like, hypothetically, but, like. And so you're like, okay, well, I know I can't actually get them for this business because the opportunity isn't big enough. Because Harvard teachers want to teach at Harvard, right? They don't want to teach at community college. And if you've got a community college business, then you're going to get community college teachers, which means you've also got to factor that in for the talent you're getting. That's not something I understood until I sold Gym launch and started acquisition.com. and I thought all this time that I was like, gosh, I'm doing all this stuff to attract talent that I read in all these books and I've learned from all these mentors and all these things. And it's like, why am I not getting the best talent? And then the moment that it was like, acquisition.com and here's what we do, it was like. And I was like, what the fuck? Like, all this time. But it was just the opportunity wasn't big enough in that company, and so I couldn't attract the talent that I wanted or that I even had the skill to change, because it wasn't about me. It was about the opportunity. I just didn't have enough. Like, their vision for their career could not. It was bigger than it would be able to become within that business. So that's the third factor, which is, like, understanding, does your opportunity allow for that? I had somebody come up to me two weeks ago at a workshop, and he said, like, I don't know why I can't attract talent. And I was like, what's your business? And it was like, well, we resell these Amazon stores to this tent. And I was like, oh, my God. And I was like, well, that's why I wouldn't work for you. He was like, well, why? And I'm like, well, because it's like, this is just to make money. Like, it's not to build a business. It's not to have an impact. Like, why'd you start it? You want to make money? He's like, yeah, I just want to make money. I'm like, okay, well, then, like, we're not going to get Harvard teachers because they want to make a difference. They want to make an impact. They want to have a cause. So I think that's the other piece that a lot of people don't talk about, and I wish I had known earlier, which was, like, the best talent and the best teachers, right? They want to work somewhere where it's not. The mission is not, let's just make a fuck ton of money. The mission is something that they can get behind and they feel like. Gets them excited every day. So those are really the three pieces that I think about when it comes to teaching. Is that helpful at all?

[Dimitri]

Yeah, yeah, for sure. And so, like, when you think about those levels of skill in an organization, do you go about, like, aligning the different levels? Like, say, manager of a C tier versus a manager of a B tier versus your tier? Like, are you aligning. When you look at the hire, are you aligning that teaching skill for that level? Is that something, like, you consciously go about?

[Alex]

So we have essentially, like, competencies for a role in terms of, like, leadership in the company, right? So it's like, if you're a director versus a manager versus a C level, like, these are the competencies that we would expect. Loosely outlined. Yes. But it also is a little bit of, like, a. It's an art and a science. Like, it can't. It's not ever 100% formulaic, because some people are so good at one piece of the job that it's. You're willing to make up for the deficit on the other piece. So it's like, nobody ever really fits in the box perfectly, which is why I end up destroying them or not using them all the time. But I think that they're good guides, if that makes sense.

[Dimitri]

Yeah, for sure. Thank you.

[Alex]

Yeah, absolutely.

[Lily]

Hey, I'm Dimitri. I run LGBG Fashion House. We're a direct selling company for custom clothing.

[Alex]

Oh, that's cool.

[Lily]

We do about a million a month in revenue.

[Alex]

And you make custom clothes for people?

[Lily]

Yeah, yeah.

[Alex]

Oh, so interesting.

[Lily]

We just, like, sell suits and stuff in people's offices and.

[Alex]

Okay, gotcha.

[Lily]

And my question is, so obviously, like, when we sort of reach the 10 million revenue standpoint, I can't do a lot of things myself. And then you have to hire people that are better than you.

[Alex]

Yeah.

[Lily]

Now, the thing is that when you hire people that are better than you, they're better than you in areas that you're not competent in. And so the question I would have is, what are your cadences or indicators or just feelings when you have somebody on your team that you don't know what they really do because they're better? You know the question already and, like. But they're not really performing, or you're not sure if they are because you don't really know what to judge it against because you're not good at that thing.

[Alex]

Yeah. So I think you have to know yourself a little bit, which is. I tend to. Yeah, I was, like, looking for Sarah because she knows this about me. I tend to see the best in people, and I tend to always be optimistic. And I think that's what. It's a superpower. It's also a curse. So what that means is that when I feel like, gosh, I don't know what this person's doing, all these. I'm sure they're just this. I start bargaining with myself. I know about me that I give people a lot of wiggle room. And I sometimes can be too. I can see the good too much. Like, I let the good overpower these little things. So for me, a lot of times, if I'm to the point where I'm like, I don't know what the fuck they're doing, it's not because I don't understand. It's because they probably don't know what the fuck they're doing or they're not working right where on the other side, you have people who, they're very. They have no tolerance for any of that and they see the worst in people. And so they don't know much about what's going on. They don't take the time to look and then the moment they don't see anything happening, they're just like, fuck em. Blah, blah, blah, blah. Those people often will cut people too soon.

[Lily]

I'm more as a founder, obviously. I see I have the disability of not seeing the negative. Right.

[Alex]

Understand.

[Lily]

Because I see everything as being really, really good.

[Alex]

Great.

[Lily]

So I'm on your side. Yeah.

[Alex]

So then I think what you need to do is you need to inquire. Okay. So if, for example, just tell me who it is you're thinking about.

[Lily]

They're not here. Don't worry. It's. So for me, it's actually my, my social media, like video guy.

[Alex]

Yeah.

[Lily]

Like, we have a lot of what I believe to be very valuable content. I'm not going to like, say it because I'm going to sound like a dick, but we have a lot of very valuable content that I think should be getting us hundreds of thousands, if not millions of followers just based on the, on the brand equity that we have.

[Alex]

Yeah.

[Lily]

And it's completely not happening. We're getting the views of like a girl in a bikini who's not even like, you know, super fit. So. And I. Unless you're into that. But I don't know, like, but I don't know how to, how to create that value myself. Right. So I guess I don't know if, you know, so I don't know if am I paying somebody? That's just kind of leading into a dead end and it's time to, you know, really have that serious conversation. And there are some indicators. Right. But I don't, but I don't know. I'd actually. This was a very tough one because I actually don't know.

[Alex]

Okay, well, what are. When you hired this person, did you say, I need this amount of posts, I need this amount of content?

[Lily]

No. So that's a great question. We've discussed that. The reality is when I hired this person, we didn't have the sort of equity in the brand that we've built in the last couple years.

[Alex]

Got it.

[Lily]

And it might be a situation where like, the role has just outgrown his competency for which he was initially hired. That may be the situation.

[Alex]

I feel like talking to you that, that probably is the situation. A lot of times people come up here and then I talk to them. And then I'm like, no, you just don't know. But I actually really feel like you probably do know, given what you're saying right now. And you sound really sharp. So it feels like you might just need to trade up. Because here's the thing is, like, he might have the desire and the will, but it sounds like he doesn't have the skill.

[Lily]

Actually, my concern is that he might not have the desire and the will because he doesn't really get how good he's got it. So, you know, like, when things grow and things are really good, but you've been part of that growth and you're in a growth environment, you might not be the kind of person that can really, you know, like, the water is rising and you're not. And I feel like the effort is not matching the opportunity. That's actually my feeling. I feel the skill actually is there. That's. That's. But, yeah, you nailed that. Because I've battled with that sort of understood barometer. Yeah.

[Alex]

Well, then maybe it just might be easier to find somebody who does have the match. I mean, it's like, either you don't have the skill or you don't have the will.

[Lily]

Right.

[Alex]

In either case, it's going to take work from you. And if it sounds like the company's growing really quickly, you're adding a lot of brand value. I see it like this, which is like, even if you could do better in the way that you manage and communicate with him, that's a very important piece of your business, given what you do. And so you want to have somebody that is so competent that they can show you what they do, why they do it, they can tell you what needs to happen, and it makes it clear to you.

[Lily]

So can I. Can I ask you on that? Because you said something on the bullseye there.

[Alex]

Yeah.

[Lily]

From a previous thing. Because the role potentially has outgrown his competency, is there also a possibility to hire somebody above him?

[Alex]

Yes. But why would you want to hire somebody above somebody who isn't motivated?

[Lily]

That's a really good question.

[Alex]

The worst thing you can do is say, hey, I'm going to bring in an A player to manage a C player, because then you just piss the A player off. You know what I mean?

[Lily]

That's a good point. Yep. That makes sense.

[Alex]

And it's the only thing that it's like. So it's like there's never been a time that I've, like, really questioned somebody, like, so much to the degree that you're at this workshop and this is the question you asked.

[Lily]

Yeah. Which is like, that's an indicator. Yeah.

[Alex]

Right.

[Lily]

Right.

[Alex]

What the fuck? Yeah, right. Like, of all the things, like, it's about him, Harry.

[Lily]

You know, it's never quite so clear though, right? It's like, well, it's. It's good enough.

[Alex]

But is it good enough?

[Lily]

Right.

[Alex]

It's like you were smart enough to start this business, get it to the point where you're going to be doing 10 million a year. Like, you probably have a good hunch as to if this person's competent or not.

[Lily]

My. That was. My next question is how much of my hunch do I trust? Because it's an energy thing too. Like, it's. If it's eating my energy, do I really want to be trying to culture right now?

[Alex]

And here's the thing. If you mess up, and you will, at some point, you're going to learn and just learn from what happens, but you have to do something.