Dan Martell - The only 4 skills you need to build a $1B company…

00:00:00.000 I moved to San Francisco because I wanted to understand how these 20-year-olds built

00:00:04.900 billion-dollar companies. And I meet a guy named Naval Ravikant. I remember I was talking to him

00:00:08.860 once about leverage. The best entrepreneurs have the biggest output for unit of time. Time

00:00:15.540 multiplied by leverage equals output. And this is what I learned. Naval taught me this. There's

00:00:21.100 only four master skills to creating leverage. Once I understood this, I understood I only had

00:00:27.040 four things to go become world-class at and i could have anything i want in my life

00:00:32.720 most entrepreneurs when they're growing their business it doesn't matter if it's their first

00:00:37.440 100k or 300k or million they get to a place where growing is painful and in that spot they usually

00:00:43.280 do one of three things they either stall okay they say to themselves this year i made more

00:00:48.400 money last year than this year i'd rather slow down right and um and and just not grow the problem

00:00:55.840 with that is that the market's growing right gross domestic product grows your customers will demand

00:01:01.600 more from you this year than last year and the the worst part is your top people if you don't

00:01:09.280 create a future that's big enough for them then they will go find somebody else can do that so

00:01:14.560 that makes sense your dreams write this down your dreams have to be bigger than everybody else on

00:01:19.120 on your team's dreams and goals.

00:01:21.920 Write it down.

00:01:23.220 So that's stall.

00:01:25.020 Number two, sabotage.

00:01:27.180 This one's fascinating.

00:01:28.560 Some of you guys don't even know you're doing this.

00:01:30.840 I have a friend of mine, Tracy.

00:01:33.640 Business was going through some challenges.

00:01:36.620 Six months of hell.

00:01:38.640 We've all been there, it's tough.

00:01:40.800 And in that storm, Tracy tells herself,

00:01:44.700 I need to give myself a break.

00:01:47.760 and she decides to take a four-week sabbatical.

00:01:52.040 Do you think a company that's struggling,

00:01:55.400 the CEO of the company should take a four-week sabbatical?

00:01:57.820 Yes or yes?

00:01:59.180 No, perfect, you guys are on the same page, this is great.

00:02:01.640 But she didn't realize she was sabotaging her success.

00:02:04.220 She had an opportunity to keep growing

00:02:05.920 because when we're going through the worst,

00:02:08.020 just so you know this, when we go through the worst,

00:02:10.300 we're actually developing our skills

00:02:12.140 to get to the next level.

00:02:14.500 Huge, okay?

00:02:15.540 So understand, when you're challenged, you should say, thank you.

00:02:19.440 We're the opponent.

00:02:20.900 This is going to shape me to become the person I need to become to get to the next level.

00:02:25.180 Instead, Tracy went on a sabbatical.

00:02:27.380 She missed the opportunity to grow.

00:02:28.800 The third is sell.

00:02:30.520 My buddy Jason calls me one day, and he's like, hey, man, I think I'm going to sell my company.

00:02:33.680 He has an agency.

00:02:34.880 Two million in revenue.

00:02:36.460 Been doing it for about seven or eight years.

00:02:38.080 And it just became really tough.

00:02:40.540 And I said, Jason, write down all the stuff that you don't like about your business today.

00:02:44.980 and made me a list. And I said, if those things weren't true, would you sell the business? He's

00:02:48.700 like, no. I said, well, let me invite you to consider a different perspective. I know you

00:02:53.720 want to go do something else. You think the grass is greener. Here's what I know. You've just hit

00:02:59.040 your new complexity ceiling. We all have them. Write down complexity ceiling, complexity ceiling.

00:03:04.820 Anytime it gets hard, I want you to look at that turn. I said, it doesn't matter if you solve it

00:03:09.560 now or you leave and start something else. You will hit the same level of complexity where you

00:03:14.340 decide, I don't want to grow anymore. It's your pain line. So what I want to share with you today

00:03:20.040 are three strategies to overcome that pain line. The first principle that I want to share with you,

00:03:26.880 and it's a universal principle, it's the buyback principle. We don't hire people to grow our

00:03:32.120 business, we hire people to buy back our time. It's a calendar over a capacity strategy. See,

00:03:39.720 most entrepreneurs, when they're growing, they go, well now I need to hire another logo designer,

00:03:43.900 I need to hire another real estate agent. I need to hire another, you know, electrician.

00:03:49.180 And I would say, no, you start with your calendar first, because here's the deal.

00:03:53.580 If you do the second, you get the first. But if you do the first, you definitely don't get the second.

00:03:59.620 Most entrepreneurs get to about 1.2 million, about 12 employees, where their life starts to get really painful.

00:04:06.340 That pain line is screaming at them every day because they violated this rule.

00:04:11.180 this is the framework draw this loop okay it's a loop you need to go through these three steps

00:04:19.920 to move forward so every time I hit a pain line okay today I own dozens of companies

00:04:25.820 and my calendar completely shifts two or three times a year so I'm going to teach you the exact

00:04:31.280 same thoughts of how I look at my calendar every time I hit my pain line first step is we got to

00:04:37.060 audit. We got to audit our calendar for time and energy. It's not enough to just look at what we're

00:04:42.160 doing that we can pay somebody else to do. It's what are we doing that sucks our energy. What I

00:04:47.480 call green or red stuff. If we can replace that with green, we will transform our lives. Then

00:04:53.820 transfer is the ability to give what we're doing today, the work, to somebody else, but check this

00:05:00.280 out without taking any extra time using the camcorder method. And then the third, the problem

00:05:06.680 with Phil is most people get to the first and second step and then they

00:05:10.440 decide to do a four-hour work week. I ain't here to do a four-hour work week,

00:05:14.780 okay? I'm here to teach you guys all how to create an empire and that word might

00:05:19.300 scare some of you but let me show you my definition of empire. You want to write

00:05:22.880 this down. A life of unlimited creation you never have to retire from. A life of

00:05:29.360 unlimited creation you never have to retire from. That is an empire. If we fill

00:05:35.020 properly that newfound time, then we continue upward. If we don't know what

00:05:41.060 to focus on when we find that extra time, then we will just repeat that cycle. And

00:05:45.580 some of you guys have been in that spot. You grow, you go down. You grow, you go

00:05:49.420 down. Maybe not you, maybe the people out there. Maybe somebody you know out there.

00:05:56.160 Right? Up, down, up, down. The oscillate. If you follow the buyback loop, you'll

00:06:01.140 continue to grow and that's what we're here for today. Million dollar companies

00:06:05.280 were not built off $10 tasks. Write it down. This is math 101. There's not

00:06:10.320 enough hours in the week for you to grow if you're doing $10 tasks and we have a

00:06:15.180 lot of mindset monsters and beliefs that just won't support us to actually scale.

00:06:19.080 The first key strategy I want to teach you about is the replacement ladder. So

00:06:24.360 I want to ask everybody to write down if you are starting from scratch today and

00:06:29.580 and you have the ability to hire your first employee,

00:06:32.220 who would they be?

00:06:33.100 Write down the answer.

00:06:33.940 Who would you hire first?

00:06:35.100 I want everybody to write it down.

00:06:37.940 Who would you hire first?

00:06:45.540 All right, we're gonna start over here.

00:06:46.820 I wanna hear some answers.

00:06:47.660 What do you guys got?

00:06:49.540 Sales, anybody else?

00:06:53.380 What do we got, copywriting?

00:06:54.500 Cool.

00:06:56.540 Sheet metal roofing,

00:06:57.380 so somebody can do sheet metal roofing.

00:06:59.020 Perfect. Anybody else?

00:07:01.940 VA. Anybody else?

00:07:04.020 Cold callers.

00:07:06.560 Assistant. Anybody?

00:07:08.780 Secretary.

00:07:10.960 Recruiter. I love those.

00:07:15.380 Here's the fun part.

00:07:18.400 I can tell the maturity of your business acumen by the hire.

00:07:25.760 It's because I've been doing this for 25 years.

00:07:29.020 There is a strategy that I learned from this guy, Richard Branson, okay?

00:07:33.880 Now, here's the cool thing about Richard.

00:07:35.400 Richard's the billionaire every billionaire wants to be like, and it's just true.

00:07:40.380 Whatever you think he is, how he is, is exactly who he is.

00:07:44.080 In 2016 or 15, I got a cold email from my buddy out of the blue.

00:07:50.660 Hey, Dan, I'm getting together with Richard Branson in Verbier, Switzerland.

00:07:55.840 Do you want to join?

00:07:57.700 hmm let me look at my schedule yeah clear of course i want to join like i grew up reading his

00:08:05.140 books it was so funny because it was i got the email in may and i thought it was an april fool's

00:08:10.020 joke but i'm like it's may it's not april like and it honestly it wasn't until i was in switzerland

00:08:16.660 at his house aka lodge 16 bedrooms 20 staff massive in that living room sitting in that couch

00:08:26.820 And Richard comes out from the back and actually comes in and says hi to everybody, blah, blah, blah,

00:08:31.760 that I actually believed he was showing up.

00:08:33.680 Well, you guys got to understand.

00:08:34.440 You want to talk about imposter syndrome?

00:08:36.680 Ooh, it was so strong.

00:08:39.000 In that group of people was Tim Ferriss, the founder of Square.

00:08:44.280 You guys know Brian Johnson, the blueprint guy right now?

00:08:46.900 He's doing all those like weird life hacking stuff.

00:08:49.720 He was there.

00:08:50.340 He just sold Braintree for $600 million.

00:08:52.060 And there was this Canadian kid that I got invited because some guy that I invited to a dinner liked what I was building at the time and said, do you want to join?

00:09:00.840 And I was just like, Dan, just don't say anything stupid.

00:09:05.200 You can only go downhill from here.

00:09:08.160 You made it in the house.

00:09:10.320 Don't get kicked out.

00:09:11.940 So I just shut up and paid attention.

00:09:14.760 And I'll be honest with you.

00:09:15.680 All I was looking for, I wanted to understand how does a guy, some of you may not realize this,

00:09:20.660 Richard Branson has 400 companies in the Virgin Group of Businesses.

00:09:24.660 That Virgin Group of Businesses, that hold co, has two CEOs.

00:09:28.660 I wanted to understand how he thought about

00:09:32.660 scale and leverage. And I just watched.

00:09:36.660 I watched how he interacted with his staff. I watched how he managed his time.

00:09:40.660 And this is what I saw that I didn't expect. At the time, I had a virtual assistant.

00:09:44.660 I had assistants over the years, right? We've all had them. What was different was

00:09:48.660 watching Richard, essentially anything that came into his life went through his assistant, Helen.

00:09:56.580 And every morning for breakfast, they would sit there for 60 to 90 minutes, depending on what was

00:10:00.880 on Helen's list. She would review only the things that she didn't know how to deal with. She didn't

00:10:05.780 know how to route. She thought Richard would want to know about. And they just had breakfast,

00:10:10.600 they talked, and then the rest of the day he came skiing with us. That's how he ran 400 companies.

00:10:17.120 Do you guys want to learn the other stuff that I learned from Richard?

00:10:19.360 Yes or yes?

00:10:20.640 Perfect.

00:10:21.260 This is the replacement ladder.

00:10:22.940 We start at the bottom.

00:10:24.260 We work our way up.

00:10:25.200 Why?

00:10:25.780 Let me tell you two different things.

00:10:27.940 One, it's the lowest cost to pay somebody to do the work for the biggest time purchased back in your life if you do it right.

00:10:37.720 So that's why there's the outcomes.

00:10:39.500 So level one, you might be feeling stuck in your business.

00:10:41.880 It's because you don't have somebody to support you on your account and your admin work.

00:10:46.320 But the key is to do like Richard did and give your inbox and calendar to your assistant.

00:10:53.060 Some of you guys are getting a little, you guys, does that make you nervous a little bit?

00:10:56.900 Anybody?

00:10:58.460 No, you guys are all good just giving up your inbox and your calendar to somebody else and letting them figure it out.

00:11:02.660 And hopefully you show up at the right meeting at the right time.

00:11:04.520 Does that make you nervous?

00:11:06.100 Anybody?

00:11:07.460 Trust me, my assistant laughs all the time.

00:11:09.100 She's like, Dan, I could tell you to show up at the edge of a cliff and right in the description, jump.

00:11:13.480 And you would do it.

00:11:14.220 I go, well, don't do that.

00:11:16.320 But, I mean, I trust you.

00:11:20.060 And it's because I realized that if I can give up the inbound,

00:11:24.820 your inbox is nothing more than a public to-do list of other people's goals on your time.

00:11:29.440 Write that down.

00:11:30.740 Your inbox, your email, is nothing more than a public to-do list of other people,

00:11:36.760 strangers' requests on your time.

00:11:39.880 And you allow yourself to be addicted to that.

00:11:43.580 So step one is admin.

00:11:44.800 Number two is your customer success, your fulfillment.

00:11:47.980 This is where you have somebody that helps you,

00:11:49.720 but the key is you've got to give away your support and onboarding.

00:11:53.080 So when I enroll somebody in any of my companies,

00:11:55.880 now I have CEOs that run them, but when I was doing it,

00:11:58.580 the first hire after admin would be somebody to help me take the deal

00:12:03.560 that I just closed and move it forward.

00:12:05.060 In real estate, it's a transaction coordinator.

00:12:06.980 You need somebody that will work with the customer and do all this stuff.

00:12:11.600 You can still be the specialist, but give that to somebody else.

00:12:13.640 Level three is marketing, right? Now you want to start building and designing a

00:12:19.280 playbook to generate leads, okay? Because if you don't do this, I'll tell you what

00:12:23.360 happens. Sales is four because you as a CEO will always be able to sell better

00:12:27.260 than anybody else you hire and you know it. You know it. Some of you guys are

00:12:31.140 world-class sales people. 70-80% win rates. Nobody's gonna ever be able to sell

00:12:36.920 like that and the challenge if you hire too quick and you don't have the systems

00:12:40.700 underneath, what happens in six months is you either fire them because they're not performing

00:12:45.160 because they don't have enough reps and they don't have enough deals, or they quit because

00:12:48.580 they're not making any money. Anybody resonate with that? Anybody have? Yeah, exactly. It's

00:12:52.920 literally the six-month mark, depending how much they like you. Four months, they like

00:12:57.320 you six months. And the highest level is the ELT. Write this down. Executive Leadership

00:13:03.480 Team. Some of you guys call them leaders and managers. Here's my rule. Do they come with

00:13:10.540 playbooks do they come with process if you hire people or you know promote

00:13:17.740 people out that has no experience then you're just creating more work for

00:13:20.800 yourself so when I say at that level everybody else the first hire in

00:13:25.300 marketing and those are all people you can hire train etc because you're gonna

00:13:28.240 give them a playbook but when you start hiring leadership they should come into

00:13:33.340 the company with knowledge okay that's the replacement ladder and if you follow

00:13:38.620 of these five steps. Some of my clients that I coach, they'll get there in 45

00:13:42.940 days. They see this, they go, got it, and they execute. Admin, free up their time,

00:13:47.680 sell, make revenue. Next hire, success. Business is starting to grow. They hire

00:13:52.480 somebody to support the success, buy back that time out of their calendar,

00:13:55.020 reinvest that now into marketing. They build a marketing strategy, they hire

00:13:58.360 somebody to execute the strategy, generates leads every day consistently.

00:14:01.480 Then they hire, they do the sales, then they hire a salesperson, that person comes

00:14:05.380 in, goes through the scripts that they've built or the calls that they've already

00:14:08.260 done, they've recorded, give it to the salesperson, now they're coaching the team. So you can do this

00:14:14.020 in 45 days or some people are a bit slower and they'll take years, right? Because they try to

00:14:20.980 skip levels. You know what happens if you go straight to the top? How many people have you

00:14:24.500 heard say, I need to hire a COO? You don't even have an executive admin. That's the silliest thing

00:14:33.780 in the world. If you can't even work with your admin, you are not going to work with the COO.

00:14:38.700 You need to start at the bottom and build the capacity and to know how to move up.

00:14:42.820 Here's my philosophy. If you don't have an assistant, you are one. I know it stings, right?

00:14:50.820 I'm going to take the dagger and just a little bit more. The other parts of this

00:14:56.360 is you're overpaid and you kind of suck, okay? A great executive admin, they're worth their

00:15:07.000 weight in gold, okay? So if you don't have one, you are the person and you're overpaid and you're

00:15:13.460 not very good at your job. So what do we do with that? I want to talk about leadership and I'll

00:15:19.820 tell you why. I know CEOs and entrepreneurs are crazy. You guys agree? Yes or yes? We're nuts.

00:15:28.640 Think about it. The reason why we're in business in the first place is because we're able to deal

00:15:32.140 with the level of risk that most people would puke on themselves and pass out. Like, you do

00:15:36.820 understand this. So just admit to it and then try to develop the leadership skills that protects

00:15:42.820 your team from you. Some of you guys expect your team to show up like you and that's just silly.

00:15:47.140 they aren't you and if they were guess what they'd be building their own company so what happens is

00:15:54.460 the way we lead our teams have to shift okay so i moved to san francisco in 2008 this was after

00:16:02.340 selling my first company i became a multi-millionaire at 27 and i it crushed me like i i worked

00:16:09.480 easily 100 hours a week for four years first two companies failed when i got out of rehab

00:16:15.500 tried my first company failed after two years did another one was 21 failed after that it wasn't

00:16:23.260 until I was 24 that I gave it another shot and my dad would beg me even though I grew up and had a

00:16:28.560 very colorful childhood he would just beg me to get a normal job it's like dad I can't do it I'd

00:16:33.440 rather you know as long as I'm not in prison and I didn't relapse like you should be really proud

00:16:37.980 of me like I'm doing something I know I'm not making any money but I think I'll figure it out

00:16:42.340 And it wasn't until I was, you know, almost in my early 30s that I figured it out.

00:16:46.560 So I moved to San Francisco because I wanted to understand how these 20-year-olds built billion-dollar companies.

00:16:56.180 Does that ever make you wonder?

00:16:57.760 These tech entrepreneurs, you read about them on the news, like, how do they do this?

00:17:01.340 How do they convince these old white guys to give them hundreds of millions of dollars to build these tech platforms to, you know,

00:17:07.400 and they're, like, barely old enough to drive?

00:17:10.100 Like, it fascinated me.

00:17:12.340 just real talk, right? I grew up in the east coast of Canada, so that world was foreign to me.

00:17:17.780 Even though I was in software and I built a big company, that world was fascinating as an outsider.

00:17:22.820 And I get there, and in the first few days, I get invited to a party, and I meet a guy named Naval Ravikant.

00:17:30.620 This is 2008. Naval today has been on Joe Rogan. He's an incredible, like, just philosopher, honestly.

00:17:37.960 But I met him earlier on, and he kind of became a mentor of mine.

00:17:41.660 I call him one he would never say that but I share that because I remember I

00:17:46.160 was talking to him once about leverage so you gotta understand in business the

00:17:50.900 best entrepreneurs have the biggest output for unit of time so if you think

00:17:58.340 of the quick question okay write this down okay time multiplied by leverage

00:18:06.080 equals output. And output could be money, resources, etc. But time multiplied by

00:18:13.160 leverage equals output. So I want to ask you guys all a question. What are ways

00:18:18.200 that we can create leverage? Write it down. If I say, what are the tools to

00:18:21.980 creating leverage? Write it down. I want you guys to answer that. Just one idea.

00:18:25.640 The number one tool for creating leverage is... write down the answer. I want to hear

00:18:30.740 from everybody all right let's hear from over here what do you guys got

00:18:40.940 raising money 80 20 I like that anybody else social media AI delegation yeah

00:18:50.740 leverage people I like that anybody else automation what else what I can't hear

00:18:59.580 Yeah. Systems. Ooh. I love systems. Do you know what system stands for? Save yourself time, energy,

00:19:06.940 and money. Write that down. Systems equals save yourself time, energy, and money.

00:19:14.000 Here's a fun fact. Everybody's answer was relatively correct. And this is what I learned.

00:19:21.000 Deval taught me this. There's only four, I call them master skills, to creating leverage. Okay?

00:19:27.960 Write these down. The four system, the four master skills are, number one, capital. If I have money, I have incredible leverage. Okay? Takes money to make money. It really doesn't, but it takes resourcefulness. All of you guys in this room have to be more resourceful. Okay? What do you guys need to be? More resourceful. Doesn't take money, but money creates opportunity. Okay? So capital is one. Number two is code. Some of you guys said automation and AI. That fits in that budget.

00:19:57.960 code, software. Three is content. Somebody's talked about, I think, podcasts and social media,

00:20:04.800 content. I can create a system, an SOP, and it takes me an hour to create, and if I have 100

00:20:11.820 employees, that one system can train 100 people without extra effort from me. Does that make

00:20:16.740 sense? Yes or yes? The fourth is collaboration. It's people. Okay, so the four C's, write them

00:20:24.680 down once I understood this I understood I only had four things to go become

00:20:29.480 world-class at and I could have anything I want in my life code capital content

00:20:36.060 collaboration so specifically I want to talk to you about how to lead people the

00:20:42.540 collaboration side most entrepreneurs go on the left side transactional

00:20:48.080 leadership they tell people what to do they check that they got it done and

00:20:52.160 and then they they tell them what to do next that sounds pretty straightforward yes or yes

00:20:57.280 yeah everybody that's i did that for 15 years 15 years of starting companies at 17

00:21:04.000 until i finally made some money at 28 i mean not 15 but a lot a lot of time

00:21:09.920 i just thought that's how you did it the problem with that is around 10 to 12 direct reports you

00:21:15.600 wake up in the morning with all the piss and vinegar in the world i'm gonna dominate the day

00:21:20.720 I've got my list of projects and we're going to have a productive day. Anybody ever wake up that

00:21:25.200 way? You're like, I'm going to kill it today. Yes. Okay. Then the first thing you do is you check your

00:21:29.300 email and there's fire, fire, fire, fire, crap. Then you think, Oh, I wonder if Bob, Jane, Mary

00:21:34.300 is working on that right thing. So you start calling people on your team. You tell, Hey,

00:21:38.020 are you doing this? Are you doing that? Did you think of this? And then there's like fires and

00:21:42.200 issues and all that stuff. And it's not until seven o'clock at night that you finally sit down

00:21:47.800 to start doing the work. Anybody relate with that? Yeah, that's how it works. If you have a half dozen

00:21:56.860 people work for you, anybody, and you tell them what to do, you check what they got done, you tell

00:21:59.940 them what to do next, this will become your reality. That's why I call it the pain line.

00:22:05.080 The opposite of that is transformational leadership, okay? So I'm going to explain it to you, but I want

00:22:10.040 you to think of an example in your life that's tough for you right now, and apply this principle

00:22:14.900 to that situation, that person. So the first thing, when I hire somebody, let's say my assistant,

00:22:20.460 okay? The first day, I talk to her about a few principles, but the first one is,

00:22:24.860 you are the CEO of my inbox and calendar. Who is the CEO of my inbox and calendar?

00:22:30.980 You are. My assistant, exactly. And I don't mean to be a ding-dong, but I will actually ask her

00:22:36.400 to repeat it back. Who's the CEO? I'm the CEO. Who's the CEO? I'm the CEO. You're the CEO. Yay,

00:22:42.500 yay, what does that mean? And I asked them to describe to me what does it mean to be the CEO

00:22:47.380 of my inbox and calendar. Is it my responsibility to put stuff in my calendar or yours? Mine. Yay,

00:22:52.820 we're winning. You know, like it sounds foolish, but I'm trying to make it a little entertaining

00:22:57.360 for all of you guys, keep you awake and focused. But I'm not, it's not that far off. When I hire

00:23:03.700 people, I look them in the eyes and I said, I hired you to create this outcome. I don't tell

00:23:09.400 them what to do. I hired you to create this outcome. And then I describe the outcome. So I got to tell

00:23:16.720 them, what does a 10 out of 10 look like? My calendar has everything in there. It's structured

00:23:21.200 and the description is this. Everybody's confirmed. Like this is what a 10 out of 10, like my travel

00:23:27.180 schedule is figured out. All my flights are booked, international six week, domestic two weeks, whatever

00:23:31.780 it is, right? And I get really clear at describing the mountaintop. That's the way I think about it.

00:23:39.020 some of us hire people and we don't think about telling them what it's going to look like at the

00:23:43.240 mountain top right we just say hey can you start climbing this mountain they're like okay where's

00:23:48.420 where's the path you're like i don't know it's over there it's in the corner and they go over

00:23:51.940 this way they call you the next morning i couldn't find that path yesterday i'm like what are you

00:23:55.620 doing no you say that's the mountaintop see right there that's the mountaintop you figure out how

00:23:59.940 to get there what resources would you need so then we measure okay so then i explained to the

00:24:06.480 person I hired, I gave them the outcome. I said, here's how we're going to measure your progress.

00:24:10.520 Every person in all my companies have a number. My social media person has a number. My CFO has a

00:24:16.220 number. My COOs have a number. My CEOs have a number. They have one number. How many numbers?

00:24:20.600 One number. Now, do they use other numbers to understand if they're making good decisions?

00:24:24.520 Yes, but there's one number that we've all agreed on. If you're in the automotive space,

00:24:30.640 the number is called the absorption rate. I'm a software guy and I know this stuff because I love

00:24:35.860 I love nerding out on business. Absorption rate, it's the number that tells you the

00:24:39.880 ratio of the service department and parts covering the overhead of the car

00:24:45.880 dealership. And that number tells you how efficient it is. Okay? So there's

00:24:50.440 different aspects into it. If I'm in the hotel space, it's the average night of

00:24:56.560 room, you know, booking, right? That tells me how efficient the hotel is. So once I

00:25:02.740 tell my assistant the way I'm going to measure them, okay, which is response time.

00:25:07.780 That's the number. How quick do you respond to people? Okay, and it's a simple

00:25:12.100 tool. You put in your email and they respond. Then when I have issues, somebody

00:25:15.760 asked me this today, what do you do when you have issues with people on your team?

00:25:18.160 Anybody else run into that issues with people on your team? They're humans!

00:25:22.240 They're supposed to have issues. Some of you guys expect people to be robots, like

00:25:25.420 I just, can we, okay, some entrepreneurs, our expectations for their people are up

00:25:30.340 here, can we just pull it down a little bit? Can we all realize that they have

00:25:35.560 lives that don't revolve around us? And that's okay and awesome. Can we show up

00:25:42.520 with a little bit more empathy? 100%. So what happens is anytime I see something

00:25:48.680 that isn't great, I write it down, okay? On my phone, all my direct reports,

00:25:53.780 I have a Google Doc, okay? And it says at agenda, it's got all their names, and I

00:25:58.480 just write down a bullet. Once a week for most of my direct reports, every two

00:26:03.460 weeks at minimum, I sit down with them. Guess what's the first agenda item in

00:26:07.780 that meeting? Guess. Review my list. Literally, the other person's meeting, or

00:26:16.700 one-on-ones, is review Dan's list. So I pull up my phone because I forget what I

00:26:21.140 wrote in there, and I pull it out. Literally every meeting, I have a daily

00:26:25.000 meeting with my assistant, Ann. Guess what? She's like, hey Dan, what's on your list?

00:26:28.220 and I open it up because I forget I like to just write stuff down let me pull it

00:26:33.680 up here discuss podcast when traveling to optimize flights example Charleston

00:26:39.280 podcast that's the first item on the thing I just wrote it down now here's

00:26:43.580 the kicker though coach the way you coach somebody isn't to tell them what

00:26:51.080 they did wrong and tell them how to do it right which is what most of us do the

00:26:56.620 The way I coach is, number one, I ask myself, what is the principle that was violated?

00:27:02.280 What expectation do I have and what is that principle?

00:27:05.820 Most often times with leaders, I want to teach you to become a transformational leader

00:27:10.180 is I want to teach you the process of creating other leaders.

00:27:17.740 And the way we create other leaders is by coaching them up.

00:27:21.540 But most of us have never trained other people or known what a coach does.

00:27:25.200 I'm going to give you the three steps. First step, write this down, we go to

00:27:28.960 principle. What is the principle they violate? Okay, so in that situation for

00:27:34.080 Ann, one of the, one of the, there's five core SO, my SOPs are these things called

00:27:40.980 North Stars. Actually, you guys just want the Google Doc that I work with for my

00:27:46.560 assistant, would that be helpful? All right, here's the deal, just because you

00:27:49.860 guys are friends of Carlos, follow me on Instagram, Dan Martell, two L's of Martell,

00:27:54.480 write it down, at Dan Martell, or you can pull out your phone, do it now, and then message me

00:27:59.140 Freedom EA, and that'll tell me to give you that document, okay, because I'm not giving it to

00:28:04.340 anybody else, and if you're watching the recording, it's not for you, just for you guys in this room.

00:28:08.360 Cool? Yes or yes? Awesome. In there, you'll see I have North Star Principles. Dan Martell is my

00:28:14.120 name, in case you guys were. The North Star Principle, one of them is that the calendar is a

00:28:19.840 work of art and complete and always optimizing for revenue. That's my calendar, okay? And that

00:28:26.580 is one of the things that was kind of violated. She may not have known, I got to coach her up. So

00:28:30.600 the first thing I say, the thing I want to talk about is the fact that my calendar wasn't at 100%.

00:28:34.780 The second part to that is a story. That's why I always write down examples, okay? Give them a

00:28:41.760 story of when you learn that principle, okay? So if you, let's take something simple. People have

00:28:49.100 to show up on time. Does that bug anybody else when people show up late for meetings? Perfect.

00:28:54.480 Okay. Principle. If you're on time, you're late. Does that make sense? That's my principle. You may

00:29:00.000 not even know you have these unexpressed expectations, so we got to document them. We got to codify them.

00:29:04.700 If you're on time, you're late. So if you're late, you're super late. That's the principle. I learned

00:29:09.260 this the hard way. I had a client. I was supposed to meet them. I didn't show up on time, and as soon

00:29:13.660 as I showed up, they said, you missed the deal. I'm going with your vendor. Nobody's late for meetings

00:29:17.720 ever again, and I embarrass myself. You tell your personal story, okay? You can do a two-minute story,

00:29:25.000 you can do a ten-minute story. So depending on the executive, I might tell a ten-minute story to

00:29:28.960 really make it land. And at the end, this is the third part. So first part is principle, second part

00:29:33.940 is story, third part is takeaway. I'll ask them, what did you take away from that story? What did

00:29:41.260 you learn? And they'll say to me in that example, if I'm not three minutes early, I'm late. That's

00:29:47.480 awesome. Then, commitment. Will you make a commitment that in the future you'll

00:29:51.260 always be on time? Yes. If I did that with somebody, what's the probability that

00:29:55.400 you think they're gonna be late in the future? Low. Because they understand it

00:29:59.720 comes from my heart and that I learned this the hard way and I don't want to

00:30:02.420 have you learn this. Right now it's low stakes. We just start working together. I

00:30:05.300 need you to know. Most people don't follow this process for coaching, okay? So this

00:30:10.580 is the transformational leadership. We start with the outcome. Where are we

00:30:14.540 going? Then we go to measure. What is the one number? And then we coach them whenever we see

00:30:18.860 them violate anything. And we teach them our thoughts and our stories, our experience.

00:30:24.280 Anybody's had a great leader in their life, a great boss? Anybody have a great boss? I have

00:30:28.680 this guy Darcy who's just awesome. Exactly. They probably did this to you and you didn't even

00:30:32.740 realize they were doing this. That's what made them great. Here's my big belief. Delegate the

00:30:38.120 outcome, not the task. Write it down. Delegate the outcome, not the task. Stop telling people what to

00:30:45.200 do. Start telling people where we're going and let them figure out how to get there and coach them

00:30:50.420 along the process. And that's how we build people. That's how we coach up. The third and final

00:30:56.260 hot principle is the 131 rule. This will absolutely transform your life. Anybody that has a team of

00:31:03.340 people and you're frustrated that your phone is always blowing up and they're always calling you

00:31:06.220 and they're always emailing you, and they don't seem to know how to figure anything out.

00:31:08.860 I'm going to solve this for the rest of your life.

00:31:10.620 Do you want to learn how to do that?

00:31:12.000 Yes or yes?

00:31:13.180 Awesome.

00:31:13.760 Here's how it works.

00:31:14.580 You know why they call it a bottleneck?

00:31:17.720 Because it's at the top.

00:31:20.280 So you think the problem's your person on your team.

00:31:23.260 I'm telling you it's the person you're looking at when you look in the mirror.

00:31:27.460 So you've taught people this, and I'm going to teach you how to un-teach them this.

00:31:32.380 Okay?

00:31:32.540 So a few years ago, the 1-3-1 rule, and I'll tell you how it works, is culture in all my companies.

00:31:40.740 Like you won't meet anybody in any area of the business that doesn't understand what it is because we use it as language.

00:31:46.180 And I remember I had this director of HR, this recruiter on the team, and he messaged me.

00:31:51.900 He's like, hey, we got a problem.

00:31:53.280 I was like, what's going on, dude?

00:31:55.160 He goes, we need to hire 12 people in the next 30 days.

00:31:59.820 I go, yeah.

00:32:00.380 He goes, well, I don't know how to do that. Wow. Well, what do you think I should do? Oh, I don't

00:32:11.140 know. Well, I've never done it. I said, Adam, I mean, I hired you as the director of HR. I hired

00:32:18.860 you to do that job. I don't know how to do that job. Out of both of us, who do you think should

00:32:24.400 learn how to do that job? And he's like, well, I mean, do you have any ideas? I said, what's your

00:32:28.440 131. And he goes, oh man, I don't know. I don't have time for this. And I said, I don't, I don't

00:32:34.580 know how to help you. Okay. Write this down. If you want to be rich, be lazy. If you want to be

00:32:41.300 wealthy, be incompetent. Okay. If you want to be rich, be lazy. If you want to be wealthy, be

00:32:49.200 incompetent. I said, Adam, I didn't hire you to tell you how to do your job. I hired you to tell

00:32:56.940 me what to do. Does that make sense? Steve Jobs said this. He said it's easy to hire other people

00:33:02.800 tell them what to do. It's hard to hire people and have them tell you what to do. So I said what's

00:33:08.860 your 131? He said I don't know. I said how long will it take to figure out? He goes give me give

00:33:13.560 me a day. So how about the same time tomorrow we meet up when we review? He goes that sounds great.

00:33:18.580 It was like 4 o'clock that day. Next morning, 10 a.m., he texts me. I'm good. Duh. Like, I'll share with you why. Here's how the framework works. One specific challenge. When somebody comes to you with problems, okay, and I love you women, but you're the worst. You guys, I love, okay, I love you. Most of my team are executive or women, but you guys come to me with a hurricane of stuff.

00:33:44.400 It's like a tornado.

00:33:45.960 I love it.

00:33:46.860 It's creative, but I'm like, what are we talking about?

00:33:49.720 And they're like, this is wrong, and this is wrong.

00:33:51.380 I'm like, one thing at a time.

00:33:53.220 So one specific problem.

00:33:55.880 What are your three viable options that you've considered?

00:33:59.500 I want to hear them.

00:34:00.520 Tell me how you research them.

00:34:02.160 And then give me your one specific recommendation.

00:34:06.840 If you teach everybody in your team the one through one rules,

00:34:10.340 I'll tell you what will happen.

00:34:11.700 One, you'll start having your frontline people

00:34:15.140 solve problems that never make it up to your attention.

00:34:18.600 Okay?

00:34:19.580 You will teach people,

00:34:21.260 this is another big idea,

00:34:22.680 that we teach people how to treat us.

00:34:25.380 Okay?

00:34:25.660 We teach people how to treat us.

00:34:27.320 So if we teach people every time they have a problem,

00:34:28.840 they come to us.

00:34:29.360 Guess what they're going to do when they have a problem?

00:34:31.120 Come to us.

00:34:32.080 That's why it's a bottleneck,

00:34:33.080 because it's at the top,

00:34:33.720 because you taught them how to do this,

00:34:34.900 and this is how we fix it.

00:34:37.100 So 98% of the time,

00:34:40.780 somebody comes to me as a one three one their recommendation is what we should do and over time

00:34:46.260 they build their confidence and I push down all the big decision making to the front line okay

00:34:51.280 and I've got time I'm going to give you guys you guys want to know the ultimate hack this is this

00:34:55.760 is like that I don't share this often frontline workers I give them a $50 budget to fix any

00:35:01.920 problem they see is and all they have to do is tell me about it after it's called 50 to fix it

00:35:06.420 So anybody in my company at the front line they can solve any problem

00:35:10.400 They see if it's less than $50 without getting anybody permission

00:35:13.520 The only rule is they have to tell their leader within the next seven days

00:35:18.440 Okay, so they can spend their credit card expensive. It's always approved. They get to tell their leader next seven days

00:35:23.660 So they can coach against it

00:35:26.160 Leaders managers five hundred dollars

00:35:30.720 Directors it's five thousand dollars and for my executive leadership team my CEOs my CRO

00:35:36.220 my CLOs, it's $50,000. What did I just do? I just created a framework to push decisions and issue

00:35:43.340 problem solving down to the front line so we can move faster. I'm all about leverage, all about

00:35:48.460 speed, all about growth. Most of you guys are walking over dollars to save pennies. It's hilarious.

00:35:54.780 Let your people solve the problem and then coach them up. That's how we unlock the 131 rule

00:36:00.220 in a more tactical level so here's my philosophy this is how we scale companies doesn't matter if

00:36:07.340 you're a company of one or two we build the people the people build the business we build the person

00:36:12.860 the person builds the business we build a team the team builds the business when you shift your lens

00:36:18.140 on your role in the company as a people builder it will unlock massive growth okay this is how

00:36:24.780 I do it. So with that, this is my book, Buy Back Your Time. Best-selling book,

00:36:31.020 continues to sell more copies every week. Here's the movement I'm trying to

00:36:34.560 create. I want to rid the world of companies failing because the CEO builds

00:36:38.540 a business they grow to hate. Does that make sense? I think most businesses get

00:36:44.140 built to a place where the entrepreneur grows to hate it and then they want to

00:36:47.820 do something else. I want to get rid of that as being the reason the companies

00:36:50.940 fail. And I want to end with this big idea for every person in the world, for humanity, for

00:36:57.160 entrepreneurs, for sure, but everybody. I think we're all here to not only buy back our time to

00:37:02.340 grow our business, and we do that through the strategies I taught you with the buyback loop

00:37:06.000 and the 131 and the transformational leadership. That's all awesome. That will create resources and

00:37:11.360 wealth for you. Fun. I think we're here to do two things. One, become the person we needed most in

00:37:20.320 our darkest days. Become the person you needed most in your darkest days. Every day. You wake up

00:37:28.420 and try to create that person that would have had the opportunity to speak to that kid. For me to

00:37:36.500 have the character and the resourcefulness to talk to the 15-year-old version of Dan.

00:37:41.660 And then while you're doing that every day, this is the second part, is share that person with the

00:37:48.260 world. Give that person to the world. And your world may be your kids, your world may be your

00:37:53.660 community, your church, your CrossFit gym. I don't care. It may be social media. And I think that

00:37:58.620 would be the best place. Because I think that if you wake up every day to become that person and

00:38:03.800 share that person, that you will create a life of fulfillment that you can't even imagine to feel.

00:38:09.180 So with that, everybody, thanks for having me.

00:38:13.580 You guys are awesome.

Dan Martell - January 12, 2024

The only 4 skills you need to build a $1B company…

Episode Stats

Length

Words per Minute

Word Count

Sentence Count

Misogynist Sentences

Summary

Transcript