“Tiny Market, Big Money” & Common Entrepreneur Mistakes (on Foundr Stories) Pt. 2 Feb '22 Ep 437

Summary Notes


In this Founders podcast episode, hosts Mosey Nation and Speaker B, along with guest Speaker C, delve into strategies for entrepreneurs to unlock significant profits in niche markets. Speaker C emphasizes the importance of providing value and systems that can generate immediate revenue for clients, irrespective of their initial wealth. The concept of 'client finance acquisition' is introduced, where the aim is to create a negative acquisition cost by ensuring the money made from a customer in the first 30 days exceeds twice the cost of acquisition and fulfillment. Speaker C also discusses the power of making irresistible offers and the benefits of niching down to command higher prices. Furthermore, the conversation touches on the necessity of providing tremendous value and building goodwill to create a self-sustaining demand for services. The episode concludes with a candid discussion on the common mistakes entrepreneurs make, particularly the lack of patience and persistence in sticking with one venture, and the criticality of building foundational skills, beliefs, and character traits for long-term success.

Summary Notes

Big Money in Tiny Markets

  • The concept of making significant revenue in small, niche markets is a passionate topic.
  • Unlocking this potential within a business is a key focus.
  • The importance of targeting niche markets is emphasized.

"First thing we're talking about is big money in tiny markets. It's something they're very passionate about and there is lots of money there, and I'll talk to you about how to unlock it within your own business."

This quote introduces the theme of capitalizing on small, niche markets to generate substantial income. It sets the stage for discussing strategies to tap into these markets within one's own business.

Mindset and Communication in Entrepreneurship

  • How individuals think, speak, and approach situations influences their success.
  • The significance of these factors is particularly highlighted in entrepreneurship.
  • Breaking down these aspects for business owners is considered crucial for growth.

"Second thing is how you speak and how you think and how you approach scenarios and situations is going to predicate how successful you are in any endeavor you do, especially entrepreneurship, and how to break that down as a business owner."

This quote emphasizes the importance of mindset and communication for entrepreneurs. It suggests that the way one thinks and speaks has a direct impact on their success.

Common Entrepreneurial Mistakes

  • Identifying and understanding common mistakes entrepreneurs make is important.
  • The goal is to help entrepreneurs grow faster by avoiding or correcting these mistakes.

"And we bring it home with the biggest mistakes that I see entrepreneurs making in the space right now that you may be making. And candidly, you probably are making if you're not growing at the rate you want to."

The quote addresses the prevalence of certain mistakes among entrepreneurs, implying that many may be hindering their own growth without realizing it.

The Value of Skills and Character Over Money

  • Skills, character traits, and beliefs are seen as more valuable than money.
  • The journey of entrepreneurship is not just about financial gain but personal development.

"I had all the gyms, I did the turnarounds, and then I had $0.05 years later because of mistakes that I made. But the things that I was gaining was not the money, it the skills. It was the character traits and the beliefs."

This quote reflects on the speaker's experience with financial setbacks, highlighting the long-term value of the skills and personal growth acquired through those experiences.

Defining and Accessing Niche Markets

  • Niche markets may not be inherently wealthy but can be lucrative when approached correctly.
  • The strategy involves creating systems that enable these markets to generate sufficient revenue to pay for the services provided.

"Can you tell me also about kind of the tiny market, big money process? Like how are you finding niche markets that are overflowing with cash?"

This question sets up the discussion about the methodology for identifying and capitalizing on niche markets.

Client Financed Acquisition Model

  • The concept of client financed acquisition involves generating enough revenue from a customer in the first 30 days to cover acquisition and fulfillment costs twice over.
  • This model allows for growth without capital constraints and eliminates the need for a marketing budget.
  • The speaker's companies have scaled rapidly by applying this model across various industries.

"Client finance acquisition is when you have essentially a negative acquisition cost. And the equation for that is, for me, that I must make in 30 day cash, which is something that I call, which is the amount of cash that I can take from a customer in net free cash flow in the first 30 days. [...] I operate on how much money I can make them, and then I siphon off of that."

This quote explains the client financed acquisition model, where the focus is on the revenue generated from the customer rather than the customer's initial wealth.

Scaling Business Operations

  • The speaker's businesses have avoided taking outside capital by using the client financed acquisition model.
  • Operations become the limiting factor in scaling, not marketing or capital.

"And why we've owned every one of the companies outright without taking on outside capital."

This quote highlights the success of the model in allowing the speaker's businesses to scale without the need for external funding.

Pricing Strategies for Niche Markets

  • Increasing prices by offering specialized, high-value products or services to very specific niches.
  • Making offers that are so compelling that customers feel it would be foolish to decline.

"By making them an offer so good they felt stupid saying no."

This quote summarizes the strategy of crafting offers that are irresistible to customers, which allows for significant price increases.## Value Proposition and Market Penetration

  • Demonstrating the value of a product to the customer is crucial for sales.
  • Understanding the impact of one additional sale on a customer's paycheck can be persuasive.
  • Entrepreneurs, especially those who are bootstrapped, need to find a competitive advantage.
  • A niche approach allows an entrepreneur to deeply understand and address the needs of a specific avatar.
  • This in-depth understanding leads to providing more value than competitors.
  • Niche targeting can result in outsized profits and fuel further growth.

're able to achieve that because the avatar that we're selling it to, we can clearly demonstrate how much one additional sale could mean for them in their paycheck over the year, or maybe one more sale per month, and then dramatically show the discrepancy what they're paying.

This quote emphasizes the effectiveness of demonstrating the tangible benefits of a product or service to a customer's earnings, which can be a strong selling point.

And so I feel like unless you are well funded and well capitalized and trying to go after, like, a market penetration strategy, which the vast majority of entrepreneurs who are bootstrapped, et cetera, do not have, that situation, then they have to go, in my opinion, in the.

Other direction and say, how can I.

Very specifically find an avatar that I will have a competitive advantage because I will understand their needs, wants, desires, problems, et cetera. And I can, in a very real way, provide more value than anyone else can because I am so nuanced in who I serve, and then with that niche down, messaging, positioning, problem solving, et.

Cetera, I then generate outsized profits, which.

Then allows me to spin the acquisition machine so I can get more customers, I can spend more money to get.

Higher quality talent, provide a better experience, et cetera.

These quotes discuss the strategy of focusing on a specific customer group (avatar) to create a competitive advantage, which is especially important for entrepreneurs without significant funding. Understanding the customer's needs leads to better service, positioning, and problem-solving, ultimately resulting in higher profits and growth.

The Power of Giving Value

  • Giving more value than expected can build goodwill and attract more customers.
  • Entrepreneurs should focus on actions, not just words, as actions may reveal more about their strategies.
  • Goodwill can compound faster than revenue, leading to viral growth.
  • Providing value that exceeds the quality of paid content can generate significant demand.
  • The challenge lies in the self-awareness to recognize if one's content truly provides value.
  • By resisting the urge to immediately monetize goodwill, entrepreneurs can maintain and grow demand.
  • Servicing the best customers and solving their problems effectively can lead to organic growth and referrals.
  • The concept of giving more than taking is believed to lead to greater rewards in the marketplace.
  • Patience is a critical factor in the success of this approach.

Give more. And I think Gary Vee says this.

Well, he says, listen to what I'm saying, but watch what I'm doing, right? And I think that most people could learn more by watching the entrepreneurs, what moves they're making, rather than necessarily even what they're saying. And part of that is because I think you're not always consciously aware of the moves you're making, right? And you only remember to say x.

Y, and z, but there's more nuance to it.

The thing is, I think that goodwill compounds faster than revenue does.

And so I believe that if you.

Truly give tremendous value, and tremendous being the operative word here, I think most people are like, dude, my content is so good. It's like, yeah, but no one watches it.

And if it were so good, you'd.

Have more people watching it, right?

If you give a tremendous amount of.

Value better than what everyone else's paid stuff is.

And that has to be real, though, right?

That has to be real. People say that, but it's not true. And that's the hard part, is that the self awareness piece of, like, my stuff's so good, but it probably isn't.

Which is why you're not making the.

Money you want, because you think you are. But if you actually can deliver truly more than anyone else can, and you.

Can price it at zero, the amount of goodwill that you get becomes viral.

And then at that point, you will have more demand than you know what to do with. And then at that point, you'll have this desire to liquidate the demand, the goodwill, and monetize it.

But that's what you should resist doing.

And instead double down on giving more and only skimming off a handful that.

You can service at a high level.

And by doing that, you never have to keep generating demand. You will always have more demand than you want, and that demand will continue to multiply.

And I talk about this in the.

Book, in the delicate dance of desire, right? Which is like, if we can just service the absolute best customers, the best avatars who perfectly fit the problems that we know how to solve better than anyone else. Everyone else gets value from you in the marketplace. And the people that you specifically select to be your customers will get outsized returns. They'll rave about you more people will demand what you want, and again, you.

Sell less than your ability to sell.

And I think that's the dance that.

Most people mess up. And so if I had to consolidate.

It into two words, it's give more. And if you give more than you.

Take, the marketplace will always reward you. But most people, their messaging is just give, take, give, take, whereas rather than the true give, and my opinion is.

Give, give, keep going, and eventually, you just start getting. You don't even have to ask you.

Just start getting, that's just something that.

I have lived through. And I think that if that became.

Real for more people, more people would become zillionaires.

But it requires the big p word, which is patience.

These quotes collectively explain the philosophy of giving more value than is expected, which can lead to a compounding effect of goodwill and ultimately more business. The speaker emphasizes the importance of being genuine in the value provided and the need for patience in seeing the results of this approach.

Audience Engagement and Support

  • The podcast does not run ads or sell products.
  • The speaker's request from the audience is to help spread the word to assist more entrepreneurs.
  • Audience engagement through ratings, reviews, and sharing is crucial for the podcast's success and impact.

Real quick guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers.

The only way we do that is.

If you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else.

These quotes highlight the speaker's request for audience support in lieu of traditional advertising. The speaker asks for help in spreading the message of the podcast to reach and assist a larger audience of entrepreneurs.

Mindset and Confidence

  • Mindset and confidence are vital for success in sales and leadership.
  • Some aspects of confidence may be innate, but they can also be developed.
  • Three components contribute to this development: skills, beliefs, and character traits.
  • Continuous improvement and self-reflection are implied as part of growth in these areas.

I'm curious as well. I want to talk about mindset. Not sexy, often kind of overlooked, but you've had serious success for someone your age. I'm curious, kind of what gives you the ability to go out and kind of sell and do what you do? And not even just selling, but even the way that you speak, you really command a lot of confidence. How do you acquire that? Were you always this way?

Yes and no. I think we have natural proclivities. We have natural tendencies that we're better.

At than other things, just from our upbringing, whatever.

But I've thought a lot about this, and I think that there's three pieces to it.

There's skills, beliefs, and character traits.

These quotes address the importance of mindset and confidence in entrepreneurship. The speaker acknowledges that while some people may have natural tendencies toward confidence, it can also be cultivated through developing skills, beliefs, and character traits.## Ladder of Success

  • The ladder of success is visualized as having three sides: skills, traits, and beliefs.
  • Entrepreneurs often focus on developing skills and traits but neglect their beliefs.
  • A lack of balance between these three sides can prevent individuals from advancing beyond a certain point.
  • Identifying and addressing the true bottleneck in one's progress is crucial for advancement.

"You've probably heard me say this, but I see the ladder of success as having three sides."

This quote introduces the metaphor of the ladder of success with three components that are essential for entrepreneurial progress.

"Their beliefs, might be to the third, and then they're curious at why they can't get past the third pole."

The speaker highlights that entrepreneurs often struggle to progress because they overlook the importance of beliefs, which is a critical rung on the ladder of success.

Problem-Solving vs. Circumstances

  • People often misidentify circumstances as problems and invest energy into solving the wrong issues.
  • Entrepreneurs may focus on enhancing areas that are already strong instead of addressing weaknesses.
  • Recognizing the difference between actual problems and mere circumstances is vital for effective problem-solving.

"People solve problems that aren't problems, they're circumstances, right?"

This quote emphasizes that entrepreneurs frequently misallocate their efforts by treating circumstances as problems, which impedes their ability to solve actual issues.

Confidence and Competence

  • Confidence comes from repeated practice and experience, not from shortcuts or hacks.
  • Building a strong foundation in any field requires patience and a willingness to work through the basics.
  • True expertise and confidence are a result of extensive firsthand experience, not just theoretical knowledge.

"But in terms of the command and the confidence, I don't think that there's actually a hack to this."

The speaker argues that there is no shortcut to achieving genuine confidence and command in one's field; it must be earned through experience and practice.

Foundation of Success

  • The peak of success is dependent on the breadth and depth of one's foundational experiences.
  • Accumulating skills, character traits, and beliefs is more valuable than immediate financial gains.
  • Mistakes and setbacks can contribute to one's long-term assets and future success.
  • Recognizing the right opportunity is crucial for applying one's skills and achieving exponential growth.

"And it's my belief that the peak of the pyramid is predicated on the base, on the thickness and the width of the foundation that you build."

The speaker believes that the height of one's success is directly dependent on the strength and size of the foundation they have built, highlighting the importance of a strong and broad base of experience and skills.

Real-World Experience

  • Practical experience in a field leads to a deeper understanding and confidence than theoretical knowledge alone.
  • The speaker gained substantial real-world experience by personally selling gym memberships before teaching others.
  • Observing results in reality, rather than just understanding theory, is key to developing true confidence and expertise.

"I have 4000 sales face to face under my belt before we started gym launch."

This quote exemplifies the importance of accumulating a significant amount of real-world experience before attempting to teach or guide others in that field.

The Illusion of Overnight Success

  • Success that appears to be sudden is often built upon a foundation of extensive prior work and experience.
  • An "overnight success" may occur after a critical insight or change allows someone to leverage their existing foundation effectively.
  • The public often sees only the rapid rise to success, not the years of groundwork that made it possible.

"But it was because the foundation of both sides of that ladder that were built. And I was just missing three or four of these pegs. And all of a sudden, I was able to spring up from $3 million a year to $30 million a year in twelve months."

The speaker clarifies that what seems like an instantaneous success was actually the result of a solid foundation and the addition of a few key elements that allowed for rapid growth.## Common Mistakes by Entrepreneurs

  • Entrepreneurs often rush and lack patience, trying to achieve success too quickly.
  • They frequently switch to new ventures, aiming for immediate wealth rather than building steadily over time.
  • The rush to success leads to a lack of mastery in any one area due to constant switching between projects.
  • A consistent effort over a long period is more likely to lead to exceptional skills and success.

"The biggest mistake that they make is that they're such a rush that they try a new thing every 90 days."

This quote highlights the impatience of entrepreneurs who frequently change their focus, hoping for quick success.

"If you stick with it, even if you suck, you'll be better than most people after a year. And after ten years, you'll be almost untouchable because no one sticks with anything, man."

This quote emphasizes the value of perseverance and how sticking with one thing can lead to expertise and success, even if the initial skill level is low.

The Journey of a Young Entrepreneur

  • A young neighbor aspires to be a millionaire but lacks direction and experience.
  • An agreement is made to employ him, teaching him sales through cold calling.
  • Through dedication and learning, the young entrepreneur becomes a top closer, earning a significant income at 19.
  • The plan is to continue developing his skills so that he can eventually start his ventures with practical business experience rather than just theoretical knowledge.

"Now you're working for me and you're going to start cold calling."

This quote marks the beginning of the young neighbor's practical learning experience in sales under the mentorship of Speaker C.

"He's worked his way up three rungs of the ladder in our sales teams, and now he's 19 years old, making 150 grand a year, right."

This quote illustrates the young entrepreneur's progress and success as a result of his dedication and hard work in sales.

Scaling Businesses and Long-term Goals

  • Speaker C aims to specialize in scaling businesses from small to large and intends to share this knowledge widely.
  • The goal is to gain enough experience to contribute meaningful knowledge to the entrepreneurial community.
  • Speaker C sees this as laying a foundation for future entrepreneurs to build upon.

"I don't know anybody who's, like, a specialist in this space at taking companies from, like three or five to 50 to 100."

This quote shows Speaker C's ambition to become an expert in scaling businesses and fill a perceived gap in knowledge.

"I'll bet you if I did it 100 times, I would be able to write the sickest book about it."

This quote represents Speaker C's commitment to mastering the process of scaling businesses and his desire to share that expertise with others.

Dinner with an Entrepreneur

  • Both speakers have preferences for different entrepreneurs they admire.
  • They recognize the brilliance of various figures like Elon Musk, Jeff Bezos, Charlie Munger, and Warren Buffett.
  • The key interest is in gaining insights that are tailored to their own skills and perspectives to see opportunities they might not have noticed.

"If you look at my skills, my character traits, and my viewpoints of the world, and you were in my shoes, what opportunities would you pursue?"

This quote reflects Speaker A's strategic approach to learning from successful entrepreneurs, seeking advice that is specifically applicable to their own situation.

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