Episode 204: What Most 'Lucky' Business Owners Don't Know That Successful Business Owners Do

In this episode, we're going to talk about how Travis Steffen used smart ideas and tests to sell 8 companies, the newest one for almost $70,000,000! This same smart way can help you make more money in your own business, even though it's not what most people say to do. When he showed me how it works, I was really surprised, but it makes a lot of sense!

We explore how businesses can use data-driven decision-making to identify and solve problems, optimize their processes, and ultimately increase profitability. And most importantly how you should do this from the very beginning.   We'll be sharing real-world examples of companies that have successfully used hypothesis testing to gain a competitive advantage and generate wealth. We'll also be discussing how this approach can help businesses innovate and uncover new opportunities for growth. So if you're looking to take your business to the next level, join us for an insightful and practical discussion on how you can deploy hypotheses and experiments to create wealth. Let's get started!

Get Travis Steffen's Book on Amazon - Viral Hero: How To Build Viral Products, Turn Customers Into Marketers, And Achieve Superhuman Growth 

Link here: https://amzn.to/3TghJTZ

Connect with Travis Steffen:

• Instagram
• Twitter
  
• LinkedIn

All right, so  I'm gonna throw a complete boomerang at you here this morning and talk about something that's not necessarily business related, but this is something that I've been really crushing pretty hard on lately. Uh, I'm, I'm just obsessed with this technique and it's, it's really, it's a cooking technique, right?

So we're going to jump into the cooking arena here. And, uh, I'm a big cast iron guy, right? And I would imagine this technique probably wor would work. Other things as well, you might not wanna do it with, uh, you know, something that might be non-stick. I don't personally use any non-stick pans, which is a whole other conversation in itself.

But I, so again, getting back to non-stick pans, and if you've ever cooked eggs in non-stick pans, Or I'm sorry.   If you've ever cooked eggs in a cast iron skillet, you know that it's probably a pain in the ass. Most of the time. You gotta sit there with them, the chain mail scrubber thing and get all the remnants of breakfast off of that, that pan, right?

So this technique basically makes it so that the pan is quite literally non-stick, obviously, without any of the non-stick stuff in there. Uh, and it's incredibly easy to do. And I obviously, I've been cooking for, I do. 25 years and never knew anything about this before. So I'm so glad that, that I came across it.

You can literally kiss the stuck-on scrambled eggs onto the cast iron pan goodbye. You can literally just take a, a, uh, a paper towel and wipe it out at the end. So really the technique, again, really, really simple. All you have to do is. You, start heating the pan. And I used, uh, I knew I use, uh, avocado oil, right?

So avocado oil has a higher, uh, heat temperature. So, um, you have to get the pan pretty, pretty warm. So the avocado oil will just start to smoke, right? , and you can test this. You can test to see if the pan is hot enough yet by, you know, just kind of dipping your hand in a, a cup of water and you kind of flick that water onto the pan if the water evaporates, you know, like immediately, like right away.

As soon as it hits the pan, it's not hot enough yet. What you want it to do is you, It kind of, the best way that I can describe it is kind of looks like Mercury,  so the water is just, Hovering on the pan's surface, uh, then the pan is hot enough, you then take a little bit more, um, uh, avocado oil and, and put it in the middle and, you know, pick the pan up and kind of swirl the, the avocado oil around so that it coats the bottom of the pan.

And then just go ahead and cook whatever it is that you're cooking in there and you get completely non-stick. , I know that's gonna be helpful. You gotta. I'm amazed by it. I use it every single time I cook  📍 on the cast iron pans now. Completely amazing. Completely changed my love for the, uh, the cast iron skillets.

And with that, let's get on to the show.  

 We all have the same struggle where we feel like we're not making any progress... But today we're going to talk about a better way. Travis Steffen is going to introduce us to his process, his playbook that he's used now. Successfully exit eight businesses.

That means that he has sold and been successful selling those eight different businesses with the newest, most recent one being for almost 70 million. Most people are lucky enough if they sell one business or one company throughout their career, and Travis has figured out how to. Eight different times. So there is a way to avoid all the costly mistakes and banging your head against the wall and throwing spaghetti against the wall, trying to figure out what is going to stick.

Most business owners end up getting frustrated because of all of the pressure and overwhelm, but today we're gonna talk about a different, better way to be able to do that, to avoid all of those types of issues.

 I love helping people avoid the super expensive. Really confusing time-suck lessons that kind of prohibited me from getting to where I wanted to be faster.

Mm-hmm... But I also know that early on in my career I kind of got, you know, I paid the tax for that because I thought that I was a lot smarter than I was. I thought I had seen a lot more and kind of got some sort of external validation from being an authority figure or a guru, so to speak. And I should not have been in that role at all.

So I kind of made a pledge to myself that I was just gonna be a student for the rest of my life. And if people really try to, to engage with me to get value, then I would engage with them. And eventually, I relaxed those standards and, and whatnot after, you know, several more wins and losses taught me a lot that I, that I thought would be beneficial for others.

It really wasn't until I started working with some of the biggest accelerator programs in the world and just seeing how quickly the founders that I spoke with were able to implement things and evolve and create a tremendous amount of value for their businesses as a result of a couple of conversations.

But I really had an appreciation for what I was holding back value, value-wise, and that's kind of what prompted me to create maybe, the asset that you saw, which. Honestly that that wasn't even really associated with a real business. It was just I was in this mini-retirement mode after my last exit and you know, had just taken on a couple of executive coaching clients because a lot of people begged me to do it, and it wasn't really something that I wanted to do or that I was passionate about.

But I realized, okay, I I don't wanna sell people on this right now cause it's not something I wanna scale. I'll, I'll do it here and there. Uh, I want to go back to building my own stuff. So that was what that particular video was that you saw. 

So, so what types of companies, explain to them, the audience what types of companies you've, you've built and, and, uh, sold over the years.

Were they in any type of specific industries or kind of all over the place, or, um, explain that a little bit. 

So the kinds of companies that I've built and sold over the years will sound kind of all over the place because every time I sell one, I usually get a non-compete agreement for three to five years in that sector.

So I was forced, and, and even for some of the companies that haven't exited, oftentimes I've gone to a new industry because that's, Oftentimes sometimes been one of the reasons why, why it didn't work. It was the wrong market, it was the wrong model, it was the wrong channel, it was the wrong product. You know, those types of things are all factors that need to be weighed and most people don't.

Early on, it took me many years to discover that. I was unfortunately conditioned with the same thing that business gurus condition people with today that, you know, you just need a vision and an idea and you need a passion for what you do and just keep persevering and it's just the wrong advice man.

It really is. It's, I think if someone had told me, Earlier though, what the, what I was supposed to do, I probably wouldn't have listened and um, I would've continued to satiate my own ego or satisfy this weird aspiration of being some sort of product visionary like Steve Jobs. Everyone talks about Steve Jobs in that capacity and um, I think there are some founders that fancy themselves as product visionaries and things like that, and I actually think that most of 'em have gotten lucky.

and, um, you know, they've gotten enough evidence to start to believe their own hype in that way. But, you know, from, for, for me, I think, um, what I've found is there's a playbook. That can take you from company to company. I mean, in my career I've gone from um, I've gone from like clothing in fashion to financial services to, we had like an app company with 21 apps in the app store.

Uh, we then had a staffing company that was renting out access to fractional product pods. Uh, we had a, um, viral marketing company. We had, um, a social media management company for healthcare practices and, uh, the older generation of folks running those, there was in there a, a gaming company. There was a.

Oh, gosh, what am I forgetting? Uh, compliance company. There has been a variety of these and all of them have been in different sectors serving different markets so that we're not even in the ballpark of sniffing around something that could be, uh, a risk from a non-compete perspective. What that process gave me was, A really clear understanding and there was a variety of companies in there, by the way, that I didn't mention that did not exits, that we shut down, or that I merged with another one of my companies or something along those lines.

And there were a number of companies in there that I was not the founder of that did exit that I did not include. , I was able to apply the playbook to all of those, and the playbook has evolved over time. What that's done for me is it's shown me what works across industries, what doesn't work across industries, what works in one or maybe a few industries, and what only you know, doesn't work in a handful of cases.

What I've, what I've been able to kind of discovery is almost like a master algorithm for business growth, and that's now what I'm trying to focus a lot more of my life on is being able to iterate on just this ultimate system. That looks completely different than what most people are marketing today. So many people are down the train of, they're, they're just down the rabbit hole of like funnels, right?

And paid traffic and all these things. And their tactics, decay, and, and those same tactics will not work in the same with the same economics 18 months from now, especially if they're heavily marketed and prolific. So being able to take four or five steps back and iterate on exactly the job those tactics do for you and what they need to do.

Quantitatively why things fit together qualitatively, all of those things. I'm, I'm boiling it down to a far too simplistic view, but for the sake of our time here, you know, what I'm trying to create now is just like the master perennial growth system that any business can use, provided it has some sort of recurring revenue component that just provides ultimate clarity.

On exactly what to do, in what order, to what degree, when, and why. Um, that level of clarity is something I think is absent from entrepreneurship. And so many people are just running around like crazy, panicked, guessing, trying to discover, uh, a tactic that works for them. Even when it does, they don't know why.

If it doesn't, they don't know why not, and they continue throwing spaghetti at the wall to see what sticks. Yeah. Yeah. I, I, I can't wait to get into this one. And I wanna take a, a quick step back too. Um, as you were going through all of your, your exits, and you mentioned that there were some companies that, you know, you might have, might not have been the founder in, and there were some failures in there.

Um, did, have you noticed, uh, now that you have this, this playbook that the, and, and again, the experience plays into this as well, but... Um, The propensity to fail is, is less where, um, you know, you're, you're not, like you, you mentioned the throwing spaghetti against the wall, right? Like, let's see if this sticks right.

You know, I'm considering like those things, you know, failures, maybe not the whole business doesn't fail, but, you know, we realize, okay, now this doesn't work. Let's go over there and try that thing, you know, and see if that thing works, and let's try this. Right. Are you, are you noticing like less of that throwing spade against the wall and, and, uh, you know, you.

Pretty well follow this, this playbook and, and it's much more, I guess, streamlined and, and, uh, direct to that end goal, whatever that result is that you're trying to get to. 

I feel that the playbook is a lot more streamlined. Uh, I feel that failure is definitely not mitigated, uh, by executing on it, but it is.

Um, so, so from, from my perspective, just so you kind of know the object of the game, for me, it's to get to a definitive success or definitive failure as quickly as possible. Mm-hmm. , the worst thing that you can experience in this kind of little machine or, or this system that I've built is an inconclusive result.

that's when you have people that are scratching and clawing for every single dollar, not knowing when or how the next one will come in, making just enough to pay the bills and keep them at it, but not much else. That is the worst-case scenario. Um, if you're, if you're seeing very clearly that what you're after is not working like you have clear signals immediate.

But you also know why, like, that was the main unlock for me is like trying to figure out exactly what to do as a result of the failure. So being able to frame up your experiments and by and large, a new growth model or a new hypothesis for a company. Is an ever-evolving experiment. And if you treat it in that way, and you're formulating this correctly where you're starting with a problem statement and you're deriving your hypotheses from that problem statement as a way of explaining why that problem statement is occurring and, your tactics are, Birthed from that, and they're very, very pointed as a way of either validating or invalidating that hypothesis as quickly as possible and as aggressively as possible, you're gonna end up with answers that you can reuse everywhere.

Whether you, you say, okay, the model was not effective in this case, like the economics didn't work as we had mapped or the market, you know, we're getting new information that this is, while it's a large market, it's shrinking rather than static or growing. And you know, things along those lines that I think just get exposed really quickly if you're deliberate about discovering the answers.

And then what you do as a result is known, known, right? Like as soon as you get that information, you're able to kind of pivot some things in your plans. And if those things just don't fit, you know what you'll find. I mean, mathematically, there's an equation that I love. It's a caring capacity. Equation then it basically tells you how quickly you're gonna, your business is gonna top out in plateau and you can figure that out months, if not years in advance once you have certain basal data points.

Um, and if people knew that going in, it would be no surprise and they would know exactly when and where to pivot their focus, um, to kind of mitigate some of those inputs of that equation. Um, so those types of things I think, are really, really interesting. And I, I don't see them often written about because the people, I would say 95% of entrepreneurs are successful, you know, as much as they want, want to attribute it to other things.

Like 95% of them took a swing and hit one out of the park, not realizing that had they taken 10 swings, they might only hit one out of the park. Right. With their current way of doing things. And because of that, I think it gives a lot of false signals. Now, I'm not saying that I'm someone that would hit 10 swings outta the park.

I'm just the one that knows that I would only hit the one of 10. Right? Yeah. Right. So being able to see all the factors that play into that success or failure, knowing exactly why things happen, becomes a really instructive methodology. So you know exactly what to focus on, when to what degree, and why.

The biggest unlock for me as an entrepreneur without. 

Uh, so a lot of, a lot of entrepreneurs, you know, they want, they, they start their company, um, to create wealth, right? And they, they, as you mentioned before, the worst thing that you can possibly do is go through this, you know, years-long process of, you know, scraping buy-in, everything.

Using your Playbook, how quickly can you, I mean, obviously. I, I feel like a lot of people just keep banging their heads against the wall, right? For, again, sometimes years, you know, how quickly can you realize, okay, this is not working. I need to, you know, I need to follow the playbook and, and make a change.

Or make a shift. Like how, how long does it take to, to. Uh, get enough information, uh, you know, underneath your belt to be able to say, okay, let's go this direction. Mm-hmm. , what, what does that look like? 

Sometimes? Depends on the amount of data we have access to, but, uh, if you're just a normal entrepreneur using a normal analytics tool, usually I'm able to make that diagnosis on the first day we speak.

Um, it at the, at the latest, it may, it may take a week. And the only reason for that is just basically me juggling all the other folks that I'm working with in that regard. Mm-hmm... Um, but, you know, I think it's, it's usually very, very obvious. Like I'll be chatting with an entrepreneur on Friday. We haven't even had a single conversation on the phone yet.

but based on his initial comms, I already know exactly what's wrong. So, so like those types of things become really exciting, being able to almost like, see the matrix in a lot of ways. Mm-hmm. , um, I multitasked so much in my,, in the early days of my career, which is why there are so many exits on my resume.

Having multiple projects was really the only path to that. I don't think that's the correct path, by the way. I actually believe very deeply these days in like absurd. Blinders and, focus on being the best in the world. That one thing, it just creates much bigger outcomes and you have much, uh, much deeper depth of insight into the customers that you're serving.

But those reps gave me a lot of. Uh, just a, a lot of ability to see and to analyze a, a wide variety of problems. And having experienced them, I'm able to recognize them a lot faster. Um, so usually it's very, very quickly you can determine the problem. It's very difficult to diagnose the proper, accurate solution without another couple of weeks of analysis and conversations.

Uh, but usually within the first. You know, I'll be able to take a, an entrepreneur who, you know, has an existing business. Maybe they're making a couple of million dollars a year, but they're flat. Or maybe they're, they're just, you know, just south of a million or something like that and just can't crack the code and usually turn them around and give them an exact path forward and, and why to kind of create the operational brain for their business, you know, within the first month.

Wow. Wow. That's cool. That's very cool. And you mentioned some of those, uh, I guess benchmarks where a lot of, uh, a lot of entrepreneurs, entrepreneurs might be, you know, making a million dollars. Is there any, is there any, uh, I guess. Um, you know, the threshold for a, an income level where they, they should be at before, uh, this, this, uh, playbook works and, and any ceiling to it as well.

Um, you know, so I'm just curious if this works for like a, you know, a siege seed stage type startup. You know, it's just getting started. They don't really have much data yet. It's an idea, maybe even pre. Pre-income and, you know, any, any type of advice, you know, for that type of company? Or does this really work once you start getting, you know, the data, uh, the data to be able to evaluate?

It depends a little bit on your definition of work, right? So, um, like what, what I typically will do for companies now is like, for example, I have a client that is pre-revenue. And they have just bought in so deeply to the process that they've already put a lot of it in action within the first, you know, month or two.

And it's already shown great outcomes just with their free product. And because of that, there's already a high degree of trust that this is the correct path. Right. So, um, to that, like, to that end, there's no income threshold from a business perspective, but that business does have an investor that has financed, you know, my engagement with them and the company at large.

Um, on the other hand, if you go too big, you know, some of the companies that I've spoken with about this sort of thing, They have a pretty clear understanding that the business is almost hard-coded in a lot of legacy processes. So when I'll deliver them, uh, a different growth model or you know, a different strategy that's birthed from the growth model that actually mathematically works and they can see that, they then say, oh crap.

Um, So much of our business is based on this old way where we have, you know, maybe a lot of managerial silos that would otherwise need to be one cross-functional growth team or something along those lines.  and because of that, they're doubting their ability to actually execute the plan. So just because of that one factor, I've oftentimes gravitated to like, you know, companies who have seven figures of revenue but not higher.

Um, I've, I've gravitated to companies, and just because like even if you have the CEO who is gung-ho and super bought in, The culture shake-up that, you know, a pretty dramatic change to a broken system can create is a much more difficult problem than the mathematics. Uh, you know, and, and qualitative strategies involved in business growth.

Yeah, that makes, that makes a great deal of sense. Do you, I, I'm curious your answer on, on this, um, so, so if you are starting a company or if you, if you, yeah, I guess if you're starting a company and you're establishing, you know, this is the way that we do things, Are there any, uh, I guess resources or methodologies like, you know, again, scrum methodology or anything like that, uh, that you would suggest being, you know, deploying so that you don't get stuck into that, uh, you know, that out of, you know, this is the way that we do things and it, you know, needs to be this way.

Right. So, to me, I, I, I always feel like being as flexible as possible, But yet rigid enough obviously, so that you're not all over the place. Mm-hmm.  is, is the best, uh, course of action. I'm just curious from your perspective, um, you know, as you're building these things, is there, you know, a, a, a solution or a, a name of this framework that you can kind of build everything around? Does that make sense? 

Yes. So, so let me give you a quick caveat. So the system that I'm, that I've, I'm basically, and I will probably continue to iterate on forever, uh, is thus far a product of 14 years in entrepreneurship. Having sold eight companies and having, you know, uh, tanked several others.

Having, you know, coil, several others I wasn't a founder of et cetera. Also, a product of, uh, my M B A program. Right now, my doctoral program, uh, it's, it's a product of buying any single resource or even time with some of the top growth leads in the world that is building some of the fastest growing products out there and figuring out exactly what their secret sauce is through a series of conversations.

And everything in between, every book that I can get my hands on. But what I've found is that specific resources oftentimes are very, very pointed at solving a specific problem or creating a specific outcome. And the problem of starting there is. , you don't yet know what problem you need to solve. You don't yet know what outcome you need to create.

So like the day one thing, I mean, the first thing that I'll say if somebody asks me if I if I have a new idea, what's the first thing I do? I always say I try to forget it. Um, I always, always say that. And the reason is, It's almost always been the fastest path to failure, both from my experience and from other entrepreneurs that I've run into.

And the reason for that is we're all outliers in the grand field, of outcomes, right? We can't rely on our own. Our own ideas because oftentimes our ideas for solving problems are blended with this pie-in-the-sky financial outcome that we associate with that idea. Because of that, we oftentimes will get married to a specific vision because we think we've created this blueprint in our head that this is the way, this is the path to this life that we want, and it's not.

A really deep examination of the customer, their problems, how they verbalize those problems, why they exist, the value behind solving those problems, and where the customers would search for solutions to those problems. And if that's market, if that's, a problem set that is compounding and growing really quick year over year, or if it's something that's rapidly being chipped away at.

So through that lens, I would say the only resource I typically recommend outside of your, uh, more. Widely applicable, like leadership resources, which, you know, for me, I would say the Bible for leadership in a business, in my opinion, uh, would start and end at Extreme Ownership. Um, and, you know, through that lens, I mean, there are other ones that I love, but they're all very, very specific to a specific type of company.

Um, the other one that I would almost always recommend is Lean Customer Development by Cindy Alva. A very short read, but it's really, really geared towards one thing and it's having a specific structured set of customer conversations that are designed to not create biased outcomes. Meaning forget your idea, forget trying to steer the customer in one direction or another in terms of their ability to answer, and give yourself a clean data set.

Do 20 or 30 of these conversations. Um, record them and then spend a tremendous amount of time combing through them trying to find patterns, and using those interviews as your first source of information that then you're deriving potential hypotheses around. And that's your first experiment set. So if you start the journey, Through the lens of the scientific method in a very specific way.

Forget any preconceived notions of what you think is gonna happen or what you think you'll find, and let the data speak to you. And then just be really passionate about getting curious around this specific customer type, um, without, you know, marrying any idea in your mind that this is gonna be the customer subset that you focus on forever.

It absolutely could be, but it absolutely should be something that you look at in and of itself and say, I am willing to waste 30 hours of my life in these conversations and a hundred other hours of my life setting these conversations up and combing through the data. Just to find that this is not the right customer for me to serve.

Like if you're comfortable with that situation, I think it's the ultimate hack for getting started. 

Yeah, that's, that's, I, I, I love that, that outlook and as you were, as you were, um, you were talking, I, I kind of, so, so for me, I'm a very impulsive person, right. I, I, I realize. A long time ago, um, I, I, you know, would buy things.

I bought a 5,000-square-foot house and lived in it by myself, right? So, uh, I realized like, I have to really think through these things. Uh, and I don't remember where this came from, but, but. Someone told me, or, or I learned this somewhere where if you, if you want something, you know, give it, you know, 3, 4, 5 days and if you still want it afterward, then maybe, maybe you should go and get it right.

But it's a way to kind of, um, You know, talk yourself out of making those impulse type mm-hmm.  decisions. Mm-hmm.  and, and, and entrepreneurialism can be very, very impulsive as well. Where, you know, you say, oh, I've, I've got an idea. I'm going to go forward with that. And then you try to, You try to make the market fit your idea rather than mm-hmm.

you know, approach it from a, a perspective of, I'm going to, you know, I, I think there's something with this market that I might be interested in, and I'm going to evaluate that and then, you know, find the problem statements and solve that problem first. Is that, is that basically what you're getting at, with, you know, kind of that?

I would say so, and I think one addition to that is, let's say, let's take, your hypothetical example there and, um, let's drill into a little bit. Let's say, for example, I wanna buy, um, a, like a, a cold plunge. On Amazon, because that's on, it's on my list too, by the way. Six days, right? Yeah, it's on my list.

Perfect. Let's assume that that's, that's something that is on your list. Um, what I would say instead is, rather than cuz like, that's kind of a, a really cool way to almost mimic entrepreneurs skipping straight to tactics. I want this thing because this thing is popular and this thing is et cetera, et cetera.

Instead, if you're able to say, what is the problem, I'm expired. That I want to solve. Right? And if you start there and get curious about the problem you're experiencing, then if,, your next step is to try to explain why that problem is occurring, but you're able to put that cold plunge completely out your brain and say that that's, that has its job was done in that, it brought me to the table of curiosity.

And if your hypothesis or your hypotheses are around why or what are a couple of reasons why this problem is occurring for me, And based on my understanding of why it's occurring now, let's try a couple of experiments to figure out. If that hypothesis was true, one of your experiments could be, you know, maybe your problem is, I just feel really bad every day and I feel like brittle and, and inflamed and I'm, I'm now gonna get super curious and start to set some hypotheses around exactly why that's the case.

Um, this specific problem is near and dear to my heart cuz one of my graduate degrees is in exercise physiology and biomechanics.  for a little while there, I was a professional strength coach for, you know champion for some guys entering the N F L Draft way pre-entrepreneurship many years ago.

Mm-hmm. . , I remember that this was a really important problem for us to drill into. And what we actually found in some cases is certain bioavailable or kirkman supplements were able to reduce inflammation to the same degree that ice baths were. And then we basically said, all right, I wonder if we stacked these, like what could, like what outcomes would could we derive?

And you know, what we found was like, You could get more, but there is a point of diminished return pretty quickly. And also the vast majority of that inflammation was coming from, you know, dietary sources anyway. So you can either continue to slap band-aids on the cut that you're inflicting upon yourself, or you can start to solve that problem at the source.

Um, so like all those hypotheses, right, are testable. And then if you go into some of the things like, okay, before I buy this cold plunge, Can I prove to myself that I can set up a habit to actually go to someone's cold plunge that's near me, or like another company like that. And does that solve the problem?

Right? So all those things in advance of actually implementing an expensive solution, I think is, should be part of the decision-making framework of an entrepreneur. 

 This framework or this, this playbook, um, I can, I can see the value in, you know, saving so much time and so much frustration and uh, you know, just, just getting to the point and getting, you know, maybe not even walking down the path of, of developing things that, you know, don't need to be developed.

Right. That's, and, and I'm part of, uh, another startup right now as well, and, and, uh, you know, we had this idea. The four of us decided like, yeah, this is, this is something that we're struggling with, but we never really went out and, and, you know, talked to any other entrepreneurs to see if they're struggling with the same thing again.

So, uh, you know, again, that impulsive thing, I'm going to go and do this and I'm going to build it and I have the resource is the ability to be able to do it. But, you know, taking a step back and, and, uh, You know, making sure that that market is there first before you go and do that. I mean, makes, makes perfect sense.

If, if, um, if people are walking down a path, uh, even just take me for instance, you know, we're walking down this path of, of, you know, creating the frameworks, creating the wireframes. Uh, you know, to be able to hand over to a developer and, and, uh, you know, then we're going to, you know, go to market with, with this initial idea and this, this has, you know, great implications.

I mean, it can, it could be a huge, huge platform in our opinion. Uh, so, you know, there, there's plenty of entrepreneurs in that exact same type of boat. Uh, Any, any, um, I guess advice with, you know, maybe taking a step back and maybe it's even the advice to go back and, and interview entrepreneurs to make sure to validate that idea, but I'm, I'm just curious if there's anything else that you can think of, you know, in that.

In that realm where again, the goal is to create wealth and, uh, you know, be able to then take that wealth and, you know, help other people. You know, with that wealth you have the resources to be able to do it. Um, so whatever vehicle it is that you are choosing to, to go down the road to create this wealth with, you know, just thoughts on, on being able to get that, get that ball rolling and, and, uh, Uh, you know, get it, get it moving.

Any, anything come to mind there? Yeah. So, um, and I think a couple of the things that, that you said were, were super interesting. Like, for example, going back and interviewing customers to validate the idea, I think is probably the incorrect approach because you're now starting. , like almost with, an inherent bias where you want to validate the idea that you already have.

And as a smart person like you are, right, you're gonna find a way. In the same way that any like doctoral candidate will be able to comb through the millions of scholarly resources to pretty much form any argument and have it pass the, like, cut the mustard from a scientific perspective happens all the time.

The best outcomes though, like if you were able. Logically to get okay with your sun, the sunk cost fallacy in your own mind, that is also present and say, I'm gonna be okay with the fact like that, with the possibility of having wasted a whole bunch of time on this idea in advance, and instead go talk to a lot of these customers.

And have unbiased conversations and just get super curious around, you know, not just what they say, but also how, like the verbiage, they're using to describe those, which inevitably could be your sales copy where they say they're looking for solutions, which inevitably can become your initial channel hypotheses.

Uh, how much value they believe it will create for them monetarily, whether it's directly or indirectly, which inevitably can be informing your pricing strategy, uh, to come in, in some way. A lot of these interviews can kind of birth a lot of your early, you know, tactics that you implement. But the problem itself I think is critical because you get to have a good indication of like, Okay, maybe this problem exists, but maybe it's not the most pressing thing on their mind.

Maybe it's not the most expensive problem that we could solve. And if, for example, you're saying, Hey, a constraint that we wanna ensure are included in our early days model here is it needs to, within year one, give us, as the founders 30 grand a month in, you know, a ni, a nice, stable salary. Mm-hmm. , your path to that is gonna be very, very specific because not every business is gonna have that sort of margin profile.

And if it's a lower ticket offer, you may, you may find that, um, uh, you have to just do a lot more volume than you should do early because you, you don't have enough time with customers. And you might be the subject of like premature scaling, you know, which oftentimes leads to like really, really rapid rise if you're good at that acquisition piece.

But if you haven't nailed the engagement, Your attention is gonna drop you off a cliff. Um, so like that sort of thing I think, is critical, pretty critical to examine early on. Um, what I would also say is the reasoning behind solving a specific problem. Like you, you can very well. Uh, come up with a series of constraints that say, you know what, I want to bank 50 grand a month in cash just for me personally within a year, and also ensure that I have, I have enough money after the facts to pay.

Two people on my team like X amount. Identifying those constraints early really will limit the models you can use, the market you can serve, the channels you can utilize, and the products you can create that fit all of those factors. So being able to come up with those constraints early before you even think about a specific problem can actually really steer you in specific directions to make it easier to come up with those.

those answers are what they inevitably are because you're just gonna very clearly have a, does this fit or not, right? Mm-hmm. , you know, so that, that almost cut kind of goes into a feasibility analysis, um, early, early on in the process. I'm sure there was another question in there that I'm now forgetting cause I kind of rabbit hole on that one.

No, I, I, and I love that too because I, I feel like there's so many, there are so many different avenues we can go down, but, um, you know, so, so if you have a specific target, so I'm part of another, another group, and they call this dimes and dollars, right? So your dimes are, you know, kind of your living expenses and what you need to, to survive in your dollars are, you know, your legacy building things, the things that you're really trying to do so, to build wealth and all of that.

So if your, if your dimes. You know, if you need a certain amount to get to your dimes, and that's kind of, your restraint. And if there's, you know, again, four or five people mm-hmm.  and everybody's, you know, total that totaling that in like, this is my, these are my dimes that I need to make up for this.

Then we have this, this amount that we need to make, you know, as quickly as possible. Right. You're saying that essentially by having those, those limitations, by having those numbers figured out and put together, um, you know, it's, it's going to allow you to, you understand quicker whether or not this, this is the right vehicle, this is the right path to be able to go down, um, to get this.

And, and if it's not, then you know, let's scrap that and again, take a different path and figure out a different business model or a different, a different, uh, Uh, deliverable that can get us to wherever those, wherever those goals are, because then again, once you achieve your do or your dimes, you know, then the next step would be to obviously, you know, catapult that and, and work on something that can get to your dollars and, and create that, that wealth that you're looking for.

Yeah. Accurate. 

Accurate, yes. And I would also say beyond that, if the goal is individual wealth creation, your business is just one piece of a larger. In that regard, I think if you're, for example, saying, Hey, I want, I want a passive income of, you know, 500 grand a year or something like that, where I basically have, and, and by passive right, it's just very mildly active.

Let's just assume there's like maybe a little bit of something that you have to do. Let's say it's real estate, for example. Cause that's one near and dear to my heart. Um, if I know for a fact that the job that my business is doing for me, if the job that I'm hiring my business, uh, as the founder to do, for me personally as an individual.

Is to feed my passive income machine in my real estate machine and pay my bills. I can get really specific on the set of constraints that I wanna create for that business early on, because the, the goal of that very first wave of analysis is like, you know, product, market, model, channel, making sure all those factors fit together.

But then within that, if I identify constraints, you know, if I go through a specific market or I go through a specific model, I can eliminate channels, I can eliminate products, I can eliminate, you know, different other factors, which is great for me because I want clarity. In that next step, if the constraints are known upfront, the constraints can serve to eliminate other potential paths along the way.

And if I only have one that's very clear, and I know exactly to what degree I need to, you know, crank up the juice on one side of the, uh, equation or the other, you know, a lot of people go straight to optimization, but optimization is just one tactic. Or one, one, you know, tool in my tool belt out of, you know, dozens of them as someone who's focused on growing a business.

Like, I might not focus on that area because I know that mathematically speaking, it's gonna actually do a lot more for me to crank up average revenue per paying user per year, or, and that's kind of the those are the types of things that your growth model is able to do as it becomes like a really instructive, um, almost tool for you to say.

Where should I focus? Like how is this going to help achieve my goal of allowing me to buy three new properties this year in my portfolio, maybe the constraint that I've identified as well, is I only have the bandwidth to buy three properties a year, even if I have more income. Like I don't want to go through that process more than three times. 

So the extra income that I drive, I'm either gonna park in this specific vehicle, or I'm gonna pay down certain mortgages, or I'm gonna do X or Y or z. Um, and if I have that clarity in that plan in advance, as I go through and execute it and I find flaws and ways that I need to instrument that machine and go be a mechanic, that then becomes a much smaller, much more narrow problem that almost anyone, once it's identified can say, I know exactly what to Google here.

Mm-hmm. , I know exactly what vendor to go find here. And when I do, I know exactly, what metric to say to deliver to them and say, Based on what you see in your average client outcome, can you get me this specific number? Because it's what I need in my growth model to hit. And you know, maybe they say yes, maybe they say no.

But you have very clear targets that you need to hit there, and you won't stop until you get them. So once you hit that though, you know, the math is gonna work. So all those things when combined, I think become just superpowers, for any entrepreneur. 

 All right, so there you have it. I know that when Travis was going through this,, it's just such a counterintuitive way of looking at all of this. It's unlike any other guru and teaches you how to approach this type of topic. So rather than focusing on whatever it is that you are trying to build and trying to create, you wanna forget your idea.

And go deep learning from the customers who actually are going to be using the product, and you want to make sure that you are not guiding them or leading them into any type of decisions at all. You want this to be completely from their way of thinking. And after this recording, I actually did quite a bit of research, and from what people are telling me when you use this type of technique, every hour spent interviewing people can save as much as 20 hours worth of development time.

And it might even be more than that if you are. Factoring in other things like project managers into that equation as well. So this is an immense time-saving opportunity, which of course time equals money. You can also reach out to Travis on Instagram, LinkedIn, and Twitter, and it's just Travis Steffen, which is S T E F F E N.

He also has a couple of books out there, but you're probably only. Be interested in one of them. And it's about building viral loops in your products and it's called Viral Hero. 

 All right. I know that I learned a hell of a lot from Travis in this episode, and we have one more special tip for you that a lot of companies in Silicon Valley swear by. So if you're interested in getting that head over to invest in square feet.com and sign up for our newsletter.

That's the only way you're going to get this last secret tip from Travis. And of course, don't forget that investing in square feet drops every Wednesday on whatever platform you use to listen to podcasts. So go ahead and go and subscribe to the show so you don't miss a step.