← Build with Leila Hormozi
Loading summary
Transcript1 lines
- [00:00]
A
What if I told you that building a billion dollar company from zero has nothing to do with working harder and everything to do with building better systems? I went from working at Subway to being the CEO of a 500 million dollar portfolio. And I have learned that there is a reason that 99% of people stay stuck. And it is not lack of effort. The third system is the people flywheel. And this is why at some point you need to learn this, because you realize you can't do everything. This is a mistake that a lot of founders make. They think, oh my God, I'm so overwhelming to hire somebody. And then, and so for like 60 days after you've hired somebody, you have this like, very euphoric, very fake relief. But then this person you've hired starts asking you questions, they start slacking, you start asking you, they start asking you more questions. Then they start duplicating your work. And then they don't know who owns what. And then you don't know who owns what, you don't know what clear and what they do versus the other person. And then you start to realize that they don't actually make decisions without you. And then six months later, you have more people, but you have the same capacity and you haven't grown. You're like, why did I hire these people? Because I thought if I hired 10 more people, I've grow by 10 more. It's like, no, you hired a person into a system that either sucked or didn't exist. A lot of the times what happens is that people point to the person, they're like, I've got the wrong people most of the time is that you didn't build the right system. So you need three elements in order to scale. Okay, you need functions. This is what work actually needs to happen to make the business work. This is like you would literally list out all the activities that occur in your business. Like, some businesses have manufacturing, they have sourcing, some just have like technology, and they have hiring and they have customer delivery. What are all the functions that need to happen to make your business work? Second is you need people who are the right people to create the outcomes and the functions. It's an important question to ask, what people can make these functions work? What people can run these functions? And then you need operations. How does information flow between all the functions and people? If any of these three pieces is weak, then you end up filling in the gap and holding it all together. So, so you have to ask yourself, is it a functions issue, a people issue, or an operations issue? They are different issues. Most people point to person and they say it's the person. But oftentimes the person is the symptom and they are the last piece in the puzzle. So again, what I told you earlier, you gotta go upstream. Upstream. There's operations, there's functions, there's. Did you select the right people for those functions? Ask yourself these questions before you point to the person and say they suck. Next piece is that people look at the people and most people hiring people, and they want them at a level five, accountability, which is essentially like they want them to come in, take complete ownership, act independently, make decisions. And I would say that 99.9999% founders don't actually hire those people, but they say they want them. They hire people at a level two who need to be told what to do. Because most founders don't want to pay for a level five. Because if I told you how much they cost, you'd be like, I don't even make that much. I'd be like, I know, that's why you usually have to wait until you're a servo in the company. But what happens is they hire level twos, they don't train them to be a level even three or four, let alone five. And then they say, stuck doing 10 or 20% of that person's job indefinitely. And so your job, you become a bucket of all the 10 and 20% of other people, and you just do all that. You're essentially like the junk drawer. That's what you are. You're the junk drawer for your business. You do a little bit of everything, and nobody exactly knows what's going on there. We can fix this. What I call the accountability dial. So the accountability dial is essentially you hire somebody who's at a level one, which means this. They really just need to be told what to do. They can't even get started without being told what to do. There's hiring people at level two where it's like, level two accountability is like, they can do some tasks, but they can't make decisions or follow things through without input. Level three is you hire people and they can do tasks and come and get feedback from you before they finish it. Level four is like they can do tasks and make decisions, and then they get feedback from you after. Level 5 is where they can do tasks, make decisions, and don't even need to loop you in. And so what happens, a lot of times you bring someone at level two, but you really want a level four, and then you just want them to change. Instead, we want to train somebody up. So I'll tell you what I do. If I hire somebody who's a level two, how do I move them up the dial? Easiest thing in the world is you have to prompt practice so I can explain to an employee all day, this is how you make this decision. This is how you do it. Unless I give them the opportunity to practice, they will never learn. People don't learn by hearing an explanation. They learn by trying. So you have to prompt attempts. You have to prompt them to try. And so, for example, I had an executive assistant, and I remember I used what I called the Q and A framework with her, which was, every time you have a question for me, what I would like you to do is bring to me the answer that you think I will give you and I will tell you if it's right or wrong. And so we did that for a while. And this was because I wanted her to make more financial decisions. I didn't want her to ask me where to spend money or not spend money, especially if I was on requesting that she go do something with my money. And after, I would say, about two weeks of her doing it, she was able to make decisions that me as the CEO of the company was only able to make at that point because she used the Q and A framework with me, which. What was that framework doing? It was teaching her to get the answer herself and then ask me for feedback before she went to the final. And then finally I just said, you've gotten it right about 10 times without me. Go do it yourself now. Like it is that easy. This helps because you can stop being the command and control CEO and you can start being the architect. And you let this flywheel kick in where people are able to not just do things on your behalf, but decide things and move things forward. Better systems produce better people. Better people produce better outcomes. Better outcomes attract better talent. And that is the cycle for compounding a business. Which brings me to system four, the talent engine. Companies that scale the fastest, they don't hire the most people, they hire the right people. This means that your talent system has to be as good or probably better than your customer acquisition system. If you think about it, it's like a lot of founders, they spend like 40 hours a week on marketing, sales, brand, customer, customer, customer. And they spend like zero hours a week selling talent, getting good talent, improving the team, figuring out how to get more A players. But the bigger the business you want, the more you actually have to reverse that ratio. So I remember at Gym launch. We were growing 30% month over month, and we were also losing people just as fast as we were growing. So I'd optimize like every single piece of the customers bundle. Like, I knew every email, every meme that got texted to a customer, every. Every single point in the funnel. But my talent funnel was literally just like, I'm just gonna post this on Indeed in Craigslist and pray to God that I get somebody good. That was what I did. And what I learned through this is a few things. One, a player talent is not scrolling on Indeed and Craigslist. This was 10 years ago. Don't judge me. They are being recruited. They are probably choosing between me and five other companies. They probably aren't even on the market, so they can choose where they want to go. So, for example, if my job description that I post on Indeed, which they probably won't even click on, you know, reads like every other job post. Marketing manager needing to manage marketing things like, I have already lost. The companies that scale the fastest do not hire the most people. They hire the right people and they keep them. And they're able to do that by building out a true talent funnel. What I mean by that is you have to start seeing your talent funnel the same way you see your customer funnel. So it's like you have leads that convert into calls that convert into customers that then you onboard. Okay, here you have people who apply, who then you book interviews with who then you interview, who then become an employee that you then onboard. It's the same on both sides. The issue is that you haven't dialed in the talent acquisition funnel the same way you have the customer acquisition funnel. So the goal is to have the same level of detail, precision, and thought behind both. Don't just use a chatgpt generic job description posting, but like, seriously, throw that out. It's yucky. And everybody else is doing it right now. Your job description is like the sales page. Your interview is like the sales call. Your onboarding is fulfillment, and your retention system is like your ltv. If you see those things the same way, and you build out this system just as robustly as you built up this system, which, by the way, it's the same skill, then you can really build a business that runs without you. Which brings Me to System 5, the final system, which is the operating system. Most businesses don't fail because they're bad people or even bad ideas. They. They fail because they have this little gap. Even when you get all the right people and you have all the right Structure, your business can still collapse under its own weight if you do not have an operating system. And here's the thing, the team mirrors you. So if you lack cadence, they lack cadence. If you change priorities midweek, they do the same. If you cancel one on ones, they treat accountability as optional. I remember when I was running my business, I had like 13 people on the team and I was talking to them all day and I was like, man, I feel like we're like really not on the same page with things, like things are all over the place and all stuff. I remember I messaged the team, I said, hey, what do you guys think about having like a once a week meeting? We just talked, talk about like where everything's at. I remember like the first message I got was thank God, I'd never been so excited for a meeting. And I was like, oh. And that was when I realized, like, oh, I don't have a system that keeps my business running smoothly. And so this piece, this system's actually pretty simple. If you think about operating system, it really comes down to a couple things. First one is expectations. You have to define outcomes, not just tasks. So what's the outcome of this department? What's the outcome of this person? What's the outcome of this job? Every job description I have has what I call results section, which is like essentially the expectations. What are you expected to deliver by having this job? Every department that I have has metrics that they're supposed to report on. That's the expectation. I expect you to deliver on these measurements. Now the second piece that goes with this is accountability. You have to measure the expectations that you've set. So if I set an expectation for somebody, I expect us to do these things. We have to measure it. Easiest way to get this in place in a business is have dashboards. It's also the hardest thing to get in place. If you can't have dashboards, you've got Google sheets. And that will do for now. Third piece goes into communication. This means how do we talk about all the things and reinforce the accountability? This is usually by weekly one on ones. This is by giving feedback about the expectations if they have or have not been met. So it's like in all your one on ones, these are my expectations. This is what a 10 out of 10 looks like. Are you at a 6 out of 10, a 7 out of 10, etc. And the entire point of a one on one is essentially to guide somebody to a 10 out of 10. You just want to be thinking, how do I get them to a 10 out of 10. What feedback do I have to give? That's how you get people to meet expectations. And now the fourth piece of this is cadence. How do you do this in a predictable way? Is it weekly? Is it monthly? Is it quarterly? What does it look like? That is how you get a system to continue repeating itself. And then you can continue recognizing and reinforcing what you want repeated. If you want people to do more of something, reward them for it. If you want them to do less of something, ignore them for it. Literally. That is how it works now. Once these things are consistent, something really amazing happens. People actually can stop waiting for you and they can stop waiting for you to solve everything, for you to answer all their questions, for you to make every decision. And you'll actually see people start leading. And your business is no longer going to need your specific energy to operate every day. In fact, it is going to run off of systems, not off of personality. This is what it feels like. Exactly. I can tell you it's like you have just rolled this boulder up a hill with your own bare hands. And finally you have hit the tipping point. It starts to roll on some. And I will tell you, it is like such a glorious moment when this happens as a founder, because you realize, finally, I am not the bottleneck. It does not all rely on me. It can roll without me pushing it. This is the best moment that you can get to because you realize, oh my God, now I can go focus on finding another boulder, which is amazing. And also, not everyone finds another boulder. But I like to find another boulder, which is how you continue growing the business. It is like the most relieving thing that you can have ever occur in your business. And it's really great because it means that your business doesn't need you to operate. The biggest takeaway that I want you guys to walk away with is that systems are not just for when your company is getting pick and scaling. They are prerequisites in order to scale. Otherwise, you're just going to scale broken. It's going to feel worse than now. If you have a small company, you think, oh, if I get big, it'll go away. No, you're just going to make the problems bigger. Now, if you want more tactile advice on how to become the leader that can scale a business into running itself, you can go ahead and grab the link in my description here to my new newsletter I call Layla's Letters. These are my unfiltered memos I send to my team as we grow acquisition.com to a billion dollar company. So don't forget to hit subscribe on my channel. And I appreciate you guys for watching. See you on the next one, hopefully on the newsletter.