The Three P's That Filter Everything: Productivity, Profitability, and Purpose - Problems to Profit

Summary

Problems to Profit Podcast: Episode Summary

Title: The Three P's That Filter Everything: Productivity, Profitability, and Purpose
Host: Preston Brown
Release Date: May 1, 2025

Introduction

In this compelling episode of the Problems to Profit podcast, host Preston Brown, a seasoned entrepreneur and investor, introduces listeners to a powerful framework he employs to evaluate business opportunities and investments. Titled "The Three P's That Filter Everything: Productivity, Profitability, and Purpose," Preston delves deep into how these three pivotal factors—Productivity, Profitability, and Purpose—can serve as essential filters to assess and enhance both personal and professional ventures.

The Three P's Framework

1. Productivity

Preston emphasizes the importance of productivity as the first filter when evaluating any business or investment opportunity. Productivity, in his view, pertains to the operational efficiency and the ability to convert leads into tangible outcomes.

“What is the productivity look like? What Is the path of throughput. How are we going to get from point A, where it's just a lead to point, you know, B, C, D, or E... and actually delivered on the product or service and cash flowed.”
— Preston Brown, [03:45]

He underscores the necessity of having a clear process and measurable metrics to ensure that the business can consistently produce desired results. Without a structured approach to productivity, even the most promising ideas can falter.

2. Profitability

The second P, profitability, assesses the financial viability and potential returns of an opportunity. Preston discusses evaluating the profit margins, understanding the distribution of profits, and analyzing risks associated with financial investments.

“Is there a profit? Is there a risk of not having a profit? Like a mentor of mine used to say, what's the upside? What's the downside? And can I live with the downside.”
— Preston Brown, [10:20]

He advises entrepreneurs and investors to rigorously analyze the financial aspects, ensuring that every venture not only generates profit but does so sustainably. This rigorous financial scrutiny helps in mitigating risks and bolstering long-term success.

3. Purpose

Purpose, the final P, relates to the alignment of the business or investment with one's personal or organizational mission. Preston highlights that purpose-driven initiatives are more likely to sustain passion and commitment, which are crucial for overcoming challenges.

“To invest, you're not just investing in the deal. You're investing in the person... Because it's my purpose. If I would eagerly step into it, if I would chase it, if I would try to go and find a way to make it work, solve the problem.”
— Preston Brown, [18:35]

He stresses that without a strong sense of purpose, ventures can become mere transactions devoid of meaningful impact. Ensuring that your investments resonate with your core values fosters resilience and dedication.

Applying the Three P's: Real-World Examples

Preston provides practical examples to illustrate how the Three P's framework operates in real-world scenarios:

Multifamily Real Estate Investment

Preston discusses his substantial investments in the multifamily real estate sector, explaining how each P plays a role in his decision-making process.

Productivity: The demand for housing ensures constant throughput from leads to cash flow.
Profitability: Although current high-interest rates have impacted profitability, strategic negotiations can mitigate these challenges.
Purpose: His commitment to addressing the housing shortage aligns with his personal mission, driving him to actively manage and resolve issues within his investments.

“If you have productivity and profitability, but not purpose, it's just an investment. For me, multifamily is an investment.”
— Preston Brown, [25:50]

Evaluating Non-Profitable Ventures

He contrasts productive but non-profitable activities, such as hobbies, illustrating how the absence of profitability differentiates them from investments.

“So there's purpose, there's productivity, but there's no profitability. What is it? It's a hobby, guys.”
— Preston Brown, [30:10]

Preston advises that while hobbies are valuable for personal fulfillment, they should not be conflated with investment opportunities that require profitability.

Risks and Red Flags: Identifying Con Artists

Preston warns listeners about the prevalence of con artists, especially during economic downturns when desperation can lead to fraudulent schemes. He highlights the importance of the Three P's in safeguarding against such risks.

“Always make sure you are measuring productivity because you never want to invest in a con artist.”
— Preston Brown, [35:40]

By meticulously evaluating productivity, profitability, and purpose, entrepreneurs and investors can discern legitimate opportunities from deceptive propositions, thereby protecting their resources and reputation.

Conclusion: Implementing the Three P's for Success

In his concluding remarks, Preston reiterates the significance of the Three P's in achieving long-term financial success. He encourages listeners to adopt this framework to make informed decisions that are aligned with their goals and values.

“If you put these three P's in, your investments may not all win, but you'll win more often than you lose. And that's the key to long term financial success.”
— Preston Brown, [40:15]

He leaves the audience with a motivational message to integrate Productivity, Profitability, and Purpose into their lives and businesses, transforming challenges into profitable and meaningful opportunities.

Key Takeaways

Productivity, Profitability, and Purpose are essential filters for evaluating business opportunities and investments.
Productivity ensures operational efficiency and measurable outcomes.
Profitability assesses the financial viability and risk management of ventures.
Purpose aligns investments with personal or organizational missions, fostering long-term commitment.
The Three P's framework helps in identifying legitimate opportunities and avoiding fraudulent schemes.
Adopting this framework can lead to more consistent investment successes and enhanced financial stability.

Notable Quotes

On Setting Conditions for Investments:

“You have to have conditions on the money. Like, if I pay you for something, you should provide the thing, right?”
— Preston Brown, [04:50]
On Assessing Investment Alignment:

“If I said yes to every single thing, I would literally have no time for my family. I would have no money left.”
— Preston Brown, [02:15]
On Identifying Genuine Ventures:

“There's more and more dollars going to fake ass con artist gurus all over the place.”
— Preston Brown, [38:55]

By integrating Productivity, Profitability, and Purpose into your evaluation process, Preston Brown provides a robust framework that not only aids in making informed investment decisions but also ensures that your endeavors are meaningful and aligned with your overarching goals. This episode serves as a valuable resource for entrepreneurs and investors seeking to transform their problems into profitable and purposeful ventures.

Transcript

A (0:03)

All right, guys, short and sweet today. I have three ways for you to look at a business, three ways for you to look at a place to put your money, three ways that you need to use as filters for how you are going to invest time, energy, money, purpose, et cetera. Now, I call these the three P's. I get asked for money all the time. Like, I cannot even, like, count. I don't want to count, but, like, every day on a text, every day on a Facebook message, every day on an Instagram and everywhere else, hey, bro, could you support this? Hey, bro, could you do this? If I said yes to every single thing, I would literally have no time for my family. I would have no money left. I don't care. You could be Elon Musk. You said yes to everybody who asks. You're done. So I want you guys to start looking at things, at least in the business frame of your life, transactionally, in the following ways. And when I say transactionally, I mean conditionally, right? Because if it has to do with money, that's a transactional energy. You have to have conditions on the money. Like, if I pay you for something, you should provide the thing, right? So we need to look at things in three ways, transactionally, when we're dealing with any type of financial exchange. And the three ways are productivity, profitability, and purpose, right? Somebody brings me something to look at, whether it's a business, whether it's an investment, whether it's a charity. What is the opportunity here? I always look at it the same way. Is the thing productive? Is the thing profitable? And is the person running it purpose driven in it, or is it something that I am purpose driven in? And these are fascinating little nuances because when you add these three frames to anything, you know what the thing is in relationship to you. Okay, so let's, let's play it out. Like, say somebody comes to me, a guy who's got now 21 different companies all in and around single family real estate, and they're like, hey, I want you to invest in, in this single family home insurance company or single family home mortgage company, and all of my companies around single family. I'm probably very interested in something like that because it's something that's already aligned with what I am doing and there's a synergy to it. So that means that since I've already been invested in that space, in that area, in that industry, it's going to be aligned to my purpose, right? Now the next question's, what's the productivity look like? What Is the path of throughput. How are we going to get from point A, where it's just a lead to point, you know, B, C, D or E, however you want to look at it, where that lead has turned into something where you've sold a product or service and actually delivered on the product or service and cash flowed. Right. So what is the profitability process metrics? Is it existing? Is it something that's already been measured? Is it something that's a startup where you have to create that and you have to measure it? Like who's running it, who's managing it? Like what's, what's, you know, the price product People place promotion process in this system. Are you creating it or is it already created? Right, and so the productivity piece is a huge question. Next one, the profitability piece. Like how much profit is there in selling this widget, this product or service? Where is this profit going? Is there a profit? Is there a risk of not having a profit? Like a mentor of mine used to say, what's the upside? What's the downside? And can I live with the downside? He would ask those three questions on every deal and I would say that's probably relevant. Just add these three frames. Productivity, profitability, purpose. What's the upside? What's the downside? Can I live with the downside? So let's go ahead and like take these three things and actually remove each one from a thing. Like, I know that I've invested a lot of money in the multifamily space. Why I believe anything with bedrooms is going to have a lot of inflationary pressures on it, where I think the values are going to go up at least over the next 10 years. Not that there can't be peaks and valleys in the middle, but over the next 10 years, because we have a huge housing shortage, there's going to be a lot of things with bedrooms needed because we just have. We don't have enough of it. So what do I know? Is there productivity associated with apartment investing? Of course people need housing. We have a housing shortage. So there's productivity. Is there profitability? Well, right now, with really high interest rates, all the apartment syndicators, you know, they bought in and they didn't get fixed rate loans years ago. So there's an adjustment of cap rates going on. It's not as profitable today as it was projected to be three and four years ago. So that means I need to negotiate more and buy the deal now. Purpose. Whenever you're investing in a deal, you're not just investing in the deal, you're investing in the person. Otherwise, it has to be built around your purpose. Okay? One thing I know about multifamily syndications, apartment developments, it is not my purpose. If I go invest 100,000 or a million or 10 million or whatever, I invest in a deal. If that deal goes south, I know it's my purpose. If I would eagerly step into it, if I would chase it, if I would try to go and find a way to make it work, solve the problem, like if something went wrong, I would get in personally dive in and solve it. Right? Because it's my purpose. If I wouldn't do that, then I really need to know that the person who is doing it, it is their purpose. I want to see that the person that is doing it has their own money and it has done this successfully, has track record, has this. Because I'm investing in the person and like, like the project, right? So if you remove purpose from a thing that you're putting your money in, what is it? It's just an investment, right? So if you have productivity and profitability, but not purpose, it's just an investment. For me, multifamily is an investment. Okay? So let's. Let's remove another thing. Let's. Let's say that you have purpose in there. You have productivity in there now, okay? But there's no profitability. You know, let's call it golf. Tiger woods makes a lot of money playing golf for Tiger Woods. There's productivity, there's profitability, there's purpose. I am not a golfer. And if you ever play golf with me, you will find out one thing very quickly. If we bet on it, you will make more money than me. I suck at golf. I like it. Why? Because they have beer there. There's golf carts. Those are fun. There's beer. That's fun. I suck at golf. If we bet, you win money. So there's no profitability in golf. Do I have fun? I do. Is there productivity? If you want to call it that. I mean, we definitely move around the course. I don't know if we're getting holes in one at all, but. So there's purpose, there's productivity, but there's no profitability. What is it? It's a hobby, guys. It's okay to have a hobby. There's not necessarily profitability in me hanging out with my kids. It's my favorite thing to do. There's purpose, there's productivity. I'm raising them, they're turning great. So you remove profitability of a hobby okay, so we've removed purpose and we had an investment, we removed profitability, we have a hobby. Let's go and play this other game. Especially in down economies, which we're in right now, I've had lots of people reach out and they've got the best deal ever. They've got a great sales process, they're dialed into human nature based selling. They know how to leverage fomo, they know how to like leverage fear of missing out, but also like paint this opportunity to be the biggest thing ever. And when you go measure who they are, what they've done, their history, you can't find any profit or productivity. Excuse me, they're like this 21 year old business coach. They might have great abs and big biceps which at 21, if you don't, you know that's the best time in life to go get them guys. Like, so if that guy doesn't like, nobody will, right? Like, but like you can't see any track record. There's no history of success if there's no productivity that can be measured. You're a con artist. And guys, the reason con artists exist is because we pay them too. There are more and more dollars going to fake ass con artist gurus all over the place. Whether it's Instagram scams, whether it's YouTube scams, whether it's people knocking on your door and trying to sell you something than there has ever been. Like any time that economies get tough, people get creative and they try to sell shit that's not there. So always make sure you are measuring productivity because you never want to invest in a con artist. Guys, these are the three P's that I use to investigate everything. And before you invest, what's the first part of investigate? Invest. Investigate before you invest, guys, why? Because if you put these three P's in, your investments may not all win, but you'll win more often than you lose. And that's the key to long term financial success. Hopefully this adds value. I hope you guys have an amazing day on purpose and go out and use the three Ps, put those three Ps into your life. Have an amazing day on purpose, guys.