What Every Entrepreneur NEEDS to KNOW Before Starting Their JOURNEY | Tom Bilyeu

[Music] hey everybody welcome to another episode of impact theory today we're going to be talking all about the things that every entrepreneur needs to know now if you're even remotely considering building a business you're going to want to watch this thing all the way through because i've made virtually every mistake that you can make and my hope is that by watching this video you can learn with ease what i have learned with tremendous difficulty pain and suffering all right first question what is the first step to getting started in business once you have an idea what next and how do you avoid being stuck in analysis paralysis okay so first the first step in starting a business is always and forever what is the problem that you're trying to solve product market fit is everything you don't want to sell something that people don't think they want you want to be in a position not of changing behavior but of leveraging it what are people already doing what is a need that they already know that they have then the game just becomes awareness you're just needing to make them aware that your product exists and you're in the business of getting people to try it and if there is a known problem and your solution is actually awesome and the holy grail of holy grails that there is some part of that value chain that you can give away for free so that people can try it and see for themselves that oh my god this is actually better than everything else and that's the hard part people want to think that there's a business trick that they can learn and that they're going to be able to build this massive success the reality is every successful business was better at something that mattered than everybody else you need to get very comfortable with that that's why i am so glad that there was no social media when i began there was no way for me to get in front of a camera and try to build hype or persona i had to build a [ __ ] product and nobody cared who i was nobody even knew who i was in the beginning so i had to focus on what is the problem i'm here to solve how do i solve it better than anybody else let me get this product in people's hands get them to try it and then knowing that trying my product was the best marketing ever because we made sure that the product itself was awesome now when you do that now you've really got something and if you don't have that then don't start a business because it is going to be way too difficult you don't want to end up chasing your tail you don't want to end up trying to create a market or get people to behave in a new way which will finally make your product make sense you want to hone in on an area that is underserved a need is not being met with a customer that you completely understand with a product that is better than everybody else that's the goal now once you have that idea and you're like this is it i know this is the one boom now we're gonna go to social media social media is going to give you the ability to get people to know about your product to add value to people's lives before you try to extract that value and that's how we're going to start getting that word of mouth so that we can give that product away because remember that's our goal we want to create something we can give some part away it could be a freemium model where we're giving some small part away then we want you to upgrade or if you're lucky like i was at quest and it's a product people actually eat and so even if you give them one you know that if they like it they're gonna need another one the next day and the next day and so on and so forth and so people are coming back and now like with impact theory where 85 90 of the content that i create i give away for free and by doing that and changing somebody's life with the free content then i'm like now imagine that you get into one of the paid pieces of content people make the leap that whoa if the free stuff is this valuable then the paid stuff ought to be even more valuable and since we give a money-back guarantee you have nothing to lose and so that's been a tremendous win for us is by putting out all of that free content over years building that reputation impacting people's lives becomes very easy then to get them into the paid offerings now how do you avoid analysis paralysis by having a rule that you always and i mean always take action have a rule i think rules are one of the most underestimated things people don't deploy that nearly enough and so in my life i give myself 72 hours if i'm just not sure and i'm really lamenting making a decision i don't know like it's unclear i give myself 72 hours to make a decision and then i make it now i always protect my downside and i never do anything that could be a mortality event for the company i want to make that abundantly clear but assuming that i've hedged my downside and assuming that even if it fails catastrophically and even my downside hedge doesn't stop this from being an abject failure that i'm not going out of business okay that's critically important but within that i give myself 72 hours and then i need to take action now that doesn't mean that i don't find small incremental ways to try something to learn which is a huge part of part of hedging my downside is how do i stair step into this how do i put a toe in and then a foot and then up to my knee and then waist and then all the way right and there is usually a way to walk into that where you're not you know biting off something that's going to take you years and cost millions of dollars before you'll even know if it's going to work so finding that incremental way to figure something out and having that rule in your life that you take action plain and simple and that's it solve that problem get out there start telling people about what you're about get that awareness get people using the product and then make sure that you take action that you never allow yourself to just stand still in fact i will say this running a thousand miles an hour in the wrong direction is far more beneficial than standing still why because tom if you're running a thousand miles an hour in the wrong direction now you've got to go all the way back to zero and then make progress that's not how business works first of all you're just running in a direction it's not like it's the opposite of the direction that you need to go in and by moving you're learning and that's the key because failure so if you're going in the wrong direction and you have failed failure is the most information-rich data stream that exists the best way to learn is to try failure triggers areas of your mind that have to do with memory and attention so even though it hurts it's incredibly valuable all right next question how do you choose your market niche is it based on opportunity or passion now i will say for me the answer is both i am totally uninterested in working in an industry that i don't care about a product that i'm not passionate about for me that is an absolute must how do i know because i spent almost a decade chasing money and it was emotionally grueling it is not fun in any way shape or form and i promised myself that i would never do it again so my next company ironically ended up being quest nutrition but quest was a company that i said i'm only going to do what i'm passionate about where i can build community where i can be authentically myself and where my obsessive focus isn't profit it's adding value to people's lives and that built a billion dollar business but it built that billion dollar business because we solved a problem in the marketplace we were using social media before anybody else we got the product in people's hands that they could try it for free and they knew that they liked it and then we were just constantly iterating trying new things never standing still now the way that we found that niche was because we were all passionate about nutrition we were passionate about nutrition and and this is very important this is not universal for my partners i think they thought of it very differently but for me i was showing up every day fighting for my mom and my sister they were both morbidly obese and i wanted to create food that they could choose based on taste and it happened to be good for them and by doing that by connecting to that on a friday night at 2am when i'm under a piece of equipment with bloody knuckles while my friends are out at the club i could remember what i was there fighting for and it wasn't money because money is not going to give you the level of enthusiasm that you may think it will over time it did for a while but like over time it's just really a brutal way to try to keep yourself motivated because even money it's like you want to buy something for some reason right is it to just show off which is a very weak motivator is it to provide a better life for your children way more powerful motivator because then it's about your kids and for me it wasn't about the money that doesn't mean that i don't think money is powerful i think it's extraordinarily powerful but i was attached emotionally to helping my mom and my sister and so that was a very conscious choice it was a process that i walked through to reinforce that bond and then from there i built a business but i wasn't blind to the fact that there was an opportunity so specifically my partners and i were looking for the intersection of passion and opportunity and that's what i would encourage all of you to do there is no reason you have to settle for one or the other you can have both all right next what is the biggest needle mover for moving your business forward in your experience what can i do if i feel like my startup is not moving fast enough okay whenever you're trying to build a business you are saying i'm here i have a goal that's there your goal needs to be hyper specific between me and my goal is an obstacle and i need to get past that obstacle now to get past that obstacle you're looking for what tim ferriss calls the lead domino i think this is a brilliant concept you're looking for that thing that you can do first that if you do that that's going to have the biggest knock-on effect in terms of making other things easier so at impact theory i'm trying to build the next disney my lead domino was social media my set so the reason i wanted that was i needed people to know who i was so that i could attract talent so that i could go get doors open for me in hollywood because people had seen my content and i knew that that was going to be a chain that worked for me because that is one of the talents that i've just put a lot of time and energy into is the ability to articulate ideas for people so i just had a feeling that i'd be able to build a big social ecosystem it just worked out exactly like that and because of that i've been able to get meetings and open doors that i never would have been able to do before now the second lead domino is video content being competent at creating visual content because if we're going to be the next disney we know that we're going to be dealing in film tv video games storytelling books comics all of that okay so all right cool so if i know that that's what i'm going to have to do what are those areas of core competency one was going to be video content another was going to be comic books those are the first that we attacked for several other reasons but identifying what your core competencies are going to need to be and that if i were to get those core competencies they would necessarily make it easier for me to do other things okay that's what you want to identify now once you have that you're going to run something that i call the physics of progress and i actually teach a whole class on this in impact theory university in something called business decision making so if you guys have a business already and you're looking to scale it go check out business decision making we go into into a lot of depth on this but the idea is as follows there is a an actual nature to progress there is a way that it works now the reason i call it the physics of progress is because it's getting down to first principles thinking now what first principle is thinking is you're no longer reasoning by analogy okay we're not saying this is something that's like this we're saying this is it this is the thing this is how it works so take the human experience for instance the human experience the first principles way to view it is that humans are the result of evolution and when you understand how evolution shape the brain and the body and how they're in communication now the human animal suddenly becomes a lot less mysterious and you don't have to wonder where that negative voice is coming from or why you're so ambitious why you're afraid of public speaking all of those things you could understand from a first principal's perspective of understanding how evolution shaped us in business there are very similar physics right you're trying to sell something for more than it costs you to make it to scale you're going to have to have employees employees or humans and they have all kinds of what dan ariely calls predictable they're predictably irrational so looking at all of that understanding how markets move understanding how marketing works understanding the tools you're going to use in your business understanding business structure when you understand all of those things now you can think from first principles when we talk about making progress there are very simple steps that you have to do and it's basically the scientific method recontextualized for business and it goes like this i'm here my goal is there i've identified the obstacle the impediment that stands between me and my goal and a way that i like to ask it is why if i just keep doing what i'm doing now why won't i automatically get to my goal and one of the most important things to understand is the second law of thermodynamics which applies aggressively to business which states that any closed system move toward moves towards entropy meaning that if you don't have energy coming into a system everything goes towards chaos right your room becomes messy um the fire burns out like or the forest fire [ __ ] rages across everything everything moves towards chaos and the only way to organize something to structure it to get it to work in a specific way is to pump energy into that system right to get a plant to grow you must bombard it with photons basically radiation from the sun right so for a human to grow you have to eat sustenance and so we're literally translating the energy from the sun into food to create this body which we then have agency and can do things and one of those things that we're going to do in a business context is figure out where do we have to apply energy to make sure that we overcome whatever obstacle stands between us and our goal so you identify that obstacle then you're going to come up with your best hypothesis so it's just a best guess on what you would need to do to most effectively overcome that obstacle what's that lead domino what's the thing that if i do that it's going to move me most meaningfully towards my goal then once you have that best guess and it is just a guess then you're going to actually formulate and run an experiment it's going to be something that you can do it's not something that you think about so for instance let's say that i know that i want to grow my youtube channel and let's say i want to buy december 31st i want to have a million views per day by december 31st 2021 on youtube okay cool so now what's the best thing that i could do in order to get there i might have a couple ideas um maybe i need to bring on better guests that have bigger reach or maybe it's my thumbnail and uh my copy okay now as it turns out our hypothesis was uh both of those were important but believe it or not that the thing that's most important because you can have the right guess but if you have the wrong thumbnail and headline you're in real trouble now if you have all the right thumbnails and headlines with the wrong guess you're also in trouble but the lead domino is getting that thumbnail and headline right making sure that you're feeding the algorithm so that the youtube algorithm supports your content then you've got an opportunity to get the right guest in front of more people and then when the two synergistically happen it it explodes but just to stick with one of the things we actually ran was this thumbnail in headline okay so we had all the different experiments that we wanted to run we picked the one that we thought was the most likely to move us forward using something that's known as the ice method i-c-e so impact confidence and ease what's the impact if it works what's my confidence that it will work and how easy will this be to implement so we came up with those different things we were going to test on the thumbnail those become the experiments the levers as i call them that we're going to pull we're actually going to pull that lever meaning put that new approach the thumbnails and headlines out into the world then we're going to get a result from the real world and we're going to analyze that data then we're going to have learned something once we learn something we will refine our hypothesis and begin the process again and that loop is the physics of progress okay let me walk you through that one more time i know i have a problem i come up with a hypothesis on the most efficient way to solve that problem i come up with a way to test that hypothesis a thing i'm going to do in this case put out new headlines and thumbnails and then i'm going to see what the result is from the real world in this case it worked tremendously well we tried many many things many of them failed but many of them worked that was the data that we analyzed that refined our approach in terms of what thumbnail and headline changes we wanted to make and we did that over and over and over and over and in doing that we have more than doubled our view count over the testing period okay that's a massive win for us and just came from running the physics of progress over and over and over and it doesn't matter what area of your business hey guests what kind of guests should we have on here's my best guess so we should go into xyz space uh okay that didn't work we should try this space and then the one that's really popping off for us right now and of course this will change over time but cryptocurrency nfts that's there's so much energy pouring into that space right now doing a lot of content there because i happen to have a passion for it and i'm researching the [ __ ] out of it so we try doing that content marry that with the changes and boom it literally the graph on our youtube page looks like uh it's almost a straight line up it's ridiculous but it was all the work that we did over here as we're learning learning learning learning learning and then it's like we finally begin to optimize and it goes up and to the right but first you have to run all those tests fail over and over and over but as i mentioned failure is the most information-rich data stream that exists so in all those little failures we were learning refining our approach which allowed us to get better which then ultimately gave us the results all right that's how you get things moving faster the physics of progress all right next do you think buying a small business is a good idea how would you go about it all right this is not something that i can explain in the abstract i would have to know a lot of details about the specific business that you want to buy because of course a certain business at a certain price would be a no-brainer purchase but then another business at a different price or even the same business at the wrong price could be a problem so you have to be very very thoughtful now if you're going to buy a business you need to be aware that purchases often fail it's some ridiculous percentage like 95 that is directionally accurate something approaching 95 of all acquisitions fail because when you're trying to merge things it can be very difficult the founder that created the business almost certainly will have a radically different idea of how to run the business that's why you're buying it right you think you can do it better a radically different idea of the culture may have hired people that you would never hire in a million years and remember all the company is is the people and the product so if you don't have the right people or the right product what do you really have and it could become very very problematic and the number of times i cannot tell you how often i hear this refrain hey we did our due diligence but we didn't realize xyz thing about the company until we bought it and got in it and then all of a sudden whoa like now we're seeing the real problems so especially because we're talking about small businesses i would be very careful because you're probably better off building it yourself starting from scratch especially if you have the capital to buy a business you've probably got the capital to grow the business it's going to take more time but a you're going to learn more you're not going to inherit bad good or indifferent but you're not going to going to inherit anything from the other people the sort of legacy things that normally make the purchase such a high risk endeavor and you're going to be able to get in there and learn as you grow the business and starting off you know in the beginning when there's not a lot of attention there's not a lot of stakes that is a really important period as you begin to learn and so at quest for instance we were making the bars by hand before we ended up buying a bunch of equipment that showed us that there was a product a product market fit that our marketing was working then once we had that going and we had a lot more confidence then we could buy the equipment if we had just come in and bought a business that already had the equipment already had all the overhead already had all the employees already had all the different vendors lined up and all that while it seems in the beginning that it gives you that head start and trust me there were some headaches with finding my protein vendors and things like that that i really wish that we hadn't had to deal with we wouldn't have gotten in there built the relationships met the people that we needed to learn the things that we otherwise would have just been inheriting ideas which can put blinders on you so it was very useful for us to have to build that stuff from the ground up now we often joked if we had realized that the light at the end of the tunnel was actually an oncoming train we wouldn't have gotten into it because of course there were complexities that we never could have imagined but that feels a lot less like burning the ships at the shore now i know because of my hardcore intensity everybody thinks that i'm a burn the ship's the shore guy but i'm not i'm the hedge your downside guy make sure that you have an exit strategy should things implode make sure that it's not going to take your life down because you should be committed to this so you shouldn't need the fact that there's all this stress and pressure on you to succeed in order to succeed and i think it just makes people make short-term decisions and you definitely want to think long term all right how do you build resilience in becoming an entrepreneur i was just explaining this to a couple of my employees today have you ever stubbed your toe really hard and it's that like blinding pain and you're like oh god did i just break my toe now i don't know if you've ever thought this but every time that happens i think thank god i didn't know i was about to do that because oh my god that was so painful and i wonder knowing what i know now could i kick that thing on purpose as hard as i did and i don't know that i could knowing how painful it is man there would have to be something really important for me to be able to do that running a business is a little like this you come up with a plan you have to generate certainty around that plan because you have to intoxicate other people with certainty you're gonna have to convince them to run with you at a thousand miles an hour in the direction that you think is right in order to create enough momentum to get something really happening in your business most businesses never hit escape velocity which is why most businesses never reach a million dollars getting that early momentum is extraordinarily difficult extraordinarily difficult so you've got to get people hyped up you've got to believe you've got to lead with all of this energy and enthusiasm and get going and get moving hardcore but in the back of your mind you know one immutable truth at some point i'm going to fall flat on my face because some part of my strategy isn't right i know that the only thing i can guarantee about any business plan anybody has ever had throughout all of history is that some part of it is wrong and you're going to have to adjust adjust adjust to just adjust as you go okay back in 1961 if you got on the s p 500 you were going to stay there for an average of 61 years as of 2021 it's approaching 12 years okay the time that success buys you now is getting really small because the world is changing so fast the internet has changed everything nfts are going to change it even more the pace of change is insane so even if it's just that your thing might be right today but it's definitely not gonna be right six months from now or a year from now so you're going to wallop on your face you are going to stub that toe and you have to do all of it knowing how badly it's going to hurt so how do we build resilience in business the same way that we build resilience anywhere beliefs about us and how the world works that reinforce that we're going to need to be hardcore we're going to have to value resiliency we have to reward it in ourselves we have to think well of it in other people we've got to really believe that being resilient matters and we have to find ways to cultivate that in ourselves and then three we're gonna do hard [ __ ] so if you wanna gain resiliency do hard things work out every day take a cold shower don't eat the food that you wanna eat be very strict on your diet go to bed on time don't go clubbing when everybody else is doing it live a disciplined life that has rules put rules in your life here's an easy one tom bilyeu gets out of bed in 10 minutes or less no matter what here's another one monday through friday if i'm awake i'm either working or working out i work an average of 93 hours a week and i've maintained that pace for almost 20 years i don't burn out largely because of what i talked about before where i make sure that i'm combining opportunity and passion but also because i built resiliency by doing hard things over and over and over and i value that in myself so i reward myself when i do it i think well of other people when they do it i talk about it like coming on here and talking about all this stuff and i started small i started small and i got wins and i started pushing it out and i held myself accountable when i didn't do it i actually confess to my wife and frequently on camera if i fail to get out of bed in 10 minutes or less if i'm not being efficient during my work day i'll tell myself i'll call myself out i'll tell other people i'll admit it to my wife to my employees because i want the sting of that because i value resilience i value following those rules i value the beliefs that i have that propel me towards success and arguably my most important rule i only do and believe that which moves me towards my goals so i know i have to be resilient because that's going to be the thing that moves me towards my goals and i make it a rule and i practice it with things big and small whether it's taking a cold shower and getting out of bed or whether it's facing the hardest problems in my business square on never trying to hide from them dealing with it getting it done owning my mistakes publicly admitting when i'm wrong which i have no problem doing all because it lives in service of my goal which i am passionate about and once you have a goal that is honorable and exciting now you've really got something and that my friends is how you build resilience in business all right everybody that's it those are the things every entrepreneur should know and of course there is so much more and if you want more like i said i teach we have impact theory university which has some business in it then we have business decision making business decision making is for people with a six figure or higher business impact theory university is for people that are thinking about starting a business so depending on which camp you fall into please join me i think these classes are absolutely life-changing without question so come and join me if you haven't already be sure to subscribe and until next time my friends be legendary take care peace