← The Game with Alex Hormozi
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- [00:00]
A
In 2021, I sold my e commerce company, Prestige Labs with gym launch for $46.2 million. And six months ago, I broke the Guinness world record for the fastest selling nonfiction book and generated over $106 million in a weekend just using a Shopify store. And so in this video, I'm answering your questions about how to scale your e commerce business. And for all these questions, I tried to do my very best to make the solutions as tactical as humanly possible so that you watching from home, can immediately use them. So enjoy.
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B
Hey, Alex.
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A
Yes.
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B
My name is Max. I run elevate customs with my wife who's in the front row.
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A
Elevate customs? Yep. Like home custom solutions.
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B
No, we build and sell, like luxury gaming tables, like pool tables, casino tables. Manufacturing.
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A
Not what I was saying. Okay, got it. Yeah, that's cool. Like cool backlights and things like that.
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B
Yeah, like anything. Like one off custom pieces.
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A
Sweet.
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B
We're at around two and a half million revenue a year. We want to be around 2 10.
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A
How do you sell?
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B
At least Mostly Google Ads.
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A
So e commerce.
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B
Yeah, she sells.
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A
Yeah. Okay, so invoices, phone calls. Okay, got it.
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B
So how do we Increase our leads 2x3x without breaking the bank?
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A
Basically. How do you increase your lead flow without breaking the bank?
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B
Yeah.
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A
Well, I'll ask you for quality leads. So what are you currently doing? You said Google Ads.
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B
Yeah, around 15 to 20k a month.
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A
Can you spend more? Yeah, why don't we do that?
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B
We've tried and we weren't generating the same quality leads or necessarily getting different keywords.
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A
We're not getting you more quality. Yeah, correct. This is probably a scale thing, though. Like, this is a media buying question, because I can promise you that at $20,000 a month, you haven't saturated the market for cool custom gaming stuff. Like, you could probably get to like 2 million a month before you even get close to that. It's probably just a me. Like, who does your media buying?
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B
We have a company.
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A
Okay. I would. This is a keyword thing. Like, this is. This is three degrees down. Like super tactical. Like we're just buying the wrong words. And there's just like, I would be. What's your margins right now?
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B
20%, 500 a year.
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A
So you just have to see this as like, we might burn $200,000 this year on bad keywords to find another 6 that we can scale up to $100,000 a month. And by doing that, we'll 5x the business. And so if you just see it like that of like, okay, we're going to spend 200,000 or $300,000 to take us from 2 point whatever to 10. That's how I think about it. In general, we tend to be scared to spend more money. And I would say that the only thing that's really shifted for me is from entrepreneur to investor wearing both hats, is that I look so much stuff at just return on capital. And what's the point if I think we can get to 10, I would rather just get to 10 faster. And I see, because I don't live off of that $500,000 a year, I just see all of that as my fodder for putting back into the thing so that I can get to the next level. Which side? Quest for everyone. If you're a service business and you have cash flow, some businesses are really obvious for where you do reinvestment. If you're brick and mortar, you save up your shekels, you open another location, very clear where your capex goes. If you're manufacturing, you buy another big machine. Very clear where the capex goes. If you're a service business, you do accounts, you have a law firm, you got legal people. What do you do with the extra money to quote, reinvest in the business? So there's two primary sources. Number one is going to be talent and culture. So who am I going to hire and how do I uplevel the team? So in service businesses in general, you can see how good you are and how advanced you are as a service provider by the price you're able to charge. And so over time, your price should always go up because fundamentally you should have a virtuous cycle of we do good work that generates more demand. More demand means more than we have supply, which means we can raise the price. We can. With the extra cash, we can then acquire better talent, which means we do a better job, which increases our reputation, which increases our price, which allows us to charge more so that we can get better talent. And so the talent should always be going up and so should the price. And so if you're in a marketplace where you're like, man, we can't charge more than other people, it's because you aren't better than other people. So we have to beat them in order to like, we have to do better. That's point one. The second area is brand, right? It's like, how do I spend some of that extra cash to solidify the brand of me? So this is not direct response ads. This is like kind of the big aspirational moments, these brand moments. Like we just did this launch two weekends ago. It's like, how do I do these big demonstrations that might cost more and might not be the normal run of business? Like, why would Red Bull have a guy jump from out of space down. It doesn't make any sense, but. Except it makes a ton of sense because I'm talking about it right now, right? And so you're probably more likely to drink a Red Bull at the break. Real talk. And so anyways, it's like, how does this ladder back to selling more pool tables for you though? You're not in a service based business per se, but I thought it was a good offshoot for other people. See all of the profit that you have, whatever you don't need to live on, as your experimentation budget. And that budget is really like, do not see it as I lost money. You can't think with that perspective. You will just lose. You have to think about this as like, I'm going to rigorously test keywords until I find more keywords that win. And these are just investments in finding money printing machines. Because keywords, especially once you really find find them, they kind of just print for you. Which you guys are experiencing right now, right? You guys spend $250,000 a year to make a 2.2, right? You're getting 10 to 1 on it now, obviously you have cost of goods for sure, but like profitable, right? And I'm sure when you found your first keyword and it started working, you were like, holy shit. It's like, great, we just need to find like another hundred. And they're there, they're there. And you might need bridge pages. So you may have heard of Eugene Schwartz, so famous marketer. And so when you really want to scale ads to colder markets, for those of you who went through the hooks and the goated ads. Anyone go through goated ads playbook? Okay, so this will sound a little bit more familiar. So you have these levels of awareness that correspond with size of market. And so you've got your most aware customers here. And the reason that these levels are important is that it changes what the hook is and what the kind of click journey is for the customer. So at the very top you've got unaware, then you've got problem awareness, you've got solution aware, you've got product aware, and then you've got most aware, which is usually your existing customers, right? And so if you want to expand. So right now I'll bet you most of your keywords are targeting these People if you want to go up market which might have 10 times more clicks, we might have to have a bridge page after you have like the keyword might be more like home, home projects or like accessories. Like I, I'd have to think of that. I'd use a keyword finder.
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B
And then would you have like the same team work on that or hire a completely different marketing team that kind
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A
of a really good media buyer would know this. But you'll likely just need to have keywords that are a little bit broader so you start competing against more people. But as long as you bring them to kind of like an advertorial type page and then they take the next step and then it basically mimics the same path as this. It's like you take them from product aware to then advertorial then to your sales page. That bridge the clicks here might also be like 110 the price and there's an ocean of them. And then when you get from there it's like okay, well what's, what's above that problem? Aware is your house boring? Right. Like do you have an extra room that you don't know what to do with? Right. These are problem where they have a problem, they have no idea that you're going to sell them a pool table. But we have to start with where they're at and then lead them through the journey.
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B
Thank you.
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A
Yeah, appreciate it. Real quick, I'm going to show you the exact 10 stage roadmap from 0 to 100 million plus that less than 1% of companies finish. I've now done multiple times and so I can say with a lot of confidence that these are the stages and as headcount increases that you need to get through. And I broke each of these down by eight different functions of the business. What the constraint feels like, like what are the symptoms of it when you're going through it and then what steps we actually took to graduate. And we've done this across software, physical products, service businesses, brick and mortar, all of this. And it works. And it's my gift to you. It's absolutely free. And so the link's in the description but you just go acquisition.com roadmap just enter your info and it'll spit it right back to you. All free.
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C
My name is Ethan. We sell direct response E commerce products. We're all paid media. We do about $3 million a year in revenue.
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A
Direct response E commerce products. Okay. Like drop shipping stuff?
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C
Pretty much, yeah. It's more branded than that, but essentially is, yeah.
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A
So you have customers who are doing that or you're doing that?
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C
We're doing that.
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A
Okay, got it. And so you have a handful. How many SKUs do you have? Like, four. Okay. Is it all the same brand? No. Okay.
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C
Yep. So we have. We're doing. It's like four months old, so we're doing a run rate of like 3 million a year. We have, you know, background in like, paid traffic, affiliate, so it's not the first rodeo with that. We're trying to get to like, 15 million a year run rate. What's stopping us right now? You know, not entirely sure, but basically, like, we have each step for everything that has to be done. We built out teams and systems for the main priorities, and those things are working pretty well. I'm happy with our talent and what they're producing, but so far what I'm experiencing is that, you know, I'm left with this, you know, list of, like, random chores that somehow only I can
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A
do a junk drawer.
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C
But I'm not sure how to approach hiring for this because it ends up being like a very niche, specific task. But I may. I might only need them for like, you know, 20 minutes a week or something. So it ends up being me, but with a million things and your founder. Yeah.
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A
Okay, so let's start here. You want to get to 15 million. What stops you from spending more money?
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C
Nothing right now. I mean, we just hired a pretty robust funnel team and an operations guy, like a strategist. So kind of just waiting on those things to kick in, really.
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A
Okay.
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C
But I'm fairly confident at least do it.
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A
Okay, so this is more a complaint than a constraint, right? No, I'm just being. No, this is me asking for clarity. So we think we can double if we just spend more money. I'm not spending more money because I'm waiting for this thing to happen. Once this thing happens, then I'm going to spend as much money as I can. Sure. Right. And in the meantime, I have stuff I don't feel like doing. This is me trying to translate back. Is that true? Is that accurate?
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C
Yeah, but eventually there's going to be enough of that stuff that I will have to find some way to hire out for these things.
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A
Yeah. And then there'll be more stuff that you'll still do. You'll just do the more important, valuable stuff and give the other stuff to somebody else.
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C
Yeah, but a lot of it ends up being fairly tedious. Like, it's. It doesn't feel like high leverage or high value at all.
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A
I Mean, this is where like VAs and products project work can come really in handy. Like I'll give you an example. So when we made all the ads for the launch, right. I don't, I didn't need the amount of editors that I had to spin up in order to. Because I'm not going to be making 300 ads a week ongoing. I don't need to. But for the launch I did. And I wasn't going to hire an extra 15 editors full time because it's just like I don't need that. And so we spun up 15 editors that were contractors who would then just clip and we had one person just did QA on it to make sure that it was good and then we'd ship them. Right. And so if we have something that's like one time ish work or it's sporadic, then I'm fine just having a suite or a bench of contractors that I can turn on and off as long as they do decent work.
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C
We do similar things like with our video editors as well. But some of the tasks are fairly specialized.
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A
No, I understand. I was just using an example for editors. But I'm saying if you have tedious work, this is where the fibers of the world can come in handy. And worst case, you train a contractor or VA on how to do it and then they do it.
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C
Yeah, just like someone that's high level enough and like shopify work. But we only use them for a few.
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A
There's tons of shopify contractors, like a boatload of them and they're not that expensive. And some of them really good. Yeah, I like, I would just look at my list. What are the things I'm doing on a regular basis? Can I ship out most of these to a contractor? Does a piecemeal probably. And now you're trading 20 hours for two. And that's just. You just keep making that trade until eventually you're managing a ton of people and then it's like great. One person is managing all of these and you just trade all that time for you getting more. Because hopefully if you're doing that much work, then you should have the revenue to support that role. Have you, have you scaled E commerce like this before?
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C
Yeah.
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A
Okay. Are you, are you just running paid ads?
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C
Yes.
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A
Okay. Do you have influencers who are doing stuff?
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C
No, influencers who are looking to hire for that. But we, we have three or four channels for paid at least.
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A
Yeah. I'll say this. How big do you want this to be?
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C
I mean, ultimately the goal is we'd like to have a portfolio of, call it four or five brands that we can then exit in a couple of years.
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A
So I have this conversation every week with somebody who's doing E commerce and it's almost always the same. Like I would like to have a portfolio of a handful of products that I could eventually sell someday. I have really yet to see anyone do that. And it's I think for two reasons. One is that as you continue to scale, your CAC will continue to go up and your gross margins will shrink and that will get frustrating. You will then also have supply chain issues which would become a burden. You also have dupes if you start becoming really good that will undercut you in price and list on Amazon and all that stuff. Do you have patent protection for any of these products? And so you right now run a media arbitrage business and it works really well up to about 10 million and then it will quickly stop working very well. And so I think to your point of like you can see a double, that's probably true, you might even triple. That's sitting there with a little optimization, more email, follow up, blah, blah, blah blah. But you'll probably get close to capping in that neighborhood, 10, maybe 12. And then you're going to be like, well, we're doing a million dollars a month, but we have almost no margin and our cash flow is fucked. And so what I think you want is that you want to build a brand that has a product that you really believe in that will allow you to recruit affiliates to your cause. When I say affiliates, I mean influencers, not traditional direct response affiliates that are just mercenaries, but people actually believe in it. And when you do that, you will actually be able to build a brand because fundamentally any one of the products can be big enough on their own to sell. And so rather than saying why don't we try and build four totally different products and totally different brands at the same time? It's like, why don't we just try to build one that we really like that we think has a chance at actually really helping people for whatever the problem that the product solves? That's what will build what I think you want. It's just that most people who come from the direct response world just are pure performance marketers. And I say this being someone who comes from that world and I had to learn the hard way that you will run into the wall, that there's a great article, you can recall the direct response doom loop, which you might have read. But basically you just do this Revenue goes up, margins compress. Margins compress until you're eventually here. And then you have to keep selling in order to maintain your team. And then you just run a very large, very high liability nonprofit, and it sucks. And cash flow is a huge constraint and you've got all the supply chain bullshit. And then you're like, this sucks. And then you'd have another conversation, come back here, and we're like, hey, we're doing 12 million with 7% margins. And I would say, okay, of the four products you have, which one is the one that's the clear winner? That's the one that's carrying all the other losers? And you'd be like, well, it's this one. And then I'd say, okay, cool, why don't we just get rid of these three and then put all of your effort on this? Do you think you'd be able to win that way? You'd be like, oh my God. And be like, great. So, like, why don't we do that and then actually invest in building the brand?
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C
Yeah.
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A
Around it.
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C
We definitely have, you know, we're, we're paid traffic affiliates, so, like, we're data people. Like, but so one of the things that I've thought about is like, you know, our biggest skew. It's good, but it's not like, it's not that good. Like, I know a good campaign when I see it. So, like, part of the purpose of building out, like, you know, our research and funnel teams is like, well, eventually we're going to find something where the market is just like 10 times better, you know, so it's like, do we keep chugging along with like the one that's like a 6 out of 10 or do we go find the 9 and then go on on that?
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A
The skill set that you guys are deficient in is going to be brand, and that's what you have to learn how to do. And the brand is also completed with the product. Right. So, like, that's what completes the brand loop. Like, we make this amazing promise. We have all these great associations. People then make the purchase, and then the product either reinforces the brand or destroys the brand. And if it reinforces the brand, then the loop continues and becomes a virtuous cycle. And that's how you go from an E commerce store and that does media arbitrage into a household name that you can sell for not just 50 million, but maybe 500 million. And so it's just that I have this conversation literally every week. And so I know that you're coming at this from a math perspective. It's just that it will not work at scale. And so I would rather you spend as little as you can on all of these different things to find a product that you guys really think is legit and has some level of defensibility if you can. Because if you don't have a defensible product, the only thing that you have is the brand to differentiate you. That's the only differentiator. And so if you're competing because just played out the next step. Let's say you find your 9 out of 10. No one's buying that. Private equity investor not buying it because they know the game. They buy brands, they don't buy products. And so you get your 9 out of 10 and then the dupes flood because they see that you're killing it and then they undercut you on all this stuff and then your roas goes down and then you leak everything to your competitors. So either you have some sort of patent that you can actually project and you have a legal team that can enforce it, or you build a brand. So like that's the long term play. The rest of this is just making money. Until you figure that out, I'm being super real with you. I'd just rather save you a couple years. But that is where this leads. Okay. I mean, so how do you build a brand?
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C
Yeah, right. Yeah, how do I do that? But we are working on like the legal defensibility of it. You know, I didn't mean to say
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A
like I would lead with brand rather than lead with. I would lead with brand rather than legal. Yeah, because legal you have to like. It's still tough to like. It's, it's better to be big and then win with legal than try and be small and win with legal because you'll just get drowned in fees. And it's, it's, it's better to just have the coolest brand and have the coolest people promoting the thing. And then people just want to buy from you even though they see the cheaper knockoffs. But that's like, that's what you have to do if you really want to go where you want to go. Otherwise you're just going to be cycling through SKUs and you're going to say you have a portfolio and it'll sound impressive to people who don't know what you're talking about. But margins will do this cash flow get fucked and you have co founders and it'll be like, this is so much work. This sucks. I Wish we just had one product that we all really believed in that we could build a business around. And that's what you want to do?
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C
Thank you.
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A
Yeah, you bet.
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D
Hi, my name is Samantha Harrison. I own a hair extension company in Australia.
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A
Amazing.
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D
I have a salon and an E commerce business.
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A
Oh, what? An E Commerce. Sorry, I wholesale, wholesale and E Commerce. So direct to consumer and wholesale. Yeah, okay, got it.
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D
Sorry, I'm like so nervous. I have a terrible fear of public speaking.
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A
Have a panic attack and then just ask the question. You're good.
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D
I forgot what my question was.
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A
It's fine. We can pick another one.
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D
Read what I wrote down, if that's okay.
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E
Okay.
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D
So to make either business truly sellable at high valuation, it would take me years of operational restructuring, recruitment, reducing owner dependence and building systems. And even then the multiple would be low because service based product businesses don't scale without heavy ongoing input. I want to move into SaaS.
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A
You think this is hard and so you're like, you know what, I could do something harder.
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D
And so I guess that was the point of me coming to this seminar because I know you talk a lot about the woman in the red dress.
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A
Yeah. Or men in the tuxedo. You know, whatever works.
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D
Obviously I'm fearful because it's not my niche and it's not what I specialize in. But I obviously being in the industry, I definitely see a lack in the market and educate.
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A
So what is the SaaS that you're trying to build or that you want to build?
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D
It's an online booking system for. Well, the niche is for salons, but it can be used for service based businesses.
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A
There's so many of those, it's got
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D
AI built into it. And the difference between mine and say everybody else's is it's essentially bridging the gap between revenue and profit. So giving more of like a pull data rather than push. Having the AI built in as more as like a motivational business coach which will give you the real time analytics on your team, on your services, on your numbers, on your margins. Like everything like that. Like for me personally, I spend every week calculating every single team member's revenue, cost of product.
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A
You own a salon too?
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D
Yeah. Okay, but the. So the salon and the wholesale run without me.
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A
Okay.
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D
The salon does about. So the salon does about say 900,000 with 50% margin. And I'm happy with like what? Like I don't really want to scale salon. The wholesale year or this year has grown 100% but it's about 30% month
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A
on month, what was the revenue of the wholesale?
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D
I think I'm just at 2.6 so far.
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A
And you have 30% margins on that?
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D
Yeah.
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A
Great.
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D
So the financial Overview for this SaaS, it's $500,000 build, 120 grand a year to maintain. But it's serving my same audience. Right. The stockists are already selling owners. They already buy from me. They already trust me. It's something that they won't use, have already subscribed to. Like the founders. Don't look at me like that. Believe in.
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A
I do. I do. I'm just trying to figure out which you to believe in.
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D
I'd only need 150 subscribers to maintain costs, which I've already got. So if I had 2000 of my weekly stockists that already buy from me, subscribe. There's 2 million a year. It's fine, right? Tell me it's a good idea, please.
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A
So much pain.
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D
You sound like Ed. He's sulking all day.
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A
So one of the difficulties that I have, like this is a perfect scenario of telling someone what they want to hear versus telling them what I think. And I'm always. It's a very fine line because like I always want everyone to leave happy, but I also feel like I have integrity. Tough. Right. And so what I will do is I will give you a sorting question. You can pick what side you want, I can assume your position and then tell you what I would do, although I disagree with it, or I can tell you what I think you should do. Okay, which one would you like?
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D
Tell me what I should do.
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A
Okay, great. I think that I'm going. I think you getting into SaaS as somebody who has never built a software product and doing it where you're going to self fund it. And just because you have a distribution base does not mean that you should sell every single thing that that distribution base can buy.
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D
What if I've already paid for it?
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A
That's called sunk cost fallacy.
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D
I just give up. I don't try.
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A
Some of the best money you ever spend is deciding to stop spending bad money.
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D
Okay.
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A
And I say this only having done it myself. So I'm going to hit from a couple angles. So the first one is who here is organic as their primary method of getting customers like making content, et cetera. And it gets bigger and bigger every time. It's just the way it's, it's the way the world's roving. So one of the big mistakes that people who have organic audiences make is that you grow an Audience. And then you sell a product, and then people buy the product and you make money, and that's a very reinforcing event. And so then. But they already bought the product. So then you think, well, shit, I should make another product. And so you make another product, and then within two or three years, all of a sudden, you have four mini businesses that serve the same pool of customers when the real constraint of the business is you needed to grow your audience. And so the invisible beauty, or. Sorry, it's not the extensions, whatever it is that you sell. Right. The hair extensions that you sell, you're doing 2.6. Then what's the E commerce side doing in revenue?
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D
Yeah, it's like 900.
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A
900. That's what it's doing.
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D
Sorry. The salon is 900. The online is 2.6.
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A
Okay, so there is no. You said e commerce at some point.
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D
Yeah. So E commerce.
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A
I'm selling is the wholesale, is the wholesaling. Okay, got it. It's B2B on sales.
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D
I also sell to retail. Wholesale and retail. So anyone can buy. But I do have stockist.
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A
The vast majority is other stylists buying. Right.
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D
Layla can buy from me. But also hair extension. Salon owners can register for a trade account.
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A
And how many of the sales are trade accounts?
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D
It's about 50%.
- [24:14]
A
It is interesting. Okay, so anyways, back to this point, which is that that business is not. Not sellable. I just want to be like you said, like, ready, you started. You're like, it's not sellable. It's Operation Bubble. It's like, that's. I mean, not necessarily true kind of at all. You just need to get more customers. And extensions are a reoccurring product. Like, people buy them every 8, 16, whatever the weeks are. You know it better than I do, but I know I've seen the bill, so it's not one time. I'm sure about that. So all that to say, like, all we have to do is just like, you have now encountered the big hairy problem that I talked about at the beginning of today, which is that you encountered something that you didn't know how to solve and then are thinking, okay, well, there's greener pasture over here. There's a girl in a redder dress. And if I go here, surely this grass will not be fertilized with shit. But it is indeed full of shit and significantly more shit than what your current business is. The current business is actually way more chill than the business that you're trying to get into and the business you currently have. Is way more cash flow positive than the one you want to get into. The business that you want to get into, you will not make money from for many years if you ever make money from it. So if you want to win at software, you have to commit to making no money for basically seven years. Zero. And the people you're competing against don't have two other businesses.
- [25:27]
D
I guess like my limiting belief around like I've got a very lean business. So I built a property a couple of years ago. I ended up moving out and I run the wholesale and the salon from that house. And my expense for this salon and the wholesale is 500 bucks a week. So it's very lean.
- [25:43]
A
Yeah.
- [25:43]
D
So I think for me.
- [25:44]
A
So you're good at running that business. Yeah. You should do something totally different for me to see.
- [25:49]
D
I'm like, I'd need to increase my pricing and I'd need to obviously move into.
- [25:53]
A
On the extension side, you mean?
- [25:54]
D
Yeah, like my margins are too small for me to be able to scale at the margin set.
- [25:59]
A
So why don't we just do that if I can. Because you thought starting a software company.
- [26:05]
D
Well, I thought that having like a risk. Sorry, a reoccurring.
- [26:09]
A
You do have a reoccurring business product
- [26:12]
D
that I would use as well.
- [26:14]
A
So reoccurring and recurring. Right. Have the same value. What we need to demonstrate is revenue retention.
- [26:21]
D
I would just like to make money online while I sleep and I don't want to work anymore.
- [26:25]
A
That's fine. Software companies is certainly not the way to do it. Probably the worst way to try to do that. Like we just need to confront the business that you have right now. You need to improve the margins and you need to go get more acquisition. So that probably means like making more content, running ads to attract stylist, having some sort of offset front end to get them integrated. How can you run some sort of play within their salons, trying to use your vernacular to basically make them more money using your extensions. And then by doing that then they get converted because they make more money selling extensions than cutting color. And so it's very likely they'll keep selling it. And then you have basically you have a hunter and a farmer. The hunter is the one that basically closes the deal and gets them to cut columns of activate their base of ladies. I guess I don't. Maybe there's hot guy.
- [27:13]
D
It's just like the constraint of the wholesale is the production time and the capital. And again like my logic was, well, if I was to invest the same $500,000 into the wholesale. That's $150,000 margin. Whereas I thought, well, if I invested
- [27:29]
A
it into subscription, you would just lose all of it.
- [27:33]
D
Maybe that's your limiting belief.
- [27:37]
A
I've built more software companies to a billion dol. You have.
- [27:44]
D
Okay.
- [27:44]
A
Right. Two can play that game.
- [27:48]
D
Okay.
- [27:49]
A
Do you want my help?
- [27:50]
D
Yes.
- [27:51]
A
Take my advice.
- [27:52]
D
Okay, cool. I should do it.
- [27:55]
A
Thanks.
- [27:56]
E
My name is Sasha. I sell designer bags and sunglasses.
- [28:00]
A
Cool.
- [28:01]
E
And we do about 6 million a month. No, sorry, a year. Sorry. 6 million a year still.
- [28:05]
A
Cool.
- [28:07]
E
And I would like to do 38 million.
- [28:11]
A
Precise.
- [28:11]
E
Yeah, 38 million.
- [28:13]
A
Okay.
- [28:13]
E
And what's stopping me is.
- [28:15]
A
Why 38?
- [28:17]
E
Just because I figured, you know, a hundred thousand a day, something like that. Round up down. Something like that.
- [28:21]
A
Okay, got it.
- [28:23]
E
Roundabout. And I mean, obviously more.
- [28:27]
A
Yeah, yeah. Okay.
- [28:28]
E
But yeah, I was thinking 38 would be fair.
- [28:30]
A
Yeah, that works.
- [28:33]
E
And it is just recruiting.
- [28:35]
A
Oh, recruiting is the bottleneck, as you're saying.
- [28:37]
E
Yeah.
- [28:37]
A
Okay, got it.
- [28:38]
E
My house cleaner was my first employee, and she just. And because I consumed yours and lay those content so much that I was like, I'm going to be these two people in one. That's me. These two people. And as a result, I have a great team. Really great team. And it's just a matter of being militant in the recruiting process.
- [29:01]
A
Okay.
- [29:01]
E
The. We do sell on whatnot quite a bit.
- [29:03]
A
Who do you have? What's stopping you? So you make money $6 million a year selling handbags and sunglasses and sunglasses. For you to sell more handbags and sunglasses, you need more people to do that.
- [29:15]
E
Yes, because we. We only go live for about five hours a day because we get tired. It just means. Well, me and I have three salespeople, but it's just. We get tired. We could. If we were live more often, we could create more.
- [29:29]
A
You're going live on, like, your Instagram page or your what on whatnot. Okay, got it. And do you have, like a big following there?
- [29:37]
E
110,000.
- [29:38]
A
And so you're just selling to that same base. And if you just sold for longer, you would make more.
- [29:43]
E
A lot more. I could do 100 grand in the show.
- [29:46]
A
Okay, so you just need like two more salespeople going on camera.
- [29:49]
E
But yeah. And then the recruiting as well.
- [29:53]
A
Recruiting for what?
- [29:55]
E
Packing? Because we do a lot of.
- [29:57]
A
You do your own three pl or not third party, but, like, you do your logistics. Hmm. Why?
- [30:03]
E
Why do we do it ourselves? I didn't know you could have other people do it.
- [30:09]
A
Boy, oh, boy. Yeah. Step inside. Yes. So functionally. Because of the nature of the business that you're in, we have to think, like, we have to consolidate resources. I'm not normally somebody who's like, let's cut parts of the business out. But unless your shipping is some key differentiator that you have, like Amazon shipping became a competitive advantage. Right. But unless that's like some differentiator, then shipping, for the most part, is pretty commoditized. And there are people who, all day long, they think about, like, saving 15 cents on cardboard boxes and tape and packing peanuts and all that shit. And I think that. That you having to, like, think about that and run a. Functionally a warehouse at the same time as running a marketing and sales and talent business, media. That's not where the value is. The value is in the distribution and the sales. And so I would say, like, can we outsource this, the logistics part, so that you can just go all in? Because if all we had to do is you get two more salespeople and you get to 100,000 a day, we should do that.
- [31:17]
E
So we have to physically show the product.
- [31:21]
A
Like, well, no, I'm not saying you don't have, like, some product on hand. You just don't need a warehouse.
- [31:26]
E
No, we do need it because it's like, go, go, go, go.
- [31:31]
A
Okay.
- [31:32]
E
Speed. We run probably about.
- [31:34]
A
So you're like, we sold this item to this person is how you do it.
- [31:37]
E
Yes.
- [31:38]
A
Okay, so got it.
- [31:40]
E
It's kind of like a warehouse.
- [31:41]
D
It's.
- [31:42]
E
Yeah.
- [31:42]
A
Okay, that's fine. All right. So you just need to hire more people. So what's stopping you from hiring more people?
- [31:48]
E
The talent.
- [31:49]
A
The talent to hire more people.
- [31:51]
E
Well, I'm learning now. That's why I'm here.
- [31:53]
A
No, you're good. You're good. So I'm saying, like, you have two sets of roles. You've got warehouse folks and you've got people who can get on camera. Right. So what are you currently doing to get each of those people?
- [32:04]
E
Well, we had ads on. Indeed.
- [32:06]
A
Okay.
- [32:06]
E
But I didn't realize how militant had to be until I came here. It makes a lot of sense. Right. I know that there's that many interviews that are required.
- [32:16]
A
And that's more for the warehouse side. Correct.
- [32:19]
E
Both because sales is.
- [32:21]
A
I think that you'd be able to find salespeople. Like, I would probably look at Amazon affiliates.
- [32:28]
E
How much would you pay them?
- [32:30]
A
Percentage?
- [32:31]
E
Well, that's the thing. Okay. So it takes skill to do what we do. Yeah, it takes skill.
- [32:37]
A
Agreed.
- [32:38]
E
Like, for example, my girl is better Than me.
- [32:42]
A
Great.
- [32:42]
E
Better than me. And not only is it motor skills, it's presentation and entertainment.
- [32:49]
A
I get it. I understand. I did a live for three days. I got it.
- [32:58]
E
So finding and training, that, that's definitely a process and takes time.
- [33:03]
A
Yeah. The question is whether you want to buy or build. Do you want to buy the talent or build the talent? Building the talent is cheaper, takes longer, harder. Buying the talent is faster, more expensive. Which one do you. Which one feels right for you?
- [33:16]
E
So we are profitable per show? Yes.
- [33:18]
A
Okay.
- [33:19]
E
Profitable per show. But sometimes what ends up happening is like, let's just say it's a, a Wednesday.
- [33:25]
A
Are you on cash based accounting or accrual? Probably cash.
- [33:29]
E
Yeah.
- [33:29]
A
So you might like if, basically if you run a physical products business, which you do here, you're like, okay, we made money. Now let's take all of that profit, gross profit that we had and go buy more shit so we can sell more shit. Right, right. So this is where like you probably have. What's your, like what's your financial. The financial side of the business, the financial ops look like.
- [33:52]
E
My accountant handles it.
- [33:54]
A
Your who?
- [33:55]
E
My accountant.
- [33:55]
A
Oh, your accountant does it. Okay.
- [33:57]
C
Yeah.
- [33:58]
A
You will need to have soon a relatively strong finance person who can give you better forecasting so that you can. It's not just like how much cash we have in the bank account. Let's go buy more shit. It's like we can only afford to buy this much given this growth rate that we want to have. Otherwise you will get into these probably cash crunches that you're feeling right now. It's not that the business isn't profitable because I'm guessing the headcount's not super buy.
- [34:20]
E
So our shows will make anywhere from like 5 to 7,000 in profit, depending on the volume that we did that day. So we know the profit like per show. However, that's where the skill comes into play. Like if a show's not going well, we need to have that person trained to be able to do the thing. And, and so that's why not knowing how much to pay them is the concern.
- [34:41]
A
Well, I mean, I think doing a percentage would make sense.
- [34:43]
E
Percentage of profit.
- [34:45]
A
Yeah. Like a salesperson.
- [34:47]
D
Okay.
- [34:47]
A
And so you can buy or build that. Right. So you buy it as. I would just go to many micro influencers who are already like on Amazon hawking stuff and be like, well, they already do live streams and they already do sell shit. And I bet I could teach them to do this for me. That is a buy version because you already know it's already proven. You're just saying, hey, do it under my umbrella. The build version is that you have to kiss a lot more toads and try and look for who has already built in a bunch of soft skills, and then you can hire for the smallest skill deficiency that you know how to train.
- [35:20]
E
Okay, so Amazon affiliates.
- [35:22]
A
Well, you could do either, but like, yeah, I mean, obviously this is me a lower risk thing. And then you just have to have some agreement that they're going to only sell for you for X period of time.
- [35:28]
E
Like a contract?
- [35:29]
A
Yeah, like a contract.
- [35:30]
E
Thank you.
- [35:31]
A
Yes, thank you. But I would. But big picture, because I want to make sure that you're good. The indeed warehouse stuff that's just like commoditized. I mean, you have a warehouse, maybe you have to have it for your business. But like, I don't see that as like, that's not a core differentiator. You might have. You're not different because you have a warehouse behind you. That's not special. So the roles that you have there, it's like they need to be like, have a pulse. Have a good leader there. Let them just deal with it. Your star factor is going to be your ability to train people to sell. And so that's like, where is your. What is. What is the true pinpoint of where the most value gets created for you as the founder, the entrepreneur, is that you need to be able to take somebody and teach them to sell.
- [36:11]
E
Yeah, my.
- [36:13]
A
And you have to break it down in terms of the most concrete language you possibly can. And so think of everything purely in terms of behavior and do not use any amorphous words. So it's like, I need you to have higher energy. That means nothing. I need you to raise your voice. I need you to talk faster. I need you to have your shoulders back. You have to describe things that people can see, and then other people describe them as having high energy, having charisma, having confidence. And so if you want to teach someone to present, you have to tell them what to do with their body and their voice. And it will be far faster for you. And what you'll find is the training lab. The reason it takes so long for people to train or they can, where they can't train salespeople or presentation people is because they literally do not use words that other people understand. Like, this is the problem. This is why most companies cannot teach people to do shit, because they say, have more charisma. And then the person listens and is like, I'll translate that into What I think charisma means, which who fucking knows what they think it means, right? And then we're just playing this telephone game where no one agreed on what are the behaviors I want you to do that will compress the amount of time that it'll take you to get someone up to speed. And two, long term, if you can develop the sales training, then you can have a stable of stallions that are on 24, 7 for you working in your barn. So that I don't know why it's animals now, but let's go with it.
- [37:32]
E
So that's actually. That brings up a good point. So I have. So my girl, like I said, she's my house cleaner, shows up at my door one day. She's like, hey, I want to be you. And she's like, I'm a copy and paste of you. And she became me.
- [37:48]
A
Yeah.
- [37:49]
E
Now there's a little bit like a little bit of a. How can I. Because obviously I had to learn the care part like from Laila. So I learned the care part and now I have it. But then I've seen her. I mean I've seen situations kind of like not go the way they should because she's a copy and paste of me from yesterday.
- [38:12]
A
Uh huh.
- [38:13]
E
So I'm starting to see those. What's the problem of human?
- [38:18]
A
Would you put her in front of the camera, have her sell and get her out of the building if like, if she can sell?
- [38:24]
E
Yeah.
- [38:24]
A
So let her sell. Don't have her manage people, have her sell.
- [38:27]
E
Got it. Understood. Thank you.
- [38:30]
A
This is good talk. Yeah. Real quick, I have a gift for you. This is the $100 million scaling roadmap. It's something that my team and I put 200 plus hours into building and breaking the stages of scaling into 10 steps. All right. And so what we did is we broke, broke down everything that got us, basically got us stuck and what we did to break free at each level of the business. And if you'd like to know what product marketing, sales, customer service, it recruiting, human resources and finance look like at the stage that you're currently at, this is a free gift. So all you have to do is go to acquisition.com roadmap. You can plug in your business information. And if you want our help, you want my help to help you break through whatever level of scaling you're at, this is not a promise. I'm just saying I'd love to help. On the thank you page, you can book a call. Every month we have a workshop out here at my headquarters. You actually talk to my real team that does. Does our marketing, does our emails, does our ads, does our copy, does our does our, does our sales, does our finance, does our recruiting. The real people are doing this at a very high level, and what's really cool about that is that they can typically find and spot what the constraints are in a business like that. And so it's one of the most valuable things that I could possibly do. Obviously, you know, space is limited based on our actual headquarters, but if that's interesting on the thank you page, you can book. No pressure. This is a gift. Either way, it's absolutely free.
- [39:38]
C
It.