LegalZoom Co-Founder Eddie Hartman Explains Why 72% of Businesses Fail

Summary

Podcast Summary: The Level Up Podcast w/ Paul Alex
Episode: LegalZoom Co-Founder Eddie Hartman Explains Why 72% of Businesses Fail
Host: Paul Alex Espinoza
Guest: Eddie Hartman (Co-Founder, LegalZoom)
Release Date: December 20, 2025

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Main Theme / Purpose

This episode dives deep into why such a high percentage (72%) of businesses fail, with LegalZoom co-founder Eddie Hartman unpacking the real-world lessons behind sustainable business growth, creating and measuring value, retention over churn, and the mindset shifts required for entrepreneurial success. Geared toward beginners and seasoned entrepreneurs alike, the conversation explores the strategies that drive companies from fragile startups to scalable, enduring brands.

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Key Discussion Points & Insights

1. The Value Equation: Why Most Businesses Fail (02:52–07:20)

• Reason for Business Failure:
  Most startups fail because they misunderstand value—they conflate price with value and fail to communicate the full benefit of their offerings.
• Measuring Value, Not Just Price:
  Eddie explains: "The amount of money that you're willing to pay for [something] is a direct correlation to what you think you're going to get in terms of value. Price isn't really a thing. Value is a thing. Price is what we use to try to measure that thing." (03:21)
• Book Reference:
  Insights from “Monetizing Innovation”—start a business by figuring out what people are actually willing to pay for; that’s the best indicator of value.

2. Creating & Communicating Perceived Value (05:20–08:30)

• Move Beyond Product Features:
  Eddie uses the muffin example: don’t just ask “Do you like this $5 muffin?”, instead frame it as, “This is an organic, wild blueberry muffin from an award-winning recipe…”—showcase unique selling points and the deeper value.
• Paul’s Podcast Example:
  Paul frames The Level Up Podcast as more than just information—it's a concentrated tool for mindset, growth, and mental evolution.

3. Avoiding the “Single Engine” Trap (09:19–14:23)

• What is the Single Engine Strategy?
  Many entrepreneurs lean into the one thing they're good at (sales, community, product), building a company on that single strength at the expense of balanced growth.
• The Danger:
  Eventually, this single focus stalls out—acquisition without retention, premium product without enough customer base, or fanatic following without scaling revenue leads to failure.
  (“You need more than one engine, Paul. If you don’t want to stall, you gotta get wallet share and market share. You can’t do just one.” – Eddie Hartman, 14:03)
• Becoming a Profitable Growth Architect:
  Fuel growth with a balanced approach: expanding both reach (market share) and profit per customer (wallet share).

4. LegalZoom’s Journey: Finding Product/Market Fit (17:49–23:32)

• Key to Early Success:
  • LegalZoom founders listened to frustrated would-be customers—understood pain points and unmet needs.
  • “We took a hard look at what people wish they could get in terms of legal services… being able to connect with what people valued by finding out what they wanted to pay for was incredibly important.” (18:20)
• What They’d Do Differently:
  • Should have paid more attention to how customers wanted to be charged; moving from transactions to relationships (e.g., subscription model for ongoing legal needs) tripled company value.
  • “How you charge is more important than how much you charge.” (21:45)

5. Reducing and Preventing Churn (Customer Retention) (23:32–34:00)

• Eddie’s Philosophy:
  “I feel the same way about churn as my mother-in-law feels about slugs: I hate churn.” (23:38)
• Churn Framework:
  • When a customer churns, something shifted in the money-value equation—either they ran out of money, or they lost sight of the value.
  • “If you wait until somebody picks up the phone and says, 'I'm canceling,' you are way too late.” (27:09)
• Best Practices:
  • Ask for customers’ goals early and resurface their progress regularly.
  • Use “lookalike” audiences: recruit customers who resemble your longest-lasting, most engaged users—focus on sourcing the right-fit clients from the beginning.
  • “Recruit only people who look like this person [who stays]. Right. And that's going to give you a huge advantage.” (31:03)

6. Sales & Negotiation Without Pushiness (34:27–40:00)

• Negotiation Mindset:
  Prepare by anticipating objections; never give away discounts unconditionally.
  • “If you give someone a 25% discount immediately, they’ll doubt your price’s legitimacy and, by extension, your value.” (34:48)
• Give-and-Get Rule:
  • If granting a concession (discount, features), always ask for something in return (longer contract, testimonial, etc.)
  • “Exchanges make sense to people. You giving people something for free makes no sense. If it's free, then where was the value?” (39:04)

7. Principles for Scaling Successfully (40:22–43:32)

• Evolve as You Grow:
  What worked in the startup phase (single product, small team) won’t take you into scale. Evaluate and adapt as business context, offerings, and customer needs shift.
  • “The minute you have two offerings, people compare. By doing so, they become aware of the things that you’re offering which they otherwise might have missed. And remember, awareness—it’s that perception of value that unlocks willingness to pay.” (42:00)

8. Entrepreneurial Commitment & Sacrifice (43:46–50:27)

• Total Commitment Needed:
  Eddie’s litmus test: Would you borrow money from your own mom and put it into the business? If you’re not “all in,” you’ll quit at the hardest moments.
  • “If you do not super double down and over commit, there will be a day where there’s a hard choice and you’ll say, ah, you know, and that will be the slow erosion of your dream.” (45:05)
• Personal Cost:
  Both Paul and Eddie discuss lost relationships, missed time, and “giving up everything” to build their businesses.
  • “To get where I am… what it requires is a ruthless devotion to this one dream that you have…that is going to not leave room for some things you might otherwise have wanted.” (48:00)

9. The Power of Networks, Mentors, and the Team (50:27–51:48)

• Support System is Essential:
  Eddie credits mentors and co-founders for his success: “I would never, ever, ever have been able to get to where I am without them. … You need to be with your team. That’s going to help you level up. No other way to do it.” (50:53)

10. On Failure, Education, and Resilience (52:45–54:15)

• Failure as a Stepping Stone:
  “Everyone fails. … You know what [failed companies] were? It was an education. And without that, I would not have had the ladder that I stepped on to reach my next thing.” (53:33)

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Notable Quotes & Memorable Moments

• “Price isn’t really a thing. Value is a thing. Price is what we use to try to measure that thing.”
  — Eddie Hartman, 03:21

• "The one thing that everybody has in common that ever leaves you, ever, is that at one point they said yes... So I've made it a huge part of my professional life studying: how does that happen? How does a person go from yes to no?"
  — Eddie Hartman, 23:43

• "You need more than one engine, Paul. If you don't want to stall, you gotta get wallet share and market share. You can't do just one."
  — Eddie Hartman, 14:03

• "How you charge is more important than how much you charge."
  — Eddie Hartman, 21:45

• "If you wait until somebody picks up the phone and says, ‘I'm canceling,’ you are way too late.”
  — Eddie Hartman, 27:09

• "Give something, get something back. Even if you don't get it, ask for it—the other person will feel like you're more sincere and have more integrity."
  — Eddie Hartman, 39:14

• “You have to realize different people will look at what you offer and assign different value to it. As you grow… you have to evolve.”
  — Eddie Hartman, 41:47

• “Understand what you’re for. It’s 100% commit. It’s all in. It’s level up. Just like the name of this podcast, right? You’ve got to put it all in.”
  — Eddie Hartman, 45:47

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Timestamps for Key Segments

• 02:52 — Why 72% of businesses fail; the value equation
• 09:19 — The “single engine” trap and dangers of one-sided growth
• 17:49 — LegalZoom’s origin story; what worked and what Eddie would change
• 23:32 — Masterclass on churn and retention
• 34:27 — Negotiation: the give-and-get rule
• 40:22 — The importance of evolving your business as you scale
• 43:46 — Sacrifice, commitment, and the hard truths of entrepreneurship
• 50:27 — The value of mentors and supportive networks
• 52:45 — Embracing failure and resilience

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Guest Information & Resources

• Eddie Hartman’s new book: Scaling Innovation (sequel to Monetizing Innovation)
• Contact: LinkedIn, Twitter (links in episode description)

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Conclusion

This episode is a masterclass in sustainable entrepreneurship—from finding product/market fit, to avoiding common traps, maximizing customer relationships, negotiating confidently, and making the personal sacrifices that true success demands. Whether you’re just starting or looking to scale, the actionable frameworks and candid wisdom from both Paul and Eddie offer a clear, proven roadmap to beating the odds and leveling up.

Transcript

[A]

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[B]

We don't stop selling Weedle stop selling even when we obtain that client with the onboarding asking the clarifying questions. Negotiation actually scares a lot of new entrepreneurs. What would you say, Eddie? That's one rule that can help them close deals without feeling pushy.

[A]

Imagine that. They say, I'd like a 25% discount. And you say, done, 25% discount. Do they believe that your price was real? If they do not believe your price, they may question your value. If, on the other hand, you say, I can give you a discount if you are willing to do this, if you're willing to provide a testimonial for me. Exchanges make sense to people. If it's free, then where was it? Why didn't you want full frame? Was that price a real price in the first place? To avoid that, when you give something.

[B]

Get something back, I love how you framed it. I gotta share that with my sales team. All right, guys, welcome back to the Level podcast. This is Paul Alex, and I'm sitting down with Eddie Hartman, co founder of Legal Zoom. Guys, he's helped companies worth billions figure out how to price smarter, sell better, and grow faster. So on this episode, we're actually going to be breaking down what it really takes to build a business that not only scales, but states profitable. Eddie, how are you doing today, brother?

[A]

I'm so glad to be on with you, Paul. I really am.

[B]

Oh, yeah, we had a great conversation about baseball. Now, I know that you're a big fan. Not, not, not about the Giants, but the Mariners.

[A]

No, no. So the Giants are a great team, but they take it all the time. The Mariners are the only, the only franchise, Paul, to never have made it to the world. It's been 25 years since they legit, not as a wild card, made it to the postseason. Here they are on the precipice tonight going into a clutch game. We're going to see if they can take it and if they do you are going to make my wife's 102 year old grandmother the happiest, danciest. I'm going to see her dancing all around grandmother in Seattle because she will finally see her Mariners go to the show. She'd be so happy. So please send them your thoughts, send them your well wishes. I hope that they make it.

[B]

We'll do. Will do. Well, now that we're on the level up, you, you know, we're going to make sure that the Mariners level up as well and they make it through, right?

[A]

100%. Yeah, exactly. That's. Yeah, that's what it's all about. You know, we want to see everyone succeed. It's not baseball. Right. The problem is 72% of entrepreneurs, according to our study, even higher if you talk to the people at Google who also track this stuff, who try to start businesses, try to innovate, try to release something into the market, failure. And the reason they fail. And we've done a huge study this too, if you think about it, if you think about anything that you buy and if you could visualize something in your mind that you might buy, the amount of money that you're willing to pay for it is a direct correlation to what you think you're going to get in terms of value, right? You think about it. Price isn't really a thing. Value is a thing. Price is what we use to try to measure that thing. And I often tell people, if I asked you to weigh something, if I asked you to look at how much a cup of, you know, mug could hold or something like that, you may not be able to tell me exactly what the number is, but you've got a unit in mind. You've got a unit like pounds, ounces, something. If I said, tell me how much something delivers in terms of value, I think a lot of people would struggle. And my modest proposal is, it's dollars. Dollars is the yardstick, or pounds or euro, wherever you are, that is the yardstick for how you measure value. And if you think about it that way, money, a price tag is nothing more than a way that we measure value. So according to our first book that we publish, Monetizing Innovation, what we, what we showed in that book was, hey, look, first start off by saying, what are people willing to pay for? Because that shows you what people value.

[B]

Absolutely. No, and I love that. And I totally agree with you. Right. I'm a big believer in providing so much value, not only to my audience, but my clients, that over time, I mean, if you look at this podcast we haven't been on for that long, Eddie. We've only been on for a little bit over two years, but we're already ranked in top three in business for a reason. And it's because of the value that we provide, bringing special guests just like you that are able to provide us with this knowledge. Then I'm pretty sure you're going to change millions of lives after this interview, man.

[A]

Well, we hope to. We hope to you for sure. But I think, you know, when you're an entrepreneur or when you're running a business, you put so much on the line. You know, you're sacrificing your weekends, you're sacrificing your holidays, you're sacrificing your sleep. You're really sinking so much into it, and it's tragic and wasteful and wrong that so many businesses fail. Because there really are these things that you could do to ensure that you are going to come out on the side of victory. And the first thing you do is you got to say, hey, am I providing something of value? And the best indicator is, are people willing to pay for it? So I like to say, if you, if you start in a bakery and you say, hey, you know, do you like this muffin? Who's going to tell you no? Of course they like this muffin, right? Sure. The right question is, do you like this muffin at $5? If they say yes, and if you can produce that muffin for less than $5, now you've got a business. But then I'd say the next question, Paul, is, are you really showing them the value when you just say the word muffin? If you say instead, hey, I have got an organic wild gathered blueberry muffin from a James Beard award winning recipe that's been handed down in my family since 1821, what would you pay for that muffin? Right. That's fundamentally different than saying, would you pay $5 for a muffin? So I think the first thing that entrepreneurs and people who lead businesses don't really always think about is if money is a way that we measure value, you've got to make sure that people have that value in their mind. Because it's never real value, it's always perceived value. So how do you make sure that you're hitting that perceive. How do you think about it in the context of the Level up podcast? How do you ensure that people really perceive the value that you're bringing them?

[B]

Yeah, with the Level up podcast, I mean, I know who my avatar is. I know who my ideal client is and what exactly they're looking for because of not only the personal brand that I've built personally, but also what I stand for, what are my core values? So if I go ahead and I say, hey, you know, I'm going to start a podcast in entrepreneurship, but I don't want to just go ahead and just be like every other podcaster. I actually want to help people with the first thing that actually helps every single successful entrepreneur that I've met, including yourself, which is mindset. Right. And if we go ahead and talk about self help, we talk about changing your mindset before you go ahead and you level up into building that billion dollar business, I think it will change a lot of lives. So I think the, the perceived value behind the Level up is that, number one, we're a concise podcast. But then number two, I bring my own experience and my own ideas into play in collaboration with great entrepreneurs like yourself, and we bring that perceived value onto the show. And I think that's why people listen to the Level Up.

[A]

That's really well put. So you could say, hey, how much would you pay to subscribe to my podcast? Or you could say, hey, I've got a nutrient dense, super efficient podcast and it's going to increase your mindset and therefore give you better odds at succeeding at entrepreneurship, which you could do in a university course, or you could do with me for quite a bit less. You know, now you're expressing, hey, this is the job that my podcast is going to do for you, and people then perceive the full value and that really unlocks that willingness to pay.

[B]

Absolutely. So, Eddie, I've done a little bit of research on you and you've talked about a strategy that is called the single engine strategy.

[A]

Yeah, that's right.

[B]

Now, for my listeners listening right now, there's a lot of beginners out there. And what exactly is the single engine strategy? And why does it cost so many, so many businesses to stall out?

[A]

Yeah, no, great question. So the thing is, being an entrepreneur requires you to be a little bit crazy. You got to simultaneously say, I know that most of these things fail because if you don't think about the possibility of failure, you don't have that fear in you. You don't have that motivation to really put in the extra sweat, you know, that fanatic determination that you need to get through as an entrepreneur. You don't have that if you don't realize the odds are long and it's risky what you're doing. But part of your mind also has to be thinking, yeah, but not me. I am going to win, I'm going to succeed, right? So you have to be a little crazy. That self determination, that like really belief in who you are, which again has to border, you know, almost on the insane, gets you through, but it also turns into this trap, the single engine trap. It basically goes like this. Most, most of us and I think it's just, no, it's just human, right? We lean into what we do well. If you're really good at running, you like sports that involve running. If you're really good at catching, you're going to involve, you know, ball sports, whatever. I think that all of us lean into the things that we do well and that's natural. And if you combine that with deep belief in yourself, you're going to lean into the one thing that helps your company grow that you're good at. Now, for some people that is like, hey, you know what I'm going to do? I'm going to knock down doors, I'm going to expand the business, I'm going to make sales. That's how I'm going to run my business. For some people it's, hey, you know what I'm great at doing? I'm passionate about building a community. And I will answer every single response to my post. I'll sit there at midnight, 2:00am, you know, debating with people, talking with people, because I want a fanatical, devoted following. And yet other people are like, you know what I am incredible at product. I'm going to create something that is premier in the market, premium and I'm going to charge for it, right? So, and I think we all know these archetypes. We have the people who are like, they're born salesmen and they're out there, they're on stage at TechCrunch Disrupt and they're saying, I am going to just burst through walls like the, the, the Jello mascot, right? I'm just going to crash through and I am going, the Kool Aid, the Kool Aid. And I'm going to grab as much land as I can. And then you have other people who say, no, I'm going to build a devoted following of people who love me. And they're going to, you know, it's going to be more like a religion than a product, right? People are going to be crazy about what I have. And then other people say, well, I'm going to create a premium product and I'm going to charge for it because it's going to be amazing. Better than anything in the market. Right. The problem is again, if you have that crazy fanatical self belief and if you also tend to lean into the thing that you do well, the next thing you know, your whole company is built around that single engine.

[B]

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[A]

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[B]

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[A]

You are only thinking about sales and how can I acquire new people. Acquire, acquire, acquire, acquire, acquire. And the next thing you know you stalled out. It's more expensive because we have that diminishing returns. You have all the early adopters and now you're trying to reach the next tranche and it's more expensive and you didn't expect that. And it's harder. And what did you not do? Because you were focused on acquiring, you didn't really charge them very much. You discounted heavily. You gave away free stuff. Of course you did. Because you didn't want to hear, no, you wanted to acquire and that's the problem. Or you're that person who said, I'm going to create a great product and I'm going to charge a lot for it because it's going to be super premium. Fantastic. But then one day, somebody creates a knockoff version of what you're doing and they're acquiring, acquiring, acquiring. They eat your lunch. The problem is people get stuck in this one engine mindset. They do one thing super well and they lean into it. They need more than one engine, Paul. If you don't want to stall, you got to get wallet share and market share. You can't do just one. This is where companies fail. We have examples in the book. We work shipped. You know, we have a lot of examples of companies because we research thousands where the thing that brought them down and cost them not just all their investors money, but I mean, the confidence and belief of the people who followed them. You know, think about how much people sacrifice when they're starting something to see all that go away just because you believed in yourself and you leaned into one thing and you didn't think, hey, you know what, I need to get out of my comfort zone and go after wallet share and market share together. So that's what we teach in the book. We give a strategy for doing that. And you know, the introduction is written by Bill Gurley. I don't know if you know Bill Gurley, but you know, major investor behind a lot of companies, including Uber. If you ask him, he'll explain. That is the way that you become what we call a profitable growth architect. Somebody who thinks through and plans for that future strategy as opposed to just relying on their one strength. And Paul, if I could say one more thing about this. The reason it's so deadly like quicksand in the early days, it will seem successful. You know, you lean into creating that crazy devoted following. It's how you raise money. Because you say, look, you know, the one number I need to grow is Net promoter. Look at my Net Promoter score. People love me. Look at this core of followers. Or you say, hey, you know what? Look at how fast my listeners and subscribers are growing, right? Or look at how rapidly I'm acquiring new customers. It's insane. And what People don't realize is, yeah, but you're acquiring them at such a discount or you're giving away so much free stuff as wework did that this does not stack up to a sustainable business. In the early days, it seems like exactly what you should be doing. And it fits with this idea that you believe with you. You know, believe in yourself. But believe me, you got to get outside of that comfort zone. You got to look at how to become a profitable growth architect, bringing together wallet share and market share. And that's really what the book is about. It's about a roadmap to doing that.

[B]

I love that, man. And I know you lead by example as well, so I want to go ahead and talk about the early days of legal zoom with you.

[A]

Sure.

[B]

So, Eddie, what would you say? What was one decision that helped it go from actual being a startup when you started out to a household name?

[A]

Yeah. Can I give you one thing we did right and one thing we. We. We wish we had done differently?

[B]

Yeah, of course, man. Lead by example.

[A]

Yeah. So the first thing. First thing we did is we talked to a lot of people who were in a situation where they're a little bit pissed off at their options, so we took a lot of care. Remember, I said at the beginning, ask people what they'd be willing to pay for. And we did that. So we talked to people, what are the legal services that you cannot get and that you wish you could get? And it's tragic, I'll admit. My co founders are two lawyers, Brian Lee and Brian Liu. And by the way, they're both amazing human beings if you ever get to meet either of them. They're both. Honestly, I could not have gotten luckier in terms of my sort of brothers who we started the company together. And, you know, Brian Lee's got Arena Club now. He is crushing it. Brian Lew is doing amazing stuff, but the three of us, we got started. I was the non lawyer. They were both lawyers. We're all three lawyers now. But we took a hard look at what people wish that they could get in terms of legal services, and it is tragic. In the early days, they had me go talk to a woman who. A single mom. She didn't start out a single mom. Her husband left her, and he left her because he just couldn't take it anymore. She was dying of cancer, and she had little kids, and money had run out, and she could not afford a will from a lawyer, and she could barely leave her apartment in Studio City. And I'll never forget going to her to get her to sign that will and those documents, all she wanted to do was ensure that her kids would be protected and couldn't get a lawyer, couldn't afford it, you know, so being able to connect with what people valued by finding out what they wanted to pay for was incredibly important in the early days. And that helped us say, ah, okay, I get it. They need, you know, living will, which is essentially a healthcare directive. So if you're incapacitated, you can't say whether or not you want life support cut off. Have that in a piece of paper, have a will in a piece of paper, have. But beyond that, you've got a great idea. A lot of people were saying, I would pay money to have my idea protected because I want to do a T shirt, or I think that this is something I could get a patent on. And we saw, okay, let's follow that. Follow the money, follow what people want to pay for. And it led to an explosion of interest. Do you know, when I left my employment at LegalZoom, we were doing more trademarks by January 7th, by the first week of the year, than the largest law firm in America does in the entire year. Because we had just found that vein of demand. People wanted it, wanted it, wanted it. The thing I wish we'd done, I wish we'd said, yeah, but really, how much would people pay for this and how do they want to buy it? It turns out that how you charge is more important than how much you charge. And what we discovered was people did not want to just buy a will and then leave, which I thought they did. I thought it was like a chore, you know, I thought it was like taking out the trash. Your. Your wife says, we're about to go on a big vacation. I'm worried. Let's get a will. You've said you were going to do this forever. Finally, let's get a will, you know, so you get one legalzoom, provide that service. And I figured they never wanted to hear us from us again. And it turns out that's not the case. What people actually wanted to pay for was an ongoing relationship. So that if something changed, you know, their daughter turns 18, now what do we do? Or we, we sell our house, we buy a new house. What now what do we do? You know? So discovering that actually people wanted to pay in a fundamentally different way, they wanted a different relationship, was eye opening and explosive. It tripled the value of the company when we made that change in how we charged. So the one thing we did right, we found out what people wanted to pay for and kind of were desperate to find something that would provide these legal services for them at a rate that they could afford. But what I wish we did was I wish we had looked deeper at really how do people want to be charged? Because I think if we found that, we would have realized much earlier what they wanted was a relationship and not just a transaction.

[B]

Wow, that's. That's, that's powerful, man. And it seems like you know how to provide massive value, especially going ahead and taking LegalZoom from a startup to where it's at now. Now, what type of advice would you tell beginners or a company right now with stopping Churn before he even starts? What would you say?

[A]

Yeah. Oh, man, you found my favorite. You found my. My catnip. I hate. Okay, I've got a mother in law. I love my mother in law. Not everybody loves their mother in law. I love my mother in law. She is awesome. And she has a garden. And that is her, her big thing, right, is her garden. And she hates slugs. Like, if she could, if she could eliminate all the slugs in the world, I, you know, she'd pay any amount of money to just get rid of all of them. I feel the same way about Churn. I hate Churn, you know, And I think it's because we took all of LegalZoom. We turned it, like I said, from transaction to relationship. And when you do that, you hate Churn. And it's personal on a level, right? It's like, don't you love me anymore? I like to say the one. Come on. I like to say the one thing that everybody has in common that ever leaves you, ever, is that at one point they said yes, right? They can't leave you if at one point they hadn't said yes. And so I've made it a huge part of my professional life studying how does that happen? How does a person go from yes to no? I want to go. Basically, if we go back to what I was saying earlier. You say yes to a person in a. Okay. You say yes to a person in a commercial transaction if you feel that the value on offer and the money being asked are roughly the same. Because money is a way that we measure value, right? So the first thing you need to ask is, was it the money or was it the value which went wrong? And the next thing you need to ask is, was it me or was it you? So, for example, it's me. I'm the customer and it's money. I'm out of money. You know, I thought I was going to be able to afford this, but now I'm not, frankly. If those customers are churning, you need to ask, do I try to stop them, or would that be good money after bad? If they genuinely can't pay their bills and this allows you to redirect promotions and money to people who actually can pay their bills. If, on the other hand, it's, let's say it's not money, but it's value, and it's you, it's you, Paul. It's the provider of the, of the service, right? And they're saying, I just don't see the value. There are other podcasts that give me much more in terms of a mindset upgrade and it's, you know, super efficient, then you really need to ask, do they see the full value? Am I expressing it properly? I cannot tell you how many times I've interviewed customers who are leaving, and I say, you know, why are you leaving? They say, well, other people provide this and they provide that. And I realize they're talking about things my client also provides, but my client didn't make enough noise about it, you know, so if you can figure out where they fit in that grid, that's really simple. Grid, money, value, me or them, right? Then you can figure out, how do you stop churn. But the best way to do it, if you wait until somebody picks up the phone and says, I'm canceling, you are way too late. It's like trying to save a tooth when you're at the point where the tooth hurts so much that you know, come on, you should have taken better care of your teeth, right? So what you have to do is from the moment that they say, yes, that honeymoon moment, you need to ask them about their goals, what's the value that they're looking for? What do they want to get from you? And then you need to remind them that they're getting it. If you can, you're in too large a, a customer base. But for other people, if you can set appointments with them to talk about how much value are you getting? How can I give you more? If you can invest in creating a risk score to tell you, these are the customers that might leave, and long before they pick up the phone, try to give them a little bit more love and attention. But honestly, the best thing that you can do, okay, so what we said was people churn because something has fallen off in terms of that money to value equation. It's either you or it's them, right? Because they Said yes once. So something changed. Find out what that is. And now you have your strategy for how to talk to them. Second thing we said was don't wait for them to pick up the phone. That's too late. You know, that's too late. You can't save the relay. I mean, you can and people do, but it's expensive. They've already found somewhere else to go at that point. Talk to them earlier, de risk them. But I will tell you the very single best thing that you can do, the single best trick for retention is the following. I want to give you an analogy here, Paul. You have to. You're in Puerto Rico today and you are nominated and designated by the government of Puerto Rico to organize that country's 10k race this year. Okay? You get compensated based on people crossing the 9k line, right. If they get across the 9k line, then you get paid. Okay? You look at people in that first kilometer who are running and you, you lose 30% of them. Okay? Turned out maybe they shouldn't have been running in the first place. They are not in good shape. Some people came with no shoes. They have, you know, it's hot. They don't have any water with them. Right. They're, they're. But by the second kilometer, hopefully 30% didn't fall off. And by the third kilometer, we don't lose another. Hey, by the time that we're at the eighth kilometer, if 30% of your runners fell out, that's a very strange situation. There'd have to be something crazy like a steep hill or a shark pit or something. Why? Because whoever makes it to the 8th kilometer, they're in pretty good shape. They made it 8 kilometers, probably make it the 9th, probably make it to the full race. Right? We don't expect to see the same drop off late in the race that we do early in the race. Right? So the thing is this.

[B]

What if I told you that many of the rules that you've been told.

[A]

About money aren't actually true?

[B]

On this Time is Different, we're hosting long form conversations that challenge the consensus thinking around markets, the economy, and your money more broadly. Hi, I'm Malcolm Etheridge. I'm Ricky Mulvey. And on this Time is Different, we'll make sense of this strange new economy. We'll explore the stock market, its alternatives, and hear from investors, writers, those who think a little differently to educate and entertain you. Check out this Time is Different. Wherever you find your podcasts.

[A]

Churn becomes lower and lower with each passing renewal, with each passing Moment of tenure. Right. The thing to do, then why not look at a cohort that looks a lot like the people who made it to the 8th kilometer and recruit runners who look like that. Maybe the problem was that you got a lot of people who were out of shape and didn't have shoes and didn't have a water bottle. Maybe instead, even if it costs you a little bit more, find people who look like the people who made it to the eighth kilometer, and then you're almost certain that they're going to make it to the ninth kilometer. Now, that may say, seem really obvious, but you'd be astonished how many people don't do that. And instead, essentially, they look at this overweight group of people who are. I shouldn't say overweight people who are really out of shape. Right. One way or another. And what do they do? They say, oh, you know what we're going to do? We're going to try to throw water bottles at them or we're going to try to, you know, tie their shoes tighter or something like that. And I'm saying, instead of doing all that, look at the people who almost made it and just recruit people like that. You can create a lookalike audience who look like people who've stayed with you for six months, a year, two years. Take that model and recruit people like that. And then you will lose far fewer because again, if they made it to the eighth kilometer, you know, pretty much they're going to make it to the ninth. Find those people, even if you have to pay a little bit more. By the way, marketing today is so competitive. Your competitors aren't doing this, so they're going to overpay to recruit. You know, that guy who's been on the couch the whole year and really should not be trying to attempt a 10K. And you will be smarter than that. You will say, no, no, no. I want to recruit only people who look like this person. Right. And that's going to give you a huge advantage. You're going to discover that you can acquire for a lower rate if you think of it as a fraction of how much you'll make over the lifetime of your relationship with that subscriber or customer, whatever it might be.

[B]

I love that. I love that. So you're saying to go ahead and refine who your avatar is.

[A]

Yes.

[B]

As far as in your client base.

[A]

Yes.

[B]

And companies should be looking out for that when they want to go ahead and then lower or stop, churn. So to focus on basically, who are your. You would say your longing Lasting clients.

[A]

That's right. That's right. Create a lookalike model. Go after them. Go after that avatar. So again, Churn is always with somebody who said yes to you at one point. Your first step is to figure out how did they go from yes to no. And it's always a question of money and value. And then you just have to ask, is it, is it me or is it them? Next thing you need to do, instead of focusing on the moment that they pick up the phone to cancel, go earlier. Try to encourage them in the journey during the onboarding. Find out, you know, what are their goals, what are they hoping to get, and then continue to reinforce that you're giving that to them, that you're delivering that value. As you add more features or power, make sure they know about it. You know, don't hide your light under a bushel. Make sure people know what's going on. And best of all, best of all, start even earlier than the moment that they said yes. Start by recruiting that avatar. Recruit people who look like they can make it to the end of the race. Recruit athletes. Going to be so low, it'll be like a rumor, you know?

[B]

Oh, yeah.

[A]

Oh, yeah.

[B]

I usually call that being a sniper, man, going ahead and just knowing exactly who you want to attract for your offer. So part of what you had just said, Eddie, is really great because it reinforces that we don't stop selling. The mindset of we don't stop selling even when we obtain that client.

[A]

Right.

[B]

With the onboarding, asking the clarifying questions, going ahead and actually trying to see what's going to keep them to stay using our product or our service. So let's pivot towards more sales negotiations. Okay, so negotiation actually scares a lot of new entrepreneurs. You and I know this. So what would you say, Eddie, that's one give and get rule that can help them close deals without feeling pushy.

[A]

That's such a good question. Yeah, I mean, look, for better, for worse, we're all negotiators. Unless you have a product that just sells itself, we're all negotiators when we're. And I'd say even if you were, you know, even if you did, you should still think about, you know, what are you presenting in the website or whatever that's doing the selling for you where you get enough back. But what we're talking about now is a sales conversation or we're talking about a negotiation. And we negotiate all the time. I think the first thing is you got to do a little prep. If it's a serious negotiation. Like don't go in cold, don't cheat yourself. You know, you only get so many opportunities in life. So like do some prep. You don't have to do crazy things. I have a, I know some people right now where they literally go into chat GPT and they build a chatgpt instance that is like the person they're going to negotiate with and they go back and forth with them. You know, like they do some role play, like, okay, that's great. I don't do that. That sounds awesome. But I, you know, you don't have to go that far, but do some prep. Think about what they are going to want, what they're going to push back on, what they're going to object to so that you're not caught off guard, so that you're not. The first time you hear that objection shouldn't be when you're in the negotiation. It should have been when you're playing it out with yourself or with a partner ahead of time. So you want to anticipate the objections. And then if they're really pushing and they're not saying yes, think about what you can offer them in terms of concessions and think about what you'd like back. Something like, well, look, I know you want a 25% discount. I can't do that. I can do a 15% discount and I can also give you enhanced training. But in order to get that, I will need you to commit to a two year deal or a three year deal. In other words, what you're doing is you're asking for something back. Then you can position this as in order to give you something exceptional. And I want to because I really want your business. I'm going to need to make this work not just for me, but for everyone else at my company, maybe my investors. If it's just you, maybe it's other people who are also in the business of acquiring new customers. I cannot break the rules. But what I can do is find an exception in the rules. If you can commit to a two year contract, then I can do this thing for you. But there's a hidden psychology underneath this, Paul, and it's just this. Imagine that they say I'd like a 25% discount and you say, done, 25% discount. Do they believe that your price was real or do they wonder, could they have gotten 35% from you, 50% from you? And then remember I said price and value are so closely interlinked, if they do not believe your price, they may question your Value. And we see this when I interview, because I do for my clients. I interview lapsed customers. Oftentimes I hear, well, I just asked for a 30% discount, and boom, I got one. And it made me wonder, like, what's really going on over there? If, on the other hand, you say, I can give you a 30% discount if you are willing to do this, if you're willing to provide a testimonial for me in my next edition of whatever, just second I got a cough. That changes the equation. Now, they're not going to say, I don't know what's going on over there. Now they're going to say, well, I did have to give them a testimonial, but I got 30% off in exchange. Exchanges make sense to people. You giving people something for free makes no sense. And I'll take it back again. If it's free, then where was the value? Why didn't you want full freight? Was that price a real price in the first place? To avoid that, when you give something, get something back, even if you don't get it, ask for it, the other person will feel like you're more sincere and you have more integrity.

[B]

That's amazing, amazing advice right there. And you don't come off pushy.

[A]

Right?

[B]

The last thing you want is just, you know, Tom, hey, you know, I can't do that. You got to pay full price. And people are like, oh, well, you know, you must not like me. You must not want my business enough. Right? But I love how you framed it as, yes, I can't do the 25. I could do the 15, but I will need a testimonial or something in return if you could go ahead and commit. I love that.

[A]

And you're not being pushy. You're just standing up for the value of the thing that you built and you put your sweat and time into. Right. You're not. You're simply saying, look, this is the fair price for it if you'd like to pay less because you can't afford it or whatever. I recognize that. So let's talk about how we can find a meeting of the minds. Could you do this for me? And then in exchange, I'd be happy to give you a discount or concession of other kinds.

[B]

Love that. Love that. I got to share that with my sales team.

[A]

Yeah.

[B]

Eddie, for the beginners that are going to be tuning into this interview, and they're listening and they're dreaming of building something that lasts, okay, what's the one principle of scaling you wish Everyone understood before they start.

[A]

Fundamentally, as your company evolves, okay, what got you through the startup days is not going to take you into the scale up days. Evolution, my friend, is the thing that I think everyone would benefit from. The principles are the same. You still need to think about value and price. But here's the thing. Value, subjective. I have four kids, I have a minivan. I love my minivan, I really do. My brother is a handsome man, very handsome man, and he is married now and he has one little tiny baby. I think you'd have to pay my brother to get behind the wheel of that minivan. The same minivan that I with my four children, cherish. So here's the thing. You have to realize different people will look at what you offer and assign different value to it. As you grow, as you're whatever it is that you're putting out there, as it becomes more mature, or if you had one product and now you have a portfolio of multiple products, or as your product becomes suitable for a different market, you have to evolve. You have to say, what is the new value that I'm delivering, What is the new jobs that this segment wants done and am I doing them for them? You need to potentially blow up your packaging and rethink it in such a way that it fits your new portfolio offerings and the people that you're hoping to reach. I like to say, and it's hokey, but at least people remember it. I say to compare is to become aware. If you only have one offering, maybe people see everything, maybe they don't. The minute you have two offerings, I think you probably experienced this yourself. We got a gold, we got a silver. Everyone's going to look at it and say, well, what's in the gold that's not in the silver? And by doing so, they become aware of the things that you're offering which they otherwise might have missed. And remember awareness. It's that perception of value that unlocks willingness to pay. So the one thing that durable scale ups do as they exit startup and have something to defend, yes, they think about retention. Yes, they think about negotiations. Yes, they think about giving and getting and everything else we talked about. What do they fundamentally do? They evolve. They hold onto their principles, they continue to think price value, but they realize the value equation has changed and they change with it.

[B]

Wow, that's amazing. Eddie, what would be one piece of advice that you would have told younger Eddie in the very beginning when you first started out in entrepreneurship? Brother.

[A]

Oh man. So I was at a like this fun little thing in D.C. and I met these young entrepreneurs and they were really so nice and both of them had become parents, you know, and there may have been a little bit of drinking involved. And one of them said to me, eddie, do you think you would have been a better entrepreneur if you hadn't been a parent? And I said, huh, I'll tell you what, I'm going to give it five years and I bet you're going to ask a different question. And that question will be, would you have been a better parent if you weren't an entrepreneur? Here's why this is a relevant question. Are you really willing to commit? Are you really willing to commit? Being an entrepreneur takes so much. If you're not willing to fully put in your sweat, your blood, and that of other people who believe in you, then maybe this isn't the right game. Here's a test I like to give people. If your mom is alive, and if your mom is not a billionaire, would you borrow more money from your mother than she can comfortably give you and put it into the company? Because if you're willing to do that, there's going to come a day where you'll have to make a decision or you'll have to put in extra time. And if you don't do it, you're going to have to pick up the phone and call your mom and say you're never getting that money back. And you, if you like your mom, if you love your mom, you will do almost anything not to have to pick up the phone and make that call. You will go the extra mile. You will do the incredibly hard thing. You will. You'll make tough choices. You'll fire a friend because they're just not cutting it. But if you do not do that, if you do not super double down and over commit, there will be a day where there's a hard choice and you'll say, ah, you know, and that will be the slow erosion of your dream. So the one thing I would have told Early Eddie is, understand what you're for. It's 100% commit. It's all in. It's level up. Just like the name of this podcast, right? You got to put it all in.

[B]

You have to go all in, man. And I had a similar question I'm gonna ask you. I had asked at one of my live events last month. And the question that I got asked, I actually got emotional when I, when I said this because it was, it was a long day and I just got off the phone with my wife and we're expecting my son coming here in the next month and a half now.

[A]

Awesome.

[B]

So I'm looking forward to fatherhood myself. But the question that I was asking, I'm going to ask you the same question, is what did you have to sacrifice to have the life that you have now? And that is the question I'm asking you, Eddie. What did you have to sacrifice in order to have the life that you built? Yeah.

[A]

Such a good question. And again, I think it's one that a lot of people don't ask themselves. A lot of time. A lot of time. You said you've only been doing this for two years. Here's a question. You've had different periods of your life. Does this feel like a normal two years to you or does it feel like. I mean, you put so much in. Right. Will you tell me?

[B]

Yeah, just the podcast alone. Two years, but full time entrepreneurship. I left law enforcement back in, right before 4th of July in 2021. And I'm going to tell you something, Eddie. It feels like so much has happened in the past, almost five years now. And I have changed, I would say so much every single year and developed and just life is just so different, not only for myself, but for everybody around me. Man. And I would tell you it was all worth it. But I do put an extreme amount of energy.

[A]

Time. Yeah.

[B]

And I do sacrifice quite a bit to do all of this.

[A]

Yeah. I've. I've lost contact with good friends and I don't think they've ever forgiven me for it, you know? Yeah, I have. There's a. There was a person who was important to me. Friend. I was her mentor and I pissed her off. I would say we're probably not friends now because I couldn't. I couldn't put time into anything else. You know, I had to just focus up. You know what it means? Yes. It's since 2021. And yes. Oh, the podcast. Only for two years. And I'm sure you remember the day that you started it clear as a bell, like it was yesterday. When you think about everything you've done. Oh, my gosh. I mean, the amount of time, the amount of mental energy, the amount of endurance it requires. It's significant. It's significant. So, yeah. To get where I am. To get where you are. What it requires is a ruthless devotion to this one dream that you have. And unfortunately, that is going to not leave room for some things you might otherwise really have wanted. Some friendships, some federal holidays. Forget that. There's some things you're going to have to do without if you're going to climb that hill. Oh, yeah. Oh, yeah.

[B]

I mean, my answer at that live event to that young entrepreneur, it was. And it came out, man, it just. It naturally just came out. For me, I said everything. I said I had to give up everything. Friends, family, co workers. I mean, I. I even tell some, you know, some of my clients, some mentees that I have, you know, I tell them, hey, what's, you know, what's going on in your business? Well, it's not growing as fast. I don't have the people around me that are negative. I tell them, sometimes you have to go ahead and just step back and really look at your environment. What you listen to, what you see on a daily basis really does an impact on you. And everybody listening on here, guys, that's the honest truth. If you think you haven't been able to grow in the past year or even today, if you need help, you got to see who really around you to help you. Right? Because your network is your net worth.

[A]

Right?

[B]

And, Eddie, would you say that the people around you that are around you now, would you actually go ahead and say that they've helped you get to where you're at or they've at least helped you level up? Is there a friend, a mentor that you could say, like, wow, like, ever since I met that person, my life has just completely changed.

[A]

Are you kidding? The people who are in my life have supported me. I would never, ever, ever have been able to get to where I am without them. Frank Monastair, Chaz Ramithel, Brian Lee, Brian Liu, Robert Shapiro. I mean, like, oh, my God, yeah, I'd be nothing without them. Nothing. And, you know, I think the amazing thing is some of them at least, would probably say the same about me and about some of the other people that, you know, like, I don't want. Listen, I never. Unlike you, I've never carried a sidearm, never carried a weapon to defend my country or my city or anything like that. I have incredible respect for people who do. So I don't want to make this analogy too much, but it does sometimes feel like you're going to battle. And of course, you can't do it alone. You need to be with your team. That's going to help you level up. No other way to do it.

[B]

No, absolutely, man. And trust me, no one has to carry a firearm to feel like they're going into battle. Entrepreneurship is actually, I will tell you this right now, entrepreneurship is actually a lot harder than what I used to face in law enforcement, I will tell you that much. Guys, entrepreneurship is one of the hardest things I've ever done in my life, and I've only been doing it full time for almost six years now. So at the end of the day, I have mad respect for anyone who is ultra successful when it comes to entrepreneurship, because not only do you have to put the amount of energy that you did, the time, the sacrifice, but you also need mental clarity and you need to have an extreme, extreme focus to build something like you've built, which is LegalZoom. And you've helped so many companies scale and grow as well. So, Eddie, where can my audience actually find you, brother?

[A]

Well, I'll tell you what, they can certainly find me through this new book, which is called Scaling Innovation. It's the sequel to our previous book, Monetizing Innovation. And, you know, if I could say one thing to your audience, Paul, of course, and from the heart. Look, like we said at the beginning of this thing, 72% of people fail, usually because they didn't take a hard look at what are people willing to pay for, as we just explained. So please read the books, because Monetizing Innovation, Scaling Innovation, it will take that 72% way, way, way down. But the next thing I want to say is, remember, even the greats fail. Even the greats fail. You, all of them. Abraham Lincoln through Tesla, any of them through Elon Musk. Everyone fails. If you feel like the thing that you put your time into is failing, is on the verge of failing, that is not a failure. You've just taken an important step. I failed. Of course, you never talk about it. You only talk about legal zoom, that kind of thing. But of course, I had companies that didn't work. Brian Lee had companies that didn't work. We've all had companies that didn't work. You know what they were. It was an education. And without that, I would not have had the ladder that I stepped on to reach my next thing. So, you know, again, if I could talk to all your listeners, I would say be proud of what you're doing. Understand it's super hard, requires total commitment, total passion. But just walking this road is in itself a kind of victory and gets you higher and higher the more you walk it.

[B]

Absolutely. And that's what we call the level up with Eddie Hartman. Guys, make sure to go ahead and check out his latest book, Scaling Innovation. Guys. And guys, if you guys need to go ahead and actually reach out to Eddie, Eddie, besides Scaling Innovation, where else can they find you? LinkedIn, Instagram, where else?

[A]

LinkedIn on. I'm not on Instagram, but I'm on LinkedIn. I'm on Twitter. Super easy to find me. And Paul, if I can give you the links or something like that, I'll certainly do that.

[B]

Yeah, of course. Guys, make sure to check out the descriptions. Guys. Now, guys, if you guys love this episode, make sure to share with a family, a friend that actually wants to go ahead and scale their company and grow their mindset. This was such a great interview with Eddie Hartman. Guys, leave a five star review on Spotify, Apple Podcasts and YouTube. Guys, we are scaling as a podcast in business top three. We've been very consistent in 2025 going into 2026. Now because of you guys, the people that listen to this, we want to thank you from the bottom of our hearts. Go Mariners.

[A]

Hey. Thank you.

[B]

Shout out. Shout out to them. I told you, man. I told you.

[A]

I told you.

[B]

Yes. Yes. Guys, that's it. That is our interview. We will catch you on the next one.