B (24:44)
Diane in Virginia says, Dave, as an entrepreneur, I know risk is part of the game, but it's not always clear when I'm being bold versus reckless. How do you personally evaluate whether a risk is wise or foolish, especially when it involves money, people, or brand reputation? Was there a risk you took early in building Ramsey Solutions that felt crazy at the time but ended up being pivotal? No. I don't have one of those stories because I started Ramsey after going broke and losing everything, because I did not measure risk well, because I was an idiot. And I went deeply in debt in the real estate business and lost everything. And then when I started Ramsey, I became super risk averse because I. Even though I'm entrepreneurial and even though I believe in trying new stuff all the time and experimenting, I'm not doing things that are gonna ever put me back in that again. So the main thing, Diane, that I use is I tell our entree leaders everywhere, and I tell our team this, too. We don't do any James Bond deals. Now, let me explain what that means. In every James Bond movie, there is a scene towards the end of the movie that the bad guy that's trying to destroy the world is at the poker table or the baccarat table or whatever with James Bond. And at some point, James has to slide all of his chips to the middle of the table on one hand. If he wins the hand, the world is alive. If he loses the hand, the world will be destroyed. We don't do James Bond deals. We don't slide all of our chips to the middle of the table. In other words, we don't do deals that if they don't work, we're broke or broken or brand damaged to the point that we can't survive. We do things that don't work and it's embarrassing when they don't work and they lose money when they don't work. I've done a lot of things that have embarrassed me because I tried them and I failed. I looked like a fool. Ramsey looked like we were inept because we were. It didn't work. We guessed wrong, we thought wrong, we considered wrong, whatever. And not only did we stick our nose out there in the marketplace, the marketplace laughed and shoved our nose back in the door, but we also lost the money associated with that. In every case, we did not use borrowed money because we don't borrow money, because borrowed money magnifies the size of the mistake. Because you're going to borrow a lot of money, do something really stupid instead of just trying something stupid on a small scale and you don't know it's stupid when you're doing it or you wouldn't do it. So anyway, we don't do James Bond deals. We don't do deals where we slide all of the chips to the middle of the table and our reputation is ruined or our financial situation is ruined and we're bankrupt and closed. If the deal goes bad, it takes us down. And so we always have to look at every deal and go, if this deal goes bad, can we swallow it or are we going to choke to death and die on this thing? And early on, we had a large retailer many years ago come to us and they had a $10 million deal for us. And we thought that if we could do business with this large retailer that was world renowned, that we would have had the best deal ever in the world. And it'd be a big deal for us. It'd be a great brand lift to be able to say we had our stuff in their stores. And the terms of the deal were that we had to do custom products with their name on it and our name on it. To put in their stores. And if it didn't work, if the stuff didn't sell that, they could send it all back for a full refund. In the product or book world, we call that full returns. And so we're going to ship $10 million worth of stuff over there. If they don't sell it in their stores, they're gonna ship it all back. And it's all got their name on it, so it has no secondary value. It all has to go in the dumpster. We're gonna lose. Worst case scenario, $10 million. And in those days, that would have put us out of business. We couldn't take that level of risk. That was a James Bond deal. We were sliding all of our chips to the middle of the table in order to get this deal. It probably would have worked, but if it didn't work, we couldn't have survived it. So that's not bold, that's reckless. And so we did not do that deal. That's why I'm not naming the retailer. If it had worked, I'd be bragging, because that was one of the benefits of having done this, is that we'd done a deal with this person, these people, and they're a big deal. And weren't we cool? And aren't they cool and isn't everybody cool? And look at all this and how great we are and how great they are and we'll never know. They'll never know. And they said, well, we don't understand. No one ever does this. No one ever turns us down. And I said, well, see, now you can't say that anymore. Now you can say almost no one, because now someone did turn you down, and that would be those weird hillbillies over in Nashville. We turned you down. And so that's the thing, number one. So is it a James Bond deal? Is it gonna break your reputation or break your company if it goes sideways? Because all the deals don't work like they're supposed to work. As a matter of fact, 100% of them don't work like they're supposed to work. Some of them are better than you thought. Some of them are worse than you thought. None of them work exactly the way you think it's gonna work. The best laid plans of mice and men, baby. Go back to your English lit class. So the second thing is that we look for is we use the Jim Collins method of analysis. Jim talks about this in his latest book, and he says that don't shoot cannonballs, shoot musket balls first. And this Comes from the story that Jim tells in the book of in the old days and the wooden ship and cannonball warfare stage, like in the 1800s, a good captain of a warship that is like, think pirate ship with cannons or something like that, right? That type of naval vessel in the old days would not fire cannonballs until they had their muskets, their musket rifles on deck. And they would fire the muskets to establish range. Because sometimes on the ocean, things appear closer than they are or appear further away than they are. And so if you fire a musket ball and you miss, no big deal. You haven't burned a lot of powder and you haven't burned a lot of lead, but there's only so many much powder and so much lead you can have on a ship. You only got so many cannonballs, and you can't afford to waste them by not hitting things because you weren't in range. So you check the market by firing musket balls first. And if you hear those musket balls clicking off the hull on the other side, now we've established range and now we can fire cannonballs. That's called a test market. In other words, we're going to float the idea out there, we're going to trial balloon the idea out there some way, somehow, without having to do a cannonball launch. If you have to do cannonball launches because you've got no way to check the marketplace on it, you're probably going to lose your butt. And I can tell you, 1, 2, 3, 4, 5, 6, 7 times off the top of my head, without even thinking about it long, that I've lost over a million dollars by doing cannonball stuff because I thought it was gonna work. And I was so enthusiastic and I was reckless. Now, we survived the reputation hit and we survived the financial hit, but I could have avoided even the pain that I had if I'd have been a little less reckless and shot some musket balls and checked see if the marketplace actually cared. And so you want to try the thing out at a smaller scale somehow, because especially your first product in an area, if you've never launched a product in a certain marketplace area, not regional area, but I'm talking about a certain area of business. 100% of the time, your prototype is not going to be what you end up with. 100% of the time, you're version 6 of the product, and versions 1 through 5 are in the dumpster. Version 6 is going to be the one that catches on because the market's Going to talk to you and say, if you'd make that little switch there work, if you'd make it that color over there, if you'd carve that edge off, we'd all buy it. And then finally you get the sweet spot on the market. But by then, you've wasted a ton of money. And if you go buy 100,000 of your version two, because you're just so excited, that's a cannonball instead of a musket ball. So just put enough of them out there that you get them moving, get them moving, run out of them, and then iterate, iterate, iterate, iterate, iterate on the product, smooth the product out, file it down, get it where it's working, let it get the sweet spot, and then get your volume up, then fire your cannonballs. And so. Cause 100% of the time, see, it's a problem with, like, with us, we launch books, okay? And you can't. The only way we can musketball a book is we take the content from a book and do it as a talk at one of our entree leadership events. And so this latest book that I did, this Building a Business yous love the five Stages of Business. I did that talk six times for different entree situations. And we've discussed it and kicked it around with you guys here on the podcast a long time before it went into a book. So it was not an accident. That book came out number one. It came out number one because we tested it with musket balls before we fired a cannonball. If I had just sat down and wrote that thing and the public had never seen it. And by the way, the version you all saw was version six. Every time I did the talk, we read the feedback notes on the talk, and each of us would gather around, go, that point didn't hit. That doesn't work. We've got to change the way we communicate that it didn't work. And we changed it to where all the lingo that's in the book is all proven lingo. So you guys got a premium product when you buy that book because it's a tested, polished book. It's not a prototype. And so that's how we don't screw up. We don't launch a lot of books at Ramsey, but almost every one of them are number one bestsellers when we launch them. Huh. Wonder why. You think that's a freaking accident? No, it's using this process, okay? It's a process here. We test the material out. We don't test it out in many books. We did that with John Deloney's book. We did do a mini book. We launched Redefining Anxiety as a chapter book, a one chapter book, 37 pages long. We sold 150,000 of them to our great surprise. Honestly, we were all a little shocked that all of you had that much anxiety, but you did. And so we redefined anxiety like 37 pages a bunch. But we knew, hey, Marketplace is singing. They have a need for this. This is a felt need. This is a visceral need. So guess what? You know, building a non anxious life. The six keys to uncode and build a life where you fight anxiety. A full on hardback book. Well, duh. Of course it launched number one. Cause we had a musket ball out there that it was his little brother that hit a bunch of ships. Okay, so that's what we're doing. So we're doing musket balls versus cannonballs. We're not doing James Bond. A lot of metaphors being mixed up here in this talk, but that's the answer to your question, Diane. Yes, you keep trying things, but you get wiser and wisdom helps you to be bold without being reckless. And those are the two main things that we do around Ramsey to keep us from getting there. So I love that question. Thanks for letting me get up on my soapbox. I like it. Good stuff. If you're working 60 to 70 hours a week just to keep your business running, you're headed for burnout. The only way to grow without running on empty is to to stop working in your business and start working on your business. And that takes advice and accountability from people who actually make payroll. That's why you need to join an advisory group. You'll get a coach and a circle of business owners like you who will help you stay focused and grow without sacrificing your nights and weekends. Find out if advisory groups are right for you@entree leadership.com or click the link in the Show Notes if you're listening on YouTube or podcast. Thanks for hanging out with us. Hey, if you want to help us out, we could use your help. Click the subscribe button, the follow button. Share the show. If there's a share button on your platform, click Share or send somebody the link. Tell them to tune in and hang out with us. We'll give you some, some information that's actually freaking usable. There's not a lot of theory around here. This is actually stuff I do and have done for 30 years and our team does and I've Learned from some of them. And I'm gonna share it all with you. But we're just practical people. We're practitioners. This is not a theoretical thing. And of course leave those five star reviews, they're helpful. All that stuff moves the Internet stuff around and causes the show to be pushed out in front of other people. And a bunch of you are telling people about the show in different ways. We thank you for that because our numbers are. They're up. Ridiculously, considering you guys are our only marketing plan. So thank you for all your help. We appreciate you a bunch. Mike is in Pensacola. Mike, what's up?
