How to Build a Business That Runs Itself
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Summary
In this episode, I talk about how to build a business that runs without you, even if you re starting from scratch. That way you finally get the freedom you started a business for in the first place. You don t get rich with revenue, you get wealthy with equity. And that s the way we measure enterprise value.
Transcript
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while grinding a hundred hour week struggling to get ahead
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to today, making over a hundred million dollars a year,
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and owning multiple businesses that run without me.
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SOPs and spreadsheets alone, they won't save you
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because your business only runs when you're there.
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we need to define what I like to call your North Star metric.
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what is the math equation that defines your business.
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that if it gets better, it tells you the business got better.
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it's kind of like building a house without a blueprint.
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Everyone's running around, hammering and sawing
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you step back and you look and it's just a pile of lumber. Like you haven't built a home. Every
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business I start starts with a Northstar metric. For example, restaurants, revenue per seat. My
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media company, revenue per followers. Martell Ventures, enterprise value created for dollars
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spent. The way I came up with that is I'm putting my money into a business and I'm creating enterprise
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value because you don't get wealthy with revenue. You get wealthy with equity. And that's the way
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we measure enterprise value. So of course the dollars I spend to generate equity value is the
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ratio that if everybody can get aligned with, then we make it better because enterprise value is
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creating predictability, durability, and revenue that has nothing to do with cashflow. Think about
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it for you. Is it revenue? Is it lifetime value? Is it retention? Is it customers? Is it five-star
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reviews? Once everyone's clear and building in that same direction, your systems actually start
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driving real outcomes, not just keeping people busy. But let's be real, just knowing the metric
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doesn't move the needle. There's still some work that needs to get done. So the next step to build
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a business that runs without you, clone yourself with the 108010 rule. You don't scale by doing
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more. You scale by strategically inserting yourself at the right moments and in many ways doing way
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less. It's kind of like Steve Jobs. If you actually like go back and hear how he worked with his teams,
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and the different equipment and the design and the thoughts.
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and then Steve came in and they talked about it
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And that's why it's called the 108010, the first 10%.
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You talk about what the definition of done looks like.
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But the clearer you can communicate the vision,
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And the final 10%, this is where your taste comes in.
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This is where the refinement, it's review and polish.
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I'm gonna demo it this way, this way, and this way.
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So make sure we refine it so that it really pops
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The magic isn't doing it all, it's knowing when to show up.
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80% done by somebody else is 100% fucking awesome.
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The more you stay in the vision and the review part,
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making them updating them reading them i mean it's so crazy like people have these fully documented
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systems that nobody opens nobody looks at and they honestly they become stale in like six months
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after you create them in the first place however they're a hundred percent necessary i like to do
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it completely different than the way most people do the best systems aren't typed they're recorded
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a few years ago i was talking to my friend and he's like yeah i created an sop but it didn't
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really work and i was like well how'd you do it so he said i took my whole team we went to tahoe
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for an offsite. We spent three days building the company way, this document, this handbook,
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and everybody spent all this time documenting every aspect of the business. And then they got
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back. Nobody ever used it. And six months later, it became stale. It wasn't even updated. It wasn't
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useful. That is not the way to do it. Instead, use the camcorder method to document how it's done
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so that you've got the training. Then the person creates the checklist. Then it's their responsibility
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to update it and maintain it, not for the people at the top to do it. Plus, it's done well. You're
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doing the work saving you all that time. So instead of a regular SOP, I use what I call
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the camcorder method. And this is how it works. First, press record. Meaning like on this really
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expensive, hard to find software called Zoom, you can get on a meeting all by yourself, share your
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screen, record it to the cloud, hit record, and all of a sudden do the thing you're doing. The
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only difference is you talk out loud and explain why you're doing what you're doing. If it's
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processing your inbox, if it's creating a pitch deck, if it's having a sales call, whatever you
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do, just record it. Once you've got the recording, you've got a few of those, then you can give it
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to somebody else. Let your team turn it into a repeatable system. Have them document and create
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the checklist. So with that, now your marketing, your ops, your fulfillment, your hiring, they all
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get done without you becoming the help desk. So once you do that, we can now move on to the next
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step to make sure your business runs without you. Running the business by the numbers. Here's why.
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I've seen great people try to tell me what they're feeling.
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They gave you some optimism about what's going to work and how it's going to work.
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And he's like, yeah, I don't really like looking at my numbers.
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I mean, that's why I have a business in the first place.
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customer's upset and he fires someone he has no metrics to understand what's actually happening
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where it's broken and he thinks that just because of his desire to run the business based on his
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feelings to have the freedom so he doesn't feel like he's like built this prison of structure
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it's like dude you're firing people and the customer's upset that's enough for you to decide
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hey i probably need to get the data so to do this in a way that you don't go insane you just need
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your team to report on two things the first off is you need the leading indicators the leading
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indicators are things you're going to measure that are correlated to the outcome you want.
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Y'all want more profit. I get that. Number of profit goes up, you're happy. But what you need
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to teach the team is to figure out what are their activities they do before that happens. If it's a
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sales function, it's the number of calls they did that day. If it's a marketing team, it's the amount
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of leads they generated. There needs to be leading indicators that correlate to the results you want.
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That brings us to the second type of numbers you got to look at, which is the lagging indicators.
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These are things like revenue and churn and profit
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and then the lag indicators goes up and everybody wins
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You've learned how to clone yourself with the 108010 rule.
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But here's the question I hear every entrepreneur
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And that's where most founders either slide back
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into the weeds because they feel useless or worse,
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become completely disconnected, stop innovating
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and ultimately cause their own business to stall.
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for your team, for your customers, for your family,
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that honestly, if you didn't even get paid to do,
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That's why I always think the best businesses to start
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are doing the thing that you do when you procrastinate.
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They should just get a job doing YouTube stuff.
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that builds the business of like really talented people
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that are driven and share in the upside with them.
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Now, if you tell me you're stuck just managing tasks,
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and start being the accelerator of the gasoline.
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That's when the business actually scales without you
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so they can truly live into their zone of genius.
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and want help directly from me to implement these strategies,