Strategies for Rapid Wealth Creation

You guys want to hear something absolutely insane. I made more in a year than the CEOs of McDonald's, Ford, Motorola, Yahoo, and Ikea combined as a kid in my 20s. Believe me, no one was more surprised than me. And so I'm going to show you how to make money so fast it feels illegal. The first way to make money so fast it feels illegal is to understand value creation. I want to tell you a story. I sent my father a picture of our largest annual event that we held in our company, which licensed the gym owners. We had a room of 700 plus people. And he said, Oh, that's awesome. That's so many people. How much did they pay to be there? And I said, $42,000 a year. And he said, Oh my God. He said, do they know that they're paying that much? And I was like, yeah, they're aware. It's not like a magically siphoning money from their accounts. And it was like, okay. Now, rather than respond and be like really, you know, mean about it. I was like, well. Let's walk through this. I said, if you were able to pay a dollar and get $5 back, would you do it? And he's like, well, it would depend. I said, it would depend on what? He said, well, what's the likelihood that the five to one actually happens? I said, that's just the average. So some people are below average, some people are above average. He's like, okay, that feels like a fair bet. Well, what would I need to do? I was like, great question. You'd have to dedicate probably 10 plus hours a week to fully kind of implementing. a new model within your business. He was like, okay, how long would it take between when I started and when I got those types of results? And I said, about a year. He was like, okay, well then yeah, I think I would do it. And so that thought process was kind of the first big unlock to making so much money that it should feel illegal, which is that you can't sell out of your wallet. You have to sell off of the value that you're creating for someone else. we were able to charge significantly more and profit significantly more than everybody else in my space. And so everyone else in my space was charging literally a 10th of what I was able to charge, or I prefer to say command from the marketplace. And the reason that was able to happen was because I use something called the value equation. All right. And so the value equation has four components and I'm not going to go super deep on it, but I'll just walk you through it real quick. So you've got the dream outcome, which is what's the big thing that people want. So in this instance, it'd be they want to make more money in their gym. They might want to lose weight. They might want to have a fix their relationship. They might want to look cool in front of their friends, whatever. The next is the perceived likelihood of achievement or the equal opposite of that is risk. How likely is it that when I buy this thing, I get what I want? Which when he asked the question, well, how likely is it? This is what he's teasing out. The next question is time. How long is it going to take between when I start and when I get? And the longer that is, the less valuable the thing is. And then you have effort and sacrifice, which is how hard am I going to have to try? What am I going to have to start doing that I don't want to do or stop doing that I do want to do? To be clear, the reason that I made this value equation is because for so long, many people, and you probably heard them in concert, like provide value, create value. But I was like, what does this even mean? How does one create value? And so I set out to try and figure out what makes me want to buy stuff. And so in a hypothetical example, you'd want something that would be immediate. It would be no effort. It would be guaranteed and it would be exactly what they want the way they want it. That would be the most valuable version of whatever you could sell. And then you would say, let's say that our average is $100,000 of value. All right. Now in a B2B setting, it might literally be that because it's a monetary outcome. And if it's a B2C setting, selling to consumers, then we have to abstract the value of what fitting back into your high school jeans is worth to you or looking good on prom night. or just feeling good every single day, whatever. But we have this ROI, and then we have some sort of discount that we're going to apply to it. which accommodates risk, right? One is it's in the future. I would pay less for something that is guaranteed and immediate than not guaranteed and at a delay. So let's say I sell tables, right? This is a retail product. And you would immediately think, oh, this is probably highly commoditized. Well, I'm not so sure. Think about it. On the lowest end, you can buy a fold-out plastic table from Lowe's or Home Depot for probably 50 or 100 bucks. I haven't checked plastic table pricing recently. On the flip side, you can buy a $20,000 hand-carved wood table. Both of them allow you to put stuff on top of it and eat, right? And so the idea is, how can we position our thing separately from other people? Now, if the dream outcome for that table is not, okay, I just need to have something that I can put stuff on top of, the dream outcome might be, when people walk into my home, they feel immediately impressed. So now we're actually relating this to status. So this is a business, because B2B is actually pretty easy. It's just, this is how much money it is. And then the rest of your time is trying to make it easier for them, less risky and faster. This is a concern where sometimes you need to spend a little bit more time on translating what this status increase might mean for them and how meaningful that is, or the reverse, how terrible and painful it's been to lack this status, right? And so if we have this big, expensive, nice table, then we say, okay, here's the status. Now the risk of this not happening, this is where we might show trends of this being a hot thing that many people understand the value of. So the risk of them not getting the status is lowered. The time is like, hey, I can have this at your house by the end of today. That would be something that's like, wow, this could happen right in time for this dinner party I have where my boss is coming to my house. And then effort and sacrifices. Don't worry, we have a white glove service that will make sure that we can fit it into your doorways, even though it's this massive thing, and we will assemble it there for you. You just need to say yes right now, and it will be there by the end of the night, and you can have dinner on it when you have your guests tomorrow, right? Now we've tied them buying to all of the value components to getting them to then be willing to spend. $20,000 because it's not about the wood. It's not about the table. It's about how much status is worth to them within this context. And they get to keep it forever, right? And so this is how we have to unpack what we're selling so that many of you are selling tables and pricing like it's a plastic table, but you're then trying to half do the work, but then you can't make the margins work with the white glove because people say, oh, I only want to pay a hundred dollars. You're like, well, I would deliver it. And they're like, oh, I have to assemble this too. And all of a sudden they're combating you. When if you just had charged more and positioned it differently, you could then give them all these other things that they want anyway. And the reason this is so important is that price is the single largest lever on profit. So let's say we've got a before, all right, which is that you sell your tables, all right, and you've got an after. This obviously works for services or whatever else you sell, all right? And so let's say you charge $100 for your table and your cost for that table is, I'll be extreme here, we'll say it's $50, okay? Now, let's say that you have... other costs like marketing and sales and other stuff like that, that amounts to $30. All right, so that means that your net profit is going to be $20 when you sell a table. Gross profit is $50, net profit is $20. Okay, now let's say that we reposition our table as this amazingly valuable thing that is now a $1,000 table. Okay, now our cost on this, the table itself might be $50, but let's say we include some of those perks. Let's say we've got the hand delivery and things like that. Okay. Well, let's say that the delivery is going to be another $200 for one of your guys to go out there and use the truck, gas, whatever. So now we've got $250 here. Okay, got it. And then the other costs, maybe your cost of sales goes up a little bit to sell this. You've got to get more leads. Okay, so we'll call it $130. All right, so now what are we actually making in net profit for this table? So we've got $380. Okay, I wish I had done easier math, but I think it's $620 here. All right, so $620 in profit. And so this is how you can get unreasonably wealthy in a very short period of time by simply repositioning what you sell based on the value you provide someone else rather than the cost that it costs you. And so to put this in context, this is a 31x increase in profit. And so I'll tell you this quick story. There was a guy that was in the same exact space as me that paid me for a consulting day years ago. And when I looked at his numbers, what was fascinating was that he was actually selling the same amount of people per month as I was. And so he was spending the same amount on marketing. He had the same number of sales guys and he was closing roughly the same amount as we were. And so what was interesting about this, and this was a massive lesson that I learned, is that CAC or the cost of getting a new customer in an industry, as long as you're proficient at marketing, more or less is actually not that different. You'd be surprised. I look at a zillion companies every year and between industries like a local plumber and another local plumber, it's not going to be that different. And so the big difference though, is that we were able to make... somewhere in the neighborhood of about eight times more money per customer than this guy was. But here's the crazy part. We were making somewhere in the neighborhood of 50 times more profit. And it's because of this. So we had eight times more money, but then it resulted in, so remember, this is a 10X, right? So this is a 10X increase in price, but it resulted in a 31X increase in profit. And so this is why price is such a strong lever on how much you make. Now, where it gets competitive is if somebody else can do something just like you and do it for less. But there was a, I think, a McKinsey survey where they looked at a number of companies and 85% of them competed on price and only 13% of them won on price. So it's literally the worst possible strategy you can have because there's only one person who wins lowest price. Dan Kennedy said this famously, there's no reward you get for being the second cheapest competitor. You just lose a lot of money, right? And so. There is, however, a benefit to being the most expensive person. And that's going to be a direct correlation to the amount of value that you can provide any individual person. And so again, it's about thinking, how much is this worth? And then can I deliver it to them? And can I eliminate the risk, make it faster, and make it easier for them so that I can get less discount on the value that I think it can provide that person? Now, the 201 version of this is selling out of their future wallet, not today's wallet. So instead of selling a product based on, and this is in a B2B setting, how much money someone has, it's about how much money you can make them and how much that is worth to them. And then the ways that we pull apart that value, so let's say it's $100,000 of value, there's going to be a discount that's going to be applied to that $100,000 based on how likely it is, which is the risk. It's going to be based on how long it's going to take, which is the time. It's going to be how easy it is, how much work. they're going to have to put in. And then fundamentally, the dream outcome, which if they want to make more money, that one's clear. Now, if you have a B2C business, a business consumer business, then you have to translate what looking amazing on prom night means to someone financially, or how much pain they've been in for not having the specific solution in their life. And so if I buy stuff, and it gets to me faster, I'm willing to pay more for it. If someone I buy stuff, and they guarantee it, or they make it risk free, or they show me tons of proof, I'm more likely to pay for it and pay more for it. If someone says, oh, you don't have to do anything versus you have a ton of work associated with it, I'm more willing to pay for it. And then the dream outcome is just making sure that I actually want this thing versus something else. And so this actually operationalizes what we can do as business owners. How do we make it faster? How do we make it easier? How do we make it risk-free and deliver it the way they want it? So that was the first of the three kind of beliefs that I had to break in order to make crazy money in my 20s. The second way to make money so fast it feels illegal is to sell in a fast... cash conversion cycle. And if you don't know what that is, I'll explain it right now. This is what allowed me to have $1,000 in my bank account in December of 2016. I had $1,000 in my bank account after losing everything for the second time. Actually, that was the first time I lost everything. And then I lost everything again, I think three months later. So just figuratively imagine I didn't have a lot of money. Now, 10 months later, I was able to put in $10 million in sales and bank, I think something probably close to 6 million in profit. All right. Now, here's the crazy part, is that how can you get this to equate to $10 million in such a short period of time? Well, the first thing is, we got a 100 to 1 return on our advertising. And so every dollar that I put in, so I put $1,000 in ads, I made $100,000. And then I put that $100,000 in ads, and I made $10 million. And that is fundamentally what happened. And so the constraint of the business no longer was acquisition. But the reason... That was not the constraint, meaning it wasn't the thing that blocked me from growing, was that we had figured out something that I call client-financed acquisition, which is just a fancy way of saying using your customer's money as a loan to get more customers. So let me explain. So if someone walks into your business, right, today, and let's say it cost you $100 in marketing to get them to buy something from you. All right, just keep it really simple. So it cost me $100 to get this guy. Now, let's say that my thing costs $100, okay? Now you think, oh, I broke even. But that thing, just like the table, is not going to be 100% margin. Not likely. And so if it's like the table, then I only make plus 50 on this, but I minus 100 because I had to pay this 100 to get them in the door. So I'm actually negative 50 right now for my first transaction. Now, should I do this transaction? Unless I have something else to sell, not really, because it means I'm spending 100 to make 50. Bad deal. Now, if this person is going to spend three or four more times over the next however many months, then yeah, it's a good idea. But it's still going to take me time and I'm still going to lose money up front. Now, for me to do this whole thing, I got to do it a different way. And so this kind of enters the new way of doing things, which is I would acquire the customer for $100, same guy, right? Now he's smaller for whatever reason. And this time I say, okay, how can I get this guy to not only pay for himself? That's point one. That's breaking even on getting customers. But point two is I need to get him to be able to buy me my next customer. And so if I know my next customer is also going to be $100, then it means I want him to pay himself back. So I need $100. All right. Then I need my next customer. So I need another $100. And then I need to make sure I get my cost of my table back, which is $50. All right. So I need to make $250 on this transaction for me to then be able to use this dollars to then go get my next customer. And then I repeat this process over. And over and over again. And then that results in this massive amount of money. Because if you had a machine that for every dollar... you put into it. You got $100 back out. What would your marketing budget be? It would be everything you had. And so here's the crazy part is that these types of returns pretty much only exist in businesses. Like this type of arbitrage, which is why if you look at the wealthiest people in the world, they own assets. They own businesses that generate cash flow because the most significant arbitrage that exists is what it costs to get somebody to buy something from you. And if you have a well-designed business. how much you can make from that person. And so think about this as every business is a little mini investing machine. And so you pay X to get customers, you get Y dollars back. And then instead of waiting a year for 10% improvements on the S&P 500, you can wait one day and get $100 back. And so why would you invest in anything else? Well, the richest people in the world don't. They're highly concentrated in the businesses and industries that they understand well. And so this concept of client-financed acquisition was the Big unlock that I had, and I have, in four times in my life, have I gone through what I would consider a wealth warp, where I had a material change in my net worth in a very short period of time. And most of the money that I've made has been in short periods of time, and then followed by kind of like level sets for a while, and then I figure out something else, and then I get a huge step up in income. So if you're like, man, we've been stuck for a while, you're usually just this far away from figuring out what that constraint is. Now, it could have been capital. So for me, I didn't have any money. And so this solved my capital constraint. Now, what did it not solve? It didn't solve my people constraint. It didn't solve my, you know, hiring. It didn't solve, you know, key man risk. I didn't solve any of those problems, but it gave me enough cash to be able to solve those problems in the future. So let me put this in perspective for you. My weight loss business, which was my actual gyms, which are called United Fitness, all right, United Fitness, I was able to open up a new location every six months off of the cash flow. No money out of pocket using this exact same process. And so I would put $5,000 down, I would sign a lease, I would begin spending money on advertising, like $100 a day. And for every $100 that I would spend, I would get somewhere in the neighborhood of $2,500 to $3,000 back immediately. And so in the first week, I would then order the equipment. In the next week, I would order the flooring. In the next week, I would set up the lobby and get the painting done. And by the fourth week, I had made around $100,000, which is roughly what it cost to open the business and give me six weeks of payroll. So that by the end of... the promotion that I was selling, which was a six-week challenge at the time, I would have something in the area of $20,000 or $30,000 of recurring revenue at that gym. But it cost me almost no money out of pocket because I let my customers pay for my gym for me. I would say, I will spend $5 a lead, close one out of five leads on a $500 thing. And so I would pay $25 to get a customer and make $500 back. And then I would take the rest of that to go spend another $25 to get another customer, get another $500. And then that's how I was able to finance the growth of the gyms. And that's how at 23 years old and then 24 and then 25, it was open to six locations. And again, the constraint was no longer cash. It was trainers. It was managers. It was salespeople. That's what limited my growth. This was the first time I discovered this concept. And then I was like, oh man, I should do this again. And so then I started Gym Launch 1.0, which is where I flew out from location to location. And I would make $100,000 at the gym, but then I didn't have to pay for the build out. And I didn't have to manage the gym afterwards. So I could just take $100,000. It was just me with a little fold-out table, probably $100 from Lowe's. And then just a stack of contracts. And I have videos of me going through just random places and selling all day, every day for 21 days straight. And then eventually I taught that system to other people. But the average amount that I'd spend in advertising in those markets was somewhere near of like $1,000 to $5,000. And I would make upwards of $100,000 in that first month. And so this is what allowed me to go from Again, zero to doing 32 plus launches in like 18-ish months. Now, the third time that this wealth alchemy occurred for me was when gym lunch transitioned to licensing. Now, in the licensing business, this is when things got even wilder because I had fewer operational constraints to scale. And so here, I had to keep scaling more and more sales guys because I had to fly them out, which was actually a tough value proposition for them. They apparently had wife and kids that wanted to see them. Go figure. And so when I switched to licensing, which was just showing people how I was filling these gyms, that's where... we went from the zero to $10 million in sales in 10 months. All right, that's almost crazier in my opinion than the second full year of business we did. We did around 16 million in EBITDA. All right, that means profit. All right, and we did 26 million top line in revenue. And again, this is coming from somebody who had then lost it all because I have made some bad bets in my life. And you're like, okay, well, it must have only been a fluke that time. Well, the next business I started was Prestige Labs, which is our supplement company. Went from zero, 1.7 million per month. This was at the launch. This was month one. All right. And then I had Allen, which Allen went from zero to 1.7 million per month. Weirdly that it was the same number in six months. So these types of numbers. only can occur when you remove capital or money as a way of scaling, as a thing that blocks you. If you have unlimited money, which if you set up the way that you acquire customers correctly, you can. If you think this video helped you make more money or would help someone else make more money, it would mean the world to me if you shared it as a DM or send it to them as a text so they could watch it and get the benefits too and associate those benefits with you. So what you really want that math to work out to is that you want two times CAC. Plus COGS to equal 30-day cash collected, all right? Which is basically gross profit. So you're like, okay, that sounds like a really complex equation. I'll say it in plain English. You want to make two times as much as it costs you to get a customer and deliver on that customer within 30 days based on the amount of cash that you generate from them in excess of the COGS, right? And so if we have, let's say, $100, remember, to get the customer and then $50 of COGS, right, then we want to make sure that we can have $300. I actually did the math wrong before. This is why equations are useful, right? We want to make sure we make $300 on that first customer so that in the first 30 days, and you're like, why is he thinking about 30 days? The reason I'm so obsessive about 30 days is because that is the amount of time that anybody can get interest rate free cash. And so everybody has access to a credit card and it doesn't matter what your limit is. Even if it's a $500 limit that you start out with, which is typically what they'll start most people on, a $500 limit, guess what you can do? You pay it off tomorrow. And so if you can get it within that period of time, you'll only be limited by that card. Now, if you can do it in seven days, then you can repeat the cycle four times in a month. If you can do it every day, then you repeat it 30 times in a month. And so very quickly, based on your speed of collecting the cash back, which is called the cash conversion cycle, you can accelerate your growth. I honestly think the reason that most businesses don't do this is because they believe a narrative that because other people in the industry don't do it, they can't. And I think that that belief keeps many business owners poor. The amount of businesses that we've gone into and been like, okay, well, let's just get people to prepay three months at a time. They're like, no, it's industry standard to do services and then collect a net 60. And I'm like, yeah, well, that's their standard. We don't have to do that. Well, why don't we just give them incentive to pay? And they're like, wow. Well, what if what I'm like, what if what? What if they say no? Well, they say they're saying no today. Sometimes, too, might as well, like, collect more when we do it. And then we say, hey, we happen to bill quarterly. And with that convenience, we also give you a 5% discount, which, of course, we baked in the price anyways. Right. Or we add some sort of onboarding process that normally people might charge separately for or that we add in so that we can collect more cash up front. And I'm willing to give a significant amount of things up front so that I don't have. My cost of getting customers as anything that gets in the way of me growing a business. I never want my ability to get customers or money to get them to be the thing that limits my growth. And I think that's the reason that all these businesses that I just explained went from zero to a million plus per month within a year. And I'm saying within a year as a soft sale, most of them within six months. If you want to make more money, ask to get paid sooner. So think about this. So if you are a minimum wage employee, right, then you do work and then you get paid afterwards. at a delay, right? Now, if you're a contractor, sometimes you can do work and get paid, but usually you get paid and then you do work. If you're a surgeon, you get paid and then months pass and then you do the surgery. If you are an insurance company, you get paid and then you may not have to ever work at all. And if you are the church, you get paid off of someone's income, their top line, a royalty that goes straight to the church. Now, royalties happen the same way liens do. So if someone owes you money, you can take a lien off the top, you skim off the top. And so basically, your position in what's called the capital stack is predicated on your leverage in the situation. And so if it's up to you, you might as well choose to get paid sooner. Now, you might be looking at this and thinking, yeah, but how do I get all of that cash up front? How do I get people to actually spend more money with me faster? Well, it comes down to one, you can either raise the price of your thing, or two, You get people to buy more stuff immediately. And so one of the big misconceptions business owners have is that they're afraid of making offers. And so I want to be very clear. You don't want to try and force someone to do something. People don't like to be sold, but they do love buying, right? I mean, think about how much money Amazon makes. People love buying. And so what we want to do is make offers when it's convenient for them to take them. And so an offer only doesn't work if it's something that they don't want, or you present it at the wrong time, or, you know, advanced version 3. It's not being delivered in the way they want it to be delivered. All right. And I'll tell you a quick story about that. So when I was in the weight loss business, we discovered that there were some customers that would come in and they didn't want to buy. gym services. And I was like, okay, well, that's lame. But I then figured out, hey, why don't I invite them to a nutrition seminar? And so we invite them to a nutrition seminar, even though they said no to our services. Think about how crazy this is. They come in for a gym and we try and sell them. They say no. And I say, hey, can I just help you with your food? And they say, sure. Then they go to the nutrition seminar and they buy more than the people who bought gym services on average. And so I was like, oh, we just needed to make them a different offer to solve the same problem. So they wanted to lose weight still. They just didn't feel like sweating. They wanted to take supplements and eat differently. Fine. So learning to make multiple offers to a customer is not only beneficial for them because you help them solve the problem in more ways, it's also beneficial for you because you get more cash up front. And so thinking through how do I get someone to buy because there's something that people enter called a hyper buying cycle. So if someone makes any kind of new decision, especially if it's like, okay, I'm now somebody who's going to start taking care of their lawn. I just bought this new car. Hey, I'm going to run a marathon. There's these little cycles that people enter. There's these buying windows. And what a traditional business owner would say, let's say somebody who runs a marathon, they sign up for the marathon, and then they go to the running store. When they go to the running store, they have to buy some shoes. Now, the store owner says, oh, I don't want to offer them fancy socks or an iPod wristband or new tank tops. I don't want to seem like I'm being pushy. But what are they going to do? They're still going to go buy that stuff because they have to get the whole thing. And so there's this natural problem solution cycle. That continues over and over and over again within every customer's purchases provided the first problem is solved with the first purchase. And then that then opens up the next problem. So once you have your shoes, what else do you need? You're going to need socks. Once you have socks, what else do you need? You're going to need shorts. Once you have shorts, what else do you need? You need tank top that doesn't rub on your underarms. You're also going to need an iPod carrier. All of these different things. You're also going to want the number thing. You might want a coach. You might want an app. You might want a hydration thing. Like there's supplements. There's all these different things that stem from this. And everyone's afraid to ask. So just make the offer available. And if they choose not, no worries. Like if you go buy something and then the thank you page says, hey, would you want this too? If you're offended by that, well, the business doesn't really care. I'll just put it that way. Because other people won't be offended by it and will be happy that you made it available and more convenient for them. So ultimately, you're providing more value and you're getting rewarded for it. Yeah, and at each one of these... upsells that you might want to include, you still think through each of the value equation components. So you still think, what's the dream outcome they ultimately want? How do I make it risk-free for them? How do I do it faster? And how do I make it easy? So number one, we're charging as much as we possibly can because we're doing it based on value, not based on cost. The second thing we're doing is restructuring our economics of the business, how we upsell, how we downsell, so we can generate more cash in the first 30 days so that we can get enough to pay for this customer and the next customer and delivering for both of them in that same time period. So that cash... And getting customers is not limited to business. And the third way to make money so fast it feels illegal is to understand wealth alchemy and ignore taxes, or kind of just play the game the right way. So let me walk you through an example. So let's say that you give away free trials of your thing. Okay, cool. Makes sense. We give away free trials. And let's say a free trial of your thing costs $100 to get someone to start. Fine. Now, let's also, for simple math, say the trial is $100 per month. All right, we'll keep this really simple. All right, that's the price. That's our free trial after the conversion. Okay, now let's say that we get one out of three people who start a free trial to become a customer. Okay, that means that it's going to cost us $300, right, this times three, to get a customer. Okay, now let's say that we know one out of three customers becomes a permanent customer, meaning once they get on our subscription, they never leave, which would mean that our permanent CAC is somewhere close to $900. Okay, now, if our price here is $100 a month, then that means that the annual revenue, in recurring revenue, is $1,200 per year. Okay, so we pay $900 to make $1,200 per year. Well, if you had a stock that you could buy for $900 and then it sent you back $1,200 within 12 months, you'd probably be like, that's a great investment. Now, if it kept doing that, you'd be like, it's unbelievable investment. Well, let me show you how much more wild this can really get. Now, let's say that we have this. Let's just say this is a software company. All right. So if it's a software company, let's say that it trades at 10 times top line, which is fairly typical for like a B2B SaaS business, as long as you have good retention metrics, which is why this is so important. Permanent customer. So if we know that, then it means that we're actually making $12,000. in enterprise value, which just means how valuable the business is that can create this kind of money. Now, here's where it gets even nastier, is that this is tax-free. And so you get paid this money, but you also get this. It's not either or, it's and. And so when I figured this out, I was like, oh, this is how people just make stupid money really fast. And so let's work this out. Okay, I want to make $120 million. Let's say that was my goal. Okay. So $120 million, I would have to, how many $12,000 customers in terms of enterprise value would I need? Well, let's go look. All right. So I need 10,000 customers of this, of this $900 times 10,000 to get my $120 million enterprise value here. So let me ask you a question. Does 10,000 times 900, so you're telling me if I pay $9 million, I can make this year an increase of $120 million in asset value tax-free and, and make $12 million in revenue that I add for the $9 million. And so, Walk through this in sequence with me. You spend $9 million, you get back $12 million in annual revenue, and that $12 million of annual revenue is worth $120 million that you paid zero taxes on. That is the fucking game. This is the wealth alchemy. This is how it works. This is how these software companies that IPO at $3 billion, how in four years it goes from, you know, nothing, right, to a multi-billion dollar thing. If you look at how much it costs them to get customers, you're like, like when I understood this, I was like, oh, it's literally just a massive arbitrage between the permanent cost of acquiring customers relative to the annual value, relative to the enterprise value multiple. And then those three things put together is what creates this massive discrepancy between what you put in and what you get out, which because of my fancy, fancy t-shirt here, I will show you is the definition of leverage. And so the reason that there are two symbols that are woven into the acquisition.com logo, which is supply and demand, and a fulcrum for leverage, is that you get more for what you put in. And so if you have two businesses, right, so let's paint this out. Let's say we had a different business, that we did the same thing. But let's say that we actually, these types of businesses, whatever business it was, traded on bottom line. And so if the business was doing 12 million, let's say that it's doing $3 million in profit, whatever this new other business is. Okay. It's doing $3 million in profit. And let's say that we get a 7x multiple on this EBITDA, which is a fancy word for profit, which means that we have $21 million. Now, if I pay $9 million for $21 million, would I be down for that? Probably. I mean, it's still a 2 point something x. It's not bad. But this is why picking a good opportunity vehicle, because in both of these situations, you still spent the $900 per customer. You still make the $1,200 per year. But the big difference was how much is that $1,200 per year worth? Yeah, and so let's dive into this permanent customer concept for a second. This concept took me so long to grasp as an entrepreneur. What every business owner needs to focus on is how do I not lose customers? And the reason for that is that let's compare two businesses, all right? So let's say you've got business A and business B. Okay, so business A... acquires 100 customers year one and loses 100 customers. And the next year, they double their acquisition, they double their marketing and sales, they acquire 200 customers. And then year three, they lose all 200 and then they add another 50% acquisition. They do 300 customers in year three. Okay, so it's a 300 customer business. Now, company B sells 100 first year. Now, second year, they keep their first 100, but they don't increase their marketing and sales. So now, they have 100 from last year plus 100 this year. And then the third year, they have 100 from two years ago, 100 from one year ago, and then 100 this year. Both of these businesses, A and B, have 300 customers. But which company would you rather own? This one. Absolutely no question. So why is that? You want time to be on your side, not your enemy. Because time is going to pass no matter what. And you want a business where no matter what happens, it just keeps growing. So you can sell the same amount of customers, you can even not sell customers, and still make money. And so this is a far less risky business. And as a result of that, if you recall the value equation from earlier, an investor is valuing a business fundamentally on the same things, which is how likely is this to occur? How much effort and sacrifice is this going to take? What is the time delay between now and when this becomes this ultimate thing, right? And so the same process is still done, obviously at a slightly more complex scale. But when we're thinking about permanent customers, this company is turning customers into permanent customers. Company A, It's just a churn factory. They sell something once and people don't like it and they leave, which means the only way to grow this business is market and sell more. But that is only a one-way road. At some point, you sell through all the customers within a given base. And so, it would behoove us to spend more time just figuring out how to not lose people, so that 10 years from now, as we keep going, because this map would continue, this guy's going to slow down, right? Being able to double marketing and sales every single year is tough. But... Just keeping the customers you had for 10 years significantly easier, but people don't focus on it because it's not as sexy. But this is where the real leverage occurs. And this is where that wealth alchemy that I was referencing earlier, this is how you get stupid rich. And so let me give you a real world example. So Starbucks, do you want to know what their LTV per customer is? $14,000. That's how much they make per customer. And that is why Starbucks makes so much money. So you think about these like high ticket businesses and stuff that's all around B2B, whatever, they're making $14,000 per customer from like everyone. And so what does it cost to get somebody to buy a cup of coffee? I promise you significantly less than $14,000. And this relates back to my very first point that I was telling you. where I had another company that was in the same space as me, the cost to get a customer for Starbucks to get somebody to buy coffee is probably similar to a Dunkin Donuts, probably similar to another random coffee shop down the street. The difference is that they had engineered their model such that people wanted to keep coming back, that they became recurring or reoccurring customers. So the difference there really quickly is recurring means it's not a subscription like Netflix. Reoccurring means that you buy on a regular basis. So you might buy Coca-Cola, for example, or whatever, one of their products that you like. You're probably not on a subscription for it. but you buy it when you're out at restaurants or you buy it when you ship it to your house, whatever. Or you just buy a Costco when you're there from a distribution center. Either way, you are a reoccurring customer for them. And so figuring out what is my cost of a permanent customer? And all you have to do is figure it because a lot of businesses have this is you say, okay, let's say you're an agency of super high trend business typically. Okay, there are some customers that have been with you for a long time. And we will I will consider somebody who's been with you two plus years as a permanent customer within the context of what we're talking about. Now, you might figure out, and this is why this is so important, that one out of every 10 of your customers becomes a permanent customer. Well, then you say, okay, well, how much does it cost to get a customer? Multiply it by 10. This is actually the recurring base that we're trying to build. Everyone else is just sifting through the wheat from the chaff, I think is what it's called, to just get the kernels, right? The main part. And if you want to be smarter about it, you can say, huh, well, it takes us 10 customers to get these ones. But what if... these customers look and smell, walk and talk a little bit differently than the other nine. Well, I'll bet you if we changed our advertising and attracted only those types of customers, we would be able to get a higher hit rate on that. So even if our CAC for this specific avatar doubles, but we get it to one out of three, it costs us $600 to get a customer rather than $1,000. And we're still winning overall. And so the big picture here. is that number one, we have to sell off a value. We have to use the value equation to make things less risky, faster, and easier for the customers. Once we do that, we are decoupled from a race to the bottom price war. Number two, once we know what our premium price is, we want to pull that cash forward and speed up the cash conversion cycle so that capital or money is not the limiter of the business. And so we can get customers on demand and we can do so profitably. We're literally getting paid to get new customers. They pay us. They... refinance our acquisition, which is why I call it customer finance acquisition. And then finally, we understand the game of wealth alchemy, which is of the customers that we acquire, what percentage of them become permanent customers? And they become the reoccurring revenue base within this business. And then that reoccurring base is what we are going to be valued on. And then what is that value multiple? And so then we just look at the arbitrage between what it costs us to get a permanent customer versus what our enterprise value multiple is going to be, which is. until the day you sell it, growing tax free. And so I'll show you one last little hack here that I think is important. So let's just say in this business, it's in the original vehicle. So you can just forget about this little side stuff. So it's in the original vehicle. And let's say that we've got $3 million in profit for this business. It doesn't matter. Okay. So you have 3 million bucks in profit in this business. And let's say that you live in a high tax state and you get taxed 50% for tax reasons. So you're going to take home $1.5 million after taxes. Now, you're really butthurt about this because you're like, what the heck, government? You're taking half of what I made. But if you added $12 million to the business and you spent this money to do that, what did you really increase? Well, you increased your personal net worth by $120 million. And so if you had $120 million plus the $3 million that you made in cash flow, and you only had to pay $1.5 million on $123 million, now you're paying... I don't know, 1.5% in taxes. When I realized this, it fundamentally shifted how I played the game. I was really obsessed with tax strategy and trying to maximize all these loopholes when the biggest and most obvious one is just build something valuable. And as long as you keep building it and you don't want to cash it out, all of that growth is tax-free and compounds. And the clue that I got on this was realizing that I was like, This is before Elon moved from California. So I was like, Elon's in California. I was like, Zuckerberg is in California. And I looked at the Forbes list that all these people in the U.S. were in California. But I was like, but California has the highest taxes. How is this possible? I was like, oh. They understand something about wealth creation that I don't understand. What is that? And that was when I dove deep and understood this level of wealth creation, or what I like to call now wealth alchemy. If you like this video, you'll love these.

And so I'm going to show you how to make money so fast it feels illegal. The first way to make money so fast it feels illegal is to understand value creation. I want to tell you a story.

I sent my father a picture of our largest annual event that we held in our company, which licensed the gym owners. We had a room of 700 plus people. And he said, Oh, that's awesome. That's so many people. How much did they pay to be there?

And I said, $42,000 a year. And he said, Oh my God. He said, do they know that they're paying that much?

And I was like, yeah, they're aware. It's not like a magically siphoning money from their accounts. And it was like, okay. Now, rather than respond and be like really, you know, mean about it.

I was like, well. Let's walk through this. I said, if you were able to pay a dollar and get $5 back, would you do it? And he's like, well, it would depend. I said, it would depend on what?

He said, well, what's the likelihood that the five to one actually happens? I said, that's just the average. So some people are below average, some people are above average.

He's like, okay, that feels like a fair bet. Well, what would I need to do? I was like, great question.

You'd have to dedicate probably 10 plus hours a week to fully kind of implementing. a new model within your business. He was like, okay, how long would it take between when I started and when I got those types of results?

And I said, about a year. He was like, okay, well then yeah, I think I would do it. And so that thought process was kind of the first big unlock to making so much money that it should feel illegal, which is that you can't sell out of your wallet. You have to sell off of the value that you're creating for someone else.

we were able to charge significantly more and profit significantly more than everybody else in my space. And so everyone else in my space was charging literally a 10th of what I was able to charge, or I prefer to say command from the marketplace. And the reason that was able to happen was because I use something called the value equation. All right. And so the value equation has four components and I'm not going to go super deep on it, but I'll just walk you through it real quick.

So you've got the dream outcome, which is what's the big thing that people want. So in this instance, it'd be they want to make more money in their gym. They might want to lose weight.

They might want to have a fix their relationship. They might want to look cool in front of their friends, whatever. The next is the perceived likelihood of achievement or the equal opposite of that is risk. How likely is it that when I buy this thing, I get what I want?

Which when he asked the question, well, how likely is it? This is what he's teasing out. The next question is time.

How long is it going to take between when I start and when I get? And the longer that is, the less valuable the thing is. And then you have effort and sacrifice, which is how hard am I going to have to try?

What am I going to have to start doing that I don't want to do or stop doing that I do want to do? To be clear, the reason that I made this value equation is because for so long, many people, and you probably heard them in concert, like provide value, create value. But I was like, what does this even mean?

How does one create value? And so I set out to try and figure out what makes me want to buy stuff. And so in a hypothetical example, you'd want something that would be immediate.

It would be no effort. It would be guaranteed and it would be exactly what they want the way they want it. That would be the most valuable version of whatever you could sell. And then you would say, let's say that our average is $100,000 of value. All right.

Now in a B2B setting, it might literally be that because it's a monetary outcome. And if it's a B2C setting, selling to consumers, then we have to abstract the value of what fitting back into your high school jeans is worth to you or looking good on prom night. or just feeling good every single day, whatever.

But we have this ROI, and then we have some sort of discount that we're going to apply to it. which accommodates risk, right? One is it's in the future. I would pay less for something that is guaranteed and immediate than not guaranteed and at a delay. So let's say I sell tables, right?

This is a retail product. And you would immediately think, oh, this is probably highly commoditized. Well, I'm not so sure.

Think about it. On the lowest end, you can buy a fold-out plastic table from Lowe's or Home Depot for probably 50 or 100 bucks. I haven't checked plastic table pricing recently. On the flip side, you can buy a $20,000 hand-carved wood table.

Both of them allow you to put stuff on top of it and eat, right? And so the idea is, how can we position our thing separately from other people? Now, if the dream outcome for that table is not, okay, I just need to have something that I can put stuff on top of, the dream outcome might be, when people walk into my home, they feel immediately impressed. So now we're actually relating this to status. So this is a business, because B2B is actually pretty easy.

It's just, this is how much money it is. And then the rest of your time is trying to make it easier for them, less risky and faster. This is a concern where sometimes you need to spend a little bit more time on translating what this status increase might mean for them and how meaningful that is, or the reverse, how terrible and painful it's been to lack this status, right? And so if we have this big, expensive, nice table, then we say, okay, here's the status.

Now the risk of this not happening, this is where we might show trends of this being a hot thing that many people understand the value of. So the risk of them not getting the status is lowered. The time is like, hey, I can have this at your house by the end of today. That would be something that's like, wow, this could happen right in time for this dinner party I have where my boss is coming to my house.

And then effort and sacrifices. Don't worry, we have a white glove service that will make sure that we can fit it into your doorways, even though it's this massive thing, and we will assemble it there for you. You just need to say yes right now, and it will be there by the end of the night, and you can have dinner on it when you have your guests tomorrow, right?

Now we've tied them buying to all of the value components to getting them to then be willing to spend. $20,000 because it's not about the wood. It's not about the table.

It's about how much status is worth to them within this context. And they get to keep it forever, right? And so this is how we have to unpack what we're selling so that many of you are selling tables and pricing like it's a plastic table, but you're then trying to half do the work, but then you can't make the margins work with the white glove because people say, oh, I only want to pay a hundred dollars.

You're like, well, I would deliver it. And they're like, oh, I have to assemble this too. And all of a sudden they're combating you.

When if you just had charged more and positioned it differently, you could then give them all these other things that they want anyway. And the reason this is so important is that price is the single largest lever on profit. So let's say we've got a before, all right, which is that you sell your tables, all right, and you've got an after.

This obviously works for services or whatever else you sell, all right? And so let's say you charge $100 for your table and your cost for that table is, I'll be extreme here, we'll say it's $50, okay? Now, let's say that you have... other costs like marketing and sales and other stuff like that, that amounts to $30. All right, so that means that your net profit is going to be $20 when you sell a table.

Gross profit is $50, net profit is $20. Okay, now let's say that we reposition our table as this amazingly valuable thing that is now a $1,000 table. Okay, now our cost on this, the table itself might be $50, but let's say we include some of those perks.

Let's say we've got the hand delivery and things like that. Okay. Well, let's say that the delivery is going to be another $200 for one of your guys to go out there and use the truck, gas, whatever. So now we've got $250 here. Okay, got it.

And then the other costs, maybe your cost of sales goes up a little bit to sell this. You've got to get more leads. Okay, so we'll call it $130. All right, so now what are we actually making in net profit for this table?

So we've got $380. Okay, I wish I had done easier math, but I think it's $620 here. All right, so $620 in profit.

And so this is how you can get unreasonably wealthy in a very short period of time by simply repositioning what you sell based on the value you provide someone else rather than the cost that it costs you. And so to put this in context, this is a 31x increase in profit. And so I'll tell you this quick story.

There was a guy that was in the same exact space as me that paid me for a consulting day years ago. And when I looked at his numbers, what was fascinating was that he was actually selling the same amount of people per month as I was. And so he was spending the same amount on marketing.

He had the same number of sales guys and he was closing roughly the same amount as we were. And so what was interesting about this, and this was a massive lesson that I learned, is that CAC or the cost of getting a new customer in an industry, as long as you're proficient at marketing, more or less is actually not that different. You'd be surprised.

I look at a zillion companies every year and between industries like a local plumber and another local plumber, it's not going to be that different. And so the big difference though, is that we were able to make... somewhere in the neighborhood of about eight times more money per customer than this guy was.

But here's the crazy part. We were making somewhere in the neighborhood of 50 times more profit. And it's because of this. So we had eight times more money, but then it resulted in, so remember, this is a 10X, right? So this is a 10X increase in price, but it resulted in a 31X increase in profit.

And so this is why price is such a strong lever on how much you make. Now, where it gets competitive is if somebody else can do something just like you and do it for less. But there was a, I think, a McKinsey survey where they looked at a number of companies and 85% of them competed on price and only 13% of them won on price. So it's literally the worst possible strategy you can have because there's only one person who wins lowest price. Dan Kennedy said this famously, there's no reward you get for being the second cheapest competitor.

You just lose a lot of money, right? And so. There is, however, a benefit to being the most expensive person. And that's going to be a direct correlation to the amount of value that you can provide any individual person.

And so again, it's about thinking, how much is this worth? And then can I deliver it to them? And can I eliminate the risk, make it faster, and make it easier for them so that I can get less discount on the value that I think it can provide that person?

Now, the 201 version of this is selling out of their future wallet, not today's wallet. So instead of selling a product based on, and this is in a B2B setting, how much money someone has, it's about how much money you can make them and how much that is worth to them. And then the ways that we pull apart that value, so let's say it's $100,000 of value, there's going to be a discount that's going to be applied to that $100,000 based on how likely it is, which is the risk.

It's going to be based on how long it's going to take, which is the time. It's going to be how easy it is, how much work. they're going to have to put in. And then fundamentally, the dream outcome, which if they want to make more money, that one's clear.

Now, if you have a B2C business, a business consumer business, then you have to translate what looking amazing on prom night means to someone financially, or how much pain they've been in for not having the specific solution in their life. And so if I buy stuff, and it gets to me faster, I'm willing to pay more for it. If someone I buy stuff, and they guarantee it, or they make it risk free, or they show me tons of proof, I'm more likely to pay for it and pay more for it. If someone says, oh, you don't have to do anything versus you have a ton of work associated with it, I'm more willing to pay for it.

And then the dream outcome is just making sure that I actually want this thing versus something else. And so this actually operationalizes what we can do as business owners. How do we make it faster? How do we make it easier?

How do we make it risk-free and deliver it the way they want it? So that was the first of the three kind of beliefs that I had to break in order to make crazy money in my 20s. The second way to make money so fast it feels illegal is to sell in a fast... cash conversion cycle.

And if you don't know what that is, I'll explain it right now. This is what allowed me to have $1,000 in my bank account in December of 2016. I had $1,000 in my bank account after losing everything for the second time. Actually, that was the first time I lost everything.

And then I lost everything again, I think three months later. So just figuratively imagine I didn't have a lot of money. Now, 10 months later, I was able to put in $10 million in sales and bank, I think something probably close to 6 million in profit. All right.

Now, here's the crazy part, is that how can you get this to equate to $10 million in such a short period of time? Well, the first thing is, we got a 100 to 1 return on our advertising. And so every dollar that I put in, so I put $1,000 in ads, I made $100,000. And then I put that $100,000 in ads, and I made $10 million.

And that is fundamentally what happened. And so the constraint of the business no longer was acquisition. But the reason...

That was not the constraint, meaning it wasn't the thing that blocked me from growing, was that we had figured out something that I call client-financed acquisition, which is just a fancy way of saying using your customer's money as a loan to get more customers. So let me explain. So if someone walks into your business, right, today, and let's say it cost you $100 in marketing to get them to buy something from you. All right, just keep it really simple. So it cost me $100 to get this guy.

Now, let's say that my thing costs $100, okay? Now you think, oh, I broke even. But that thing, just like the table, is not going to be 100% margin.

Not likely. And so if it's like the table, then I only make plus 50 on this, but I minus 100 because I had to pay this 100 to get them in the door. So I'm actually negative 50 right now for my first transaction. Now, should I do this transaction? Unless I have something else to sell, not really, because it means I'm spending 100 to make 50. Bad deal.

Now, if this person is going to spend three or four more times over the next however many months, then yeah, it's a good idea. But it's still going to take me time and I'm still going to lose money up front. Now, for me to do this whole thing, I got to do it a different way.

And so this kind of enters the new way of doing things, which is I would acquire the customer for $100, same guy, right? Now he's smaller for whatever reason. And this time I say, okay, how can I get this guy to not only pay for himself? That's point one.

That's breaking even on getting customers. But point two is I need to get him to be able to buy me my next customer. And so if I know my next customer is also going to be $100, then it means I want him to pay himself back. So I need $100.

All right. Then I need my next customer. So I need another $100.

And then I need to make sure I get my cost of my table back, which is $50. All right. So I need to make $250 on this transaction for me to then be able to use this dollars to then go get my next customer. And then I repeat this process over.

And over and over again. And then that results in this massive amount of money. Because if you had a machine that for every dollar... you put into it.

You got $100 back out. What would your marketing budget be? It would be everything you had. And so here's the crazy part is that these types of returns pretty much only exist in businesses. Like this type of arbitrage, which is why if you look at the wealthiest people in the world, they own assets.

They own businesses that generate cash flow because the most significant arbitrage that exists is what it costs to get somebody to buy something from you. And if you have a well-designed business. how much you can make from that person. And so think about this as every business is a little mini investing machine. And so you pay X to get customers, you get Y dollars back.

And then instead of waiting a year for 10% improvements on the S&P 500, you can wait one day and get $100 back. And so why would you invest in anything else? Well, the richest people in the world don't. They're highly concentrated in the businesses and industries that they understand well.

And so this concept of client-financed acquisition was the Big unlock that I had, and I have, in four times in my life, have I gone through what I would consider a wealth warp, where I had a material change in my net worth in a very short period of time. And most of the money that I've made has been in short periods of time, and then followed by kind of like level sets for a while, and then I figure out something else, and then I get a huge step up in income. So if you're like, man, we've been stuck for a while, you're usually just this far away from figuring out what that constraint is.

Now, it could have been capital. So for me, I didn't have any money. And so this solved my capital constraint. Now, what did it not solve? It didn't solve my people constraint.

It didn't solve my, you know, hiring. It didn't solve, you know, key man risk. I didn't solve any of those problems, but it gave me enough cash to be able to solve those problems in the future.

So let me put this in perspective for you. My weight loss business, which was my actual gyms, which are called United Fitness, all right, United Fitness, I was able to open up a new location every six months off of the cash flow. No money out of pocket using this exact same process. And so I would put $5,000 down, I would sign a lease, I would begin spending money on advertising, like $100 a day.

And for every $100 that I would spend, I would get somewhere in the neighborhood of $2,500 to $3,000 back immediately. And so in the first week, I would then order the equipment. In the next week, I would order the flooring. In the next week, I would set up the lobby and get the painting done. And by the fourth week, I had made around $100,000, which is roughly what it cost to open the business and give me six weeks of payroll.

So that by the end of... the promotion that I was selling, which was a six-week challenge at the time, I would have something in the area of $20,000 or $30,000 of recurring revenue at that gym. But it cost me almost no money out of pocket because I let my customers pay for my gym for me.

I would say, I will spend $5 a lead, close one out of five leads on a $500 thing. And so I would pay $25 to get a customer and make $500 back. And then I would take the rest of that to go spend another $25 to get another customer, get another $500. And then that's how I was able to finance the growth of the gyms. And that's how at 23 years old and then 24 and then 25, it was open to six locations.

And again, the constraint was no longer cash. It was trainers. It was managers.

It was salespeople. That's what limited my growth. This was the first time I discovered this concept.

And then I was like, oh man, I should do this again. And so then I started Gym Launch 1.0, which is where I flew out from location to location. And I would make $100,000 at the gym, but then I didn't have to pay for the build out. And I didn't have to manage the gym afterwards. So I could just take $100,000.

It was just me with a little fold-out table, probably $100 from Lowe's. And then just a stack of contracts. And I have videos of me going through just random places and selling all day, every day for 21 days straight. And then eventually I taught that system to other people.

But the average amount that I'd spend in advertising in those markets was somewhere near of like $1,000 to $5,000. And I would make upwards of $100,000 in that first month. And so this is what allowed me to go from Again, zero to doing 32 plus launches in like 18-ish months.

Now, the third time that this wealth alchemy occurred for me was when gym lunch transitioned to licensing. Now, in the licensing business, this is when things got even wilder because I had fewer operational constraints to scale. And so here, I had to keep scaling more and more sales guys because I had to fly them out, which was actually a tough value proposition for them. They apparently had wife and kids that wanted to see them. Go figure.

And so when I switched to licensing, which was just showing people how I was filling these gyms, that's where... we went from the zero to $10 million in sales in 10 months. All right, that's almost crazier in my opinion than the second full year of business we did.

We did around 16 million in EBITDA. All right, that means profit. All right, and we did 26 million top line in revenue. And again, this is coming from somebody who had then lost it all because I have made some bad bets in my life. And you're like, okay, well, it must have only been a fluke that time.

Well, the next business I started was Prestige Labs, which is our supplement company. Went from zero, 1.7 million per month. This was at the launch. This was month one.

All right. And then I had Allen, which Allen went from zero to 1.7 million per month. Weirdly that it was the same number in six months.

So these types of numbers. only can occur when you remove capital or money as a way of scaling, as a thing that blocks you. If you have unlimited money, which if you set up the way that you acquire customers correctly, you can. If you think this video helped you make more money or would help someone else make more money, it would mean the world to me if you shared it as a DM or send it to them as a text so they could watch it and get the benefits too and associate those benefits with you. So what you really want that math to work out to is that you want two times CAC.

Plus COGS to equal 30-day cash collected, all right? Which is basically gross profit. So you're like, okay, that sounds like a really complex equation. I'll say it in plain English.

You want to make two times as much as it costs you to get a customer and deliver on that customer within 30 days based on the amount of cash that you generate from them in excess of the COGS, right? And so if we have, let's say, $100, remember, to get the customer and then $50 of COGS, right, then we want to make sure that we can have $300. I actually did the math wrong before. This is why equations are useful, right?

We want to make sure we make $300 on that first customer so that in the first 30 days, and you're like, why is he thinking about 30 days? The reason I'm so obsessive about 30 days is because that is the amount of time that anybody can get interest rate free cash. And so everybody has access to a credit card and it doesn't matter what your limit is.

Even if it's a $500 limit that you start out with, which is typically what they'll start most people on, a $500 limit, guess what you can do? You pay it off tomorrow. And so if you can get it within that period of time, you'll only be limited by that card. Now, if you can do it in seven days, then you can repeat the cycle four times in a month. If you can do it every day, then you repeat it 30 times in a month.

And so very quickly, based on your speed of collecting the cash back, which is called the cash conversion cycle, you can accelerate your growth. I honestly think the reason that most businesses don't do this is because they believe a narrative that because other people in the industry don't do it, they can't. And I think that that belief keeps many business owners poor. The amount of businesses that we've gone into and been like, okay, well, let's just get people to prepay three months at a time. They're like, no, it's industry standard to do services and then collect a net 60. And I'm like, yeah, well, that's their standard.

We don't have to do that. Well, why don't we just give them incentive to pay? And they're like, wow. Well, what if what I'm like, what if what? What if they say no?

Well, they say they're saying no today. Sometimes, too, might as well, like, collect more when we do it. And then we say, hey, we happen to bill quarterly.

And with that convenience, we also give you a 5% discount, which, of course, we baked in the price anyways. Right. Or we add some sort of onboarding process that normally people might charge separately for or that we add in so that we can collect more cash up front. And I'm willing to give a significant amount of things up front so that I don't have.

My cost of getting customers as anything that gets in the way of me growing a business. I never want my ability to get customers or money to get them to be the thing that limits my growth. And I think that's the reason that all these businesses that I just explained went from zero to a million plus per month within a year.

And I'm saying within a year as a soft sale, most of them within six months. If you want to make more money, ask to get paid sooner. So think about this.

So if you are a minimum wage employee, right, then you do work and then you get paid afterwards. at a delay, right? Now, if you're a contractor, sometimes you can do work and get paid, but usually you get paid and then you do work.

If you're a surgeon, you get paid and then months pass and then you do the surgery. If you are an insurance company, you get paid and then you may not have to ever work at all. And if you are the church, you get paid off of someone's income, their top line, a royalty that goes straight to the church.

Now, royalties happen the same way liens do. So if someone owes you money, you can take a lien off the top, you skim off the top. And so basically, your position in what's called the capital stack is predicated on your leverage in the situation. And so if it's up to you, you might as well choose to get paid sooner. Now, you might be looking at this and thinking, yeah, but how do I get all of that cash up front?

How do I get people to actually spend more money with me faster? Well, it comes down to one, you can either raise the price of your thing, or two, You get people to buy more stuff immediately. And so one of the big misconceptions business owners have is that they're afraid of making offers.

And so I want to be very clear. You don't want to try and force someone to do something. People don't like to be sold, but they do love buying, right? I mean, think about how much money Amazon makes.

People love buying. And so what we want to do is make offers when it's convenient for them to take them. And so an offer only doesn't work if it's something that they don't want, or you present it at the wrong time, or, you know, advanced version 3. It's not being delivered in the way they want it to be delivered.

All right. And I'll tell you a quick story about that. So when I was in the weight loss business, we discovered that there were some customers that would come in and they didn't want to buy. gym services.

And I was like, okay, well, that's lame. But I then figured out, hey, why don't I invite them to a nutrition seminar? And so we invite them to a nutrition seminar, even though they said no to our services. Think about how crazy this is.

They come in for a gym and we try and sell them. They say no. And I say, hey, can I just help you with your food? And they say, sure. Then they go to the nutrition seminar and they buy more than the people who bought gym services on average.

And so I was like, oh, we just needed to make them a different offer to solve the same problem. So they wanted to lose weight still. They just didn't feel like sweating.

They wanted to take supplements and eat differently. Fine. So learning to make multiple offers to a customer is not only beneficial for them because you help them solve the problem in more ways, it's also beneficial for you because you get more cash up front.

And so thinking through how do I get someone to buy because there's something that people enter called a hyper buying cycle. So if someone makes any kind of new decision, especially if it's like, okay, I'm now somebody who's going to start taking care of their lawn. I just bought this new car. Hey, I'm going to run a marathon.

There's these little cycles that people enter. There's these buying windows. And what a traditional business owner would say, let's say somebody who runs a marathon, they sign up for the marathon, and then they go to the running store.

When they go to the running store, they have to buy some shoes. Now, the store owner says, oh, I don't want to offer them fancy socks or an iPod wristband or new tank tops. I don't want to seem like I'm being pushy.

But what are they going to do? They're still going to go buy that stuff because they have to get the whole thing. And so there's this natural problem solution cycle. That continues over and over and over again within every customer's purchases provided the first problem is solved with the first purchase. And then that then opens up the next problem.

So once you have your shoes, what else do you need? You're going to need socks. Once you have socks, what else do you need?

You're going to need shorts. Once you have shorts, what else do you need? You need tank top that doesn't rub on your underarms.

You're also going to need an iPod carrier. All of these different things. You're also going to want the number thing. You might want a coach.

You might want an app. You might want a hydration thing. Like there's supplements.

There's all these different things that stem from this. And everyone's afraid to ask. So just make the offer available. And if they choose not, no worries.

Like if you go buy something and then the thank you page says, hey, would you want this too? If you're offended by that, well, the business doesn't really care. I'll just put it that way. Because other people won't be offended by it and will be happy that you made it available and more convenient for them.

So ultimately, you're providing more value and you're getting rewarded for it. Yeah, and at each one of these... upsells that you might want to include, you still think through each of the value equation components.

So you still think, what's the dream outcome they ultimately want? How do I make it risk-free for them? How do I do it faster? And how do I make it easy?

So number one, we're charging as much as we possibly can because we're doing it based on value, not based on cost. The second thing we're doing is restructuring our economics of the business, how we upsell, how we downsell, so we can generate more cash in the first 30 days so that we can get enough to pay for this customer and the next customer and delivering for both of them in that same time period. So that cash... And getting customers is not limited to business.

And the third way to make money so fast it feels illegal is to understand wealth alchemy and ignore taxes, or kind of just play the game the right way. So let me walk you through an example. So let's say that you give away free trials of your thing. Okay, cool. Makes sense.

We give away free trials. And let's say a free trial of your thing costs $100 to get someone to start. Fine.

Now, let's also, for simple math, say the trial is $100 per month. All right, we'll keep this really simple. All right, that's the price.

That's our free trial after the conversion. Okay, now let's say that we get one out of three people who start a free trial to become a customer. Okay, that means that it's going to cost us $300, right, this times three, to get a customer. Okay, now let's say that we know one out of three customers becomes a permanent customer, meaning once they get on our subscription, they never leave, which would mean that our permanent CAC is somewhere close to $900.

Okay, now, if our price here is $100 a month, then that means that the annual revenue, in recurring revenue, is $1,200 per year. Okay, so we pay $900 to make $1,200 per year. Well, if you had a stock that you could buy for $900 and then it sent you back $1,200 within 12 months, you'd probably be like, that's a great investment.

Now, if it kept doing that, you'd be like, it's unbelievable investment. Well, let me show you how much more wild this can really get. Now, let's say that we have this.

Let's just say this is a software company. All right. So if it's a software company, let's say that it trades at 10 times top line, which is fairly typical for like a B2B SaaS business, as long as you have good retention metrics, which is why this is so important.

Permanent customer. So if we know that, then it means that we're actually making $12,000. in enterprise value, which just means how valuable the business is that can create this kind of money. Now, here's where it gets even nastier, is that this is tax-free.

And so you get paid this money, but you also get this. It's not either or, it's and. And so when I figured this out, I was like, oh, this is how people just make stupid money really fast.

And so let's work this out. Okay, I want to make $120 million. Let's say that was my goal. Okay. So $120 million, I would have to, how many $12,000 customers in terms of enterprise value would I need?

Well, let's go look. All right. So I need 10,000 customers of this, of this $900 times 10,000 to get my $120 million enterprise value here.

So let me ask you a question. Does 10,000 times 900, so you're telling me if I pay $9 million, I can make this year an increase of $120 million in asset value tax-free and, and make $12 million in revenue that I add for the $9 million. And so, Walk through this in sequence with me. You spend $9 million, you get back $12 million in annual revenue, and that $12 million of annual revenue is worth $120 million that you paid zero taxes on.

That is the fucking game. This is the wealth alchemy. This is how it works.

This is how these software companies that IPO at $3 billion, how in four years it goes from, you know, nothing, right, to a multi-billion dollar thing. If you look at how much it costs them to get customers, you're like, like when I understood this, I was like, oh, it's literally just a massive arbitrage between the permanent cost of acquiring customers relative to the annual value, relative to the enterprise value multiple. And then those three things put together is what creates this massive discrepancy between what you put in and what you get out, which because of my fancy, fancy t-shirt here, I will show you is the definition of leverage. And so the reason that there are two symbols that are woven into the acquisition.com logo, which is supply and demand, and a fulcrum for leverage, is that you get more for what you put in. And so if you have two businesses, right, so let's paint this out.

Let's say we had a different business, that we did the same thing. But let's say that we actually, these types of businesses, whatever business it was, traded on bottom line. And so if the business was doing 12 million, let's say that it's doing $3 million in profit, whatever this new other business is. Okay.

It's doing $3 million in profit. And let's say that we get a 7x multiple on this EBITDA, which is a fancy word for profit, which means that we have $21 million. Now, if I pay $9 million for $21 million, would I be down for that?

Probably. I mean, it's still a 2 point something x. It's not bad. But this is why picking a good opportunity vehicle, because in both of these situations, you still spent the $900 per customer.

You still make the $1,200 per year. But the big difference was how much is that $1,200 per year worth? Yeah, and so let's dive into this permanent customer concept for a second.

This concept took me so long to grasp as an entrepreneur. What every business owner needs to focus on is how do I not lose customers? And the reason for that is that let's compare two businesses, all right? So let's say you've got business A and business B. Okay, so business A...

acquires 100 customers year one and loses 100 customers. And the next year, they double their acquisition, they double their marketing and sales, they acquire 200 customers. And then year three, they lose all 200 and then they add another 50% acquisition.

They do 300 customers in year three. Okay, so it's a 300 customer business. Now, company B sells 100 first year. Now, second year, they keep their first 100, but they don't increase their marketing and sales.

So now, they have 100 from last year plus 100 this year. And then the third year, they have 100 from two years ago, 100 from one year ago, and then 100 this year. Both of these businesses, A and B, have 300 customers.

But which company would you rather own? This one. Absolutely no question.

So why is that? You want time to be on your side, not your enemy. Because time is going to pass no matter what.

And you want a business where no matter what happens, it just keeps growing. So you can sell the same amount of customers, you can even not sell customers, and still make money. And so this is a far less risky business.

And as a result of that, if you recall the value equation from earlier, an investor is valuing a business fundamentally on the same things, which is how likely is this to occur? How much effort and sacrifice is this going to take? What is the time delay between now and when this becomes this ultimate thing, right?

And so the same process is still done, obviously at a slightly more complex scale. But when we're thinking about permanent customers, this company is turning customers into permanent customers. Company A, It's just a churn factory. They sell something once and people don't like it and they leave, which means the only way to grow this business is market and sell more.

But that is only a one-way road. At some point, you sell through all the customers within a given base. And so, it would behoove us to spend more time just figuring out how to not lose people, so that 10 years from now, as we keep going, because this map would continue, this guy's going to slow down, right? Being able to double marketing and sales every single year is tough. But...

Just keeping the customers you had for 10 years significantly easier, but people don't focus on it because it's not as sexy. But this is where the real leverage occurs. And this is where that wealth alchemy that I was referencing earlier, this is how you get stupid rich.

And so let me give you a real world example. So Starbucks, do you want to know what their LTV per customer is? $14,000.

That's how much they make per customer. And that is why Starbucks makes so much money. So you think about these like high ticket businesses and stuff that's all around B2B, whatever, they're making $14,000 per customer from like everyone.

And so what does it cost to get somebody to buy a cup of coffee? I promise you significantly less than $14,000. And this relates back to my very first point that I was telling you.

where I had another company that was in the same space as me, the cost to get a customer for Starbucks to get somebody to buy coffee is probably similar to a Dunkin Donuts, probably similar to another random coffee shop down the street. The difference is that they had engineered their model such that people wanted to keep coming back, that they became recurring or reoccurring customers. So the difference there really quickly is recurring means it's not a subscription like Netflix. Reoccurring means that you buy on a regular basis. So you might buy Coca-Cola, for example, or whatever, one of their products that you like.

You're probably not on a subscription for it. but you buy it when you're out at restaurants or you buy it when you ship it to your house, whatever. Or you just buy a Costco when you're there from a distribution center. Either way, you are a reoccurring customer for them.

And so figuring out what is my cost of a permanent customer? And all you have to do is figure it because a lot of businesses have this is you say, okay, let's say you're an agency of super high trend business typically. Okay, there are some customers that have been with you for a long time. And we will I will consider somebody who's been with you two plus years as a permanent customer within the context of what we're talking about. Now, you might figure out, and this is why this is so important, that one out of every 10 of your customers becomes a permanent customer.

Well, then you say, okay, well, how much does it cost to get a customer? Multiply it by 10. This is actually the recurring base that we're trying to build. Everyone else is just sifting through the wheat from the chaff, I think is what it's called, to just get the kernels, right?

The main part. And if you want to be smarter about it, you can say, huh, well, it takes us 10 customers to get these ones. But what if... these customers look and smell, walk and talk a little bit differently than the other nine.

Well, I'll bet you if we changed our advertising and attracted only those types of customers, we would be able to get a higher hit rate on that. So even if our CAC for this specific avatar doubles, but we get it to one out of three, it costs us $600 to get a customer rather than $1,000. And we're still winning overall. And so the big picture here. is that number one, we have to sell off a value.

We have to use the value equation to make things less risky, faster, and easier for the customers. Once we do that, we are decoupled from a race to the bottom price war. Number two, once we know what our premium price is, we want to pull that cash forward and speed up the cash conversion cycle so that capital or money is not the limiter of the business.

And so we can get customers on demand and we can do so profitably. We're literally getting paid to get new customers. They pay us. They... refinance our acquisition, which is why I call it customer finance acquisition.

And then finally, we understand the game of wealth alchemy, which is of the customers that we acquire, what percentage of them become permanent customers? And they become the reoccurring revenue base within this business. And then that reoccurring base is what we are going to be valued on. And then what is that value multiple?

And so then we just look at the arbitrage between what it costs us to get a permanent customer versus what our enterprise value multiple is going to be, which is. until the day you sell it, growing tax free. And so I'll show you one last little hack here that I think is important. So let's just say in this business, it's in the original vehicle. So you can just forget about this little side stuff.

So it's in the original vehicle. And let's say that we've got $3 million in profit for this business. It doesn't matter.

Okay. So you have 3 million bucks in profit in this business. And let's say that you live in a high tax state and you get taxed 50% for tax reasons.

So you're going to take home $1.5 million after taxes. Now, you're really butthurt about this because you're like, what the heck, government? You're taking half of what I made.

But if you added $12 million to the business and you spent this money to do that, what did you really increase? Well, you increased your personal net worth by $120 million. And so if you had $120 million plus the $3 million that you made in cash flow, and you only had to pay $1.5 million on $123 million, now you're paying... I don't know, 1.5% in taxes. When I realized this, it fundamentally shifted how I played the game.

I was really obsessed with tax strategy and trying to maximize all these loopholes when the biggest and most obvious one is just build something valuable. And as long as you keep building it and you don't want to cash it out, all of that growth is tax-free and compounds. And the clue that I got on this was realizing that I was like, This is before Elon moved from California.

So I was like, Elon's in California. I was like, Zuckerberg is in California. And I looked at the Forbes list that all these people in the U.S. were in California. But I was like, but California has the highest taxes. How is this possible?

I was like, oh. They understand something about wealth creation that I don't understand. What is that?

And that was when I dove deep and understood this level of wealth creation, or what I like to call now wealth alchemy. If you like this video, you'll love these.

Transcript for:Strategies for Rapid Wealth Creation

Transcript for:
Strategies for Rapid Wealth Creation