25 Years of Business Advice in 27 Minutes

So I've been running businesses for 15 years and I've hit this wall multiple times. It's somewhere around $7, $8, $9, $10 million in revenue where suddenly your biggest problem— it's not a lack of ideas, it's an issue with you. You're the bottleneck. And so I've got this buddy named Ryan Dice. He's got this amazing quote. He says, the more valuable you are, the less valuable the company is. And I read that quote in one of his books a while ago, and it kind of changed my game on how I thought about business. And so I decided to have Ryan come on and talk about this simple but very effective framework he has for running companies. It's changed my life and maybe it could change yours. But on this podcast, he shared everything. So he shared his whiteboard, his spreadsheets, his flowcharts with his employees. It's basically like a 30-minute MBA, which is pretty insane and very valuable. So check it out. Let me know what you think in the comments. All right, let's get into it.

Yeah, you got to, you got to decide, do you want to be down on the court hitting the last minute, you know, jump shot to win the game, or do you want to be up in the owner's box? Um, that, that is the choice that you make. And so you're either going to be the most valuable player or you're going to own the team. Most entrepreneurs would much rather be valuable, and they would rather do the things that enabled them to get started than do the things that are going to enable them to actually achieve the things that they say they want. But really, they kind of like being important. They kind of like being valuable. And I think that's— you've got to decide what do you actually want. And the nice thing is it's your business, so you get to decide.

I like this graphic you had here of the before and after. If, you know, I think the messy sort of entrepreneur, which is, you know, I've been guilty a lot of these things. You're working 80 hours a week, you're in the weeds. If you ask who owns this, the answer is me, me, me for each, each area. The whole team is asking you, hey, got a minute to talk about X? You know, 200 times a day. You're missing soccer games. You can't sell the business because it's all, it's too dependent on you and the business owns you rather than you owning the business.. And then you have sort of the, the ideal sort of outcome here at the end, which is, you know, it's an hour a week for you. Team executes without you. The team optimizes without you. The team decides without you. You can take a 30-day vacation. You break revenue records while you're gone and you're exit ready if you want to, right? Like as an ideal end state. And this is for an entrepreneur who wants to exit, you know, wants to build what is sort of insultingly called a lifestyle business. But it's, I think, the the main type of business I'm interested in. I use business to have a good lifestyle. So yes, that's kind of what I want. So what's the process? How do you do that, that transformation? How do you go from player to the owner's box, Ryan?

The way that you begin to implement it is you have to establish defaults. You have to establish certain default constraints. I'm going to leave at 5:30 every day. Like, I'm just, I'm going to do that. And I'm not going to show up until 9. And what do you know, magically I got my work done in that block of time because I did. Um, and so just the prioritization of that is going to do it. So I mean, that, I think that's the first thing. That is then going to, to force you to at least stack rank your priorities because you can't do everything. Because yeah, you're right, we got a million different ideas, but what are the ones that we're going to do first? I like to say like our ideas are like chocolate cake, not cotton candy. You can only eat so much chocolate cake. It's delicious, but you can only eat so much of it. So what are those, what are those things that, that you're going to do to begin to, um, to stack rank those? And it does come down to, again, just getting really good at constraint identification. We can do everything. Like we, there, there's all this stuff that we could potentially do. As entrepreneurs, we are trained and adept at identifying problems. We see them everywhere. We will never not see them. But we, we certainly can't fix them all at once. So what's the one we're going to do next? And that's the only question I'm ever asking. What is my right next thing? What is the thing that I'm going to do next? And every problem in business is going to come down to one of two things. Is it a supply constraint or a demand constraint? Demand constraints, I just need more leads and sales. Supply constraint, please don't give me more leads and sales, I can't. Fulfill the ones that I got. And so once I've identified that category, now I just need to say, okay, how do we get this done? So if it's not going to be me that does it, who do I need to bring in to do it? And ultimately what it's going to look like is bringing somebody in who is better than me at one aspect of this. So I'm not going to find somebody who's better than me at everything, but I can almost certainly find Multiple people who are better than me at one aspect of that. And that's what assembling a leadership team looks like. What you have to first do is you have to map and visualize what are the core value drivers of the business. And every business does 3 things. You make stuff, you sell stuff, and you fulfill stuff. And so if you will create a visual map of how that happens, and so we do this with visual process mapping. Like we literally will get, go to a whiteboard. And get sticky notes and we'll say, okay, how do we get customers? Let's sticky note this out in flowchart form.

Exactly. So this is, this is an example of one that we would do just in sticky note version. But like, this is an example of the growth engine. So where we would start is, you know, how do we generate initial awareness? So like, let's say for this business, they run Facebook and Instagram ads, they run Google ads, and they're doing, you know, Reels and Stories. Yeah. So we're going to start here and then we're gonna say, okay, cool, then what happens? And so for this particular business, they're driving traffic to an email challenge. So they're going to have people sign up. For that challenge page. And then all you're doing is just saying, then what happens? Well, did they register? If not, then we're going to retarget. If yes, we're going to deliver it. And all you do in this process, you just keep saying, okay, then what? Then what? Then what? And if you just will map the process, and I didn't invent this, this is called business process mapping. But if you will just say, where does it start? Where does it end? And you will create a business process map for everything that you do as a company. And specifically, if you'll do it for how you get customers, once you— what you do with them once you have them, and how, you know, you could also do for your manufacturing process, your product creation process, um, then what you've done is you visualize the core value creation aspect of your business.

So this is kind of a digital example of the growth engine I just showed you. And this would be like their fulfillment engine. So what I would do is we would take this growth engine, and one of the first things that we would do is we'd say, okay, which of these can we really not afford to screw up? So one of the biggest mistakes that companies make when they're trying to systemize is they try to document everything. Don't do that. Just document the ones that are really, really, really important. The second thing that we do is this is how we figure out, um, who we need to hire. So we create this thing called a high output team canvas. And so every single one of the sticky notes, every single step or stage on here, we're gonna say, okay, this one right here, Facebook and Instagram ads, who is uniquely responsible for this one? And then we will create this canvas. So I'll go down to the marketing team and I'll say, okay, You've got, you know, John here. John is going to, you know, collaborate with agencies to, you know, establish those, those budgets. But ultimately, it's going to be our agency that's going to manage and optimize these. So every single sticky note, every single box is going to have corresponding what we would call critical accountability bullets. And this is how we begin to assign roles and responsibilities. So that's, that's the, the second thing that we do with this. And it becomes interesting because as you go through these, instead of going to people and saying, okay, what does, you know, what does Betty do? You know, what is, what does Lloyd do? What does Carly do? You start with your value creation processes and you, you assign stuff to the people. And when you're done, you realize who's got all the things. And who's got like none of the things. And so you can see on your team who's overburdened with work that actually matters and who is underburdened with work that actually matters. But to the point that, that you made, this is how we create our scorecards. So for our scorecards, every single one of the different squares, every single sticky note, if you will, is going to have one or more corresponding metrics on the, uh, on the scorecard. And so this is how we know that we're actually tracking the metrics that matter. And so when you look at your scorecard and our scorecards, if you work top to bottom, that's going to visualize what we're seeing as we work across here.

Let's first kind of talk about like the hiring component, because that is one of the things that I see entrepreneurs as they're scaling screw up and they tip, they make one of two really big mistakes. Um, the first is they hire helpers or they want to try to hire somebody just like them. And like, it's these two opposite ends. It's like, so they either try to hire a bunch of helpers to just do the stuff that they don't want to do. Um, or they're like, oh, I thought if only I could hire somebody just like me, if I could hire like a quote unquote integrator. That is one of the biggest lies ever perpetrated on the entrepreneurial community is this concept of I, as the visionary snowflake, can just hire this like one magical integrator who'll just do all the crap that I don't want to do. It just does not freaking work. It makes for a very good book. It just doesn't work ever in practice. So it's not about you changing necessarily. What it's about you doing is getting really good at identifying What is the single biggest constraint right now in my business? Right? What is that? Right now, in my business today, for us to grow to the next level. And it's never ideas. And this is the thing, as entrepreneurs, as business owners, what we do in the beginning, what gets us going is, I got an idea. And so, like, that's the freaking hammer that we take to every single nail is, I got a new idea. And the last thing at some point that your business needs is another new idea. It doesn't need another new thing to implement. What it needs to figure out is what is the thing that is holding us back from the level, you know, of growth that you need. So the first shift that needs to happen is shifting from I got an idea to shifting from constraint to constraint identification. Once you have shifted from idea generation to constraint identification, then the answer becomes, okay, what's the best way to solve for this constraint? And it's almost always system and people related, but it's almost never hire a bunch of helpers. Because when you hire helpers, what you actually did is you gave yourself a new job called management, which is even harder. Or let me hire somebody just like me, because somebody just like you doesn't want to work for you. What you need to typically do is realize that that constraint is solved by a functional leader. And so what you need to get good at is hiring very, very, very good and talented functional leaders. So head of sales, head of marketing, head of product. And this is the thing that most entrepreneurs aren't as good at as they're scaling. They're good at hiring a bunch of little helpers. They think they're good at hiring a quote unquote COO, although nobody actually knows what that is. If you get really good at hiring a functional leader and building a team of those, Now team leadership becomes a lot easier when you have really— when you have 3 or 4 actually talented, skilled people working for you. They have massive capacity because they'll build the teams under them to execute all your ideas.

Yeah, there's a new test for is this person a good hire or not, which is you basically, you switch from I wish this would happen or I hope this would happen or I want this to happen to basically fear that, will this person leave? Because, oh my God, this person is so good and they are like, they're so transformative to the business. And I just don't have to worry about that. And that if they ever left, I would have to worry about that area of the business again. I think we had John Morgan on last, last week, and he has this phrase called send and delete people. He's like, there's people at your company that you could just send them the email, you could forward them the email, and you could delete the email because you know it's going to get handled. And, you know, Brian, this thing you just said is so true. I actually was talking about this last week about helpers. I was like, talking to somebody on my team. I was like, are you going to be a helper? Like, so far this has worked because I needed you as my helper, but now I'm asking you to drive, but you still are acting like a helper. And like, but you want to be a driver and we need a driver. So like, it's time to be a driver. Now, whether that person can make that adjustment or not, I think is always just about that person and their own kind of goals and self-improvement and self-development, their self-image. But, uh, it's so true that it's very, very tempting to hire other just kind of entrepreneurial people like me. Great. Now I got another sort of like shiny object syndrome idea guy in the room that doesn't help. Or I got a helper who, as long as I'm directing everything, they help me get stuff done. But that means I always have to keep my eye on that area because I'm the one coming up with the plan. I'm the one driving the execution, and they're just, you know, there to help. It's, uh, I've, I've definitely felt this problem firsthand.

The biggest mistake that people make when they, when they map their, their business process maps is they will map what they wish were true instead of mapping what actually is. And so you have to map what actually is happening today, not like, well, what we should be doing is this. Like, that's generally unhelpful. You need to see all of those as points of future optimization because we've got to get a picture of what it is today, because that's what's going to inform what are all of the people actually doing or what should they be doing. What are the metrics that we do need to track? The other kind of thing that you want to make sure that you're doing is that you are starting from the audit of those value engines. So you don't want to just say, I'm going to build out my scorecard because that looks cool. Okay, but what are the metrics that you're picking? Because if the metrics don't— that you're tracking, if they don't all link back to a step or stage, you know, on one of those business process maps, then you could very well be tracking something that doesn't matter. I'll give you an example. When we rolled out our scorecards to our team, we had somebody at our company who was like, hey, we don't currently have any metrics for— this was at DigitalMarketer, one of our companies. We don't, we don't currently have any metrics for our email newsletter. Why don't we have that? I was like, well, Where, where, show me where the, show me where the newsletter feeds into anything. Like, oh, well, you know, it's, it's good for awareness and engagement of the list. I'm like, okay, but how does it drive into anything? And the answer was it didn't because the newsletter didn't show up as a sticky note on any of our growth engine because at no point in the newsletter did we ever link off to anything that was meaningful. It never showed up. It never wound up as a sticky note on anything. Like, that's, that's why it never showed up on one of our, you know, growth engines, which is why it never showed up on the scorecard. We're not tracking the metrics. So I had to say to the person, like, look, if you can show us where this actually has an impact on one of our, uh, you know, on, on, on our growth engine, then, then you'll get some metrics to track. And until then, you won't. And if you don't, then we're going to stop doing it completely. There's so many orphaned activities that companies are doing that it's because you're doing things that don't have a sticky note that's represented anywhere. And so that's the other kind of mistake I'd say that people are making.

Yeah, it's almost always systems. At the, at the end of the day, I think it happens earlier. Like really, this swamp of scale happens at kind of 4 to 6 million. That's no man's land. That's when you probably need 3 people that you absolutely can't possibly afford, right? There's like 3, you know, VP-level kind of roles that, that you can't afford yet. But if you could get them, they would take you up to $20 million. At that point, you would have the, the margin, you would have the cash flow to be able to get the rest of the people to then be able to scale to the next level. And the only way that you can bridge that gap is through systems. You're not going to be able to bridge it through, through just brute force, through just chewing rocks. Like that's what's going to get you from $1 million to $2 million. Like you said, maybe for, for really motivated people up to 7, 8, 10, but it is not going to get you beyond that. You're going to have to get really, really, really talented people. And really talented people are expensive. And the only way you're going to be able to create that margin is through systems. Also, really talented people want to work for good companies. One of my least favorite pieces of advice is like, oh, just go hire talented people. That's like saying to like your sad, lonely, pathetic friend just like, oh, just only date 10s. That's not helpful. You have to become the kind of person that a 10 would want to date. And it's the same if you want to attract talent as a business. You have to become the kind of business that A-players want to come and work for. It's why I say like, my goal is not to hire like rock stars and A-players. My goal is to build a company that doesn't require them because I know that that that's the kind of company that rockstars and A-players want to come and work for. So that happens through better systems. If you can put those in place, then great people want to come and work there. It's, it's why, you know, big companies get even bigger.

So me and Tyler, the CEO of Beehive, came up with a little challenge for you. It's the newsletter challenge. Now, if you know me, you know that I'm a big fan of newsletters. I got my own newsletter. I also had a business that was a newsletter business that was amazing. I wrote this newsletter about crypto. We grew it to 250,000 subscribers and we ended up selling it after a year for millions of dollars., and I want you to be able to do the same thing in your business. So we're doing a challenge. $10 grand is on the line, plus me and Tyler will actually be in your corner as growth advisors. You just need to go to beehive.com/mfm and you either start a new newsletter or you move your current newsletter over there, and 5 finalists will get picked to pitch me and Tyler, sort of like Shark Tank, and the winner gets $10 grand. So go to beehive.com/mfm. That's beehive.com/mfm to enter the challenge today.

Yeah, it won't be from that perspective because we talked about doing the licensed practitioner model with it. We don't want to. So our model is when, when we work with clients, we do it all internally. And so we're somewhat limited in terms of what we can do. But that's because, again, for us, this is us getting paid to do due diligence because we want to basically have access to the deal flow. And so if we were to license our model to other kind of coaches and consultants like EOS did, it would be a simpler business. It would arguably be more scalable, but we would lose out on all the deal flow. And so we talked about it., but we don't do it. So on, um, on one hand, I mean, Scalable this year is going to do just right at about $10 million in revenue, which is good. And it's really good, healthy margins. But what we generate from the deal flow is way better than that. There's, there's one deal that we're going to have that we got from it that it won't happen this year, but it should be this next year. $300 million company. It's not, we're not going to get 20% of it. Well, it'll be a much smaller percentage of that with a baseline. But if this business winds up going public in a couple of years, let's just say that's, that's a couple of EOSs for me.

Yeah. No. And look, a lot of it's just being old, having done, having been around for, you know, for 20+ years and being in the game for a long time. And that's why I tell people, like, so much of this is patience and just allowing, you know, just getting in the stuff and doing it. I mean, again, the first thing that I sold online was an ebook on how to make your own baby food for $14. So your first thing does not have to be, I went out there, I had an idea, I flew out to San Francisco, I got, you know, I was in the YC batch and, you know, next thing you know, I'm a billionaire. Like, that's not how it has to be. It's not how it is for most people. It can start pretty humbly.

Like, and so I appreciate the I am completely coin-operated. I'm in this for the money. I wish, you know, and I acknowledge the brokenness of it too, by the way. Like, I wish, I don't know that there is like some number. And it's also one of those things like, I don't even know how much I have. It's, I don't look at it because it's not about like stacking those kind of things. And it's the same even with the businesses. Like, I can tell you more about the businesses we have that are broken than I can the ones that are working well. You know, like, it's for whatever reason, my focus is always on the things that, that aren't quite right than on the things that, that are.