There comes a point when you get so rich that you question the meaning of making money. Today, Tom is going to show you how to achieve this. Tom Bilyeu is the co-founder of Quest Nutrition, a billion-dollar company revolutionizing health and wellness, and the founder of Impact Theory, a media powerhouse empowering dreamers worldwide. Tom is here to share the fundamentals behind building a successful business.
So Tom, walk us through the nine things we're going to learn in today's YouTube video. First of all, you want to be solving a known problem. Next, thinking from first principles. You want to turn everything into math.
And anything that you can't turn into math, you're going to turn into narrative. Next, you want to test the marketplace. Then, you're going to need to build your infrastructure.
Obsess over adding value. You are going to have to change your relationship to failure. And then last but not least, you're going to run the physics of progress. All right, start at the top.
So you don't want to find yourself in a position where you're creating a product that nobody wants. And so the first part of that is to solve a known problem. Now, this is something that I have to remind myself about.
It's something that I have to remind my team about all the time. Yes, you have your finger on a problem, but it is a problem that the customer actually knows that they have. So you want to be solving a problem that they're screaming to have solved.
It's a real problem in their life. And so a lot of A lot of times this is going to mean avoiding sexy industries. Make sure to write this down for people.
Avoid sexy industries. Because you know they're going to definitely want to not avoid. They're going to want to be all over sexy industries. So the great irony of my life is though I teach people to avoid sexy industries, I'm trying to build the next Disney. Which is like the entertainment is the sexiest of the sexy industries.
Which means it's going to be flooded with competition. Which means also that the only real problem they have is boredom. And there are so many things that they could be using to solve that problem. They don't have this screaming need, which means that this business is a lot more difficult for me to build than my previous company, where we had to overcome a very difficult physical challenge. So for people that don't know, my last company was Quest Nutrition, and we were trying to make a protein bar.
that tasted like it had sugar but didn't. And so we ended up in manufacturing. And so extremely unsexy niche of the world, but by going in there we were able to have a legitimate zero to one moment.
So nobody had been able to make this bar before. We can talk about how we get there later, but recognizing we knew that there were people out there that wanted something that tasted delicious, was convenient, met a certain price point, had a lot of protein and didn't have sugar. A known problem and it was difficult to overcome.
And so by going in and doing the extremely difficult things behind the scenes to solve that problem, we now put ourselves in an incredible situation. The audience knew that they wanted this thing. They just didn't think that it existed. And so now when you go on to the next thing, you're able to realize, oh, I really have something here that people are going to want.
Now we just have to actually be able to build all of the connective tissue that allow for a business to take off. How did you know people wanted that product? Well, so you start with, is it a problem that I'm experiencing in my own life? And so my partners and I used to joke, well, we know there's at least three people that want this.
But the honest answer is was broader than that. So we were running a software company at the time, and we found that the tech guys, they didn't care about food, nutrition. They just ate whatever they wanted to eat.
But because the three of us worked out, they would all ask like, oh, man, what do you guys eat? Like, you know, I want a physique, too. And we were like, dude, you got to eat a lot more protein.
You got to cut out the carbs. And they would see us bringing in these homemade protein bars. And the reason we were bringing in homemade protein bars was there was nothing on the market that met that need that was high in protein, low in sugar or had no sugar, but tasted delicious. And so each of us had our wives making these bars at home. So we would bring them in and they started asking, hey, can we try one?
Can we have one? And we found that if we brought more, they would eat more. So we're like, this is really interesting.
fact that people who do not care about their health and fitness think these things taste good enough that they'll eat them regardless of the fact that later in the day they're probably going to have a cookie and so we thought okay there's something in the formulation there's certainly something in the idea if we could scale it we didn't know at the time how much this would scale But we also, and this is where we really got the timing right, because right around the time that we launched, there was all this news breaking, and this will seem absurd to people watching this now. in 2024 but when we launched back in 2010 people actually didn't understand that sugar was the problem so people didn't realize that was a problem yeah exactly so whole conspiracy there which we can go down that rabbit hole some other day another day but um we really caught that wave and so people were waking up there were all these articles being published all these influencers going on what we now call social media, coming out and saying, hey, you want to avoid sugar. And so when we said we have this protein bar at first, people were like, oh, man, I don't need protein bars. Those are junk.
And so we're like, this is the first protein bar that isn't a candy bar in disguise. So try it. Check your blood glucose levels.
You're going to see that this is real. And so we knew we wanted it. We saw normal people that didn't care so much about what they ate. They would allow themselves to eat anything.
They also liked the taste. There was a metabolic reality to it. So we're like, we just know what people who really care about their physique, care about their health, the challenges they're facing, because we were our first three customers.
And so, yeah, we were very confident that we had something that at least was worthy of testing in the real marketplace. Because as we saw in the opening, one of my core things is you need to test the market. So forget that you love it. You've got to find out if people that absolutely don't care about you whatsoever, do they respond to it as well? Yeah, I think the avoid sexy industries is an interesting one because back in 2010, for example, social media was, you know, building platforms like Facebook was a sexy thing, right?
So I think it's interesting. But is a is a. A product like that's still sexy.
Behind the scenes, not really, right? It's a lot of moving dirty parts almost. Manufacturing is a dirty business, hard, right?
Literally. So knowing the problem, but you knew it because you had the problem and then you saw that other people wanted the product you had that was solving your problem. So people listening, how can they know the problem is one that they should solve?
And if they don't have an idea in their head, how can they... How can they find out what problems are out there? All right, so first they need to validate the idea at the level of thought experiments.
So this is something I find young entrepreneurs do not do. They get so enamored with an idea or an idea is simple, it's easy, and there is a real intoxication to there is a simple, easy thing that I can do. But they don't run the thought experiment of saying, OK, let's say that I do this really well. Then where am I at?
And if you do the same really well and then you still don't have anything, then that wasn't a thing that was worth pursuing. So I would just run a thought experiment of let's say everything goes swimmingly. What do I then have? And so we looked at that and we're like, OK, well, wait a second. If this goes swimmingly, then we have a product that can fit into a known category.
But a category that's been declining, we believe, because there is. they either taste terrible or they have a ton of sugar in them. So there's no real benefit. Like if you're eating something that has the macronutrient profile of a cookie, just go eat a cookie. Like it doesn't make sense.
And so, um, we thought, okay, known category, known sales distribution pipeline. It's in so many retailers. So if we can be different and better, which is one of the keys you're trying to break into an industry, ask yourself.
how am I different and better? So one of the keys becomes, all right, if you're trying to solve a known problem, odds are there's already somebody there. So you either have to solve a newly known problem, in which case there aren't going to be as many competitors, or you have to solve a known problem by being different and better. And that's going to be how you're going to get attention for it.
You solve it faster, you solve it more cheaply. In our case, you're more delicious. There's a better glucose response, whatever the case may be.
So we did the thought experiment validation, but then we also ended up just actually putting it out into the marketplace and going to people who we believed would understand the product immediately. And they would be a billboard for the future people that we actually want to sell to because the avatar that. up making me wealthy was a 35 to 50 year old mom who was trying to get her weight under control. But that wasn't the early influencer that we went at. We went after the person that you would see at a pool party.
in the summer and they would be jacked six-pack abs and we knew whenever somebody sees that person they have one question what do you eat and we just wanted that person to say i ate a quest bar and so we're like if we can build that and we're going to be in good shape but first we had to put it out into the market get those people to eat it to try it to see if they liked it and that that was a big big step for us was to get that validation to give it away and see if they would come back as a paying customer so next up what we got what was it from first prince principles. All right. So think from first principles, tell us what we need to know. Okay. So there's two really important things that I'm going to be talking about today.
Think from first principles and run the physics of progress. Like if you can really zoom in on those, that's going to be, that's the game. It's like everything else I'm saying to give people context, tell them through sticking points, but that's really it. So the whole idea of first principles is quite literally to get to the level of physics. So The reason you want to do that is most people reason by analogy or a frame that someone else has handed to them.
Now, if you think of a frame as a box, you'll understand why this becomes problematic. Once you're stuck in the box, this is why people. We'll say to think outside the box. What they're really saying is somewhere at some point, somebody else handed you a frame or what I'll call a frame of reference.
And a frame of reference completely controls the actions you take, what you look at, and what you see. And so if you're, and Elon Musk gave such a great example of this with what he did at Tesla, if you're Elon Musk and everybody tells you batteries are just too expensive, Elon, there's no way to build the car that you want to build. If you're thinking from first principles and not accepting that frame of reference.
They've told you that. But if you don't know the physics of it, why would you automatically believe that that has to be true? And so what he did, thinking from first principles, thinking up from physics again, just to make it very clear what you're doing is he said, OK, I understand that this is how much battery costs right now. But a battery is made of constituent parts. Those constituent parts are mined, manufactured, assembled, whatever.
And if I can figure out what are all the cost structures of each of those items, I can. actually asked the question, does it violate the laws of physics to make this for cheaper? He looked at it and realized it didn't. In my own experience at Quest, we kept asking this really simple question.
Why has nobody made a protein bar that tastes like it has sugar, but doesn't? We're doing it at home. This obviously is possible.
It clearly does not violate the laws of physics. So why isn't anybody doing it? And what we found was we went to co-manufacturers and we said, hey, we want to make this bar.
And they're like, guys, that bar can't be made. And we're like, why? And they're like, let us show you.
And they would put it in their equipment, they would run it, and it would gum up the equipment, it would stop it every time. And we're like, whoa, what's going on here? And this is where getting into problem identification becomes really important.
Whenever you're trying to identify what the problem is, you go like this. What's my goal? Okay, our goal is to make a protein bar that tastes like it has sugar but doesn't.
Why will I not automatically get there? Because it's very hard to produce at scale. Why is it very hard to produce at scale? Aha, we're now onto the right question. Because what we found by going and talking to equipment manufacturers was that all of the equipment for protein bar line that's industrial scale has been made over the last 70 years with one base assumption that you're going to be using high fructose corn syrup.
Why? The government subsidizes it, it tastes awesome, and it gives this really nice texture that makes it easy to produce, especially in the... the most typical ways that a protein bar is made.
So now you're left asking yourself a question. Okay, I know what I want to make. I know the obstacle that stands before me, which is manufacturing, but I'm not trapped in anybody else's frame of reference. So I'm not going to do what everybody else did, which is go, oh, I guess I have to add high fructose corn syrup.
We said, just because the physics demand it, that I can build my own equipment. And so if we were willing to become our own engineers and build our own equipment, then we could make the bar that we want to make. And so being able to think from first principles is difficult. So now I'll often shortcut this by saying, okay, I'm not going to think out from physics all the time because most of what I deal with is just the psychology of the human mind.
So I'm dealing with the physics of you're having a biological experience. I have to understand how your brain processes data. This is why at Impact Theory, I realized, oh, I thought we were going to make stuff for adults. I never thought I was going to be aimed at kids.
It's not my natural inclination. I don't take in a lot of things aimed at kids. But what I realized was, oh, wait a second. The brain architecture of human development creates this little window.
The Japanese actually have a name for it called shonen, which translates as the few years. The few years is 11 to 15. It's where you start drinking from culture. So I was like, okay, cool. I get it.
I get what the brain is doing. But again, because I'm now reasoning up from physics, the truth of the... architecture of the human mind, I went, okay, my business can't be aimed at adults.
They can change, but they mostly won't. So if I really want to have the impact that I say I want to have, I've got to skew younger. And so that's an example of how just being honest with yourself, that there are things that are true in the world and there are things that are true in the world and I want to adhere myself to them.
So I always judge an idea's value on its utility of moving me towards my goal. And I'm always trying to update my prediction engine. So your brain's a prediction engine, but it's often wildly miseducated. And so you have all these crazy base assumptions because you're reasoning from analogy. You've taken on a frame of reference from your parents, your society, all of that.
And so people just get trapped, trapped, trapped, trapped, trapped, and they can't figure the way out of these problems. And so when you look at somebody like Elon and say, how has he been able to do all these things that people thought was impossible? It really is as simple as he just starts from physics.
Now it's. The fact that he can understand physics, that opens up a lot more world. to him then for the next person but once you accept that's the game of business then it's like you start thinking in a whole new way right next turn it into maths i think i know what you mean by this but i'm quite excited to hear what you mean okay because i hate maths and i yes you and me both but turn it into maths so you want to turn everything you can into math the reason that you want to do that is so much of business really is just a model of inputs and outputs And a lot of times people will trick themselves into thinking that it's not. They think that it's some sort of black magic. But the reality is you need to get a certain number of impressions to drive people to your lead magnet, a certain number of opens in your email to get them to click on the link to get them to buy your product.
Right. Like if you have a sales cycle, everyone can learn to sell if you follow his numbers. Exactly. And so that's everything in your business.
What do your employees cost? How much money do you generate? And you want to build a real business model that has a bunch of assumptions that you understand so that you know there's something real here. Because what that model is going to do, it's going to force you to see where your inputs and outputs are.
So I have to spend this much to get a customer. I have to spend this much to retain them. I have to spend this much to replace them, whatever the case may be.
And so now you can really just look at the map. Oh, my problem is that not enough people open my email. The problem is I have too many returns.
The problem is I have to give away too many products to get a customer back. On and on and on. But it allows you to map all the variables that work your business and to figure out what's working and what's not. And then you can put your finger on the real problem. This goes back to your ability to dissect that problem is going to determine whether you can solve that problem or not.
And everything in The world of business is about problem solution, problem solution. We'll get to it more when we get to the physics of progress, but it's like, that's what you're looking for. But if you don't have the math, you're going to treat everything like it's narrative. Narrative is critically important. That's why the very next thing we're going to talk about is the narrative.
Narrative works. Narrative is a must. It is how you aim your team at the right thing.
It's how you make sense of disparate variables that you're not quite sure how they fit together. You're going to force them together into a narrative that's going to allow you to take action. But if you don't also have the math.
First and foremost, people will confuse progress with an acceptable rate of change. Let me say that one again, because I see people make this mistake all the time. People will confuse progress.
Hey, we added another sale. This is amazing, guys. Yeah, we did it. With, yeah, but you have to be adding 100 new sales a day. And so while you added one, and that feels good from the narrative perspective, we did it.
One is infinitely bigger than zero. This is so exciting. But our known rate of change when we look at our business model tells us for us to hit the goals at the end of the year, because you just take how many days are left in the year, subdivide that, you've now got units of time, how many units of sales or whatever do you have to get over that time? Now here's another thing I see people do that's absolute lunacy.
Never, and I mean never boys and girls, assume that something linear will suddenly become exponential. Linear does not beget exponential. linear begets linear. So if you're growing by 20% month over month, there is no month at which it kicks in and that suddenly linear growth where you're exponential growth, where you're doubling month over month. Okay.
So when you start doing something, if it has exponential growth out of the jump, okay, now we can make some assumptions around exponential growth. But for the most part, once you hit a linear path, it's going to be linear until the cows come home. And so what I see is people have this sort of magical sense that, oh, if I keep growing by 20%, that I'm somehow going to start doubling.
And it just doesn't work like that. And people make financial decisions around that, which often, I've never gone bankrupt, and people always, you know, all the businesses are built, like I've never gone, I'm quite proud of it, never going bankrupt. It's okay, a bad job aware, but when I listen to people that have gone bankrupt, often they over anticipate what's coming in.
Correct. Let me draw you a graph. So this is why I beat that horse to death.
So people will, in their model, because it will have assumptions and they'll be unknown, they'll do this for the year. And what they're imagining is somewhere right around here, a thing happened that took them from being linear to suddenly being exponential. Or maybe they assumed exponential out of the jump.
And they're just saying, no, it's going to be exponential from the beginning. It's just one to two is not very big. Two to four is not very big.
Four to eight is not very big. So on and so forth. And what I say is, cool.
If you make the assumption that this is going to be a true exponential curve right from the jump, if this ends up being one, this had better be two. And if that's two, this had better be four, because if this goes from one to 1.5, stop. You have linear growth, everything downstream, toast. No good. And I'll see people push it out.
Well, it took us a month to get up and running and look, look, we're making progress month two. We were growing faster than we were in month one. This I'm telling you is still going to become, and people will get eaten alive because odds are this number here became what they budgeted off of for the year, because they know if I don't spend this money to get up here, I'm not going to get up there.
So they spend here. And at the end of the year, they missed all the missed marks along the way. And this, I see people make that mistake all the time. This is hopium. You hope that that happens, but we're not going to build our mathematical model based on that.
Or if we do, because we have an actual model that says from day one to day two or week one to week two to give a more realistic increment, but I'm not waiting a month from week one to week two, I expect to see the following thing happen. And then you just hold yourself accountable because you have the math. Did it actually happen? If it actually happened, then cool. You're on the right track.
Your predictive engine is working great. Keep going. If it didn't happen, either you were over or under, you need to update your predictive engine because if your prediction engine breaks, you're going to be spending money foolishly. You're going to get yourself out of your skis and it happens all the time. So if you're ready, we should move on to everything that you can't turn into math.
You're going to turn into narrative. So this is dangerous. So, um, Emotions is the name of the game here.
Emotions make dots feel, that's the operative word, like they connect even when they don't. And this is how people get themselves in trouble. This is how the guy washing windows, the emotion of somebody watching his video makes him feel like he's making progress, but the reality is that he's not. So this is narrative is a double-edged sword. So here's why narrative is important, but why you have to couch it against the fact that emotions will make dots feel like they connect that don't actually connect.
Life is just all these disparate dots. What those dots mean are going to be completely up to you. I'm a window washer.
People are watching my videos. What does that mean? It means that I'm going to be able to grow this big audience. And the more videos I put out, I'm going to be able to generate tremendous amount of revenue doing this thing that I love, which is making these videos, making people aware of my product.
It's going to market itself. It's going to be incredible. That's all make-believe.
It's all narrative. Now, it may end up being true, but we don't know that yet. It's a narrative.
So what I know as the CEO, because when you have employees, this gets very important. So You asked me today what my dream is. What you did is click me over into my narrative.
Now my narrative is I'm trying to build the next Disney. I want to show that you can empower people at scale through entertainment if you focus on people 11 to 15. Now to keep myself in check, I named my company very specifically Impact Theory. Now what's a theory? It's something you've discarded all the other hypotheses. So it's not a hypothesis, not impact hypothesis.
I'm way farther down the road than that. I've studied this way too hard, but it also isn't impact fact. So my theory on how to impact people at scale is this, but I don't know.
And so I'm running all of these experiments. Now I call it that to remind myself not to get lost in my own narrative. So as a CEO, what you have to do is say, hey, Simon, I want you to join me in this thing that I'm doing. I've got to give you a mission to focus at.
We have to look at the same North Star. We've got to be moving in the same direction. But I also need a filtering mechanism to know if you're the right person or not.
So I'm going to tell you, this is why I'm doing the things that I'm doing. This is why we're building this entertainment. I don't want to attract you just because you're into video games. I want to attract you because you're into video games that empower people. Now I know we're going to pull in the right direction.
I also know that humans are wired for meaning. And so if I can show you, hey, what it means to work at this game company is very different than what it means to work at a different game company. And I'm giving you the words to say to your friends and your family so that you can explain why you've chosen to work with me. I'm small time, all that. Okay.
So now I'm also going to use that narrative to galvanize the company. And I'm going to say, guys, this is what we're about. This is what we do. And we celebrate inside the company, people that did great things.
We do what we call a community connection. where we read from somebody in the community that's like, the other day I had somebody come into my stream and they brought their kid who's being bullied at school. And so they then wrote this cool testimonial.
You have no idea how much that meant to my son. Like your insights were incredible. So I'm sitting there playing video games and they said, Hey, I brought my son in. He's having this problem.
If you would talk to him, he thinks you're cool, whatever. So I then go into it. They write the message.
We read that in front of the team. That's me reinforcing the narrative of why we do what we do now. The The only thing I know is that narrative is wrong in some way. And going back to our previous point, I've now put myself in a box. So I've created the frame that I now exist in.
Now I need to. I need that narrative frame to point everybody at the North Star, to galvanize them, to hold them together as a group, to give them the lore, essentially, that they're going to tell each other about why they're working so hard and why they're here and who do we serve and all of that stuff. Why us instead of somebody else? But it puts us in a box. And I'm going to say things like, hey, we should build this video game.
I think it's going to have this impact on people. I don't know that. I hope that that's true. I have reason to believe that that's true, but I don't know it's true yet. And so I'm going to be constantly, privately blowing my narrative up and going, what if this is wrong?
And so I, boom, I abstract it back into the dots. Okay. 11 to 15 kids go through this period where they're drinking from culture. You can implant ideas through story.
We're a meaning making machine as a human animal, but they're just dots again. And I'm like, is there a better way to connect these dots? That's that gives me more predictive ability.
If yes, then I redraw the narrative. I come back to the team and I say, hey, it's not this box. It's a box that looks more like this.
Right. And so you keep updating that, adapting that however you need to. in order to make sure that you're actually hitting the rate of progress that you want to make.
So anytime we're making progress, but it's not fast enough, I know I need to blow up my frame of reference, start again at the physics, the level of physics, build up from that to see if I've trapped myself somewhere somehow. So again, narrative is important, but the emotions will kick in here and you step out of your logical brain. You're no longer looking at the numbers and you can feel really good.
about something that isn't working. And that's why you're going to have to have key metrics and constantly judge against it. Is narrative... Okay, let's take your example. And people listening, take your example.
You say we want to be the next Disney. Yep. But isn't it more...
That's just a quick headline. That's just a quick headline. So when it comes to narrative, why do you want to become the next Disney? It's probably more important for the people in this internally, for example, right?
Becoming the next Disney, well, who cares? You know, there's already Disney. So how do you go deeper on the narrative? Well, so we talk about it. It's that we are using, we believe that you can get an empowering mindset out to people at scale through entertainment, specifically by aiming at the age 11 to 15. And then I'll go deeper into my own story and I'll say, look, my life was changed by a little green character named Yoda and Yoda's advice is real.
And Yoda's actually based on- Buddhist and Taoist teachings. Now, I didn't know that at the time, but when I turned 15 or 16, a friend of mine handed me a book called The Tao Te Ching, and I started reading it, and I was like, whoa, this sounds like Yoda. Now, obviously not realizing that George Lucas had worked with a guy named Campbell who had written all of these books like The Power of Myth, The Hero with a Thousand Faces, Joseph Campbell, and that drew me to that. So I start reading about Joseph Campbell.
I start reading The Tao Te Ching. I then find Bruce Lee. Bruce Lee introduces me to the Tao of Jeet Kune Do, this idea of being like water, that water can take any shape, it can flow, it can crash.
And so I start like all these really interesting ideas start getting into my mind because this little green character had real advice. Flash forward a few years later, I meet another character. His name is Morpheus.
And Morpheus also gives me advice that actually works in my life. And so I'm like, hold on. I'm actually cobbling together a worldview largely from these stories that I listen to. I mean, this is why for Lord knows how many millennium we have told stories that contain a message. And that's how kids learn these messages.
And we are a species that transmits our culture through narrative. So rallying everybody around this, talking about this kind of stuff all the time, specifically my. being changed by star wars the matrix we've got a whole list and the karate kid and realizing all that's real at least in my life for sure and i've met countless people for whom that's been true and then just looking back historically this is how we convey this stuff the bible is the ultimate self-help book it's like the og live like this your life will be better so i know that this stuff works i know just historically speaking that packaging it up inside of a narrative makes it far more likely to stick with somebody.
And I know that I hate quoting this guy because he was absolutely evil, but he was right about something. Lenin said that I can change the entire world if you'll give me a single generation of children. Because what he knew is you can give them these ideas, they build their entire worldview around them, and then they will spread that worldview. Totally.
You go to North Korea and talk to people there, they think that it's being well run. You know, it's a crazy one. I really love narrative generally because I think storytelling in general, every brand should be a story, right? That's, to me, that's what brand is. So a brand is both an external and an internal thing.
It motivates people internally, externally. By the way, it also helps you get some investors. A lot of people want investors.
They want to hear a narrative. They don't, it's not just about making money. Of course, that's a by-product, I think, of a good narrative.
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Test the marketplace. Alright so the idea here is that the only thing I can tell you is that some part of your plan is wrong. It could be the product, it could be the go-to-market product, it could be the way you're positioning the brand, it could be your understanding of the avatar, whatever, something is wrong.
And the only way to find out what that is, is to get into the messy battle of it all. And so you'll have by this point, you've got your business model, it's full of all these assumptions, and as Mike Tyson says, everybody has a business model. until you get punched in the face.
I think it was a plan. Everyone's got a plan to get punched in the face. Oh, was his a little different?
Everyone's got a plan to get punched in the face. I don't know if he said business model. I think it was business model. He might say that now. I think Tyson might have upgraded these days.
Of course. He's a business guy. But back then, everyone's got a plan to get punched in the face. Okay, my misremember.
But the internet will correct either of us, whether it's right or wrong. The internet will tell us. It is just abundantly true that your business plan is only as good as it's...
first encounter with the market. And the first encounter with the market is going to be absolutely terrible in most parts. And we'll get later to changing your relationship to failure. But in that moment, it's not about giving up. It's about going, okay, what in my assumptions is incorrect?
Where did I get trapped in a frame? Where am I not working from first principles? Or now that I just have an updated piece of information, where do I plug that in?
As I plug it in, does everything else still work? So if everything down the line still works, it's like, cool, I'm just a little bit smarter. But you really do want to get into the market as quickly as you can. So back at Quest, we got the bars into people's hands when we were hand making them.
So literally wrapping them in cellophane and just giving them to people and seeing if they liked them. Then it was when we were making them by hand, we were getting them to people. And again, you want to get them to people that don't know or care about you. You want real feedback.
So we'd give them to people. How likely are you to buy this? You know, get a sense of net promoter score, all that good stuff. Okay. People are are either loving it or hating it.
If hating it, then you go back and you try to address, you bring it back and you test it again. But the video game, same thing. So the actual video game that I'm building is going to take me probably another three years, but people can already play parts of the game right now.
And I did that. We're building in phases. Because I knew I had to build a combat system, for instance.
So I'm going to build mini games around that combat system. And I want to do that because I want to see, is the combat fun? Is the movement fun?
Are the assets in game optimized enough? There's so many things that we learned that stopped us from building tech debt, tech debt, tech debt by just getting it in there, seeing it on real machines, seeing people play it, seeing where they spend their time. All that has been wildly influential in the product development.
So it's extremely important not to worry about being embarrassed. And I've told people many times over, one of my superpowers is that I'm willing to be embarrassed longer than the next person. And the reason to me that that's so effective is because the secret thing that I know is going back to the only belief that matters. If I put time and energy into getting better at something, I'll actually get better. Okay, cool.
So I just need to figure out what do I have to get better at. But I have to risk embarrassment. I have to risk putting something out that people will ridicule because it's so early. It's not really ready for prime time.
but I don't know in what way it's not ready for prime time. So if I can get people to give me feedback and then I've got a whole thing about community, but we'll set that aside for now. So I'm getting all the punches in the face from the marketplace.
It's toughening me up. It's making me harden the product. I'm finding out the ways that people actually want to use it. And now I can really begin building the brand, sharpening the product, and then going back out to market. Now I have a very counterintuitive view.
That is you get 10,000 chances to make a first impression. Yeah. So I don't care how badly your thing goes out.
It doesn't matter. There's 9 billion people on earth. You're the hardest thing you will ever encounter is getting people to know who you are. So there are people right now that.
Don't know the prime minister of the UK. There are people right now that don't know the president of the United States. Crazy, but true. So it is just, there's always going to be a fresh market that you can go out and go into.
And as long as your product is awesome and solves a known problem well for a price that they're excited to pay, you're always going to have an opportunity. So don't be afraid to get it out. Make sure that you can do this thing profitably. It says again, it's people don't quite understand what that means, but Airbnb launched nine times before it worked.
Yep. Right. I launched a platform called helpbank.com.
When it first launched, it was like, it's rubbish. Oh, I can't believe you put something rubbish out there. But we were testing to see how we could improve it. And back to your point earlier about framing. When we launched Help Bank, I thought it was a platform where people would go and get help.
That was my frame. People need help. They go there and get help.
You know what it turned into? After we launched it, we got market feedback. It was a place where people went to help people help people.
That's interesting. So it wasn't a place just to go and get help. It turned out it was a convenient way for people to go and help.
So we completely switched to where our client was. That. That's really cool. So I think testing the market is a great way of also validating who your client is.
Right? And I'm sure when you're back to your, you know, your... Quest Nutrition? Quest Nutrition.
I bet when that bar went out, you've also got, initially you've got the public. But then testing the market, you've got to get it in retailers. And they're a different animal completely.
Very. Right? So that's a whole new testing the market because they are actually also your client in a way.
Right? Was that true in that case? Yeah.
You had to convince them to take the product. In the beginning. You can have customers that want it, but it won't necessarily mean that the supermarkets are going to stock it. Right?
So you have to test the market. What's the price point? Will the supermarkets make a profit?
Will they put it on shelves? How long will it last on shelves? Right?
How does the packaging look on the internet versus in a store? It's all very different. And I don't know if this is true, but without the retailers, I'm sure the business couldn't have grown as quickly as it could have done.
So you thought your customer is the person going to buy it, but your other customer is also the person going to stock it. And that's all part of testing the market, right? No doubt. Love that.
So people listening, test the market and do it as cheap as you can. Hey, I hope you're enjoying today's podcast. I wanted to ask a quick favor.
I've just written a book, guys. It's taken me 35 years to get all this knowledge, and I put it all in here. It will help you remove any subconscious bias you have for stopping you from starting your dream.
The key in this book that I want you to learn is if you want your dream to happen, you've got to make other people's dreams happen first. The link is down in the description. It would mean a lot to me if you bought it.
All the proceeds from this book I'm giving away to fund dreams. So please buy if you can. Thanks. Now let's get back to the podcast.
Okay, building infrastructure. Yeah, I think I know what this is, but I'm intrigued. And I'm going to do my thing in building infrastructure.
There we go. There it is. That's exactly how you spell it. That's exactly how you spell it. Thank you very much.
What do we need to know first? Okay, so because we're talking about building a billion dollar business, while yes, I think it will be true that somebody's going to end up building, it's going to be a one person thing. You use AI, software based, you build a billion dollar business. That is, I think, going to be the exception, not the rule.
and that if you really want to build something to last, you're going to have to get in and understand you're not going to be a solopreneur and do that. You're going to have to surround yourself with a team. You're going to have to figure out sales, distribution.
Like there's, you can, I mean, look, most companies fail to make it even to a million dollars, but you can get to a million dollars with a pretty small team. Start pressing $10 million, it's going to be tough. You start talking $100 million, especially if we're talking revenue, you're going to have a lot of employees.
And so there's a lot of things you're going to have to do in there. One of the most important is just getting the culture right. So building a culture for excellence. Now, this is, in today's society, this is not as easy as I would like it to be.
So if you think about building a culture of excellence, it's we are here to win a championship. So our job is not to carry players that aren't able to meet minimum requirements. Our job is to set the standard.
And then if people can't meet the standard that we quickly replace them with people who can. Now, it's a very different kind of culture. So it's going to require that you're very candid. It's going to require that you have an expectation of everybody in the company that if they have a criticism, even if they're willing to take it to the grave, that in this company, they have an obligation to voice it. Now, why?
Because I know as a CEO, I'm blind to something. And I know that the people in the company. See it pretty clearly a lot of times.
So they can see in me things that I can't see. And if I'm trying to lead us, what I'm trusting them to do is remove the scales from my eyes. Now, most people won't because they're terrified.
And so you have to create a culture that really allows excellence to thrive. The people are held accountable that we use a system called DOTS. DOTS was made by the person who created the largest hedge fund in the world.
Its name is Ray Dalio. And... this is something that he learned in his own company, that we're making all these gigantic bets and we get it wrong. People lose millions, hundreds of millions, potentially billions of dollars. So we have really got to minimize the amount that we're wrong.
And what he found was we had to be radically humble coming into this. And by being radically humble, then hopefully we could triangulate around the right idea. And so, again, just sticking with culture for a second, which is not the only part of infrastructure, but it's arguably one of the most important.
Probably the foundation for all of it. Yeah, exactly. So we. Use dots where anybody can give anybody else documented feedback on a, it's like 30 different variables that we created that matter to us as an organization.
And so you get to understand who's good at what, and it isn't going to be just because I'm the CEO that I'm somehow magically good at everything. I'm not. And so everybody in the company knows they have a document of here are the things that Tom is good at.
Here are the things that Lisa, my co-founder and wife are good at. Here are the things that the other people are good at. So just nobody's hiding.
Everybody knows what they're good at. We talk very openly about it. And if somebody has credibility in something, because this is an idea meritocracy, somebody who has proven that they can do this, when they say, no, that thing, the noob over there just said will work, it won't work. It's like they get a lot more credibility.
And so this is how you avoid not getting bogged down, having to take everybody seriously, but still always being open to criticism from any direction. Now, again, also some of this is just team. And team structure. So now as you get into structure, now we're talking about organizational structure. Some of the infrastructure, depending on the type of your business, is going to be physical.
So you're like back at Quest, it was massive facilities. We had 300,000 square feet of facilities between where things were stored, where they were manufactured. So you're building all that out, all of your equipment.
You're going to have a lot of processes and procedures. So getting your process right is going to be critically important. So how do you track a product?
This is unique to food, but it's like, you've got to be able to be compliant. You've got to know we made this protein bar on this day with these ingredients, and it ended up going to these places. So you have to have all those processes in place. Hiring, firing, HR, legal, all of that stuff. As you scale, you're going to need all of that.
And the needs of the business are going to change as you scale. Again, if I were talking to a solopreneur. I probably wouldn't spend a lot of time here, but if we're really talking about building a billion dollar business, this is where you start separating the entrepreneurs from the entrepreneurs. It's just a different ballgame. And so, yeah, you're going to have to get those right.
Go ahead. This stuff's more exciting than people realize as well, because if you're building a business, what I discovered was it's actually easier to run a big business than a small business. My first company, which was a gardening company, I have to do it all. And if I'm sick, nothing happens.
Right. So That's a very tough business. But if you can get, for example, the hiring culture around your purpose, when people join, I found that you don't have to manage people so much because they're managed around the purpose. The mission is important to them. Like you were saying earlier, they care about the mission as much as you.
So you manage them less. But once you have the systems in place, you can also take time off without the company collapsing. You can actually enjoy the business and not have to worry because you've got a process in place when you go on holiday. And I think people don't realize how... actually this is pretty sexy to me i didn't used to be when i was younger i'm like oh i have to hire people oh god i have to manage people oh god i have to build a process document and like hr god no thanks and now i actually love these things because they're freedom if you do it right as a small business owner right yeah no doubt and i'll add one more and this becomes ridiculously important and bizarrely hard to do and that's comms so you've got to do internal communication Which you wouldn't think you would do because you're there and you're saying it all and everybody's hearing you.
But if you don't have an official comms channel where people can get the information that they need, that's relevant to them, that you can tag them on things that they definitely need to be aware of. Woo. You will be shocked at how rapidly people start pulling in opposite directions. So true. And like you just said there, sometimes when people are listening and make a note of this, like you will say something to someone and you think they understand, but they may have a different way of interpreting the information.
Yes, indeed. So, like, an accountant, I used to work with an accountant, a really genius CFO, and every time I explained the mission to her, she'd hear something different. But when I wrote it down in an email, she got it.
Yeah. You know, it's that simple. It's just a different way of processing it. So comms, I've always struggled with this, too.
Like, I think it's obvious. You have a stand-up meeting, tell everybody what it is. Yeah. That's it.
Go away and do it. And then everyone takes a different thing from it, right? So true. Yeah, comms is so important.
So true. All right, that's amazing. Okay, right.
We're on the last few important parts of this blueprint. Let's do it. We are obsessed about adding value. What do we need to know?
What we need to know here is that ultimately the customer doesn't care about you. They have a problem and they want that problem solved. And if you can add tremendous value to their life, that they will buy your product and they'll come back and buy it again. And if you understand that you're up.
Against the chaos machine, there are plenty of competitors that are going to be trying to add value to your customer. And one of the most powerful ways that you can differentiate yourself is just by adding more value. I get more out of my interactions with this company.
Now, for a lot of people, this is going to seem self-evident today, but this is really what social media is predicated on, was when it first came out and it wasn't called social media, it was just like Facebook. What I realized was, oh, the marketing message itself. should be valuable.
Simply looking at my marketing should make your life better. And that's when I realized that the world had changed. And so we used to joke that the first rule of Quest marketing is not to talk about Quest.
It was just, we're going to add value to your lives. Now, again, people are going to be very used to seeing this now, but when you're putting out organic content, that's what you want to be doing. You want to make sure that the content in and of itself is interesting. So the way that I'm going to, so we use something at Impact Theory that we call straight lines.
So I put out a piece of organic content. Right. And I know that that piece of organic content ultimately is responsible for selling a product.
So before I put out an organic piece of content, I ask, what product is this selling? But when you're engaging with that piece of organic content, you should have no idea. So what I do is I say, okay, the straight line is that the type of value that this organic piece of content adds, because everything we do is value add, the type of value that this piece adds is going to add value in the same way as the paid product.
So now I know I'm picking up the right person. So whoever interacts with this, and then I'm going to point this at a lead magnet. So, Hey, you like this piece of content.
You should check out my list of 10 things. You should, whatever, whatever. Cool.
So now that person goes to a lead magnet that adds value in the same way as the organic piece of content, which adds value in the same way as the product, but I've now added. So added value. They liked the organic. They love the lead magnet.
Like, I can't believe I just got this for free. This is crazy. And then they're going to go from that into a newsletter drip sequence. And that drip sequence is going to add value in the same way that the organic post added value, that the lead magnet added value, that the final product is ultimately going to add value.
And then in the lead magnet, occasionally I will say, hey, and I also have this product. And then when they get into the product, I'm going to ladder them up. And so I'm going to have two or three different. tiers that they can buy into, all of them adding value in the same way.
So I never break the line by changing the type of value. A lot of times, and I've made this mistake more than anybody, you'll make a piece of organic content that adds value in a different way than the final product. And so now you have a broken line. And when you break that line, you're just going to hemorrhage people.
They're going to fall out of your funnel like crazy. And so understanding that if we're obsessed over adding value, we want to make sure that one, we're consistent with that value so that the person knows what to expect and two, that we're really just like adding a ridiculous amount of value. One of my favorite things that I've ever done as a business operator is back at Quest, if you called our customer support line and were like look man, I really want to lose weight, what do I do?
Our operators were instructed not to say eat Quest and the reason they were instructed to say eat chicken breast and broccoli is because we believe that that was actually the truth. And so we knew we were a snack, that people should eat it when they want a snack, when they just can't bear any more chicken breast and broccoli or steak or vegetables or whatever. You just, you gotta have something that tastes like cookie. Cool, we got you covered, but that's when you should eat us. And so the reason that we wanted to do that was we believed if we added that kind of value, where you call up and you can tell, I'm not doing this because it makes me money.
I'm doing this because it's actually true. It's gonna add value to your life, that you'll come back and when you're, looking for that product then you're going to buy us because there's trust and we've just been adding value at every turn when you do that enough people are just like huh my life is just a little better by being associated with these guys and they feel they feel a sense of love for you too you know in a strange you know strange way of putting it maybe but i think if people don't i call it give without take right we're actually yeah whole slogan about like you keep giving and people will give back naturally you have to force them to do it and i think there's something um When I look at people's social media and people listening, if I looked at anybody's social media now that wasn't working, I 100% say the problem will be they're posting straight up, here's my product, please buy it. They're not posting up, here are the three ways that you can lose weight without buying anything.
Or these are the three ways you can be fitter without buying anything from me. They're not really giving the value up front or helping people in any way. They're literally asking people for help straight away themselves. That's really what they're doing.
Here's my product, buy it. So it's the number one mistake I see businesses make, actually. They don't bring any value in their posts.
There's no value in what they're putting out other than for themselves and hope that someone buys it. This would be valuable for me if you did what I'm asking. Yeah, yeah. Well, just say that. That should be at least you could say that.
It's like, do me a favor, buy it. I've done that with my book, by the way. I've actually just done a post like, do me a favour, buy the book. I want to get on the Times bestseller list.
Do me a favour, buy the book. Fine. And I think if you give enough value, people will do it. Plus, sometimes that does appeal to people. Like, okay, look, I did a LinkedIn post.
I'm like, I'm sick of all the bullshit on here. Actually, I'd just love to sell some more copies of my book to you guys. Do you mind?
And like... About 500 people did. Wow. You know, so it's just, so that's a different technique though, right? To your point, like I think being obsessed.
And I think that works because you've added value historically. True. And so you've built up this sense of like, man, he's done so much for me.
I want to reciprocate. And so if you hadn't added that value, my guess is it would fall on deaf ears. Patience is another way of putting what you've just said, I think.
I hate patience. I literally have a t-shirt that says F patience. But that's, it's semantics. I know what you mean. But patience, as an entrepreneur, I don't think we like patience.
But I think in marketing, you need to have patience, actually, especially today, right? To build a relationship with your community. You need them to get to know you.
You need to get to know them. It's difficult to be patient. That's the problem, right?
It's interesting. I'm going to challenge you on this. So here's why I think this is a mistake.
You have to play the long game for sure. Always go for the referral, never the sale. Totally agree. And I think spiritually we're on the same page. But what I find is when people think I need to be patient, they accept a low rate of change.
So I'm growing, but I'm not growing as fast as I could. Whereas when they say, I'm always going to play the long game. I'm not going to try to close you today. That's just clumsy.
But I'm going to see how fast can I go? So for instance, when I first started streaming on Twitch. on the gaming side, I would go live for about an hour, two to three times a week and playing the long game.
But I was like, I'm not happy with my rate of growth. So now I'm going live seven days a week, two to three hours a day and trying to just add as much. Again, I'm not extracting anything.
I'm not asking people to do anything other than follow. And now all of a sudden we're growing a lot faster because I'm in there being aggressive. I'm telling myself no matter how fast we're growing, it's not enough.
It's never enough. I'm always dissatisfied. I'm always pushing forward with joy in my heart. You can get deranged doing that.
But if you're thoughtful and careful about it and you say F patience, like I'm going to go as fast as I can, always playing the long game. I want to be very clear. You'll grow a lot faster.
Now you, you're the advanced class. I'm sure you don't get stuck in that. But a young entrepreneur here is I just have to be patient.
Yeah, I know what you mean. I'm not patient. I know what you mean. I like training myself to be patient around certain things. Like I don't, I don't sell to people straight away.
I want them to understand the mission. I don't hire people straight away. Right.
Although I want to sometimes, you know, so there's a, patience is an interesting word. I will wear a t-shirt saying fuck patience. I'm, I actually love your nuance point to it.
Okay. Change your role. Relationship.
We shouldn't stop there because people might get upset. With failure. I love failure. I love it.
I seek it out. All right. So you've already changed your relationship.
So most people think failure means I'm a failure and they feel badly about themselves because their ego is tied up around being better, faster, stronger, right, more intelligent, whatever. All very fragile positions. Even worse, they don't start even. They don't even start because of failure.
They failed and they feel bad. But even worse, they don't even start. That's the worst one. Correct.
And so what I've realized is that failure is the most information rich data stream on planet Earth. You're never going to learn faster than when you fail. Going back to Ray Dalio again, he has a quote, pain plus reflection equals progress.
So it has to sting a little bit. So you've got to try something, be out of your skis, make a mistake. You don't want to have a mortality event.
But you want to try something that you were really trying to make happen. It didn't. And you need to figure out why. And so what I'm always trying to get people to do is think of failure the way an AI thinks of failure. So if you've ever seen an AI try to learn to play the Atari game Breakthrough, it's utterly fascinating.
The AI knows I have a paddle and I can control the paddle and that there's a ball that's moving, but I can't control the ball. So it just wiggles the paddle back and forth, back and forth. And it's constantly missing the ball.
And you can tell it doesn't know why it's supposed to wiggle the paddle. Now, it's not worried that other AI is laughing at it. It's literally watching the video. You're going to be in a stares because it's like, it's just freaking out.
And it's not having an ego death in there. It's just trying. If I move left at this moment, did I get what I wanted?
Yes or no? No. Cool. It's not thinking about a failure. It's thinking about a point of data that didn't work.
Okay. If I move here at this time, does that work? And then it finally hits the ball and it's like, got it.
Make contact with the ball, I get points. Now I understand. And so after a few minutes, it starts making contact with the ball, starts getting points occasionally. Then it realizes, okay, wait, there are actual paths that I can hit the ball. And like two hours in, it's now setting world records for scoring all because it just.
Just looked at everything as a piece of data and it trained off that piece of data. Now, if humans looked at failure that way, if I do this thing in this way, do I get closer to the result that I'm looking for? If yes, do more.
If no, do less. Change. Then, this is why I say I can be laughed at. Because I understand what I'm doing is learning.
I'm just learning. And so, yes, it is a failure. And yes, knowing humans, I have embarrassed myself in their eyes.
But... My entire life has proven to me if I just keep doing this and getting better and sincerely pursuing the acquisition of skills on a long enough timeline, I will be able to beat the vast majority of humanity at whatever it is that I'm focusing myself on. And it's just played out time and time again.
And so my wealth brought to you by the fact that I can just get in that upward spiral of learning, learning, learning always for my failures. And so if people reframe that is this is just a data point. And it's a data point meant to educate you so that you can gain skills and that, and this is a big part of this, skills have utility. And this is something that I think people don't think about.
Skills have utility. What do I mean by that? I mean skills let you do something. So you don't read a book so you can say, hey, I read a book.
You don't read a book so you can put it on the shelf. You don't read a book to impress your parents. You read a book so you learn how to do something.
And then you go out into the real world and you do it. And if you're unafraid to face failure. you're using failure as an educational opportunity to grow more powerful, all of a sudden you can do things other people can't do.
You can outperform them in the market. I think the problem has been the school system has taught us that if you fail at something, it's bad. You get a D, it's bad. But that, I think it's in which poor dad talks about like 80% of A students end up working for D students.
So why is that? Because the D students have learned to accept failure and go again. And the failure is okay, the world didn't end, I got a D, so what?
Okay, I'm not good at maths, I'll do something else. You know, point of reference is, I don't do that anymore because I get Ds, so I'll do this instead, right? I think, yeah, the reframing at school issue, I think, because...
The subconscious brain gets taught that if I get a D, I'm a failure, as opposed to what is the truth. The data shows you get a D, you learn to fail. It's good. You also need to build your self-esteem around your willingness to learn. So by default, everybody's going to build their self-esteem around being better, faster, stronger.
But if instead you build your self-esteem around, I'm the learner. Now it's like you messed up. Oh, cool.
I messed up. Awesome. That shows me that I'm not good at something. As long as I can identify the thing I'm not good at, I can go get better at it.
Cool. And my willingness to stare nakedly at my inadequacies is the thing that makes me feel better about myself. So if somebody says, you're a fool, Bill, you, I'm like, cool.
In what way? Because if you can actually help me see something that I don't currently see, you can point out a thing that I can get better at and now I can make more progress. But if I remain blind to it, I can't make progress.
Right. Last but not least. The big one.
Run the physics of progress. Run the physics of progress. Yeah.
Okay. The physics of progress is a six step circle. Let's draw our circle. All right. So it's all nested inside of KYG.
So KYG is know your goal. So where is it exactly that you're trying to get to? Now, this is basically the scientific method reconceptualized for business. So you're going to come up with a hypothesis. So So one is the hypothesis.
Okay, so I know where I'm trying to get to, and I have a hypothesis about how I'm going to overcome the obstacle that stands between me and what I'm trying to do. Then once I have my hypothesis, I'm going to turn that into a test. And I'm going to say, okay, this thing that I think I would need to do, how do I make it a thing that I can actually do?
Then third, I'm going to, I'm going to set the KPI, the key performance indicator. There we go. that I'm going to need to hit in order for this test to be a success.
Now, what ends up happening is people here, they don't do it. They are like, I'm ready to run the test. Let's just do it and see what happens.
They didn't set the KPI ahead of time. And so they're not going to know over here when they run the test, if the test was a success or failure. And the reason that that is so important goes back to this idea of rate of change.
That if they do it, they do the test, they had no KPI ahead of time where they said, this is what success looks like. They get some, like, let's say that your business model actually requires you for all of your numbers to work out. This test has to yield a thousand new customers and it instead yields 25. In the abstract, you're like, oh, it's 25 customers that we didn't have.
This is amazing. But that test is actually an abject failure because what you were expecting out of it is something that could yield a thousand. And then over here we are going to assess.
Now this is the biggest problem of them all. People will lie to themselves even if you get them to say okay we're expecting a thousand and we run the test and we actually got 25. We get over here and we go well Simon obviously COVID hit, what was I supposed to do? It only yielded 25 because there was something outside of my control that happened. If you do that, you're dead in the water. You are always willing to make an excuse for somebody else.
Instead, I would say, okay, we had a black swan event, something that I was not prepared to plan for. Is there anything that I can do in the future to mitigate that? Maybe you say that there's not, but at least you're not just abdicating your control, your responsibility from the junk.
Most of the time it's nothing big like that. I thought I was going to get a thousand. It only got 25. I point all 10 fingers of responsibility back at myself.
And now I'm going to assess where was the problem. It was a problem in the hypothesis. I just did the wrong thing.
Was the problem in the test. I was doing the right thing, but in the wrong way. What was it? Is it going to be a minor tweak to the approach? Is it going to be trying something new altogether?
And if you're not good at assessing, you're going to be in real trouble. And again, It comes back to, did you have a known KPI that you were trying to hit so that you can really figure out, is this something that shows absolutely no promise? Is this something that, hey, 25 and I'm aiming for a thousand?
Odds are, even if I finesse this and get it right, it's probably me barking up the wrong tree. And at a minimum, I'm going to ask, what's the next thing? And that's step six is we're going to re-evaluate.
a new hypothesis. So we're coming back at it a little bit smarter. So here we almost always failed to some extent.
And now we're going to turn that failure into this reassessment. We're going to come up with a new hypothesis and then we're just going to repeat. And this is one of those things, man, I want to scream and yell and jump and grab people and shake them around because there isn't anything other than this that people need.
Now, of course, there's a lot hiding in all of these steps. How do you come up with a good hypothesis? How do you not waste a lot of your time?
How do you make sure that you're running your tests well? How do you know if you've never done this before? What KPI should you consider good?
All of it. But this is what you're doing. Did you run this for your business? So you want to be the next Disney.
You did a test and you realized you weren't getting the age group you thought. So you adjusted the age and that's how you went back around with a new age. So we, yes, but that one, if I'm completely honest, I had not started officially running this.
So I really formalized this about five years ago. And this was me going, OK, what is it I'm doing? Because I teach this stuff inside of what we call Impact Theory University. And one of my magic tricks is that you can put me on a stage in front of any industry in the world that doesn't matter.
And my ask to them is always bring me your hardest problem. Bring me the thing you guys are really stuck on. What do we do?
And I could always. find an answer that they would agree was very useful and would help them get through whatever plateau they were getting through and so people were making it seem like it was a magic trick and I'm like this is actually a really basic thing so I was like what am I doing and so I mapped it out and I presented it to my team and I was like hey I'm going to start teaching this but let me know what you guys think and one of my employees was like oh that's the scientific method And I was like, oh, I actually never learned the scientific method or if I did, it was back in middle school or whatever. And I don't remember it at all. And I said, that's when you know, you're probably getting close to ground truth. When you take people from disparate places and you get them to map out what they're doing and they're doing the same thing, they're doing it because this is why I called it the physics of progress.
There's nothing below it. This is just, this is how you make progress. So you know where you're trying to get to. You've got a guess as to how to overcome the obstacle. You test that guess with a known KPI so that you don't lie to yourself, right?
Or you formulate the test, I should say. You come up with the KPI. You run the test. Did I get what I wanted?
Yes or no? If no, get a little bit smarter. I mean, that's everything.
Like whether you're being a parent, whether you are trying something in fitness, diet, running a business, it's all going to be this. This isn't the physics of business. It's the physics of progress itself. You try a thing.
It either works or it doesn't. you needed an expectation to judge whether it worked or worked well enough. It's probably an even better way to say it.
And then you just loop and you get in this upward spiral. You can run this for everything, business, life. You know, if your hypothesis is cut out carbs, I'll lose some weight. You do a test, see what actually happened. Did it match?
If not assess, re-evaluate your hypothesis, start again. Yep. It's genius.
Literally everything. This is my life. That's, it's genius. Tom, thanks for sharing your knowledge. I hope you enjoyed that guys.
We're off to have some chicken now. See you later.