Loading summary
Transcript53 lines
- [00:00]
A
So I've been running businesses for 15 years and I've hit this wall multiple times. It's somewhere around 7, 8, 9, 10 million in revenue, where suddenly your biggest problem, it's not a lack of ideas, it's a issue with you. You're the bottleneck. And so I've got this buddy named Ryan Deiss. He's got this amazing quote. He says the more valuable you are, the less valuable the company is. And I read that quote in one of his books a while ago, and it kind of changed my game on how I thought about business. And so I decided to have Ryan come on and, and talk about this simple but very effective framework he has for running companies. It's changed my life and maybe it could change yours. But on this podcast, he shared everything. So he shared his whiteboard, his spreadsheets, his flowcharts with his employees. It's basically like a 30 minute MBA, which is pretty insane and very valuable. So check it out, let me know what you think in the comments. All right, let's get into it.
- [00:46]
B
I feel like I can rule the world. I know I could be what I want to. I put my all in it. Like, no days off on the road, let's travel.
- [00:55]
C
You have two things that I like. One is you have this quote, which is the more valuable you are at your company, the less valuable your company. I think this is like for every entrepreneur you will hit this point, especially when you want to sell where it felt really good to be the man, to be the one creating all the value to taking all the shots and having your name everywhere and your face everywhere and your, your fingerprints all over the business. It does feel good from an ego perspective. It does feel good to have control, but it sucks if you ever want to go on vacation or sell your business because the more valuable you are to the business, the less valuable the business is.
- [01:31]
B
Yeah, you got to decide, do you want to be down on the court hitting the last minute jump shot to win the game, or do you want to be up in the owner's box? That is the choice that you make. And so you're either going to be the most valuable player or you're going to own the team. Most entrepreneurs would much rather be valuable and they would rather do the things that enabled them to get started than do the things that are going to enable them to actually achieve the things that they say they want. But really they kind of like being important. They kind of like being valuable. And I think that's. You've got to decide what do you actually want? And the nice thing is it's your business, so you get to decide. Yeah, but a lot of times the.
- [02:14]
A
Problem is impulse control. Like so, like he says as he.
- [02:19]
C
Cuts you off.
- [02:22]
A
It'S, it's impulse control. I think like I can say that I want something and I do truly want it, but 20 years of previous behaviors have to be broken and it's incredibly challenging to actually do that. And I think that like evolving as a person as we actually just did an episode on the other day, is way more challenging than, than a lot of people think.
- [02:43]
C
I like this graphic you had here of the before and after. I think the messy sort of entrepreneur, which is, I've been guilty a lot of these things. You're working 80 hours a week, you're in the weeds. If you ask who owns this, the answer is me, me, me. For each area, the whole team is asking you, hey, you got a minute to talk about x 200 times a day? You're missing soccer games. You can't sell the business because it's too dependent on you and the business owns you rather than you owning the business. And then you have sort of the ideal sort of outcome here at the end which is, you know, it's an hour a week for you. Team executes without you, the team optimizes without you. The team decides without you. You can take a 30 day vacation. You break revenue records while you're gone and you're exit ready if you want to.
- [03:24]
A
Right.
- [03:24]
C
Like as an ideal end state. And this is for an entrepreneur who wants to exit, you know, wants to build what is sort of insultingly called a lifestyle business, but is, I think the, the main type of business I'm interested in. I use business to have a good lifestyle. So yes, that's kind of what I want. So what's the process? How do you do that transformation? How do you go from player to the owner's box?
- [03:46]
B
Ryan, the way that you begin to implement it is you have to establish defaults. You have to establish certain default constraints. I'm going to leave at 5:30 every day. Like I'm just, I'm going to do that and I'm not going to show up until 9. And what do you know, magically I got my work done in that block of time, because I did. And so just the prioritization of that is going to do it. So I mean that, I think that's the first thing that is then going to force you to at least stack, rank your priorities because you can't do Everything. Because, yeah, you're right, we got a million different ideas. But what are the ones that we're going to do first? I like to say, like, our ideas are like chocolate cake, not cotton candy. You can only eat so much chocolate cake. It's delicious, but you can only eat so much of it. So what are those things that you're going to do to begin to stack rank those? And it does come down to, again, just getting really good at constraint identification. We can do everything. There's all this stuff that we could potentially do. As entrepreneurs, we are trained and adept at identifying problems. We see them everywhere. We will never not see them, but we certainly can't fix them all at once. So what's the one we're going to do next? And that's the only question I'm ever asking. What is my right next thing? What is the thing that I'm going to do next? And every problem in business is going to come down to one of two things. Is it a supply constraint or a demand constraint? Demand constraints. I just need more leads and sales. Supply constraint. Please don't get any more leads and sales. I can't fulfill the ones that I got. And so once I've identified that category, now I just need to say, okay, how do we get this done? So if it's not going to be me that does it, who do I need to bring in to do it? And ultimately, what it's going to look like is bringing somebody in who is better than me at one aspect of this. So I'm not going to find somebody who's better than me at everything. But I can almost certainly find multiple people who are better than me at one aspect of that. And that's what assembling a leadership team looks like. What you have to first do is you have to map and visualize what are the core value drivers of the business. And every business does three things. You make stuff, you sell stuff, and you fulfill stuff. And so if you will create a visual map of how that happens. And so we do this with visual process mapping. Like, we literally will get. Go to a whiteboard and get sticky notes and we'll say, okay, how do we get customers? Let's sticky note this out in flowchart form.
- [06:23]
C
And you're basically creating, like, assembly lines that connect. Is that the right way to think about this? Like, it's literally like a pipeline. Something comes in at the start, then. Then what happens to it? And then it gets handed off over here. Then it gets handed off over here.
- [06:36]
B
Right?
- [06:36]
C
That's Kind of what you're doing.
- [06:37]
B
Exactly. So this is. This is an example of one that we would do just in sticky note version. But, like, this is an example of a growth engine. So where we would start is, you know, how do we generate initial awareness? So, like, let's say for this business, they run Facebook and Instagram ads, they run Google Ads, and they're doing, you know, reels and stories.
- [06:56]
C
Organic content. Yeah.
- [06:57]
B
So we're going to start here and then we're going to say, okay, cool, then what happens? And so for this particular business, they're driving traffic to an email challenge. So they're going to have people sign up for that challenge page. And then all you're doing is just saying, then what happens? Well, do they register? If not, then we're going to retarget. If yes, we're going to deliver it. And all you do in this process just keep saying, okay, then what, Then what, then what? And if you just will map the process. And I didn't invent this. This is called business process mapping. But if you will just say, where does it start? Where does it end? And you will create a business process map for everything that you do as a company. And specifically, if you'll do it for how you get customers once you. What you do with them once you have them, and how, you know, you could also do for your manufacturing process, your product creation process, then what you've done is you visualize the core value creation aspect of your business.
- [08:03]
A
Have you ever done this, Sean?
- [08:05]
C
Yeah, but the question is, what are you doing it for? So, you know, there's a couple of different ways you can look at that. One is you look at it and you identify where's the constraint. You know, the problem is this part's working well. Like, you know, what we would do is we would overlay some numbers. We would say, great, so how many, how much are we spending on those Facebook ads? How many clicks are those driving? So I would have little numbers written on the arrows, basically, and then we would kind of circle to one, like, where's the leak in our bucket? Um, you know, this is the. This is where we feel weak. You know, we got a lot of demand, but maybe, you know, we're breaking in terms of how many we can fulfill. There's a long wait list. Right. Or they're not coming back. Why aren't they coming back? And you try to identify the constraints. So is that why you do the business process map, or is there a. Is that the first thing you do with it? What's the. What are the different things you do once you create the map?
- [08:51]
B
So this is kind of a digital example of the growth engine I just showed you. And this would be like their fulfillment engine. So what I would do is we would take this growth engine and one of the first things that we would do is we'd say, okay, which of these can we really not afford to screw up? So one of the biggest mistakes that companies make when they're trying to systemize is they try to document everything. Don't do that. Just document the ones that are really, really, really important. The second thing that we do is this is how we figure out who we need to hire. So we create this thing called a high output team canvas. And so every single one of the sticky notes, every single step or stage on here, we're gonna say, okay, this one right here, Facebook and Instagram ads. Who is uniquely responsible for this one? And then we will create this canvas. So I'll go down to the marketing team and I'll say, okay, you've got John here. John is going to collaborate with agencies to establish those budgets, but ultimately it's going to be our agency that's going to manage and optimize these. So every single sticky note, every single box is going to have corresponding, what we would call critical accountability bullets. And this is how we begin to assign roles and responsibilities. So that's the second thing that we do with this. And it becomes interesting because as you go through these, instead of going to people and saying, okay, what does Betty do? What does Lloyd do? What does Carly do? You start with your value creation processes and you assign stuff to the people. And when you're done, you realize who's got all the things and who's got, like, none of the things. And so you can see on your team who's overburdened with work that actually matters and who is underburdened with work that actually matters. But to the point that you made, this is how we create our scorecards. So for our scorecards, every single one of the different squares, every single sticky note, if you will, is going to have one or more corresponding metrics on the. On the scorecard. And so this is how we know that we're actually tracking the metrics that matter. And so when you look at your scorecard and our scorecards, if you work top to bottom, that's going to visualize what we're seeing as we work across here.
- [11:23]
A
All right, check this out. So Ryan is giving away his entire operating system. I'm Talking about the actual spreadsheet he uses to run his companies. Everything from Sprint roadmaps and workflows to planning tools. The whole thing. The same system we're talking about in this episode. You can get it right now. Scan the QR code or click the link in the description. Now, let's get back to the show. When I see things like this, it's sort of like reading the book how to Win Friends and Influence People, where you like saying stuff. And I'm like, oh, yeah, that's obvious. That makes sense. And, yeah, I don't do it. And I'm like, I would love to do this. I should do this.
- [11:58]
B
What.
- [11:58]
A
What mistakes am I likely to make when I see this stuff? Because to me, as someone, you know, what do they say? Like. Like, it's easy to sell. Like, it's easy to sell water to, like, a guy in hell. Like, to me, this is, like, where I am now, where it's like, yeah, I need this. And so I see there's, like, five or 10 of these types of frameworks, and I'm like, I want all of them. I need all of them.
- [12:18]
C
So after this, Sam's gonna go run off and do it. What's the first place he's gonna stub his toe?
- [12:22]
A
Yeah, where am I gonna screw this up?
- [12:24]
B
Let's first kind of talk about, like, the hiring component. Cause that is one of the things that I see entrepreneurs, as they're scaling, screw up, and they make one of two really big mistakes. The first is they hire helpers, or they want to try to hire somebody just like them, and it's these two opposite ends. So they either try to hire a bunch of helpers to just do the stuff that they don't want to do, or they're like, if only I could hire somebody just like me. If I could hire a quote, unquote integrator. That is one of the biggest lies ever perpetrated on the entrepreneurial community is this concept of, I, as the visionary snowflake, can just hire this, like, one magical integrator who'll just do all the crap that I don't want to do. It just does not freaking work. It makes for a very good book. It just doesn't work ever in practice. So it's not about you changing necessarily. What it's about you doing is getting really good at identifying what. What is the single biggest constraint right now in my business. Right. What is that right now in my business today, for us to grow to the next level. And it's never Ideas. And this is the thing. As, as entrepreneurs, as business owners, what we do in the beginning, what gets us going is, I got an idea. And so, like, that's the freaking hammer that, that, that we take to every single nail is I got a new idea. And the last thing at some point that your business needs is another new idea. It doesn't need another new thing to implement. What it needs to figure out is what is the thing that is holding us back from the level of growth that you need. So the first shift that needs to happen is shifting from I got an idea to shifting from. To constraint identification. Once you have shifted from idea generation to constraint identification, then the answer becomes, okay, what's the best way to solve for this constraint? And it's almost always system and people related, but it's almost never hire a bunch of helpers. Because when you hire helpers, what you actually did is you gave yourself a new job called management, which is even harder. Or let me hire somebody just like me, because somebody just like you done want to work for you. What you need to typically do is realize that that constraint is solved by a functional leader. And so what you need to get good at is hiring very, very, very good and talented functional leaders. So head of sales, head of marketing, head of product. And this is the thing that most entrepreneurs aren't as good at as they're scaling. They're good at hiring a bunch of little helpers. They think they're good at hiring a quote unquote coo, although nobody actually knows what that is. If you get really good at hiring a functional leader and building a team of those. Now, team leadership becomes a lot easier when you have, really, when you have three or four actually talented, skilled people working for you, they have massive capacity because they'll build the teams under them to execute all your ideas.
- [15:26]
C
Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book but then tearing out 4/5 of the pages. Point is, you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business, the insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference, because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it, visit HubSpot.com Sean, two.
- [15:53]
A
Years ago you were like, I just hired this. I think, I think you said I just hired this VP of marketing or cm. I forget exactly. It was a marketing position. I forget the title. And you're like, what was that? Was it a cmo? And you were like, why didn't I do this sooner? And I remember thinking, oh man, you found a winner. Like that's like the highest leverage thing that we can do is just like find winners. And it's so challenging. But I remember you like talked about finding this, this, this person and your like frame was broken.
- [16:19]
C
Yeah. There's a new test for is this person a good hire or not? Which is you. Basically you switch from I, I wish this would happen or I hope this would happen or I want this to happen to basically fear that will this person leave? Because oh my God, this person is so good and they are like, they're so transformative to the business and I just don't have to worry about that, that if they ever left, I would have to worry about that area of the business again. I think we had John Morgan on last, last week and he has this phrase called send and delete people. He's like, there's people at your company that you could just send them the email, you could forward them the email and you could delete the email because you know it's going to get handled. And, and you know, Brian, this thing you just said is so true. I actually was talking about this last week about helpers. I was like talking to somebody on my team. I was like, are you gonna be a helper? Like, so far this has worked because I needed you as my helper, but now I'm asking you to drive, but you still are acting like a helper and like, but you wanna be a driver and we need a driver. So like, it's time to be a driver. Now whether that person can make that adjustment or not, I think is, is always just about that person and their own kind of goals and self improvement and self development, their self image. But it's so true that it's very, very tempting to hire other just kind of entrepreneurial people like me.
- [17:33]
B
Great.
- [17:33]
C
Now I got another sort of like shiny object syndrome idea guy in the room that doesn't help. Or I got a helper who as long as I'm directing everything, they help me get stuff done. But that means I always have to keep my eye on that area because I'm the one coming up with the plan. I'm the one driving the execution and they're just, you know, there to help. So I've, I've definitely felt this problem firsthand.
- [17:53]
B
The biggest mistake that people make when they, when they map their, their business process maps is they will map what they wish were true instead of mapping what actually is. And so you have to map what actually is happening today. Not like, well, what we should be doing is this. Like, that's generally unhelpful. You need to see all of those as points of future optimization because we've got to get a picture of what it is today because that's what's going to inform what are all of the people actually doing or what should they be doing? What are the metrics that we do need to track? The other kind of thing that you want to make sure that you're doing is that you are starting from the audit of those value engines. So you don't want to just say, I'm going to build out my scorecard because that looks cool. Okay, but what are the metrics that you're picking? Because if the metrics don't, that you're tracking, if they don't all link back to a step or stage on one of those business process maps, then you could very well be tracking something that doesn't matter. I'll give you an example. When we rolled out our scorecards to our team, we had somebody at our company who was like, hey, we don't currently have any metrics for this was at a digital marketer, one of our companies. We don't, we don't currently have any metrics for our email newsletter. Why don't we have that? And I was like, well, Show me where the newsletter feeds into anything. Like, oh, well, it's good for awareness and engagement of the list. I'm like, okay, but how does it drive into anything? And the answer was it didn't. Because the newsletter didn't show up as a sticky note on any of our growth engine because at no point in the newsletter did we ever link off to anything that was meaningful. It never showed up. It never wound up as a sticky note on anything. Like, that's, that's why it never showed up on one of our, you know, growth engines, which is why it never showed up on the scorecard. We're not tracking the metrics. So I had to say to the person, like, look, if you can show us where this actually has an impact on one of our, you know, on our growth engine, then you'll get some metrics to track. And until then you won't. And if you don't, then we're going to stop doing it completely. There's so many orphaned activities that companies are doing that it's because you're doing things that don't have a sticky note that's represented anywhere. And so that's the other kind of mistake I'd say that people are making.
- [20:15]
A
I think I read somewhere that someone said like, I think it was Jason Lumpkin. He was like, if you get to a 10 million in revenue, it's you 100%. Your business can 100% get to 100 million in revenue. Do you think that what stops people from growing from 10 to 100 million or whatever? This arbitrary like it's kind of working too. It's a huge home run is like being better operators, like being systemized and things like this.
- [20:38]
B
Yeah, it's almost always systems at the end of the day. I think it happens earlier. Like really this swamp of scale happens at kind of 4 to 6 million. That's no man's land. That's when you probably need three people that you absolutely can't possibly afford. Right. There's like three VP level kind of roles that, that you can't afford yet. But if you could get them, they would take you up to 20 million. At that point you would have the margin, you would have the cash flow to be able to get the rest of the people to then be able to scale to the next level. And the only way that you can bridge that gap is through systems. You're not going to be able to bridge it through just brute force, through just chewing rocks. Like that's what's going to get you from a million to 2 million. Like you said, maybe for really, you know, motivated people up to 7, 8, 10, but it is not going to get you beyond that. You're going to have to get really, really, really talented people. And really talented people are expensive. And the only way you're going to be able to create that margin is through systems. Also, really talented people want to work for good companies. One of my least favorite pieces of advice is like, oh, just go hire talented people. That's like saying to like your sad, lonely, pathetic friend just like, oh, just only date tens. That's not helpful. You have to become the kind of person that a 10 would want to date. And it's the same if you want to attract talent as a business. You have to become the kind of business that a players want to come and work for. It's why I say like my goal is not to hire like rock stars and a players. My goal is to build a company that doesn't require them because I know that that that's the kind of company that rock stars and a players want to come and work for. So that happens through better systems. If you can put those in place, then great people want to come and work there. It's why, you know, big companies get even bigger.
- [22:32]
C
So me and Tyler, the CEO of Beehive, came up with a little challenge for you. It's the newsletter challenge. Now, if you know me, you know that I'm a big fan of newsletters. I got my own newsletter. I also had a business that was a newsletter business that was amazing. I wrote this newsletter about crypto. We grew it to quarter million subscribers and we ended up selling it after a year for millions of dol. And I want you to be able to do the same thing in your business. So we're doing a challenge. Ten grand is on the line. Plus me and Tyler will actually be in your corner as growth advisors. You just need to go to beehive.com mfm and you either start a new newsletter or you move your current newsletter over there. And five finalists will get picked to pitch me and Tyler, sort of like Shark Tank. And the winner gets ten grand. So go to beehive.com mfm that's beehive.com mfm to enter the challenge today is.
- [23:16]
A
The company of selling this like license of, of scalable, of the scalability company. Is that going to be the best business that you've ever founded? I mean, is it. It's sort of going to be like EOs. I heard EOs, which is like, you know, an operational framework. I heard that company sold for like, I think $90 million.
- [23:33]
B
Yeah, it won't be from that perspective because we talked about doing the licensed practitioner model with it. We don't want to. So our model is when, when we work with clients, we do it all internally. And so we're somewhat limited in terms of what we can do. But that's because again, for us, this is us getting paid to do due diligence because we want to basically have access to the deal flow. And so if we were to license our model to other kind of coaches and consultants like EOS did, it would be a simpler business, it would arguably be more scalable, but we would lose out on all the deal flow. And so we talked about it, but we don't do it. So on, on one hand, I mean, scalable this year is going to do just right at about $10 million in revenue, which is good and it's really good, healthy margins. But what we generate from the deal flow is way better than that. There's, there's one deal that we're going to have that we got from it that it won't happen this year, but it should be this next year. $300 million company. It's not, we're not going to get 20% of it. Well, it'll be a much smaller percentage of that with a baseline. But if this business winds up going public in a couple of years, let's just say that's, that's a couple of eos's for me.
- [24:47]
A
Dude, this is why you're fascinating to me when you, I think that when you, like, I think Sean uses this phrase generative. I use the phrase prolific. You've been like doing stuff for like 30 or 20 years now.
- [24:59]
B
Yeah. No, and look, a lot of it's just being old, having done, having been around for, you know, for 20 plus, for 20 plus years and being, and being in the, being in the game for a long time. And that's why I tell people, like so much of this is, is, is patience and just allowing, you know, just getting in the stuff and doing it. I mean, again, the first thing that I sold online was an e book on how to make your own baby food for $14. So your first thing does not have to be. I went out there, I had an idea, I flew out to San Francisco, I got, you know, I was in the YC batch and, you know, next thing you know, I'm a billionaire. Like, that's not how it has to be. It's not how it is for most people. It can start pretty humbly.
- [25:42]
A
When did you first feel rich?
- [25:44]
B
I still don't feel very rich.
- [25:45]
A
Why not?
- [25:46]
B
Part of it's because we still live relatively below our means. I've got four kids and I never wanted to live in kind of a place where, you know, they, they weren't around, I guess normal kids, if that makes sense. I've seen some of my other friends who, they, they moved when they hit it big. They moved to like, very ritzy areas. And, and there were no kids there for their kids to play with. And so my wife and I talked about that. Like, we just sort of stayed in the same place that we were in the whole time. And so I, I, I haven't really expanded my lifestyle that much.
- [26:17]
A
Are you still chasing money?
- [26:19]
B
Yeah, I think the, the main reason though is, is I still live in a, the perpetual fear that it's all going to go away.
- [26:25]
C
I appreciate the honesty. I, I feel like most people aren't honest with themselves or others. About, about that, you know, Sam just asked, are you chasing money? I think most people would, you know, reflexively deny that. No, I, I just love what I do, blah, blah, blah. And then it's like, but everything you do is about making money and if there was no money, you wouldn't do it. You know what I mean? Like, and so I appreciate the, the.
- [26:50]
B
I am completely coin operated. I'm in this for the money. I wish, you know, and I acknowledge the brokenness of it too, by the way. Like, I wish, I don't know that there is like some, some number. And it's also one of those things, like I don't even know how much I have. It's, I don't look at it because it's not about like stacking those kind of things. And it's the same even with the businesses. Like, I can tell you more about the businesses we have that are broken than I can the ones that are working well. You know, like, it's. For whatever reason, my focus is always on the things that, that aren't quite right than on the things that, that are.
- [27:30]
A
You're, you're interesting to me because you come off like a fairly conservative person, meaning like super well operated and yet there's this other side of you that comes off like a gunslinger. Like, screw it. Put it all in red. Let's do it. Sean looks like a guy who I'll.
- [27:48]
C
See at church every weekend, but also has a bookie who calls him and it's like, whoa. Okay, great. I like it.
- [27:56]
B
That's very close to home, Sean. Thank you.
- [27:58]
A
All right, that's it. That's a pod.
- [28:00]
B
I feel like I could rule the world. I know I could be what I want to. I put my all in it. Like no days off on a road. Let's try travel. Never looking back.
- [28:09]
A
Alright everyone, if you're listening to mfm, you probably want to make more money. Well, I want to tell you about a podcast you might want to check out. It's called the Sales Evangelist and it's hosted by Donald Kelly. Each week, Donald interviews the world's best sales experts who share their strategies to succeed in sales. They share actionable insights and stories that will encourage challenge and motivate you to hustle your way to the top. If you're someone looking to raise your income level, check out the Sales Evangelist. You can find it wherever you get your podcasts.