How To Build A Business That Runs Without You - Codie Sanchez - #1145

Hello friends, I'm bringing a brand new live show across the UK and Ireland this October. It's stories, psychology, audience Q&As, and whatever happens when thousands of overthinkers voluntarily leave the house and end up in the same room together. I'd love to see you there. The last two are completely sold out, so make sure that you snag tickets now using the link in the description or heading to chriswilliamson.live. Dublin's already sold out, loads of venues are limited, tickets are very limited, so get yours now. chriswilliamson.live. What's the biggest lie that people are told about getting rich? That it's actually about looking rich and not getting rich. I think especially for men these days, like, it's all in your face. On social media today, you can see just about everywhere what somebody's success level is, except if you were to pull up the balance sheet, it would be something very different. And so I think rich actually is two things. One, yes, do you have enough money, you know, divided by 0.4 to have the life that you want? And then two, it's do you actually like the life you want? I love Naval's. Which is, you know, basically the definition of success is do you have what you want out of life? The definition of happiness being the same. And I think we all kind of trauma bonded as business owners over the fact we should be miserable when we run our businesses. You don't look miserable. It's hard. But I don't think being rich or being an owner has to be miserable. And that's a great lie. I wonder how many people love the idea of working for themselves until they realize that they end up being trapped by their own business. Well, I mean, interestingly enough, 46% of businesses. Owners actually aren't profitable. So most business owners aren't profitable ever. 64% of business owners are profitable, but they make less than minimum wage in California, which is actually wild. So if you think about it, that the average business owner makes somewhere between 40 and 60 K per year. I think minimum wage, if you were to work full time in California, shakes out to about 75, $78,000 a year. So, yeah, I think a lot of. You don't need to take your job home with you. You're not stressing over whether or not you can make it. You're not stressing over whether or not you can make ends meet inside of the business. You're not paying yourself in order to front load the staff's wages for next month. Yeah. And, you know, and I get a lot of crap for talking about wanting to buy businesses instead, but it's mostly because it's really fucking hard to start one. And most of them fail. And sadly, the ones that do win, that means you paid for the right to one day eventually make some money for three to four years. And people don't think about that. And so if you actually have a business that makes money right now, you're in the top 10%. You know, if you have a business that makes money right now, you're in the top 10%. If you have a business that makes a million dollars a year, you're well above the top 1%, even though you're probably only taking home on 150K a year. And if you have a business that's a $10 million a year business, that's 0.01% of all businesses. So it's way harder than anybody thinks. Does that mean that very few people should start businesses or become business people? I think it means you got to know what you're getting into. You know, I think anybody who's trying to sell you that you can have everything you want inside of 30, 60 or 90 days. And you can do it with little or no money down and you can do it with no effort. It's not going to work out. The only time it works out is when you look at the math in most of these things. And I'm just a nerd. Like I look at the spreadsheets of buying a business and I say, what's the lowest default rate you could have? That's an SBA loan. 13% of those businesses fail per year. That's just public math. Then I look at startups, 90% of them fail within a five to 10 year period. So you basically have these like crazy two amounts of success rates. I think probably most people should go work in somebody else's business that's really successful first before you ever think about starting your own. You'd be much better off. It's interesting. The question, could anybody become a business owner? It's probably quite high with enough childhood trauma and caffeine and sleep deprivation and obsession. Probably anybody could. That doesn't mean that anybody should. And I saw this a lot when I was coming up doing nightlife stuff. Lots of people had the ability, but not the ability to do it. Not the capacity or the disposition maybe would be a better way to say it. Like you have all of the component parts of the talent, but what it does to you, what it requires from you in terms of a sacrifice, especially in the beginning, because for the most part, it's hardest in the beginning and the challenges get more complex and more difficult in some ways. But as you say, momentum is a hell of a drug and the habit of I'm a business person and I understand what time I get up and I understand how to switch off. If I can't, I can't. And so on and so forth. Those are skills that take a long time. And the Dunning-Kruger messy middle bit is where it really hurts. And most businesses fail, not just because of cash, but because the founder gives up. I mean, that's why venture capital loves two founders, sometimes even three, because the likelihood of you burning out in your business is actually higher than an employee burning out in their business. Most entrepreneurs just don't make it. But I mean, my flip side there is like, you can own part of a business for almost anybody pretty quickly. I think people overestimate how hard that is. Like, you must get thousands of applicants, right, for your business. And how often you're like, God, where are the competent people? Where are they? Aren't you thinking that a lot? Like, they don't work hard as much. This generation's not as tough. Every business owner I've ever met thinks that. So I think you can actually go inside somebody else's business, carve out a piece of equity in that business if you're super valuable, and then you're still a business owner. Like, we don't look at Sheryl Sandberg differently for that. We don't look at Balaji. We don't look at Andrew Navasian different because he was CTO. The guy's still worth hundreds of millions of dollars. So I think it's actually totally feasible, but people just don't think about it that way. What's that story about when you turned down Richard Branson? Well, you know, early on in my career in business, I was a terrible operator. And I had what I call the hero complex in business. Like, you have to survive. If you're not the savior in everything in your business, your business won't survive. And most entrepreneurs tell ourselves that because we're unemployable. And we do have a little bit of a God complex, and we have a little bit of trauma from whatever happened to us that put us into the masochism that is entrepreneurship. And so in my business, I was a huge Branson fan, and I still am. But it was because he got to live this crazy life while he built a business. Like, how many billionaires do you know go and, you know, travel in a hot air balloon across the world? I just thought that was really cool, and I like adventuring. So and then he invited me to his island. Now I don't go to billionaires' islands. You know, that's our own. I think you should bring them back. I don't know. So now I'd probably say, no, I guess. No, I would go. But I got invited, and I couldn't. I told myself that I didn't have time. If I left the business, it would fail. And I saw this activity list of, like, water biking, water bicycling, whatever that is, hanging out without your phone for multiple days. And there was just no way I could get away from my business for that. And, you know, since then, I have had a bunch of friends go. They've done business deals. They've met, you know, power players. They did all this stuff. They did all this stuff that is asymmetric to business being in spreadsheets. And I missed out on it because I told myself a total lie about building businesses, which is that the business is centered around you, and you are the most important part. And if you don't drive revenue, the business won't make revenue. And now that's not true at all. You told yourself that, didn't go and see Branson. Meanwhile, Branson's snorkeling and running billion-dollar businesses. Yeah, multiple. And I think at the time, this business was probably doing $5 million a year. You know, it was not a big business at all. And it was growing. And it was profitable. You know, there was no fire to put out. It was just a lie I told myself. How much responsibility is really just ego, do you think? That's an interesting question. I think when it comes to business building, we try to wrap up our identity so much in the thing that we call ourselves, CEO, founder, creator. And we don't realize that one day, your business will have a giant, gaping hole of failure in it. And you'll sit alone in the dark with no idea of what to do next, wondering why you ever started this thing, and really worried that it's going to fail. And it's going to fail because of you. We will all have that moment. And when that moment happens, if it's your entire identity, then what do you do? Then you're a failure because you couldn't figure out this one business issue. You know, Branson's had something like 60-plus businesses over his career. Multiple huge failures. And so how much of us wrapping our identity in one thing, is the thing that's holding us back? Probably a lot. And is that actually healthy for you at all? And what if actually the people who work for you are more competent than you think, and they might be better than you at something? But it's taken me, I don't know, 15 years to figure that out. Take me through the story arc of the typical founder, business owner, person, who they are, how they start, how they frame it, what that morphs into, the problems they face, and sort of what the path out is on the other side. What's the story that we've got here? Yeah. Well, I would say there's really, there's 12 types of owners. And the three most common owners or founders or entrepreneurs are what we call the closer, the ball hog, and the visionary. And we've run about 15,000 people through a survey to figure out what are the three most common and what are their strengths and weaknesses. And what's fascinating is the three most common all have a very similar story arc, which is I worked for somebody else. They wouldn't listen to me. I wanted to do it differently. Uh, they saw a different path for me. I didn't fit into the mold. And so I had to go create my own thing because I became relatively unemployable, or I was faster, better, stronger than the other guys. And so I went and did my own thing. And the founders typically have three characteristics. If you're a closer, they're really good at selling anything, right? You could probably sell ice to an Eskimo. You're like selling promotions. Then you're on Love Island selling yourself. Then you're here talking to an entrepreneur. higher generation. right? You probably are a closer. I'm not sure. That's like one of the most successful archetypes. We have lots of friends who are great salespeople. The second one is the founder, which is like you will something to existence like Newtonic that just hasn't existed before. You create a product that nobody else has had. And the third is the visionary. And the visionary sells dreams. They have, you know, if you want to succeed as a CEO, you have to sell a vision that's bigger than what your employees could see by themselves. You need to be able to raise them up. Otherwise, they don't need you. And so I think the arc for almost everybody is you're highly qualified, you're good, you're in business, you're outperforming other people, they're not listening to you, you go execute. The problem is all of that is about you. None of that is about you as a leader, as a builder of a real business, putting in systems and processes. That is actually usually for number twos and number threes. So you've got to learn that skill and I had to too. And you have to learn it a lot more when you're outside of an organization, you're creating your own. What are the component parts of those skills? Well, if I was going to break down what makes a good, like a great founder, what are the best founders have? One, they hate repeating themselves. Like how many times have you as a leader said, I swear to God, if I have to repeat this one more time, I'm going to lose it. That annoyance for repetition actually leads to systems. And systems are the only thing that allow you to scale. So you can be an incredible salesperson. If you're a salesperson, of one, you'll only get to, I've seen some businesses get to a few million in sales with one salesperson, but that's it. So one, you hate repetition. Two is you love one thing about your business more than anybody else, which is selling the client on exactly not the product, but the problem you're solving. And usually I take new tonic again. It would be like, yeah, I don't actually really know what's in the drink, but you're selling, Hey, maybe I want to be like Chris Williamson. Maybe I want to be like Chris Williamson. Maybe I want to be super productive. Like I have this brain frog, right? You have to be obsessed with this problem set. And I think the problem with a lot of young entrepreneurs today is they're like, I'm starting an AI services business. You're like, why are you obsessed with that? Can you not sleep for the want of it? If not, you shouldn't start it. And then the third thing they have to do is they have to be able to have other people believe that they might actually be able to follow through on the dream. And I think a lot of entrepreneurs fall down there. They'll say there aren't A players anywhere. Well, how many times have you wanted to be an A player? How many times have you wanted to go work for a C player? If you're an A player, you got to be a winner. If you want to attract winners. And that's really hard to look in the mirror and ask yourself, do you think is being indispensable, a compliment to founders? No. I mean, if you could take one thing as a founder to heart, it would be your revenue should have nothing to do with you. You actually, the more that you are the driver of your revenue, the less you have a business, the more you have a highly paid job. And, you know, I think about it like a, entrepreneur pyramid with three levels to the game, the bottom level of the pyramid, that's the entrepreneurs. This is like, uh, we all do it together, you know, but really I do everything. The next level is a manager, which is they do things kind of, but I micromanage and oversee them. And at the very top, it should actually be as a CEO. Uh, I do very few things and the team does everything else. It's also called the generalist to specialist curve. Like essentially move people from doing many things kind of well to having a few specialists on everything really well. Yeah. You say that most a dangerous addiction for a founder is being needed. I mean, it's true. I mean, I think in your business, there's nothing better than feeling like you can come in and save the day and make the money and do the clothes in your business, especially, I mean, we have a lot of entrepreneurs and founders who are, are men. That's like 95% of the companies that we have. And I see it a lot, with them. Uh, women typically want to be needed by their employees. Men want to be needed for the business. And so if the business needs them to close and grow revenue, then they feel really excited about it. And the thing that got them the ability to be a founder ends up becoming the reason they'll never succeed. You know, we have one founder that I, I adore and he's built a really big company and the business is quite big now. It's a nine figure business. And if that business fails, it will be one person's fault. And that is fucking him not get out of the way to hire people better than him. And I think a lot of times we get scared of hiring people better than us, because what does that mean for us as a founder? Do we have guilt? Do we have shame? Could they take over our position? Uh, it's kind of not normal. And like, that's it. I mean, you might be right that, um, lots of founders have access to a talent pool, which is better than them. I get the sense that finding people that are incredibly rarefied skillset. And I would guess more founders struggle to find the candidates and the staff than find them and have some existential fear about bringing them into their organization. What do you think? I think the fear is subconscious. And I think, and you know, so it's hard to know. I think the fear is subconscious, but the real problem is what Charlie Munger said, which is you or I are probably not good at enough at setting up incentives So the reason why somebody you're scared of somebody in your business being better than you is often because you don't know how to corral them as a force inside of your business. Because if you are really good at incentives, you could hire just about anybody and point them in the right direction and get out of their way. Okay. How does a business owner get the most out of their stuff? You nail the incentives. If you want to win, follow the incentives always. So first, like, they want to make money. One. Two, they want relevance. Three, they want to lead. They want a team and to not be a doer on top of it all the time. Four, they want not just relevance, but significance. Like, I'm higher than this person. I have a higher hierarchy or title than this person does. And five, they want work-life balance or freedom. And so those are like the five main levers we use in our business if we want to incentivize somebody. The biggest mistake you can make is you want to make money. You want to make money. You make early on as a founder is thinking that everybody's like you. I like money. So like, if I'm incentivizing me, you can insert Shemoff and his sweater. If it's me, you're going to give me a comp plan that just shows me I can make millions of dollars. I'm going to fucking run. If you show me a comp plan that gives me lots of work-life balance, Fridays off, foosball table, I don't give a shit. That's not interesting. But if you're in Austin, guess what's more important? The freedom than the money, actually, from the culture here. And so how you incentivize them, you've got to know your people. So we make all of them take a personality score. This comes from private equity. It's not that I'm smart. I stole all of this. And private equity makes every single employee take personality tests and then drives their incentive comp plan to what they do. Like, if you hire somebody who's balance and freedom based, but they're a genius at creative insight or engineering or product, that's a win. But if you put them on a comp plan that's only about money, you're going to lose and so are they. And so it's a dance. And I wish it was the same every single time. It's not. What are the most overlooked from those five? Or what are the ones that people. Probably significance and relevance. If you think about titles, there's a lot of people today that will say, you shouldn't care about titles. You know, don't have title creep. I don't know that that's always true. If somebody wants to have a high title and that's really important to them, you could pay somebody way less money. You could give them less time off, but you could give them a higher title. Okay. That's just a lever. We all know of people in our industry that use the title game to compensate for the salary game. Oh, a lot. Most founders actually put founder or entrepreneur or visionary, that one makes me want to die, like next to their name. But their business makes, you know, 30K a year. But that's important to them, that sort of significance. And then relevance is slightly different in that a lot of people, like my company, for instance. So we have a media company and an advisory business. And I would say like probably 15% of them really care about impact and relevance. Like they could have been in private equity. They were in private equity before, but they're like, God, I don't want to die, you know, on Wall Street doing deals. I want to feel like it meant something, what I did. So you could pay that guy less. In fact, often we do, but they could have more impact. And that might be a reason why they stay. 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Right now, you can get up to 35% off your first subscription and that 30-day money-back guarantee by going to the link in the description below or heading to livemomentus.com slash modernwisdom and using the code modernwisdom at checkout. That's L-I-V-E-M-O-M-E-N-T-O-U-S dot com slash modernwisdom and modernwisdom at checkout. What I'm interested in most, I think, is this transition from founder mode to owner mode over time. And, you know, I've seen this three times now in my life. life first running the nightclubs then running modern wisdom and now also running newtonic as well less so with newtonic i've been good with that but here's the problem that i think a lot of people face right founder initiative initially has to become sort of psychologically fused to the company like they are the company they work harder than everyone they know every customer they take every just checking in call and that intensity is what gets the company off the ground right that is the fuel and then at some point the rules reverse and to become an owner the founder has to dismantle that identity they've got this identity that's who they built themselves into and they have to tolerate other people doing things differently they've got to lose the dopamine of saving the day they have to let other employees become more important or make mistakes allow customers to form relationships with other people inside of their company that they don't anymore and then accept that the ultimate evidence of their success is that things can go perfectly well and that's what i've been doing for a long time and i've been doing perfectly well without them right like this is the arc but the problem is basically entrepreneurship rewards like narcissistic levels of self-belief in the beginning and then ownership punishes narcissistic levels of self-importance when you grow up how does an owner know when they have stopped being the hero and started being the bottleneck because everyone unless you buy the business and i guess you can leapfrog and maybe basically get yourself out of a little bit of the founder mode because i wasn't there at the very very beginning lots of people are going to found businesses many of them are going to fail some of them are going to succeed for the ones that want to not fail how do you coach people through relinquishing that control they've wrapped their existential sense of well-being their personality their psychic morphic resonance with the world is all all contorted around this this thing right i'm the guy i took every fucking call this podcast i did every fucking call i did every fucking call thousands and thousands and thousands of ad reads i signed every single invoice i made sure that every single guest was booked for 800 episodes with no assistance like scheduling researching booking things entitled thumbnail everything and now i need to relinquish all of this stuff how does a business owner know when to let go of being the hero because they become the bottleneck yeah well i mean first our our line at our company when we bring anybody on to advise them is uh being the hero is uh taking heroin so you you have an addiction it is to your business and if you continue to be the the hero that's a four-letter word at your company actually i think you need to flip the entire script this is super unpopular but of you know how people used to say you have to serve your employees well actually the best way to serve your employees is make sure you don't flame out miraculously and not be able to pay them and fail and so your employees actually have to serve you in some ways and they need to get on the on the board with that so that would be first realize that being the hero is actually heroin the second is i don't like to talk about it as founder versus owner mode i don't like to talk about it as founder versus owner mode because i don't like to talk about it as founder versus owner mode i don't like to talk about it as founder i say are you self-employed versus an owner self-employed is what 95 of businesses are you know most businesses don't have any employees and even the ones who do you have such micromanagement oversight on the business that you're addicted to slack your wife and your friends know it and you feel good every time you get the dopamine hit of a ping and so if that is you then the question is well what is the opposite of that and the only reason i can own a ton of businesses today is because i never want to be self-employed again it was miserable i mean it probably led to me not being able to get pregnant for so long and congratulations oh thank you um i think it led to stress of of you know feeling like for the last five years what if the business couldn't go on without me meanwhile it's growing faster than ever so if you say the difference between self-employed and owner is really two things one if you're self-employed that means that either the fulfillment of the product the sales of the product or the distribution of the product falls entirely in your hands if any one of those three falls entirely in your hands you're still self-employed we got to remove those first and then if you want to be an owner actually that means you have to have the number one things most business owners don't have which is transparency i do not believe you should hire great people and get the fuck out of their way i used to that's that's actually a disaster because they're never going to care totally as much as you about your business so you need to have a way to see under the hood and see a dashboard i think most of us are going to have a in an airplane without a cockpit without a cockpit and without a dashboard and so i think the way for you to move from founder mode and self-employed to owner mode would be what if you could see inside of your business the most important metrics every single day and you could see the two type of score cards that matter activity based which you can control so has my team reached out to all the people that they need to um has my team done a number of cold calls emails right so that's activity based and then outcome based are we hitting our revenue goals are we hitting our close goals is our conversion rate right is our churn down etc most people only measure the outcome based goals with very few predictions so it's hard for them to project out what the future might look like very few people measure activity and outcome and have forward-looking projections and so i think you'll know you're an owner when those three three things aren't completely reliant on you and you have a cockpit and a dashboard and you can actually see where the business is going this sounds really complex to build sounds like a big unwieldy huge fuck-off database and i'm tracking all of this stuff and like what are we going to have to get mckinsey in to build this for me that's a good question absolutely not your business should really run on two main oars in my mind i don't believe in nor stars because imagine you're like in a boat with your team and have you ever talked to the team and they feel like they're like chris i feel whiplashed in my business like one day you say revenue next day you're like where are our follower metrics like fuck our followers are down but our revenue is really up we're annoying we're annoying we're annoying we're annoying we're annoying we're annoying them too much with our ads right and so the team's like come on it's like you know you're like pulling a boat like this left right left right if you actually want to win in business you have to set expectations with your employees and you tell them hey imagine you're in a boat and you only have one oar what happens well you're going to fucking circle you can't go anywhere so we can't only focus on revenue that would be great if we could we have to focus on some top of funnel metric maybe that's followers leads etc and so most businesses have two metrics that you can run your entire business on and if you find those then your dashboard can actually be pretty chill takes a little work to figure out the two of them but most businesses and and they're not always revenue and followers it might be if you're an auto mechanic you might actually care about what is the average order value that every car has that comes through and you might care about car count how many cars come through in total and if you just nail those two things you'll know if your business is winning or losing and that should be it but most business owners are owners don't even know that that's outcome right the what about the other side because linking all of these together maybe okay so what are the determinant factors that decide how many cars come through well maybe it's outbound calls that we've been sending maybe it's the amount of money that we've spent on a home postal campaign maybe it's how good the sign twirler dude out on the street is well maybe but usually it's everything's Pareto's principle right so the 80-20 rule is almost everywhere most of us get overwhelmed because we try to do 552 things and then realize that like no Facebook ads typically and cold calls are going to drive most of my conversion and my leads so how we like to run scorecards is you have your two oars up top so now you know it's car count plus it's average order value so how much people give you each time they they pay then those go down to each of your teams and so every one of your teams if it's your sales team they're going to have two metrics and that's probably going to be leads and it's probably going to be conversion rate or something like that so you know you kind of think about it like a little drop down but there are only really seven parts or business units in every business from finance to ops to marketing to sales so that means like you're going to have 14 metrics but you're going to have a leader in charge of each one of them that actually is a really clean way to run a business and you'll be wrong sometimes and that's okay but at least you'll know at any given point there's two fucking things we care about at the company overall only two and everything number wise that you guys care about needs to roll up to those two and if it doesn't roll up to those two don't talk to me about it until we're hitting like a hundred million dollars in revenue because we don't have enough cash to do it and that makes it a lot easier at least from what we've seen from running businesses how much are you thinking about the introduction of ai at the moment in businesses because as far as i can see lots of people get very excited about it it's super super sexy there's this stat 76 percent of small businesses now use ai per goldman sachs 10 000 voices survey yet only 14 percent have it fully embedded in core operations and from the same study they said everyone's dabbling and almost nobody has actually rebuilt their operations around it i don't know if trusting ai to run a business is a good idea right now because it might be a dangerous place to leverage we don't know where that's going to go in future there's this claw to raise an entire company's database and all of its backups there's still an awful lot of concern talk to me about how you think about using ai in new small businesses yes you do i mean it would be a terrible idea to let ai run your entire business like it would be an absolutely awful idea one one i mean have you tried to have ai just write you something one-shotted it's the most ai slop i mean how much do you want to die every time from an employee you get a list of questions and it's it's not x it's y and it's same same same and it's rules of three right it's awful that is like the number one way to not make more money as an employee is to like one shot right into your boss um i don't know the data says that actually AI is not that important for most small businesses, which is super counter to the narrative. You know what's a lot more important? more important? Answering your fucking phone, responding to emails, answering text. Most small businesses respond on average 18 to 24 hours after they get a lead. And the crazy part is most small business owners will fight with me on that. And so, you know, if- Are they saying that that's too long or too short? Oh, we respond right away. We respond immediately. No, you don't. But they don't. And so if it's me and I'm choosing between AI and response time, it's response time all day. Like what if all you need? So they say that most small businesses, 80% of the reason why you win versus somebody else is that you just respond faster or you come up quicker, right? That's why point of sale is so important at the grocery store. That's why the first plumber who responds back to you is going to win. And yet we spend all this time AI optimizing from all these nerds on Twitter. Yeah, no. So I'm an absolute, for most small business owners, you need to earn the right to use AI by doing like standard business practices. And then you can play around with all this fancy stuff. Such a good point. You know, it makes me think about one of the best hacks that we realized when we started running business, which is pay invoices as quickly as possible. If you are, every business needs a graphic designer. You need some new stuff making for you. If you pay, the guy sends the final version of the flyer through and you've done a ton of amends. No, fuck it. I'm sorry, mate. It was a nightmare. I'm really, really glad that we got that. Thank you. Paid. That moment, that day, if you're the person- If you're the person that pays quickly, the next time that you need to go back to that graphic designer, they will remember, fuck, I didn't even need to chase him. Or if you're pushing them for the invoice, hey, hey, get it over now because I want to get it paid to fucking day. That, in my experience, has put us straight to the top of the list. Because even if we're just getting charged the same rate as everybody else, they know that we're easy to deal with. Yeah, cool. Maybe there's a little bit of pain in the, you know, you got to be a little bit charming on the back end. That's one. And here's the other one, which is, I guess, I don't know whether this, puts you in the realm of owner, but certainly gets your foot in the door in rooms that you shouldn't be in. And this was the way that most of the guys that I've worked with have ended up getting in with me. If you're good at something and you say to someone, I'm going to come and work for you. I'm a videographer. I want to work for you as this particular person. I'm going to come across and I'm going to work for you for 30 days. I'm just going to do it. I'm going to give you everything. In 30 days time, if you're as good as you say you are, they're not going to be able to let you go. They're going to have to, have to pay you and you can call it out. We do this with partners. I don't really talk about the way that I do deals on the show that much, but one of the ways that I've always done them is, Hey, I'm going to do probation period with you. I'll do 90 days or six months. And once that's done, I'm going to give you the deal of a lifetime. I'm going to give you way less than you should in six months time. I'm going to come to you with my handout and you're going to have to pay me and I'm going to make you pay, but I'm going to tell you that this is what's going to happen. I'm going to call out the game. And if I don't deliver, I've taken on all of the risk. And this is the way that we used to get deals back in the day. Between those two things, you're someone that has a skill that you think this person needs. If you can go to them and say, I'm going to do it for you because I care about what you do. And I'm going to show you that you need me. They can't not pay you at the end. If you're as good as you say you are, they can't not pay you. Same thing goes for if you're going to pitch somebody to go and give some sort of a service to their business. I think that I can do this thing. They don't want to let you go. And there's this weird, karmic, psychological debt that we have where you go, fuck, damn it. He put his money where his mouth was and he actually delivered what he said he did. So that's on both sides. If you're somebody that wants to get into the room, just work for free for 30 days. Or if you're trying to get a deal across the line, say, I'm going to give you a deal of a lifetime. And in 30, 60, 90, six months, whatever, I'm going to come in my handout and I'm going to make you pay for it, but you're going to want to. Or on the other side, if you're somebody that pays just pay the fucking thing straight away. Those, at least for me, have been step change business hacks that just keep on working. I can't believe they keep on working two decades later, but they do. Yeah. Well, I mean, that goes back to the law of reciprocity. Like why, when you go to the car dealership, do they give you a hot dog and a Coca-Cola, even though most of the time you don't buy a car? Because actually there is an innate human belief that if somebody gives us something, we've got to give them something in return. I owe you. Yeah. And the higher the value to what you give, the higher the. You know, belief that I have to give you something in return. I think the law of reciprocity is super underused in both sales and employment. We also have something, I think it's chapter seven in the book, which is all about pitch. And what I've realized is like, most people don't show enough proof. We talk about having a proof vault. Like there is nothing you can say to me now with how the internet is and the lack of trust that exists that would be stronger than you showing me right now live what this tastes like, showing me right now live what somebody looks like who just had it. So why so often do we yap so much and show so little? And I think if you want to get a job and you want to get paid really quickly, one of the best ways to do it, even if they don't want to work for 30 days, because people pillory for us and they'll say, it must be nice. You know, Chris and Cody, you're so rich. And so that's why you could do that. I don't think that's true. I did a bunch of free work when I was super poor, but I like people to show me in loom videos. I'm like, what's the point of an interview anymore? I mean, there's no point in submitting resumes. Like we get probably 2000 resumes for individual jobs that we have open across our companies. That's insane. So instead, I like when they show me and like, what would that mean? Well, let's say you're a salesperson. Show me what your calendar looks like. Just like pull up Google and be like, these are all the calls I have every day. Here's how I stack them. You know, show me the list of people that you reached out to. Show me your process and your CRM for how that works. You don't even have to do a project for me. Just show me how the fuck you work right now. Great. Most people can't do that. And then second would be, all right, now show me what you would do with what I got. And that would be like, give me a project. So most people that we hire have to do a project. We do it paid because I don't want to mess with getting yelled at, but something really tiny to show, yeah, yeah, I can watch me. Here's how I put together your 30 day sales process if I was going to do it. So I think if you don't sell enough right now in business, you don't have enough proof. You don't have enough show, don't tell. And you probably don't have enough show me right now what you could do for me. With AI, you could do almost all of that. Show me a clean house, take a photo of my, you know, house from Google maps and show me what it'd look like if you painted it. You know, that this like one step further than the next guy will help you close so much more. Maybe that's one way to use AI really cheaply fast. A quick aside, you probably heard me talk about Element before, and that's because I've started every single morning the same way for the last five years now, which is a cold glass of water with Element in it. Element is an online marketing platform that allows you to do a lot of things. Electrolyte drink mix with everything that you need and nothing that you don't. It's a science backed electrolyte ratio of sodium, potassium, and magnesium. No sugar, no coloring, no artificial ingredients. It reduces muscle cramps and fatigue, supports brain function and helps to regulate your appetite throughout the day. I genuinely notice the difference when I take it versus when I don't, which is why I don't shut up about it. And also why it's used by everyone from Dr. Andrew Huberman to Olympic athletes and FBI sniper teams, the good sniper teams, not the bad ones. Also, never no questions asked refund. So if you don't like it for any reason, they'll just give you your money back. Plus, they offer free shipping in the US. Right now, you can get a free sample pack of Element's most popular flavors with your first purchase by going to the link in the description below or heading to drinklmnt.com slash modern wisdom. That's drinklmnt.com slash modern wisdom. How do you advise people to go about finding the right talent? Because I do think that a big bottleneck that business owners feel is, this is my fucking baby. And I'm terrified of giving it over to someone that I don't trust fully. And I've been burned in the past because people have made promises when I was earlier and greener in my business career. And the first person that I hired, that was a nightmare. And then I tried to get a family member and that was a nightmare. And what's the 80-20 rules of finding and training great staff? Yeah. Well, I would say one, your first hires are almost always going to suck it because you kind of suck. When you start. So just don't feel bad for hiring bad people in the beginning. That's totally natural. And you're probably not going to do much about that. We have something called the hiring matrix, which is basically, this is, so there's three steps to finding great people, right? Or getting great people. First, you got to find them, but you can't really find them until you know what they look like. And then you got to know how to close them. So it's like, what do they look like? How do you find them? How do you close them? Those are the three steps to finding great people. Most people say, I can't find great people anywhere. And that's because they're not going to find great people. They don't know what they're looking for. It's like chicks on dating websites saying, I want six, five blue eyes, whatever that whole thing was. That's not actually what you want. So now you're reverse optimizing for something that's not good. So first we have something called the known candidate matrix. And basically it's five things that will tell you whether this person has a high likelihood of being successful in your business or not. One is proven experience. They've already done this task before. They've been a CEO before, a CFO before. Two is sector experience. They've worked in your specific sector. Three is size. They didn't work at Google and you're a startup because that would be a big jump between the three of them. They have a problem set that they have already nailed. So you could hire somebody from a startup that's have proven experience that is in your sector, but they were in charge of a growth company and yours is a turnaround. You got shit sideways. Somebody's got to fix it. And then the last one is, does this person know anybody in your sphere? So you can get a real gauge on if they're good or not. And so that's called known candidate. So they, you know, I like to rank those all as fives, top. performing candidate is going to be a 25. A bottom performing one is going to be a zero. And what we've seen across hiring thousands of people for these companies is the higher you can rank on that, the more likelihood you are to win over time. So that's one. It's like, how do you know what a cheetah looks like? You got to figure out that it's got spots, right? And then the second is you got to figure out if you want cheetahs or house cats. So I think most employees are house cats. They're like nine to five. They work in this realm. They don't want to work too much harder than that. They're not going to go out and find their meals. The cheetah is going to be your 20%. Those are going to be your killers. They're going to really go after it. But you don't need a whole company full of cheetahs. I think that's a misnomer. They're really expensive. They're hard to manage. You should hire divas every time you can because actually divas are the ones that perform over time, but you're going to hear the most complaints about them because we're impossible. Anybody who's really good is impossible to manage. I'm a dream. I don't know what you're talking about. There's no way. I love that you've actively laughed. Shut up, dude. Shut up. We're a nightmare, but you're so good that you will put up with your bullshit when you're a diva or an A player, and that's okay. So you couldn't have a company of 80% of them because you drive everybody crazy. And because most people fill roles once you have a system and a set incentive stack, you're like, they don't have to be amazing because you go, you do this, and then you do this, and if you do that, you get that. And then the third thing is how do you now actually go out and figure out if these people exist in the world? That's the hardest part. The only way that we've found to do it really consistently is first is referrals, second is recruiters, then third is websites. I think recruiters are really underused right now. They're expensive, but they're so worth it. And your best recruiters ever will be your employees. And that will be because you've built a culture that isn't terrible. And they will come because they want to. They will come because they want to work with other people just like you. What are the biggest wastes of time in hiring? What are the unnecessary traditions or things that people feel like they need to do as part of the process? That's a great point. One, don't do hour-long interviews ever. I would never, ever have an hour-long meeting to recruit somebody until I know that I'm obsessed with them and I want to have them on. And even then, I'm probably setting it as a 30, 45-minute meeting. And you can extend. If you want to. But I think 15-minute meetings are totally underutilized. Isn't that weird? Why, when you get into corporate, do they tell you, let's follow up on that when next week? Why did we decide next week? Let's set a meeting for that. It's an hour or 30 minutes. Why? Is that what the meeting necessitated? So I think half of this is getting to the first principles of everything in business, which is how do I do the most amount of stuff in the least amount of time and kind of not apologize for it? And so in our hiring process, we're very particular about like, hey, these meetings are really short to the point when I get on, there's not a lot of chit-chatting. I'm like, hey, how's it going? You mind if I get right in? Amazing. Bam, bam, bam, bam, bam. The second thing is like, you are really hiring wrong if you don't have a list of questions that you ask. And everybody on the team has set questions. They're not the same. And all the notes get accumulated. You could throw that into AI and they all get stack-ranked and scored. Everybody says they do this for hiring. Nobody does this for hiring. What are your favorite questions to ask candidates? Yeah. I mean, my favorite question, it's not just a question. It's I want to get an answer. Like, if you want to find an A player, by and large, an A player is determined by how hard of things have they ever done. Have you done something really hard? And the other probably month or two ago, we had one candidate I really liked, smart lady, going to be super competent in marketing. And I asked her, I was like, tell me about what's the hardest thing that you've done lately? Give me the last 90 days. What has like kept you up at night? What has pushed you farther than you thought? Let me know. And she said, well, I did. I went on a really hard, hot yoga retreat. And I thought, well, fuck, you're not gonna make it. Because if that's the hardest thing you've done is go on a hot yoga retreat, which I would deem a vacation, you probably wouldn't like this job very much. And so I think you want to try to figure out when was the last time they stayed up all night? Like if you want a high performer. Yeah. And so a lot of times, that's a really good question to ask. Like, when was the last time you couldn't go to sleep because you wanted to work on something so badly? And you can just tell in their eyes if they're slow to respond. Or if they're like, well, Joe, yeah, I don't know, you know, oh, I needed to. Sister's bachelorette party was getting, the flights were a little, sorry. That's not a winner. And so that's super unpopular. People don't like to hear that. And I'll probably get in trouble as people say it's too hard to work in my company. But the flip side is like, good. Like if people, like, we also have something called the anti-sell. I learned this from Amjad, who I think you've had on here too, from Replit. No. Oh, he's amazing. I can make an intro if you ever want. But fastest company from zero to billion dollars in sales in like that period of time, not since the beginning of zero dollars, because he went like eight or nine years with zero dollars in revenue. But Amjad has something called the anti-sell for new employees. And I think this is super smart. If you go to his website, and now if you go to mine too, because I stole it, on there, it will basically say, do not join if you do not love hard things that almost break you. You know, do not join if you do not want to be, because this is big in technology, if you do not want to be on the frontier of open source as opposed to closed source. So stuff that would be really contentious, put it up front like a billboard. I love, I think one of the best examples of this, which, you know, people on the left wouldn't like, but is Daily Wire. On their website, it's so good. Go to their recruiting page. And it will say, it literally has the most inappropriate meme that they've ever done, which, well, maybe not the most, but the him hers bars is like front and center. And they make some joke about like, you're not going to like it here if you don't think this is a hysterical joke. It's like a shit test. Exactly. It's a recruiting shit test. And I think a lot of- And you can do the same thing on the left. Oh, of course. You could do the exact same thing if you were part of like Navarro Media in the UK or something. And you could have like, if you don't think this meme of Elon Musk's funny, then go fuck yourself. Orange man, make him do something crazy on it. But I think, and now maybe you don't want to go that polarizing, which is probably a good idea for most companies not to go that polarizing, but go with what are your top performers all agree with that your mid performers would actually get ticked off about. And that should be what you put on your anti-sale. Yeah. I mean, it works for specific types of organizations. Probably if you're hiring estheticians or salon workers and stuff, you maybe don't need, to have them be cheater energy in quite the same way. But it would be something like, like if you're obsessed with the newest hairstyles that are coming out of Hollywood, like if, if you think that, or you could, I guess you could do it in kind of a fun way. Like if you think that Taylor Swift's got swag, then like this place isn't where you should, well, I don't know, like, you know, someone that's like, that's not cool. But I, I remember this such a like canonical example in my learning about business was when Elon bought Twitter, and he posted basically the same thing. And he said, I'm looking for people that want to try and attack the hardest problems in the world. There's going to be very little rest. There's going to be very little respite. You're going to work harder on the biggest problems to try and create the new town square. If you're interested, apply here, like twitter.com slash jobs or something. And there was this big sort of furor around it, him saying it's going to be 80 or 90 hour weeks. You're not going to get any spare time. There's no PTO. There's no nothing you come here. You go home or you, maybe you don't go home. You just sleep under the desk and you get back up again. But what that didn't account for is there is a cohort of people out there for whom that sounds like a good time. That actually is what you want. And in the kind of the same way as who are you to kink shame me? Like, don't say that me being walked on a leash with a dog mask on is something that shouldn't be allowed. Like that's what I'm into. That's what they're into. They're into people who want to send it professionally and people that don't. And the people that don't kind of won't really understand the people that do. And that when, when I saw that, it really just reminded me, oh fuck, like you're allowed to own your intensity. You're allowed to own your intensity and actively seeking people by positioning you as not the opposite of it, right? As not the opposite of it. And so I think that's a really great way to say, this is what we stand for by this is what we stand against. Yeah. And I think like, do you really not like being intense or do you just not like the things you're doing right now? I actually would hazard to guess most people, if they could do the thing that they really want to do deeply inside, you would go full bore and do it. And everybody has had that feeling before where you get lost in something, you lose track of time, you get into flow state, you're obsessed with the thing that building, reading, watching, whatever. But you haven't figured out a way yet to do that for a living or to have some aspect of that in what you do. That exists in your day-to-day life. Yeah. And I think you can. Like, I don't love everything about running a business. There's so many things I hate about running a business. And I just try to do less of them. It's like, are you burnt out or are you just not doing enough of those things you actually like to do? I keep getting in trouble every time I try and say this on the internet. So I'm going to try and do it again and get in trouble again. I don't think that introverts try to do truly exist. I think that most people's friends just suck. and every single time some fucking midwit that once watched a psychology video goes well actually the way that it works with introversion and extroversion is it's a measure of where you take your energy from it's whether you take your energy from being on your own or being around other people i'm like okay i fucking know all right i know the literature around introversion and extroversion my point is that even the most introverted person on the planet around the right group of friends doesn't want to leave the conversation and i think it's the same thing here i think you're right even the most work shy lackadaisical laissez-faire 3 p.m wake up weed smoke in person if you give them the right concoction of life will want to send it that being said i also believe that there are some people who are serial obsessives and some people for whom the obsession the obsessions are kind of once in a blue moon i'm someone that's been serially obsessive across my life i was obsessed with getting in shape i was obsessed with running nightclubs i was obsessed with djing i was obsessed with business i got obsessed with crossfit and tie boxing and then yoga and then podcasting and then moving to america became obsessed with the country for a while and became obsessed now with the beverage industry and cpg and now i'm obsessed with cinematography and okay like and it's just been stacking these things side by side fortunately for me it's been relatively linear like i haven't bounced between a like whiplash to myself with very spurious uh pursuits i've been relatively linear so i've kind of been able to build a set of dominoes that almost maybe even compounded some people are like that other people less so but and this is my like pitch to people who have obsession a lot of the time i get messages saying um uh i'm obsessed with this thing and it's kind of ruining my life and i can't stop i'm like that's not going to last forever that fuel is going to run out at some point and your fear is i have no work-life balance and it's never going to end that's the concern but the freest discipline and motivation that you're ever going to get is when you're obsessed right this hierarchy of discipline motivation and obsession it's all to do with friction so uh discipline is friction accepted i will pay the price it's going to hurt i'll pay it motivation is friction removed it's like i want to do this thing and obsession is friction inverted i can't not do this thing i have to i'm pulled toward it this is not going to last forever your level of obsession around crossfit or tie boxing or your business or your girlfriend like is not going to last forever so like allow it to wear you for a while i think that it's cool to be a serial obsessive because this obsession is going to cool down into it's going to harden and like ossify into what looks from the outside a lot like your identity after a while what you are is this the residue of your past obsessions like previously you would have been obsessed with business in a manner that you're not anymore but there's elements of that that aren't still active but they're just a bit of you like this huh they're just a part of my personality anyway no i think you're i mean i totally agree the only thing that i would add to it is like i think you you have to have it's like have you done what you want to do or have you done what's required and i think a lot of times when you get obsessed you get selfish on the part of it that you get obsessed with and most people don't think about how to connect the dots to have a series of dominoes that fall so you get obsessed with one thing but you don't think at all about stacking a bunch of chains so that you actually build something that can create leverage or pull for you over time and so you wouldn't be so freaked out about being obsessed with something if you saw that that obsession would lead to a little bit more freedom eventually would lead to a little bit more money would lead to not a have to but a still want to and i think i've been there i mean i've been in a business so miserable i wanted to get about making seven many many seven figures a year walk away from my equity entirely because i was so obsessed at some point and i never built the chain to where i had an out i just i built myself a really tall pedestal i could not jump down from and i think that's the difference it's like yes be obsessed but i'm not obsessed with it and i'm not obsessed with it and i'm not obsessed with it think about the chain link and like yours is like that yeah you're obsessed with cinematography but you're not like oh fuck the podcast i'm gonna go start a documentary and never do this again you know you link the two even if you have that moment i call it a someday maybe list like i think if you're a little bit add like i am and you're always adding things to your plate or you're getting distracted you've got the golden retriever thing i keep a little list on my phone it's not so little actually it's huge and on it it's called someday maybe and on it is a what like oh my god everything like uh i do want i want to own a puppy farm i want i want that's like my rich people shit you know have you met a lot of like rich people that do weird things okay i never understand really i'm not into fancy stuff i'm looking for golden retriever breeder at the moment so if you can hurry up and get that sorted before absolutely december january time like i would like i that would be that's like my retirement plan i want to be like oprah winfrey not with golden retrievers equal opportunity we don't you know we don't have dog specific races okay but um but a book build this next business buy this next business i've bought a lot of businesses in my day i had to stop buying so many because they didn't make sense for our new ecosystem and my team would yell at me like can we focus for a second because you know focus is like a laser you know the wider it is the less intense it is and so if you can narrow your focus you can really win so that would be my only caveat it's like be fucking obsessed but try to figure out a way that can lead to some freedom or some money for you because then it'll be an option in the future tell me if this sounds familiar you train regularly you eat reasonably well you feel fine but you're just kind of going off vibes most people have absolutely no idea what's going on inside their body and that is why i partnered with function function gives you access to more than 160 advanced lab tests spanning hormones heart health kidney function and even detects early signals linked to more than 50 types of cancer to put that in perspective your typical annual physical might test 20 markers function runs over 160 it's huge best of all you test twice a year and everything lives inside of a simple dashboard so you track trends over time make sure you're moving in the right direction and this level of testing would usually cost thousands but with function it is 365 dollars per year just one dollar a day to actually know what's happening inside of your body and right now you can get 25 dollars off bringing it down to 340 bucks get the exact same blood panels that i use and save 25 by going to the link in the description below or heading to functionhealth.com modern wisdom that's functionhealth.com modern wisdom let's say someone someone who's running their business has turned into their identity what do people do with their sense of self-importance if they slow down or begin to use more leverage because i think this is this is one of the mistakes that people make when they think about scaling up inside of business they assume that doing less spit and sawdust work means less importance but it's actually more leverage and more leverage from the outside looks less busy but it's the first time that someone has to face themselves finally they've got all of this self-importance and now they're slowing down at least objectively how talk to me about the emotional movement the transition that people need to go through that well one i would say if you are an obsessive type of person you're probably never going to slow down you're just going to change lanes so instead of starting to like going on the highway at 50 miles an hour when the speed limit's 75 you might never like that but you won't feel like you have to go 75 on something that you don't want to so realize that you can always just change lanes um what would be an example of that an example would be in your business right now you might be what we call a ball hog that closes every deal like every deal has to go through you you're the one that gets the sponsors you're the one that gets the partnerships you close all the deals and if you stop doing that are they you're going to be seen as a sales god anymore you know or you're going to transition these relationships and and then you're not going to have them anymore because other people are going to steal them from you you just offload that one part of it and instead you go okay it was pretty good at selling one-to-one you're going to be seen as a sales god anymore and then you're not going to have them anymore what about selling one-to-many let's do content now could i figure out how to do that so just change late slightly add a new skill that has higher leverage because really you can only like business only is so many things which is really can i sell something for more money that i pay for it like that's kind of it and so if that's all business is then we can just change the seven you know uh segments of the business and do a different part of them it could allow you to go and do a different part of the business and then you can just change the seven you know learn how to write more it could allow you to go and hire people better um but i guess the only thing i'll say about like that deep dark part of you that feels like if you no longer are the man you aren't a man or you know a woman at all anymore i think for that you've got to ask yourself what do you think is more valuable a business where you can take it and sell a job to another human jobs aren't transferable or a business where it's so good you are so good the business runs without you and i think the usual the business runs without you and i think the usual like the way that i usually can get out of being upset about something like that or worried about my identity is i look at a person in the future that i'd like to be like in that business sense so you know i the goat is obviously warren buffett you know he sort of religiously talks about how little he does does anybody think less of the man no so like it only takes one example to go oh that's a complete mental fallacy i have why did i hold on for so long to something that is so not true it's interesting the the Puritan work ethic, which coming the northeast of the uk is almost like a religion yeah uh you know good example of that from my last industry was we would run nightclubs and as a club promoter you don't own the venue but you have marketing and networks and 500 staff that bring their friends down and you know djs and you know social media and you people think you're cool and then you have venues venues have got a building and a license and door staff to punch people and you know speakers and djs and stuff like that yeah and the gap in between building with no one in it and people who want to party that's where the relationship lies there is no fucking reason that i need to be on the front door of a nightclub certainly not on the front door if anything i need to be down in the dj booth so i can see what's going on what's the atmosphere did that most recent pyrotechnic show go off correctly what's happening with the till if we go you know the rest of the stuff my side you sort with the bar keep the fucking lights on i'll do everything else just get out of my way problem is if it's the middle of november it's freezing fucking cold in newcastle in newcastle and the manager of the venue is outside to make sure that his big hairy door staff don't punch seven shades of shit out of everybody he expects me to be out there as well because there is this if you're not suffering along with me you're not in it with me mentality and that took so long to unwind and lots of businesses i think still have this if i achieved it but i didn't suffer it didn't matter or it doesn't count if i don't see you proselytizing yourself you know a prostrating yourself sorry on the fucking crucifix altar of whatever this business is you need to be the first person in and the last person out and yes you for a very long time you do and the kernels of truth that are in this are why it's so pernicious because you like i do know that and also by the way i'm trying to hire the cheater that is staying up all night to do this thing after a while you can't lead from the front anymore and that took a very long time for me to unwind and also separating out especially if you've got other parties that are in and around this you've got maybe uh partnerships outside of that like working on the front door of a nightclub it's like hey i need to have a really serious conversation with where my value adds here it is not my highest point of contribution for me to be stood on the front door at one in the morning freezing my tits off with you my highest kind of point of contribution is to be dealing with djs and buckings and making sure that the accounts are right 9 a.m tomorrow so we need to change the way that this works but that um puritan work ethic and unwinding it is very difficult it's very very difficult if i might make a suggestion i think it always works the best when you don't make it about you you make it about them i try in my conversations with my team to almost say nothing about what my highest value is instead my conversation with your doorman would probably go something like this i'd be like all right brad dude freezing out there today it's gonna be intense people are gonna be rowdy you're probably gonna want to hit them in the face i feel like i should be out there but i know that you've been doing this for x number of months now like you're a pro you don't actually want me over your shoulder doing that with you because you want us to earn more bring more people in get the club full is that is that right you'd have to know that that is what he wants yeah i actually do want that you know or you know that like god we're having problems in the back end i can't get them to spend enough i'm gonna go back there i'm gonna try to like get them do bottles sell it i'm going to do instead of exactly and you are getting their buy-in to your highest and best use as opposed to saying my highest and best use what do we always like to hear one we like to hear ourselves talk and two we like to believe everything's our idea not somebody else's idea right so if you can get your employees to think it is a good idea for you to not be there that's when you get them and then again you go back to that like five quadrant if you know brad really cares about money you play with money with brad if you know brad really cares about relevance he's like i fucking chris i don't need this i don't need you over you think you're a tough like listen i'm not actually as tough as you you do it and so i think we don't sell enough inside of our companies we don't sell enough to our bosses to our co-workers we try to do two things i see it all the time we try to be a dictator to our employees you have to do this why haven't you done this or we try to be a doormat which is like okay i'll do it i'll be fine i'll do it i'll do it you're either a dictator you're a doormat between the two extremes probably most of us do that and employees do it too as opposed to why aren't you trying to be so persuasive to the people around you in business that you can get them to do the things they want to do without them even realizing that it was your idea not theirs that is when you really win in business and it takes a minute in the beginning of this i had to do a ton of psychological sales i had to learn about priming you know which you know i had to learn about okay would i have this conversation with brad i'm actually not going to do it when he's outside and it's cold and he's already pissed i'm going to do it when he's inside feels good i'm going to bring him up a hot coffee i'm gonna be like brad let's sit down have a conversation take a seat off for a second right that's called set and setting i'm going to prime him to feel like he's really important we're having an intimate conversation and then i'm going to send him off there you know it's the same way with your your significant other like how many times i'm sure you never have you had a fight with your significant other or girlfriend right and she's pissed and she's pissed and she's pissed and she's pissed and raging at you and you're like let me rationally talk to you about this and this is why all the reasons that i'm right and she listens to you like that doesn't happen you know it doesn't and so when would be a better time you listen and then the second you're no longer pissed you hand her a glass of wine you two sit down you're like let's talk about this this is kind of my perspective so with your team think about do you really need to be the hero and do they want that from you are you just not a good sales person yet to them what about the other side what about disciplining staff saying hey look brad we need to have a really serious conversation here that things aren't going well and i need to really tell you where i'm at how do you think about broaching that i think most people quit jobs because they have terrible bosses and their terrible bosses are not bad because they overly discipline them they're bad because they never tell them the truth they gaslight them they tell you that you know you're winning even when they're not they wuss out on top of you and they're not going to win even when they're not tough conversations and they don't tell you how to win they just tell you why you're not winning and i think we've all had that i think most people don't like conflict and most people's leaders are not good leaders because it takes a lot of training what's your advice for leaders that don't like conflict then how can they get better at it you sit down you don't think about it as conflict you sit down and say i want to have a conversation and i'd like us both to win you know i'm the leader over this i have these metrics for you as an employee i have these metrics for me as a manager you're not hitting these metrics which means i can't hit these metrics what's going on then you're going to listen to a lot of stuff and you're going to say well at the company you know that we work on 90-day plans i run all of our businesses on 90-day sprints it's kind of like our core owner be owned and the reason why is humans work in cycles right birth you know growth decay winter summer spring fall and quarterly cycles work really well for businesses and so you would sit down and say over this 90-day period we got to start hitting these 90-day cycles and i think that's a really good number and if we don't how do you think i could keep running a business in which our team doesn't hit their 90-day numbers do you think we could keep doing that and paying everybody what are they going to say no okay so over the next 90 days we're going to check in every 30 days and if we don't keep hitting these numbers i can't keep you here like that's reasonable right am i crazy should there be a way that i can keep you even if you don't hit all the numbers well what about this what about this hey listen we have to be fair to everybody you might be my favorite person but i'm not going to keep you here i'm going to keep you here i'm going to if you're not doing it i can't just say that's okay for you so we're going to check in every 30 days and we're going to see if we're hitting these numbers or not and this is so foreign to most people because it's a bunch of pc bullshit in corporations about well i don't feel like you're doing that well and sally said and hr is in the middle like how often have you just sat down and said here's what you're supposed to do you're not doing x either why not what can i do for it and how do we fix it by 90 days otherwise we got to part ways because maybe you'll go be a superstar somewhere else what are the things that a founder should stop personally approving first oh god yeah um well let's do a generalist if you're a founder doing this currently you're doing administrative work uh at a minimum wage of a virtual assistant which would be responding to emails by and large that needs to go immediately uh if you are doing any sort of automated reporting for your business so reading out of numbers scorecards etc see that a lot in businesses uh if you are approved any invoice that is less than depending on the size of the business one to ten percent of your revenue if it's a really small business that's why it could go up to ten percent that's probably not something you should be doing continuously and you should be using something like ramp which i don't have any affiliation with but can track all of your expenses of your employees instead uh and then probably the next thing that you need to be doing is thinking about how many employees i also think we were told a big lie as leaders and the lie was you should have an open door policy you should be available for everybody on your team but an open door policy just means that you are on everybody else's schedule not your own and as an employee i think you should guard against it too you shouldn't allow people access to you every second of every day continuously instead you need to set up ways and means to get to you only when they have what we call the three which is basically problem potential solution risks to potential solutions then if you have those three things let's talk and if you're just bringing me a problem you're not ready go back and work on it a little bit but all of this stuff is so hard because you sound like a hard ass when you say all of it. And then everybody's like, she sucks. Be a terrible leader. That would be the worst. But I think the worst leaders actually are the ones that seem nice and then never help you make more money, never help you progress in your career, never help you get better, never help you get promoted. What a fucking tragedy. Who wants to work for that person? And I think that's most people. And then they wonder why they hate their job and don't make as much money as they want. This episode is brought to you by Whoop. Most people treat recovery like it's optional, but unlike politicians, data doesn't lie. How you recover is literally going to determine how good your next day is going to be. And Whoop tracks all of it. Sleep, strain, heart rate, recovery. It's like dog the bounty hunter, but instead of criminals, it's tracking down your bad habits. All of this data gets pulled into a dashboard that actually tells you what to do with the information. And now the brand new Whoop 5.0, 7% smaller. It's got two weeks of battery life, shows you how fast you're actually aging. It comes with hormonal insights for women managing their cycle. Or pregnancy, or men hiding from it. Once you see the patterns, you start making better decisions. It's that simple. Best of all, you can join for free, pay nothing for your Whoop 5.0 strap. Plus, you get your first month for free, and there's a 30-day money back guarantee. So you can buy it for free, try it for free. If you don't like it after 29 days, they just give you your money back. Right now, you can get the brand new Whoop 5.0 and that 30-day free trial by going to the link in the description below or heading to join.whoop.com slash modern wisdom. That's join.whoop.com slash modern wisdom. Why do you think so many entrepreneurs are afraid to charge more? Oh, yeah. Well, I don't think you have a pricing problem. I think you have a confidence problem. I mean, one of the first things I said to one of the business owners in our group was, I can tell about your lack of confidence in yourself and your business by your price. Because most people price according to market pricing. Like, here are what other people charge. Well, why do you think other people have any fucking idea how to charge in your space? They don't. Everybody's just guessing. They don't. They're just guessing by and large. And most people haven't done any research at all. So people, one, don't have confidence. Two, they do market-based pricing. And three, they don't understand value-based pricing, which is basically, I give this much value in savings or in revenue or in freedom or whatever it is, and I'm going to take somewhere between 10% and 30% of that value that I drive you. That's just like the number. But when you look at how many business owners actually do that, we all are so scared of getting told no. Ever since, like, our first high school date told us that we couldn't, that I think it translates straight through to our prices. And then, perniciously, a lot of us as entrepreneurs have a murder complex where we think it is good for us to not charge. Charitable. Yeah. That means I'm a good person. I don't sell expensive things, so I'm good. Get the fucking money. And don't now, don't sell a shitty service. That's what you should be worried about. Do not provide enough value. But you should never worry about do I charge too much? If you provide enough value, the price spectrum is unlimited. Last thing I'll say on this is kind of nerdy, but we break it down, is this wallet share phenomenon. Have you heard of this? No. So, fascinating study that basically says, basically saw, you put a group of pricing experts in a room, many, many times over, and normal people in a room. And you knew a couple things about them. You knew what they were worth, so, and how much they made per year, net worth and income. You would think that the pricing experts across net worth and income would be better at determining the right price for something than a group of random people, right? Yeah, that's their job. Well, it turns out those people were no better at pricing than the random people. In fact, they actually priced about 15% lower than the random group. Why? Because of something called the wallet share phenomenon, which is most people will only price about 10 to 15% higher or lower than what they could afford. And this happens across almost every business. So, you are actually restricted by your amount of money you make without even realizing it. It's a subconscious bias. But sitting out there is somebody like Chamath, who would spend a bajillion dollars on a sweater, and you can't even conceptualize why that would be worth it to somebody. And so, in business right now, you've got to ask yourself, one, what's holding you back because of how much you make? But even more so, what about the other people on your team? Because they're probably, employees on average, have a 30% lower rate of making money than the other people on your team. And so, lower pricing range than owners think they do. So, your employees are dragging down your profits by 30% and you don't even realize it, which is crazy. When I heard that, I went and analyzed our business and saw, oh my God, it was the same for me. And so, that's a good realization to have. You don't have a pricing problem. You have a confidence problem. So many people are undercharging. God, almost all of my friends, especially people in service businesses, right? It is insane. I have a couple of friends, who've done features on records. These records have gone on to do tens of millions or hundreds of millions of plays. So, they're an integral part of a unique part of a music track. And the fucking, like, even in retrospect, they're not thinking, I undercharge for that. Like, dude, this is one of the biggest things that's ever happened. You can't bring yourself, the next time that the opportunity comes around to, like, turn the screws on. It's almost like you want to shake people and go, like, you don't understand how good you are at what you do. You can charge more. Well, so, that's fascinating because that's why we do this thing called OwnerScore that I was telling you about before this. And if you go to Ownerscore.com, it's free. You can do it. But basically, those people are usually either the artist or the dreamer. And so, it's funny because they literally are an artist in this instance. But the artist almost always underprices. In everything that they do. And so, even if they're at the top of the food chain in their industry, they have a predilection to think charging more is actually greedy. And so, the interesting part about business, the part that, like, kind of got me ticked off at some point is I started thinking, have you ever started watching, like, really good business people online? And you're like, Elon Musk. And you're like, well, if I just follow Elon's directions, then my business will grow. Like, I'm just going to listen to his advice because he's a billionaire. Well, that's sort of problematic for a lot of reasons. Because one, you and I aren't as good as Elon Musk, right? Like, if we were, we'd be billionaires. We're not. He's an anomaly. Second is, I don't want his life. Like, with much love, we know a lot of people in common. I'm happily married. I'm going to have a kid. I like to hang out a little bit. Like, I want to enjoy life. I want to be fit. Not now, but again, eventually. And so, it doesn't work on two fronts. I'm not Elon. Plus, I don't want his life. And so, if you take business advice from somebody whose life you don't want and who has skill sets you don't have, you'll be fucked even if the business advice is great. And so, I was like, God, we have, like, these thousands of companies. Why could I have HVAC, HVAC, HVAC company, all the same information, same revenue, same team, and there's total variance. Wildly different performance. It's because of the founder, right? But if I know, hey, founder A is an artist, so he's probably underpricing, just at the gun, then I can have different advice for him than I can have for closer founder, which I know probably doesn't have as good of fulfillment or creative in his business. And so, like, it seems standard, except nobody does it. Everybody starts with, what's the best business advice I can do? Yeah. As opposed to, like, who are you? If it's one size fits all. Yeah. And I just don't think that works. And you, there are some core business principles, but you have to apply them to who you are as a human. Otherwise, you'll be miserable even if you end up getting rich. Related to the price thing, when do you think a founder should start paying themselves properly? Immediately. Like, almost immediately. Even if you can't afford it. And what would that mean? Put it on your, on your profit and loss statement. Like, and just write a little loan to yourself or put it in a spreadsheet so you know going forward. I think a lot of times founders will spend years, you'll spend years not making any money and thinking that you have a profitable business. But really, the only way you can profit is your labor. And basically, it's slave labor at this point. Right. So the founder's free labor is disguising bad economics inside of the business. A hundred percent. And you can't fix a business if you don't understand the underlying math. And so I always start with, like, pay yourself a market rate salary. It's super easy to figure out what that is. Go online, say market rate, this size company, this industry, this location. Okay. I'm going to pay myself that. If I can't pay myself that in year one, okay, that's okay. If I can't pay myself that by year two, that's actually, not okay. What are you doing? Yeah. Then you're doing something wrong. And that means that you either have to probably usually raise your prices, sell more expensive things, find rich people. They like to pay more. But I think, I mean, if it's, I mean, like, what a wild thing. There's, so let's see, last year there were 5 million businesses created. That's the most businesses that have ever been created before in history. In like 2019, we should check my math. I think it was a couple hundred K, 200,000 and 500,000 businesses created. So we've had more businesses created than ever before. And yet we have less profitable businesses than we've ever had before. And entrepreneurs' wages continue to go down. So you look online and everybody looks like they're Gucci, Fendi, Prada, you know, Lamborghini, whatever. And they're not. And they're, they're actually poorer than most employees. Yeah. So it's like better to work for you than to run it. It would be a thousand percent better. And so. So why are we doing that? ourselves let's look ourselves in the face and be honest and say all right i'm not quite ready for this game yet i mean if your company becomes enormous or reputable and it still owns your life i don't think you can class that as winning i don't think you can class that as being successful and i i'd love to ask a question of a lot of founders i'd love to ask if nobody ever knew that you founded the business would you still want to own the company and i think that a lot of them wouldn't you know the best example of this i had ben francis on the show a few years ago jim shock found a 70 of the companies owned by him completely bootstrapped took some advisory thing a few people have got some percentages he's in the 70 he's worth like two bill pounds right fucking pounds that's like three billion dollars and he was co-founder ceo then stepped out of the business in highly from 100 million to 500 million and the guy that used to run reebok came in and then at 500 million he stepped back in he gave me this line and he said when your aspirations for the business are bigger than your aspirations for yourself you'll become a successful entrepreneur and i was like that is fucking great that is so good i care more about the success of the business than my own ego and you can say this is actually an acceptable thing do you know what it is i take so much pleasure from being a business owner from playing the game of business even if i'm playing it badly by most of the metrics that you would assess the business by but i just love the uh impact i love the significance uh even like giving it to myself being a business owner being able to say that it's my thing and my baby and i get to you do the obsession thing that's cool but don't kid yourself that you're doing business you are playing the game of business that i'm playing it at least by most metrics pretty badly and yeah i i if nobody knew that you founded the business would you still want to own it i think it's a great question it's and you know it took me it took me 12 years of working for other people before i went and started my own thing you know i actually i was way more risk averse than you and a lot of the people that we know who just went out and did this crazy i didn't like that idea i wanted to sleep in my own bed i didn't believe in sleeping in like closets and couches and garages you know i wanted to i'm not that fancy but you know i wanted to be able to go on vacations and do all the things eyebrow raise i saw that i know now i can actually eyebrow raise again because when you're pregnant you can't get botox so it's a real tragedy but um the uh like it took me a long fucking time to take the risk and i actually think that's totally fine i think if you're scared and you want to stack cash and you only want to build on the side that's totally fine and you have to stop listening to people who try to get you into entrepreneur porn when in fact you could just own a part of the business you could invest in a bunch of businesses you could be really successful as a number two and be way happier and that is totally okay and i think we got to normalize some people saying that dude if you in the same way as i mentioned before you can go to somebody that has a business or or is in an industry that you're really desperate to go and work in you could do the same thing i bet that you could roll the dice and say i've worked in a similar or completely symmetrical industry for a very long time i think that you need an operator i'm going to come in and i'm going to take i'm going to be your right hand i'm going to be the sword that cuts through all of this bullshit inside of this business and i'm going to do it for fucking sweet nothing and in 60 days we're going to have a little review and i just want to see what happens you could go to that person and say i want to take 50 market rate salary and i want 10 of the business over the next couple of years let's see how we get on and then you build it up and build it up and build it up and as long as you've got good enough contracts you're going to guess what you're a legitimate business owner with none of the issues of having to fucking start it find it get your market position i think i i think it makes sense ultimately this challenge for most people that this relates to will come down to an emotional one yeah can you relinquish your identity of being the person that was supposedly the one that fixes all of the things keeping on top can you deal with problems occurring are you going to be able to have the hard conversations when you need to and if you're going to be able to have the hard conversations when you need to and if you can do those things i think you'll be successful and if you can't i think you're going to kind of be trapped in the same hamster wheel yeah and i think it's not just do you want the business to win more i think you really start winning in business when you want your customers to get bigger than you because of the things you did for them like you want to be the mentor that has a bunch of mentees who are way bigger than you are and you want to be the employer who has a bunch of employees that you want to invest in in the future like one of the you know i mean many of uh many of the greats like if you think about uh antonio uh gracias uh head of valor uh one of the i mean i think he made 40 billion dollars on elon musk's space x transaction that's probably more than antonio's ever made in his life and it's because of elon because he invested in him and also elon was an employee kind of got ousted from paypal by you know peter teal and a bunch of the founders fund guys didn't have an ego about it and he was like i'm going to do this i'm going to like i'm sure was super pissed could felt like he could have taken that company the moon but he just ate it and said i'm going to keep a relationship with these guys they're going to fund me in the future they come in and save him later when they almost run out of capital and uh because of that elon was able to continue his company and take it to new heights and now you know luke nosik and a bunch of guys here in austin are also going to make billions of dollars not off of their work but off of elon's and those are people that he used to report into or partner with stuff right and so it's one of my favorite things about elon musk is that he's going to make millions of dollars favorite parts about finance and investing is it teaches you that you don't always want to be better than your employees you actually want winner employees because when they leave you should go what are you doing can i throw some pennies at that what is that let me in there that's how the rich people like rich people do not think in terms of their labor rich people think where can i put some money and leverage to play so i could do less and make more and they feel no fucking shame about it and then you know you and i because i came from nothing and my entire my entire identity was wrapped up in cody's good because cody works a lot i feel bad when i don't work and because of that i actually miss a ton of opportunities where i get to invest in somebody else and they work harder than me i don't even have to do anything i get to make money from it what a fucking beautiful thing so it's totally changed my perspective investing over the however many years because when you're an investor you don't look for where you can put like we have a portfolio of like uh let's see so in contrarian thinking capital we have like 33 36 companies inside of there it's a crazy thing the companies that want the most from us do you think those are the winners or the losers losers those are the losers the ones i have to work hardest on in there are really typically the ones that are going to give me the least money the winners i'm like cool just saw that you did another 100 million and they're like not responding you know that is busy running the business 100 and so um and you think about that the a players in your business sadly the worst leaders are bad leaders because they spend all their time with the losers yeah as opposed to hey you're a stud what else do you need let me get out of your way like that's what i think a real leader does increasingly is like let's get out of the way of the winners and stop spending all our time on the losers and get more winners on board um but that's probably not that profitable or popular either yeah the gifted and talented program for the people inside of your organization is opposed to raising up the bottom uh percentage is is usually not where people apply their attention what would you let's say there's somebody listening who is ready to relinquish some of that control and is ready to go from being owned to owning what would you leave them with well i would start with like there's one one hire i would highly consider which is like who is going to be your right hand in business do you have a number two that you trust uh because i think it's hard in the beginning to just implement a ton of systems etc typically if you're the founder you're you're the visionary you're the one with the crazy ideas your execution is probably not as good as it needs to be for most people who aren't running multi-million dollar businesses if you don't have a number two if you don't have an assistant you are one i mean one of my my mentors bill perkins who you know too he famously told me when i wanted him to invest in one of our companies he wouldn't do it unless i had not one but two assistants and i said that's the most elitist shit i've ever heard in my life bill and i said well i'm not going to do it unless i have and he was like i don't give you my millions so that you can go do minimum wage work so like no you you need to have junior people and again it's like do you want to do you want to sound right or do you want to win do you want to be right or do you want to win and so i think that would be the first thing and then maybe the only other thing is a chief of staff one of the most underrated hires out there for anybody who's making seven figures plus if you don't have a chief of staff i highly recommend it you're going to train a number two they're not much more expensive than an assistant and you know ours his name is azad he's a stud and we actually chris worked with him in iraq he was his interpreter uh when chris with my husband was in the military he was a navy seal in iraq and um he during the the pullout of iraq uh azad's occurred and so um they were prosecuted and so chris had to call in a bunch of favoritists to get azad out of the country and we got him here the guy went and immediately upon coming in went and worked at starbucks and uh the grocery store, two jobs at the same time to just like pay rent. The second he got his green card, he went and applied for the Marines, joined the Marines like first in his class, total stud, then goes and becomes an electrical engineer and was going to go work at Amex for an internship program. And we pulled him to be our chief of staff. He didn't have any of the background. He didn't have any of the knowledge of it, but I knew I was going to hire him because I remember we just got breakfast with him and I was talking to Chris about it, my husband. I'm like, I think we should hire Azad. Like he's just a killer. He wants it. He's so hungry. He has none of the experience, but I think he's going to grind and we can help him be really successful. And so I called, we called Azad and he was like 20 minutes away. And Chris just says, hey, can you come to the house? And he's like, yes. He had just left us. Any normal person would have been like, why, what? He comes to the house and we offer him and I don't even get out like what the pay is and whatever. And he's like, yeah, I'll take it. And I was like, this guy's going to win. And I think all around you, you don't even realize it, but there's like some young gun or there's some hungry person, age unrelated, who would kill to just be next to the owner, to just be next to one of the winners at the company. And you don't have to pay that much. But then the second they start outperforming, you start paying them more. And those people, almost every time for me, have become the people who have run my companies eventually. So I could see Azad doing that one day too. Unreal. Cody Sanchez, ladies and gentlemen. Cody, you rule. Where should people go? Ownerbook.com. We have a, this is kind of cool. We're doing something a little crazy we've never done before. Ownerbook.com, we're doing a massive giveaway. And the idea was, I don't know, you want to get your book in everybody's hands, but then it becomes about how many books you've sold as the author. And that's cool. But I was like, what if we could give away a million dollars in cash? I don't know. I don't know. I don't know. I don't know. And so we're doing that. So we're going to try to like Oprah Winfrey, a bunch of business grants to business owners. We're going to give a bunch of cool prizes, actually, while we're there, things to help people with their productivity. And we're going to try to help a bunch of business owners actually make some money live during the book launch, which I don't think there's ever been a million dollar book launch before. So that's kind of fun. And then, you know, and then we're partnering up with all these charities. And so you might like the Navy Seal Foundation. So some of these charities will like live have videos and access to things that they wouldn't because of everybody coming and buying books. So anyway, could totally implode, but it's going to be really fun to try. Unreal. I'm going to watch either the fireworks or dumpster fire, depending on what direction it goes in. You're great. I appreciate you so much. Thanks for having me. All right. Goodbye, my beauties. Dude. Yes. This was great. Thank you. Star Wars. Star Wars. The Mandalorian and Grogu is now streaming on Disney Plus. What are you waiting for? Hop on. The must-see galactic adventure comes home on Disney Plus. This is the way. Our only chance is to work together. I like this kid. Always wear your seatbelt. Star Wars. The Mandalorian and Grogu. Now streaming on Disney Plus. Rated PG-13.