Ryan Deiss 8:52

Yeah, I mean, there’s, there’s two things that play here. The first is diminishing returns of some of those previous efforts. And I’ll talk about that second. The second big factor is just as your business does grow, and as it does scale, if you’re at the core of everything, right, what you’ve got to know is, the bigger your business gets, right? The more your business owns you instead of the other way around. Let me invert that the more valuable you are to your company, the less valuable your company is, right? And I can sum this up with a very simple visual. If you don’t have to be like a planetary astrophysicist, whatever. It’s a know that out there in the solar system, right little things orbit around big things. He got moons orbiting around planets, planets orbiting around suns, right, we get that. The same is true in business. And so when your business is a small little startup, right, the mass that is you and your entrepreneurial energy, that is enough to get this thing launched, right. You’re the planet, your businesses, the moon, right. The thing is, if you’re good at this stuff, If you achieve success, if you have all the things that you want, the mass of your company expands, right, and this moon becomes a planet and it becomes a planet that’s, frankly, bigger than you. And so the, the effect of that is that now we’re being whipped around by our business, instead of us being able to keep our business in orbit by ourselves. And that’s because you’re one person, you get 24 hours period, and you’re gonna need to sleep some of those and probably eat, and maybe you want to hang out with people that you love, right. And so your mass as an individual is only so great. Your mass is what we call a you operating system, right? The operating system that is you, it’s only so big. And so what happens is, either you’re going to limit and constrain the potential scale of your company, by your own mess to keep it in orbit, or it’s going to start flinging you around, and you’re gonna get burned out. So the first great task of any entrepreneur is to get it scaled to the point where this even becomes a problem. Right? This, I want to be clear, like, if you’re struggling with this, if you’re burnt out, if you feel like your business is whipping around, it owns you, you don’t own it, if you feel captive to it, that’s only happening because you’ve been successful. Right? So on one hand, I want you to realize the urgency of the situation. On the other hand, I want you to cut yourself some slack, because you wouldn’t be feeling this if you hadn’t done a lot of right things. And so if we just acknowledge that, okay, great. If it can’t just be me, it’s got to be something else than what is it? Right. We can’t just say, well, let’s just replace it all with software, right? Some automation is, you know, there’s a piece of that, you can’t simply say, Well, let me just throw a bunch of humans at it, right? Anybody who has ever been incredibly, like frustrated and overwhelmed, and they, then they just like, hired somebody at random, then thrown at the problem knows that the problem didn’t get fixed, the problem got worse, right? Because you can’t throw good people in a broken system. You can’t good people don’t fix broken systems, right? Broken systems will break good people. But I’ve seen it time and time again. So what’s the solution? The solution is you got to solve the systems issue. And you solve the systems issue by upgrading your operating system upgrading from a new operating system to a more scalable operating system. And that is going to require, you know, the actual systems side of the business, it’s going to require the you know, the processes and the way a lot of people do it is wrong, we can get into the right way to build an operating system, if you want to. I can say it’s not just about creating a bunch of checklists. But that’s what it’s got to be. So that’s the first thing. The second thing I want to come back to is diminishing returns, right? Why do you need to kind of this operating system? Why do you need a new playbook? Because you talked about like, oh, you know, we were on Amazon, and just being listed on Amazon and doing basic, you know, search, Amazon search optimization, got us 10 sales a day, let’s just say you got and then we ran some Google ads, and Google Ads got us another 10 sales a day, right? Well, those efforts and adding Google ads that didn’t just get you 10, sales a day more, that doubled your sales, right, double, right. And then you begin to optimize all these things. And through the optimization, you go from, you know, 10 to 22, you’re like, great, we doubled it over again. Now. Now, that’s where we’re making the leap from zero to six, you know, six to seven. And now you’re gonna say, Okay, let’s try Facebook, and Instagram and Facebook and Instagram, it adds another 10 sales a day, right? Well, 10 sales a day was all the sales in the world in the beginning, but now, you know, 10 sales a day going from, you know, 20, up to 30. You know, we’re now talking about a 30% increase, right, you know, 35% increase is kind of what we’re looking at here. And now we’re doing other little optimizations, and maybe it’s adding an extra five sales a day, we can five sales a day would have been a 50% increase back in the early days. But now five sales a day, depending on the outcome, maybe it’s a 10% increase. And now we’re gonna try Tiktok. And we don’t quite have it figured out. It’s not quite there in the market, but it’s a lot of work. And it adds like three cells a day, and that’s good again, in the beginning would have been 10% increase. Now, now, it’s like, barely a blip. So that’s what I mean by diminishing returns at some point. It’s not just about layering on tactics, or practicing random acts of marketing, right? It does need to be about creating the capacity within your business to go out and do the really big things where, you know, launching whole new product lines, perhaps doing acquisitions, going into traditional retail, right? This is not the stuff that’s going to happen through tactics. But at some point, the leaps we need to make to go from seven, eight can be iterative, it can’t just be an extra, you know, five to 10 sales here or there. So that’s why operating systems matter,

Josh Hadley 14:28

man, I love that. And I think we could break this down into finite detail with each of these things. Now, Ryan, I think I have a couple questions. I want to go back to what you said earlier, in terms of you know, as you continue to scale, you’re going to run into issues in the business or you might say, hey, I want to we need to figure out tick tock. Well, you can’t just throw somebody at a problem right? And just hire somebody and be like, I don’t know, go figure out tick tock for us. That’s the way that we’re going to grow right. We made that mistake. I have my One of my first podcast episodes like, here’s my top five mistakes that I’ve made in this journey to eight figures. And one of those early mistakes was like just willy nilly just like hiring people and throwing them at problems without myself like understanding how are we going to approach this problem in the business myself learning a little bit about it, and creating maybe a process or framework around how this is going to support the business and maybe a light SOP. So when this team member comes on, I’ve got some KPIs that I can track, I know what the goal is, and I can tell somebody to go run towards that goal. So I completely aligned with everything that you’re talking about. Because I’ve been on the opposite end of that of yeah, this this is we’re throwing people at this problem. And we’re not making any progress. So Ryan, my question would be if, if somebody does not have like a formal operating system in their business, like, where do you even begin, right? Could be you couple other people on your team? Maybe you have some SOPs, but where should people begin? I think

Ryan Deiss 16:01

they need to start like so an SOP is really great. And then if you don’t know if that’s just a standard operating procedure, it’s a fancy word for checklist. Let’s call it what it is a checklist on to this than this business. I think checklists and SOPs are great. But the problem is, is they speak to a very specific narrow task, right? They speak to a narrow, maybe even a project that will be repeated, but it’s fairly, it’s fairly narrow, and it’s out of context, to the business as a whole. So I think we got to go, you know, start a little higher level than that. And we need to answer the question. Okay. How do we as a company create value? Right? This is a question that that very, very few founders, entrepreneurs, CEOs ask, just at our core base level, how do we create value in the marketplace? Like, Why do we exist? Now? That’s a big question. So let me break it down a little further. What every company does, and I don’t care, you know, e comm software, you know, b2b services, you know, mom and pop, brick and mortar retail, I don’t care what you do. All companies do three things. We make stuff, we sell the stuff we make, we fulfill the stuff we sell, okay, that’s it, to even have a business you had to have made something and making could be you physically made it with your hands, it could be that you sourced it, it could be that you came up with intellectual property, you had an idea, there was a moment of innovation that got the thing launched, right? Even if like, let’s say you are a franchisor, a licensee, somebody else made it and your licensing what what they made, but you know, still something was made. Okay, something has to be there. There you go. So we make stuff and then we sell it. So that’s what we would refer to as a growth engine, like how to customers happen. And then there’s, we got to fulfill it. So that’s the fulfillment engine, once we have a customer or a client, how do we fulfill on the promises made during the sales and marketing process? Those are the three things that businesses do. So anytime we’re working with a client, in founders board, or one of our, you know, accelerators, we always just say, Okay, let’s begin, let’s make this customer facing and ask the question how to customers happen, right? We can we can answer the how do we make stuff later on? But in general, let’s assume we got some stuff, right? Let’s start the customer facing how to customers happen. And the process that we use is not a checklist, right? The process that we use is what’s known as business process mapping, right? We get a whiteboard, we get post it notes, and why have them handy. I always have them here. And we just asked the question. Okay, what’s the trigger event? How does somebody find out about our brand? You know, and so if you’re an E commerce seller, it could be well, they do a search on Amazon. It could be well, they see our ad on Facebook or Instagram, while they see us on Pinterest. Right? Okay, great. So each one of those sources gets posted them. Great. And then we just ask question, then what happens? Well, then they go over to our product page, right? And it could be a product page on Amazon. Or it could be your own, though. And those may be two different processes. And we keep on the same, but we discussed, okay, great, then what happens? Well, then they add to their cart, great, then what happens, then what happens? And what we want to create is a visual flow of how customers happen. And sometimes it’s like, well, if they take the upsell, you know, and add that then they go to this other place that they don’t think, oh, here, there’s all these ways to visualize, but it’s a basic flowchart. Right up. And so we do this for how customers happen. We do it for Okay, great, now that we’ve got a customer, right, so somebody bought something, then what happens, let’s keep the customer journey going. And if you will do that, you will have a visual flow. You could call it a customer journey, you know, but really, it’s a business process map but you will have a visual flow of how you create value as a company or you acquire customers, how you serve the customers once you have them. So that really is the first step. Then you go stage by stage and you say okay, which of these stages are really the most critical, right which are the ones that we definitely not want to screw up? Right, which are the ones that like this is kind of our secret sauce. Those are what you create your your SOPs around, right, that’s what you create your SOPs around, then you can come back around and say A Okay, great, let’s go step by step stage by stage and say, who’s going to be accountable to making sure this gets done right? Not necessarily who does it, but who’s going to be accountable to making sure that this particular stage right here is done. Right? Right, especially if it’s what we call a power stage. So we built an SOP for it. Now you go around all the people and what you’re gonna find if you do this for the first time as an entrepreneur, it’s gonna be me, me, me, me, me. And then you put, then you can begin asking the question, okay, I can’t be accountable for all this stuff. I don’t have time to do all this stuff. I’m not even the best at all this stuff. So whose names should be there? Is it somebody who’s already on the team? Do we need to make a hire? But if you start with this is our value creation process? If based on that, then you create checklists, playbooks, SOPs, right, not at random, but like documenting exactly how we deliver value, then you say, Okay, now who, who should be accountable for this, who should be responsible, you never get into this issue. Again, if throwing people in a broken system, we got the system, but the high level and granular we know who should be you know what type person doing it. And then when they come aboard, we say, this is how you do the job. This is where it fits into what the work that you do fits in the broader, you know, fit fits in the broader value creation process. That’s what we do. That’s what we have all of our clients do. And that’s what we found actually works, as opposed to just random acts of thought about random acts of marketing before. There’s also random acts of SOP when you don’t

Josh Hadley 21:23

want to do that. It’s true. Yeah. So going along those lines, then Ryan, how do you know? Who should be your first hire? Right? Is it kind of going along that customer journey, so to speak, or your value journey that we’re talking about here? And is identifying? You know, hey, actually, our secret sauce is in product innovation, right? Like, that’s our secret sauce? That’s where it seems like we’re bringing a lot of value, especially on Amazon, right? You talked about, you know, bringing traffic, it’s like, well, Amazon’s brought traffic to you. Plus, they have the fulfillment engine. So like, they’ve tackled two big levers for a lot of people, right? So if you identify like, Hey, we’re really good at product innovation or something like that. Does that mean, hey, I should first hire out that product innovation? Or do I need to figure out a product? Do I need to hire a project manager? Or it’s an executive assistant? Like? How do you go through the process of deciding who to hire first? And why?

Ryan Deiss 22:21

So let me answer the question by telling you what not to do. And then I’ll come back around and give a more explicit answer. So what most people do, and it’s not what you should do, is they go around and look at all the stuff that needs to get done, right. And it’s their name and all the boxes. And so what they say is, okay, I need to get somebody to help me with all of the little things so that I have more time to do these quote unquote, important things, Ryan, so I need to hire a virtual assistant to help like, answer my email and to deal with my scheduling. And, you know, I need to hire somebody else over here to, you know, respond to this and take care of that. And, you know, in this particular, if I just had somebody to help me do some of the pieces of this, you know, then, you know, then then I could be more efficient. And what we’re doing when we do that is, and the reason that’s not what you do, is you’re what is known as the genius with 1000 helpers, okay? And so you’re not actually creating any additional space and freedom for yourself. You’re just adding the management of other people and the tasking out of other people to your already cluttered to do list. And that’s why doesn’t work. And that’s why ultimately, these people failing, and we’re like, oh, they suck, and they were supposed to help me. And they’re supposed to take time off. And they’re not, they’re just asking me all these questions. I don’t have time to answer all these questions, right? It’s because we didn’t hire someone to own a critical aspect of the value creation process, we hired somebody to help us continue to own that process. So what I would encourage you to do is look at the value creation flow, and to say, what are the critical tasks and processes that I don’t like, and I’m not particularly good at, but I’m currently being forced to do, okay. So it’s incredibly critical. It’s incredibly important, but you don’t necessarily like doing it. And you don’t necessarily, you’re not necessarily the best in the world at it. So let’s say again, you know, you’re running an E commerce business, and you really love the product side of things you love, the innovation and the sourcing, you love, you know, thinking about the packaging, and the positioning, but you’re getting the bulk of your traffic, let’s say from you know, Pinterest, and Instagram, and you don’t geek out that much on Pinterest and Instagram. But you’re you’re good enough. Right? So what people would say is like, I guess I’m gonna get somebody to help them photography. And maybe somebody can write some of the descriptions and do a little bit of screw that they I get a head of marketing that can own this entire section of this and hire big hire up and let them build out the team. Now why don’t we do that? Okay, we don’t do that because we’re scared. We’re scared because that person that we’re going to hire well, they’re going to be more expensive person. And I don’t know if we can really afford that right now. And so we don’t make that big hire. Right? And we’re also a little bit nervous to make an hire because because it’s the thing that We’re not as good at how we know that we’re hiring the right person. So the way that you cover the second piece is you get help, right? If you suck at marketing, but you know, you need a marketer, then get somebody on your advisory board, get an A, in a group with smart with smart marketers, where they can say, well, you can go to them and say, Hey, we can kind of help me build out like, who this should be, you know, what should the job description look like? What’s my experience level, and maybe even help with the interview process? Okay, get somebody in your corner to help. That’s how you do that. Even if you got to pay him a little bit. We’ve hired consultants before to help us with an interview process, some of the best money we’ve ever spent. And so, but truly, if you’ve got an advisory board or a network, just ask for help. I’m sure you got friends in the industry that would help you. So get get over that one. Okay, you’re the CEO, you’re this will not be the last time you hire for a job that you never thought about. Okay, it’s very figure routable. So let’s talk about the the investment side, what people don’t realize is that, let’s say you gotta hire somebody. And let’s say it’s a, it’s a big role, they’re going to make 120 grand a year, they made 10,000 a month. Okay? Two things. Number one, they come with a 12 month finance plan, okay, so it’s not like you hire somebody for 120 grand a day, and you got to cut them a check for 120 grand a month, okay, you’re gonna pay this person, approximately $10,000 a month, plus 18 to 20%, for all the other stuff that goes along with it taxes, insurance, what have you. Or you can hire two or three helpers, to help you do all the other little stuff. And guess what, collectively, that’s going to cost you at least that much, if not, but they didn’t actually remove anything from your plate, because they can’t actually lower level employees entry level, folks, they can’t own a result. And so you’re gonna work with them a lot longer, you have to invest a lot more time and training them in managing them. You’re gonna give them a lot more time, right? Where you’re gonna go and be like, oh, yeah, I mean, it’s been six months, and they’re not help a lot. But they’re just learning all this stuff, right? Whereas you bring somebody in, you know, 420, grand, 150 grand, who cares? They got experience, high level, people should be a creative medium, they should be paying for themselves in the first 90 days. Well, they’re gone. Yeah, and that sounds harsh. But you know, who gets that high level people, they get that experience, people get that, and they’re not going to take a job unless they know they can do it. And so you figured, let’s say that you’re gonna pay him $15,000 A month, right? $15,000 a month? Well, they’re gonna take off a massive chunk. So just in not having to worry about this, you’re gonna be able to make that a piece of cake. Okay, but let’s compare it to the option, right, you’re paying this 15 grand a month, and you’re gonna know in 90 days, they’re paying for themselves in 90 days. So really, it’s a $45,000 bet. And now, we bumped this person up to 165, grand, whatever in salary, just so we’re clear, high level person, you’re not hiring people that yet expensive. But let’s say it’s 15 grand. Now, let’s go back and say that we’ve hired two people at $4,500 a month. Okay, right. So now we’re thinking, Okay, we’re at about nine grand throw an extra, like, you know, 10 grand, they’re really helping us out, we’re not getting any gains from anywhere else. Because we’re managing these people. And we’re trying to, we’re trying to make them successful. And but they’re asking us a lot of questions, and we’re gonna get a lot of shoulder taps, and hey, do you have a minute, and hey, I can’t move forward until I get your feedback on this, like that kind of stuff. So we’re not actually gaining any capacity, we’re not actually getting a lot more done, you’re actually more frustrated, but because you know, it’s not quote unquote, their fault. You know, you’re eight months into this thing. And you’re only just now beginning to ask the question, maybe I made the wrong decision. So you’re a full 12 months into this deal. You know, you’re almost triple what you have invested with it individual, you haven’t gained anything, and you have to start all over again. And that’s when you declare, well, maybe I just minded, I should just keep my business small, maybe scaling it to eight figures. I shouldn’t do that. It’s too much work. Employees suck. I’m just gonna have it be a small seven person kind of thing. It’ll be a little lifestyle business. Yeah, maybe it could have been more, but I don’t want to mess with that again. Hmm. I don’t know if anybody else ever said that. But I hear it all the time. And it comes on the heels of a massive hiring spree, being a genius with 1000 helper not actually making the call to hire the big functional Pro to come in, and to take significant stuff off your plate. So that’s how you do it. Start with, I’m not that good at this, and I don’t really like it, hire a pro to do that. Then slowly begin handing, you know, as quickly as possible, responsibly, begin handing off the other things until eventually you can look at your entire value flow, and you’re not your name is not in any of them. That should be the goal in every entrepreneur. That’s when freedom happens.

Josh Hadley 29:31

Yeah, man, I love that Ryan and I’ve already got a few mindset shifts, just as you’re talking about that. I think that the common I think thing that you hear people say or preached at you is that you can’t hire somebody unless you know, you know what you’re hiring for, or like creating that, you know, job description. You mentioned, like being able to go to advisors, or other people that are more experienced in let’s say the marketing realms. so to speak, right, that could actually help you craft the right job description, set KPIs and things like that. Versus the person that has to go in there. And hey, I’m gonna go hire this marketing person. Well, first, I have to go figure out marketing, right? Because I need to learn how it works, then I can hire it out. Why break down that barrier? Why? Why is that? Because

Ryan Deiss 30:23

that’s not the way that any real company actually works. You’re telling me that Jeff Bezos said, before we can build out any significant fulfillment centers, I have to learn every aspect of robotics. Come on, like anybody who says that they’re just either incredibly inexperienced, and naive, or they’re so freaking arrogant as to believe that they’re the only ones that can possibly figure this stuff out. And then they can teach it to somebody else. Yeah, of course, crap. There’s so many functional things where people have been doing this for their entire lives, and you’re saying level, I’m not gonna hire somebody who’s who’s actually a pro at this, I have to first figure it out myself. And then I’ll teach it to somebody, this is not the way anything works. I’m not going to hire a heart surgeon until I learned heart surgery myself, then I’ll explain it to somebody who I guess maybe went to medicine, medical school, but maybe not, I don’t know. The point is, if I know it, then I should be able to share with somebody else, then they’ll know it. And then they can do it. For me. It is just incredibly asinine. limited thinking it’s not true. It’s not the way that real business is done. And anybody who’s saying it is just wrong. They’re wrong. And if you think it doesn’t even make any frickin sense, it’s not how any real business works. It’s just wrong. Now, am I sympathetic? Of course I am. Because I’ve said the same stupid crap before, but it doesn’t make it any less stupid crap. No, you don’t have to learn it yourself. If you do, you will simply burn yourself out and stall the growth of your company.

Josh Hadley 31:49

You know, Ryan, I think like, I’ve already got a lot of takeaways from our conversation, you know, because I was in that, you know, kind of field of, hey, you know, before you can hire this out, you’ve got to go figure this out yourself so that you know what to look for, when you’re hiring this person, you know, and we just hired our VP of Operations, who he’s already coming. He he worked in supply chain at Procter and Gamble, like he worked at another CPG firm for seven years took them from 10 to 50 million, right. So he’s already playing at a higher level. And I’ve already seen him come in and be like, this could be better, this could be better, this could be better. And like, oh, yeah, those are things I did not know, slash, I can’t train you on those things. And so I agree with kind of what you’re saying there, Ryan, in terms of like, I think that’s a mindset shift that I wish I would have had earlier. And that actually probably would have sped up our path to eight figures. Had, I said, Hey, instead of going out and hiring a marketing specialist, that’s a virtual exit vert for a virtual assistant, right, that I’m just adding to my management play at this point of like, Alright, now I’ve got another meeting that I have to do every single week, just go straight to the top of saying, I need to find somebody that’s going to own this department. My question on that, though, Ryan would be how do you bridge that gap of? Okay, yeah, this might be $150,000. Team member that we’re about to bring on to the company, you know, that’s going to be you know, maybe tight? Maybe not, but like, how do you bridge that gap? Because I think that is the mental gap of like, yeah, I could hire five VAs to make up that $150,000. Person. How do you bridge that gap? Yeah,

Ryan Deiss 33:37

I mean, the gap is twofold, right? So the gap is real, and the gap is imaginary. So we talked about the first thing, the the first gap that you have to bridge is what we were just kind of talking about what you alluded to, and I’ll give some grace to other people like us who believe the I’ve got to figure it out first. A lot of this is imposter syndrome. Okay, a lot of us, especially those of us who are accidental entrepreneurs, we didn’t graduate with MBAs from the best colleges, we weren’t funded by the best, you know, VC or private equity backed kind of groups. It was us in our spare bedroom, figuring this crap out as we go along. And we live in a constant state of of fear that somebody’s gonna figure out that we don’t know what we’re doing. And I think part of the reason that we don’t hire these experts and the specialists is because we most fear that they’re gonna figure us out, right? Why would anybody with this background want to come and work for a little me? Okay. So here’s the first thing that you have to understand number one, as an entrepreneur, what you do is very different and very difficult for them to figure out to and the best operational talent who they really know their craft. Guess what? They respect yours. Okay. They respect yours as well. Right? Like ballers respect other ballers, right? They just do, and maybe what you do is different, but they still respect yours. So there’s no you shouldn’t NCSY when you say like, so don’t have impostor syndrome. I know it’s tough. But if you go through this enough, and you own what you’re good at and you don’t pretend to be good at everything, then people respect that. And there’s no secret. That’s why you’re hiring them. Right? It’s only going to pick those people off. If you try to pretend like you got this VP of ops coming in. And you know, first week in there, you’re like, Alright, I’m glad you’re here. Let me tell you all the stuff that I know about this, but that’s like an impressive, right? If you approach with humility be like, Look, I’m really good with stuff I’m good at, obviously, I’m not gonna do stuff you’re good at. That’s why you’re here. Super happy that you’re here. People appreciate that. Okay. And if they’re being hired for senior level position, they want to know that they’re probably the best there. Right. And so, so that’s the first kind of gap overcomes that impostor syndrome. You mentioned the financial gap. It’s an investment. It’s an investment, like anything else, how do you overcome that decision to make that first, you know, ad buy, you know, make that commitment to that agency? You know, take your stuff, if you believe there’s going to be a return on the investment, you believe it’ll ROI? How did you make that first decision to make a really big inventory? Buy? Right, I remember the first time we bought a container load of stuff from a supplier, you know, in China, and it’s like, you know, we’re gonna have about 80, grand, you know, floating on the water for an extended period of time tied up? Yeah. Why did we do that? Because we believed it would turn into $207,000. When it landed, right, we believed there would be return on that investment, all the same. And it’s the reason why I would encourage you to spend more on better, okay, make bigger investments in less places make bigger investments in less people. Because when you do it, not only are you more likely to have success, you’re also more likely to take it seriously. And to say, Okay, this is the hire we need to make. If we make this hire, and they crush it, what will that then enable us to do that we can’t do today. And you’re going to ask the difficult questions, and come up with a business case. Right? What is the business case for me? And this higher end, if you can’t paint a picture of a positive return on investment? Don’t make the friggin higher? Yeah, so the question isn’t, can we afford it? The question is, will the investment ROI? Will there be a positive return on investment? If so, over what period of time? I’ve already told you, it should be three months, six months at the absolute worst. So go and plan for six. Okay, so this person comes in and adds no value? What’s our six month risk? And do we have that, and look, if you don’t have, if you don’t have six months to hire, to afford to hire one person that if that amount of money were just to be lit on fire, that that would essentially ground your business, then I guess you can’t make a hire right now. Right? Maybe that’s a bit or maybe you need to wait a little bit, build up a little bit more of a, you know, cash reserves that you feel comfortable making it, but we’re just not talking about how much money if you’re a seven figure business where it’s not, it’s not that much money. And it’s not probably going to take six months. You know, if you’re three months in, and it’s an utter freakin disaster kind of loose right then in there, you can’t afford to do anything, otherwise, you’ll be a lot more responsible, you’ll be a better steward of your resources. If you’re a little bit scared on the front end, part of the reason we let headcount go up is because it’s easy to hire another $36,000 your person, it’s easy to hire another, you know, $20 an hour, you know, VA doing whatever, these things build up, we turn around, and it’s more than that big higher, and it’s also just a much bigger time and energy suck. And yet, we’re afraid to make the investment that’s more meaningful than saying I’m gonna buy apple instead of I’m gonna buy some random penny stocks.

Josh Hadley 38:19

Yeah, that’s so true. And I think that so many people tout, like, how big is your team, right? As though the number of team members you have indicates your success as a business owner, right? And I think it’s better to instead of like, Oh, I’ve got five V A’s, right. So that’s adding to my headcount. But if I hired one expert, like, they would be crushing everything, and it would be less management, and it’s actually somebody that knows how to drive results and knows how to show up and will make stuff happen. So with that, Ryan, I also want to ask you like, Are there any other like pitfalls that you see, you know, as we’re running up on time here, what other pitfalls or common mistakes do you see entrepreneurs make? As they’re building out their team? They want to scale that we can kind of sum things up here.

Ryan Deiss 39:06

Yeah, I mean, if I think about kind of as a CEO, my job is to automate everything. And an automation doesn’t necessarily mean through software. My rule is if I don’t have to do it, it’s automated. Okay. So the first thing that I want to automate is all of the execution all the doing of the value creation. And we talked about how you do that, right? You got to map those value flows. You got to figure out what are the power stages let’s we’re going to, you know, build SOPs around those. We’re going to assign responsibility. If that’s me, then I’ve got my hiring plan. That’s how you automate the execution. The next thing that we want to begin to automate is the optimization part, right? Because the next thing that I trap I see entrepreneurs get themselves in is they’re the only one that can fix stuff when it breaks. They’re the only ones who can go from good to great. We got to get get out of it. So that’s where you talked about the scorecards before. Right? It should you should have very simple I believe in manuals records where your people, it’s clear look at these are the metrics that matter. Incidentally, the way you build your scorecard. So you go back and you look at your value creation process. And just like we said, Who’s responsible for this? You say, What metrics do we need to track to know this stage is working? Yeah. And so if you do that, you know, now we don’t have vanity metrics, we have metrics that actually follow the flow of the value creation process. And so we decide, okay, these are the metrics we’re tracking. This is these are our targets, meaning this is what good is figuring out ahead of time then after the fact. And then we call it code. Right? Green is Ron, Tracker ahead. Yellow is we’re a bit behind. But we think we can catch up, we got a plan. Red is, we’re way behind them. We’re freaking screwed. Okay. So for me as the CEO, I can look at that those colors. And I can ask questions. But what I found is, if there’s people who are uniquely responsible for that, when they change the color from yellow to read, they start coming up with ideas how to fix this without me even asking, right so that it’s the scorecards and the manual nature of scorecards. That’s why they’re not just dashboards, not just aggregating data, I’m talking about scorecards that real people need to plot and data, manually make decisions about have insights take action because of it. That’s how we get ourselves out of being the only ones that can optimize. But the last area where entrepreneurs get stuck, is they’re the only ones who can make a high level decision. Right. And so the last piece that you need to automate, after you’ve automated execution, after you’ve automated optimization, is to automate the decision making process. And to do that, you gotta have a framework for decision making. And we found that comes down to four things, right, four things to have a framework for decision making. Number one teamies know the goals. Where are we headed? Right, where are we headed? And so something comes through, does this get us closer to our stated business goals? This much revenue? This much profitability? Yes or No? If yes, great. Now, let’s go on to the next one. does it align with our company purpose, our stated why our greater, you know, mission and vision, does it align with that? You know, if the answer is yes, great. Next one, does it align with our core values? Right? Is this going to cause us to deviate from one of our core values behave in a way that we’ve stated? You know, we’re not going to behave? If the answer is no. So they’re great. The next piece is what we call strategic anchors. And this is simply a list of all your competitive advantages. What’s the stuff that you’re uniquely great at? And so we’re going to ask, Does this tap into? Are we playing to a known strength? Right? If the answer is yes, great, then let’s move forward. I’ve worked with a lot of entrepreneurs, I’ve worked with a lot of CEOs, I’ve run a lot of companies, I found every single decision that I made, I went through those four criteria, does it align with your goals does align with our company purpose? does it align with our values? does it align with our strategic anchors? If the answer to all those things is yes, and I’ve made it clear, and we document we have a framework for it, I’ve taught this to our leaders, they should be able to make decisions as good or better than you because they got your framework for decision making. And they’ve got there in the trenches context, that frankly, you don’t have, once you automate all that stuff. That’s when you actually finally get to kick back and have some freedom. But that that last trap that I see entrepreneurs get caught in, is they still are the ones that feel like they have to make every decision. And you’re not. And at scale. You

Josh Hadley 43:14

can’t. Yep. Man, Ryan, I think we could spend the next 10 hours diving into these this in more detail. And I know that’s actually why you have founders board and scalable.co, which we’ll give a shout out to. But as we wrap things up today, I do want to ask you my final three questions. Before we get there. I love to leave the audience with three actionable takeaways from each episode. Here are the three takeaways that I noted Ryan, let me know if you think I’m missing something. So number one, from today’s episode, I would say like, if you haven’t done this before, go do your value creation mapping, right? Could be your customer journey. But go back, hit rewind, Ryan walked through all the different like steps that you should consider in that value creation process. You need to do that. And honestly, I, I can say that now because Ryan and I jumped on a call about two years ago, when COVID was taking our business. And it was like, Dude, where are you? Where are you generating your revenue from? You’re making money from these blogs that you’re trying to start and this whole membership program was like, Well, no, everything’s coming from Amazon, then why? Why are you supporting this other side of the business? Right? And like it was this finally like this aha moment, even though it’s like kind of right in front of my face the whole time. Like that simple exercise will reveal wonders for your business. Action Item Number two, I would say is overcoming that impostor syndrome, and being able to make those executive hires so to speak, right? Those bigger hires people that are experts in their space, you’ve got to be able to create the ROI, right or see and calculate the ROI that that team member can provide. You’ve got to just frankly, like shift your mindset, and you’ve got to get used to it, especially if you want To be a business owner that can scale businesses. Last but not least, is going to automating that value creation process, right? If you’ve, if you’ve already checked the boxes, you’ve got capable people on your team. Now it’s time to automate that value creation. And then especially establishing that decision making framework that you talked there. Talked about there at the end, Ryan, anything I’m missing? Now? Seems like you got all the gullible high points. All right. So last three questions. Ryan, let’s go through it real quick. What’s been the most influential book that you’ve read and why

Ryan Deiss 45:34

it’s hard to pick a single one. So I’m not gonna, like asked me which kid is my favorite. But I would say The Goal by Eli Goldratt is a phenomenal book, because that’s where I learned about theory of constraints. Basically, you know, any value creation process is only as efficient as its least efficient state. And so after you do that value mapping, figure out which where’s the bottleneck, and just focus on that one, and that, by the way, becomes the role of the CEO. Right? Find the bottleneck, dive in and try to fix the bottleneck, either through your own resources, through getting additional resources, opening up additional investment channels, tap in your network, whatever needs to happen, your job is to find the bottleneck and help to unclog the bottlenecks and build teams that can do that same thing, so I would have to give the nod to the goal.

Josh Hadley 46:25

Awesome. I love that book as well read it, read it back in college. Yeah. Next question.

Ryan Deiss 46:30

The audiobooks pretty good. By the way, it’s a long book, I recommend audio versions. Well, good for long trips.

Josh Hadley 46:37

That is good. That is good feedback. What is your favorite productivity tool or resource,

Ryan Deiss 46:42

I mentioned this earlier. It’s these things post it notes, sticky notes. So the way I do my to do list and I’ve tried to London for months, I literally start off every single week. And I just make a very simple checklist. It’s it’s goes right on my laptop. So wherever I am, I can see what I’m supposed to be working on. It’s all by hand. I’ve tried every system in the world. And no system has worked better than just sitting there on Sunday evening and saying what must get done this week for me to feel good about my productivity this week, I write the things down and leave some spots at the bottom for you know, the things that might come up on Monday. If things wind up getting moved I’ll just draw a little arrow you know in the box if it’s done I check it i Then keep a stack of all of my to dues next to me so I can review what all did I get done in the last month or or year and that’s how I kind of do my review. So for me, it’s the humble sticky note.

Josh Hadley 47:36

I love it simple yet effective. All right, last question Ryan, who is somebody that you admire or respect the most in the E commerce space that other people should be paying attention to?

Ryan Deiss 47:45

So I’m going to kick it old school um, pre e pre the E in E commerce and I’m going to say J Peterman. Are you familiar with J Peterman and the J Peterman Catalogs?

Josh Hadley 47:55

Yes, I do know I mean, it goes back to that’s a Seinfeld reference the two right?

Ryan Deiss 48:02

Yeah, most people only know about J Peterman from basically him being this like ridiculous character, which was Elaine’s boss on Seinfeld, but this is a real person, I believe is still still with us. But what J Peterman did I think was so brilliant, is he created value manifested value, and very simple objects through the act of story. And so if he could take just some random sweater and make somebody feel really great about owning this sweater, more importantly, giving people other stories to tell, because when you bought something from the Peterman catalog, you didn’t just feel like what you had was something unique and special. It also made you unique and special, because you had a story to tell about it. And I think, in the E commerce world, right? Everything we do, can can very quickly become commoditized, whether it’s Amazon declaring that what we do is basic, and they’re therefore they’re going to suck it in their Amazon Basics category, whether it’s getting knocked off by, you know, some Ollie Express, you know, somebody on all the Express just another competitor, like, what are the differentiators? People talk about brand as being the moat and the differentiator. I don’t think it is anymore. I think ultimately what it is, is its story, right? And the stories we can tell about our products and the things that we sell, and not just the stories that we tell, but the stories that our products enable other people to tell. That’s what we need. We’re all we’re also boring, we’re all so bored. And so if we can tell a great story, then I think the world’s a better place. I would encourage you anytime J Peterman catalogs come up for sale, old school ones on eBay, I buy them and I’ve probably got the largest collection of J Peterman catalogs in the world. And so that would be

Josh Hadley 49:47

fascinating. I have never heard that name before used in this type of reference. And so this is awesome. Definitely something I’ll be checking out. Ryan, thank you so much. You’ve shared a lot of value with our listeners. Today, if people want to learn more about what you have going on at The Scalable Companies, where should people go to learn more about you and join your programs?

Ryan Deiss 50:09

Yeah, I mean, if you’re looking for a, you know, a mastermind and network of other seven figure folks looking to scale to eight outside of e-commerce, so e-commerce folks, but also other business, I think there’s tremendous learnings that can happen across business models. That’s what we do in Founders Board. So check out foundersboard.com. And if it seems cool, then apply. Let us know in the notes that you heard about us through through this podcast and through the Hadley’s here. And I thought that we’ll only do favors because, you know, I like you, Josh. Mostly, though, you know, I like I like the actual boss. I like that you’re good, too.

Josh Hadley 50:46

Hey, well, I appreciate it. Sorry. You got stuck with me today. I’ll take it. I’ll take it. Awesome. Well, thanks so much for your time, Ryan. We look forward to following up with you later. But thanks for your advice today.

Ryan Deiss 50:58

Thanks, buddy. Appreciate it.

Outro 51:00

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