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 a 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.
You have two things that I like.
One is.
You have this quote which is the more valuable you are at your company, the less valuable your company.
I think this is like for every entrepreneur you will hit this point, especially when you want to sell where.
It felt really good to be the man, to be the one creating all the value to taking all the shots and having your name everywhere and your face everywhere and your fingerprints all over the business.
It does feel good from an ego perspective.
It does feel good to have control.
But it sucks if you ever want to go on vacation or sell your business, because the more valuable you are to the business, the less valuable the business is.
Yeah, you got to decide.
Do you want to be down on the court hitting the last minute jump shot to win the game?
Or do you want to be up in the owner's box?
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 enable them to get started than do the things that are going to enable them to actually achieve the things that they say they want to.
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.
Yeah, but a lot of times the problem is impulse control like uh, so like he says, as he cuts you off uh it's, it's impulse control.
I think, like i can say that i want something and i do truly want it, but 20 years of previous behaviors have to be broken and it's incredibly challenging to actually do that.
And i think that like evolving as a person is we actually just did an episode on the other day it's way more challenging than a lot of people think.
I like this graphic you had here of the before and after.
I think the messy sort of entrepreneur, which is, I've been guilty of 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 area.
The whole team is asking you hey, you got a minute to talk about X 200 times a day you're missing soccer games.
You can't sell the business because it's too dependent on you and the business owns you rather than you owning the business.
Then you have the ideal I'll come 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 is, I think, 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 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 nine.
And what do you know, magically, I got my work done in that block of time because I did.
And so just the prioritization of that is going to do it.
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 things that you're going to do to begin to stack rank those?
And it does come down to, again, just getting really good at constraint identification.
We can do everything.
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 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 constraint, 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 three 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.
You're basically creating assembly lines that connect.
Is that the right way to think about this?
It's literally like a pipeline.
Something comes in at the start, then what happens to it?
Then it gets handed off over here, then it gets handed off over here.
That's what you're doing?
Exactly.
This is an example of one that we would do just in sticky note version.
This is an example of the growth engine.
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.
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, do 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, what you do with them once you have them, and you could also do it for your manufacturing process, your product creation process.
Then what you've done is you've visualized the core value creation aspect of your business.
Have you ever done this, Sean?
Yeah.
But the question is, what are you doing it for?
So, you know, there's a couple of different ways you can look at that.
One is you look at it and you identify where's the constraint.
You know, the problem is this part's working well.
Like, you know, what we would do is we would overlay some numbers.
We would say, great.
So how many how much are we spending on those Facebook ads?
How many clicks are those driving?
So I would have little numbers written on the arrows, basically.
And then we would kind of circle the one like, where's the leak in our bucket?
You know, this is the this is where we feel weak.
You know, we got a lot of demand. but maybe we're breaking in terms of how many we can fulfill.
There's a long wait list, or they're not coming back.
Why aren't they coming back?
You try to identify the constraints.
Is that why you do the business process map, or is that the first thing you do with it?
What are the different things you do once you create the map?
This is a digital example of the growth engine I just showed you.
This would be their fulfillment engine.
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 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 going to 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 collaborate with agencies to establish 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 bolts.
And this is how we begin to assign roles and responsibilities.
So that's 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 does Lloyd do?
What does Carly do?
You start with your value creation processes and 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 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 near corresponding metrics 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 our scorecards, if you work top to bottom, that's going to visualize what we're seeing as we work across here.
All right, check this out.
So Ryan is giving away his entire operating system.
I'm talking about the actual spreadsheet he uses to run his companies.
Everything from sprint roadmaps and workflows to planning tools, the whole thing.
The same system we're talking about in this episode.
You can get it right now.
Scan the QR code or click the link in the description.
Now let's get back to the show.
When I see things like this, it's sort of like reading the book how to win friends and influence people, where you're like saying stuff.
And I'm like, Oh yeah, that's obvious.
That makes sense.
And yeah, I don't do it.
And I'm like, I would love to do this.
I should do this.
What, what mistakes am I likely to make when I see this stuff?
Because to me as someone, you know, what do they say?
Like, uh, Like it's easy to sell like it's easy to sell water to like a guy in hell.
Like to me, this is like where I am now, where it's like, yeah, I need this.
And so I see there's like five or 10 of these types of frameworks that I'm like, I want all of them.
I need all of them.
So after this, Sam's going to go run off and do it.
What's the first place he's going to stub his toe?
Yeah.
Where am I going to screw this up?
Let's first kind of talk about, like the hiring component, because that is one of the things that I see happening entrepreneurs, as they're scaling, screw up and they make one of two really big mistakes.
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.
Yeah, this 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.
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 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 of growth that you need?
So the first shift that needs to happen is shifting from I got an idea to shifting 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 can get really good at hiring a functional leader and building a team of those.
Now, team leadership becomes a lot easier when you have three or four actually talented, skilled people working for you.
They have massive capacity because they'll build the teams under them to execute all your ideas.
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Sean, two years ago, you're like i just hired this.
I think i think you said i just hired this vp of marketing or cm.
I forget exactly.
It was a marketing position.
I forget the title and you're like what was it?
Was it a CMO?
And you were like, why didn't I do this sooner?
And I remember thinking, oh man, you found a winner.
Like that's like the, the highest leverage thing that we can do is just like find winners.
And it's so challenging.
But I remember you like talked about finding this, this, this person and your like frame was broken.
Yeah.
There's a new test for, is this person a good hire or not?
Uh, which is you basically?
You switch from uh, 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 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 it's so true that it's very, very tempting to hire other people.
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 there to help.
I've definitely felt this problem firsthand.
The biggest mistake that people make when they map 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 that you're tracking, if they don't all link back to a step or stage 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 Digital Marketer, one of our companies.
We don't currently have any metrics for our email newsletter.
Why don't we have that?
I was like, well, show me where the newsletter feeds into anything.
Like, oh, well, you know, 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 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 look, if you can show us where this actually has an impact on our growth engine, 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.
I think I read somewhere that someone said like, I think it was Jason Lemkin.
He was like if you get to a 10 million in revenue, it's you 100, your business.
Can 100 get to 100 million in revenue?
Do you think that what stops people from growing from 10 to 100 million or whatever this arbitrary like it's kind of working to it's a huge home run is like being better operators, like being systemized and things like this?
Yeah, it's almost always systems at the end of the day.
I think it happens earlier, like really this swamp of scale happens at kind of four to six million.
That's no man's land.
That's when you probably need three people that you absolutely can't possibly afford.
Right, there's like three 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 just brute force, through just chewing rocks.
That's what's going to get you from a million to two million.
Like you said, maybe for really motivated people up to seven eight 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 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 10s.
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's the kind of company that rock stars 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 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 quarter million 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 beehivecom slash mfm and you either start a new newsletter or you move your current newsletter over there and five finalists will get picked to pitch me and tyler, sort of like shark tank, and the winner gets 10 grand.
So go to beehivecom slash mfm.
That's beehivecom slash mfm to enter.
The challenge today is the company of um selling this like license of, of scalable, of the scalability company.
Is that going to be the best business that you've ever founded?
I mean, is it's?
It's sort of going to be like eos?
I heard eos, which is, like you know, an operational framework.
I heard that company sold for like, i think, 90 million dollars.
Yeah, it won't be from that perspective, because we 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 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 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.
We're not going to get 20% of it.
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 a couple of EOSs for me.
Dude, this is why you're fascinating to me.
I think Sean uses this phrase generative.
I use the phrase prolific.
You've been doing stuff for 30 or 20 years now.
Yeah.
No, and look a lot of it's just being old, having been around for 20 plus 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 e-book on how to make your own baby food for 14, right?
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.
When did you first feel rich?
I still don't feel very rich.
Why not?
Part of it's because we still live relatively below our means.
I've got four kids and I never wanted to live in kind of a place where you know they weren't around.
I guess normal kids, if that makes sense.
I've seen some of my other friends who they moved when they hit it big they moved to like very ritzy areas and there were no kids there for their kids to play with.
And so my wife and I talked about that.
Like we just sort of stayed in the same place that we were in the whole time.
And so I haven't really expanded my lifestyle that much.
Are you still chasing money?
Yeah.
I think the main reason though, is I still live in the perpetual fear that it's all going to go away.
I appreciate the honesty.
I feel like most people aren't honest with themselves or others about that.
The same just says, are you chasing money?
I think most people would reflexively deny that.
No, I just love what I do, blah, blah, blah.
But everything you do is about making money, and if there was no money, you wouldn't do it.
You know what I mean?
And so I appreciate the honesty.
I am completely coin-operated.
I'm in this for the money.
I wish – and I acknowledge the brokenness of it too, by the way.
I wish – I don't know that there is some number –
And it's also one of those things like I don't even know how much I have.
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 aren't quite right than on the things that are.
You're interesting to me because you come off like a fairly conservative person, meaning like uh, super well operated, and yet there's this other side of you that comes off like a gunslinger like uh, screw it, put it all in red, let's do it.
It looks like a guy who i'll see a church every weekend but also has a bookie who calls him and it's like whoa okay great, i like it very close to home sean, thank you.
Um, all right, that's it.
That's a pod.
I feel like i can rule the world.
I know i could be what i want to.
I put my.
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