Business Success and Leverage

Key Statistics

• 1 in 250 businesses do over $10 million a year in sales.
• 90% of businesses never hit $1 million in sales annually.
• 0.4% of businesses, or 1 in 250, achieve $10 million+ in annual sales.

Categories of Success

1. The Entrepreneur

• Skills and beliefs are crucial.
• Traits like patience are a collection of learnable and trainable skills.
• Skills can be categorized as "hard" (easy to measure) or "soft" (hard to measure) but all are trainable.
• Limiting beliefs often cap potential—expand beliefs to unlock skills.

2. The Opportunity Vehicle

• Leveraging includes what you put in vs. what you get out.
• Higher leverage leads to more successful businesses.
• Leverage Types: people (collaboration), capital, code, and content.

Real-World Examples

Entrepreneurial Beliefs

• Example: A CrossFit competitor’s belief limited his business potential until he changed his mindset.

Unknown Unknowns

• Story of a gym owner advised to shift focus from gym ownership to leveraging his skills for higher returns.
• Another example: turning a successful, single-location photography studio into a multi-location business.

Leverage in Depth

Explanation of Leverage

• Input/Output: The differential between what you put in and what you get out.
• Examples: Skill in cold calling results in higher success rates compared to a novice.
• Warren Buffett’s Insight: Not how hard you row but what boat you’re in.

Types of Leverage (Naval Ravikant’s Model)

1. Collaboration: leveraging other people's work.
2. Capital: using other people's money to create gains.
3. Code: software that scales efforts exponentially (e.g., apps, platforms).
4. Content: content that reaches masses at once (e.g., podcasts, videos).

Career Trajectory and Leverage

Personal Business History

• Transition from employee to self-employed to employer.
• Became successful by increasing leverage.

Scaling Business

• Leveraging content and capital to scale significantly.
• Example: Gym business transitioned to turnarounds and licensing models.

Leverage and Returns

• Education adds leverage: learning to sell increased potential returns significantly.
• Ignorance Debt: The cost of not knowing certain skills or knowledge.

Strategy and Resource Allocation

• Prioritize investment in skills and education for highest leverage returns.

Practical Steps

Becoming an Entrepreneur with High Leverage

1. Live Below Means: Save cash for business opportunities.
2. Start a Side Hustle: Transition from earning to learning.
3. Stack and Sustain: Match and sustain income before quitting your job.
4. Document, Demonstrate, Duplicate: Transfer and scale knowledge effectively.

Infinite vs. Finite Games

• Success is about sustaining the game, not winning it outright.
• Emphasize long-term sustainability and growth.

Industry Knowledge and Experience

• Stick within your industry, leveraging existing knowledge and skills.
• Transition through roles within the industry rather than changing industries entirely.

Final Thoughts

• Focus on continuous learning and leverage to outpace competition.
• Be prepared for transitions and leverage shifts to achieve long-term success.