https://www.youtube.com/watch?v=EUW3rMp-Uvg

1 00:00:00.000 --\> 00:01:00.000 it means that people actually want the
thing that you're selling which believe it or not a lot of people sell
stuff that people do not want crazy i know in this video i'm going to
break down why all of these mass market biz ah businesses and uh
consumer product businesses plateau and so if this is you then listen up
and so uh this actually stemmed from a conversation that i had uh with a
big uh business opportunity business owner who's doing you know 50 60
million a year and you know they were reaching a plateau where their
their margins were paper thin and so i wanted to break down uh the
reasons why the way a mistake that you can avoid that took me a very
long time to figure out and a lot of pain and so if right now you are in
one of these businesses that sells to a consumer products alright so
mass market or b business opportunity or c even uh services to mass
market then this video is for you all right and i'm going to show you
how you can avoid a mistake that you won't know that you made until it's
too late alright if you don't know hi my name is alex from mozzie i own
acquisition.com it's a portfolio of companies that over 100 million
dollars a year i have nothing to sell you make these videos because i
want you to get to 3 million a year so i can partner with you that's why
all right but if you're not there then i make these videos just because
i want you to be rich af all right so let's

2 00:01:00.000 --\> 00:02:00.000 walk through a logical outline of what
happens in a business all right so zero to six figures all right so zero
to 100k you sell something to someone that's what you have to do in
order to get to 100k and usually it is unreliable all right so you have
unreliable acquisition and usually from different channels because you
don't know what you're doing all right and that's usually what it is all
right so it's unreliable acquisition but you are selling something to
someone now 100k to 1 million you create a reliable and usually a single
reliable acquisition channel which means you pick one channel one
product one avatar all right and you sell that thing that's all you do
and if you do it reliably you can get to seven figures that is what
happens here now what i'm about to show you is the mistake that most
people make all right at this point we have what i would call pmf or
product market fit it means that people actually want the thing that
you're selling which believe it or not a lot of people sell stuff that
people do not want crazy i know all right so we have product market fit
now this is the point where people mess stuff up because what happens is
they say hey i did this thing so if i do more of that thing that is how
i will grow this business and the answer is yes

3 00:02:00.000 --\> 00:03:00.000 and also no and here's why if you do
more of what you do there are three variables that are logical
eventualities that will occur in the business that will eventually rob
you of your margins and so if this actually worked then you usually are
profitable right and so you were most profitable in the beginning of the
business why because you usually had to figure something out and you
usually have very low overhead less infrastructure cost etc in the
beginning right now in a physical products business specifically you do
have some economies of scale that happens when you buy more stuff but
those are diminishing meaning you know the first two increases in orders
of magnitude of purchase is where you get the vast majority of your
savings and then after that it's razor thin in terms of how much uh
savings you're going to be able to have uh from scale all right from
increasing the quantity that you purchase all right so you're usually
profitable in the beginning and you're growing cool makes sense now
here's the thing these are the three eventualities that happen in every
business that's mass market all right number one is that cpms go up over
time all right they go up over time that should make sense advertising
today is more expensive than it was yesterday and more expensive than it
was 10 years ago right cost per impressions go up that is an eventuality
that is a lot will happen over time number two is that you will

4 00:03:00.000 --\> 00:04:00.000 have to go to colder and colder
audiences which means as you scale the conversion rate that you have on
these audiences will go down right if you had that one channel that you
were doing if you go deeper on that channel you go to lesser or lesser
likelihood audiences of people who are going to purchase right this is a
function of scale and so you think about it like conversion goes down as
you scale that makes sense now the reason that a business can scale is
because they make so much money on the on the smaller audience that when
they go to a larger audience they still make enough money to justify
doing it but it is a logical eventuality at some point you'll reach a
cold enough audience that they will not buy all right and then the third
piece is that as you scale business costs of infrastructure go up all
right which means that you have higher fixed costs in the business which
means your margins in a railway can't compress all right so these three
things are eventualities these are logical outcomes that happen as you
scale as the business progresses and does more volume all right and so
if we have these three things then what happens is let's say this is our
our line of of top line and let's say this is our margin line is that
this starts to compress right here and so we start making less and less
money over time even if our revenue is going up right this margin

5 00:04:00.000 --\> 00:05:00.000 still starts to compress and we start
to get razor thin why because of these three eventualities right these
always happen in every business so then you're like okay alex that
sounds like doom and gloom then how do i combat that well it's
understanding sequence all right and so if up to this point you said
okay i made a million dollars or making two million dollars a year or
whatever selling uh mass market services mass market products you're
selling to everybody you're selling to a big big big demo all right so
this is where beauty this is where uh business opportunity this is where
investment opportunity this is where um weight loss uh relationship
coaching big mass market things right these are huge industries okay and
so how do we combat it we have to have an equally strong thing that is
going in the other direction that is decreasing our cost of acquisition
and increasing our gross profits all right now how do we do that do that
through getting the invisible hand to work for us which is warm word of
mouth all right now before you before you look away because this is
important this is the invisible hand and the reason this is so important
is that as you scale right if we're in this little you know example over
here and we go you know uh 1 million to 10 million right and the margin
goes from you know 40 to 30 and

6 00:05:00.000 --\> 00:06:00.000 we go 10 to 30 million we go from 30
percent to sorry from 20 to 10 margins right and this margin keeps
compressing the thing is is that we need a acquisition channel that
doesn't behave in these three ways how word of mouth is quadratic in
nature meaning one person tells two two people tell four four people
tell eight and so we have far more leverage on the acquisition of one
customer and this process right here is what will drive down your cost
of acquisition over time at scale even if you're reaching more people
less efficiently than you were in the beginning which makes sense of
course you'd be less efficient at the beginning um less efficient at
scales you are in the beginning now you might say well our media
department's better our buyings are better our advertising is better and
sure all those things happen but these three things are absolutes cost
impressions will go up you will market to colder audiences who are less
likely to buy your thing and the cost of infrastructure will increase
those are eventualities all right and so we have to and this is the
piece that everyone misses you have to pause when you're in that one
three maybe five million dollar pre-year range you have to pause to do
something entirely different and you have to stop doing the thing that
got

7 00:06:00.000 --\> 00:07:00.000 you there because continuing down that
path will eventually lead to a point where you have lots of revenue and
basically no margin and then you will have a hiccup you will have a
mistake or you'll have something that happens and it will blow your
business off its course and all of a sudden you'll go from feeling like
you're on the top of the world driving all this cash flow driving all
this revenue to being like holy we're negative and we're paper thin and
i don't know what to do and you feel like you have to keep selling just
to pay payroll but there's basically no margin left and then you
basically have created a massive non-profit that you're liable for right
and if i'm talking to somebody you know who you are you're listening and
you know exactly what i'm talking about right now all right and you and
this is the eventuality that happens unless you stop and you fix this
which makes it feel like you're doing something out of sequence but
you're actually doing it in the right way to do which is why you have to
go slow to go fast sometimes okay so onwards what we have to look at is
how can we improve the customer experience right the customer experience
how can we create a customer success team or director who can start
tracking things like time to value like how quickly can someone you know
achieve this value what are mps scores what are our customer health
scores what are the things that are going to drive the one thing that
matters most which is referrals because

8 00:07:00.000 --\> 00:08:00.000 what happens is that most people either
have neutral or negative word of mouth all right and so here's a way
that you know if you have negative word of mouth negative word of mouth
is when your cost of acquisition increases at a faster rate than the
cost per impression increases okay so if the cost per impression is up
10 and you're up 40 it means that you have that quadratic that beast
that i was showing earlier that does this whatever you have that beast
but that invisible hand is now compressing your business people who
would otherwise would have purchased see your ads see your marketing and
say oh i actually heard something bad about that and then boom they
don't buy and not only that the negative ones tell 10 times more people
than the positive experience one which is why it's so hard to build a
wonderful business because it's so hard to have to be so good that you
counteract the 10 times word of mouth that happens with a negative
experience i know this is crazy it makes it feel makes business feel
hopeless but there is hope because if we do this in the right sequence
and we say we're going to pay attention to things that matter most
because we're thinking about 10 years not 10 days from now we know that
these three things are going to be the inevitable things that eat our
business and eat our margins and so we have to combat that by pausing

9 00:08:00.000 --\> 00:09:00.000 increasing our integrity about the
products that we're selling right so that we can drive the thing that
will be our our our guard our shield against this it will be the
invisible hand fighting the negative invisible hand and increasing it
because all of a sudden people heard something and then they see your ad
say oh i wouldn't normally have bought it but i did hear something about
this and then they purchased and all of a sudden what happens is holder
markets become warmer markets as a result of the word of mouth all right
and so that is how you can use this thing to give you the positive
invisible hand that can combat you now some businesses at scale what
they figured out is okay they're not shitty but they're just neutral
right and the thing is is that these three eventualities will still
happen no matter what and so you need to turn this negative into a
positive otherwise at scale the eventuality of this business is it will
do tons of revenue and you will reach a point of equilibrium where your
costs and your and your cash flow are the same and you have run a
massive nonprofit that you are 100 liable for and that is very very very
stressful and so the only way to build the enduring brand that can
continue to scale is to have this invisible hand in your team on your
side which means you might have to slow down for a period to figure out
what do clients really want what is the

10 00:09:00.000 --\> 00:10:00.000 job that they hired our products or
services to truly solve and how can we figure out a way to truly
surprise and delight them in a way that they did not expect which means
we want to increase the discrepancy between expectations and delivery
all right we want the liver to be up here and we want expectations to be
on here and the problem is that most people who are short-term
short-term minded what they do is they say they raise expectations in
order to make the short sale but then what happens is they can never
live up to that and so we have a negative expectation to delivery gap
and then that is what drives the negative word of mouth in the business
which eventually dooms them and so the idea is how can we have modest
expectations that we can set and then create such an amazing experience
decrease the time to value so that people say wow this thing was so much
better than i expected you should try this out and the easy way to show
this is have you ever had somebody pump up a movie to you and be like
hey this you got to see this thing it's so good it's okay and you're
like oh man i can't wait to see this thing and then you're like okay
that met expectations even though the movie was amazing movie that met
expectations because you had amazingly high expectations on the flip
side have you ever had an experience where someone's like oh this is a
movie

11 00:10:00.000 --\> 00:11:00.000 it's terrible blah blah blah you go in
with super low expectations and then you're pleasantly surprised right
even though the product was the same the expectation dramatically
changed our experience of the product service etc right and so when
we're dealing with consumer products right we want to set modest
expectations and then create room for us to over deliver so that we can
get this word of mouth and so what we do is we don't trade the
short-term sale at the expense of the long-term brand and the brand in a
nutshell does two things a brand is simply what people say about your
product behind your back that's what a brand is it's a reputation right
and the easiest way to build your reputation is improve the quality of
your products is to keep the promises or more than keep the promises
that you make that is how you build the brand that will endure and that
is the thing that can achieve scale because once you achieve scale you
also have the hidden power pricing behind you because once people love
your products and services if you do a 10 or 20 bump in price and for
those of you who sell mass market b2c products these things if you don't
have a change in demand all of a sudden double triple quadruple the
profit of your business right and you can only do this and have premium
pricing power if

12 00:11:00.000 --\> 00:12:00.000 you have a brand otherwise you're just
media arbitraging and you will eventually run into this these three
evils right here check check check these three evils right here that
will eventually eat away your margins and destroy your business all
right so this is a cautionary tale of what not to do and sometimes you
have to go slow to go fast to build the thing that's worth building all
right so mother nation i love you guys keep being awesome and i'll see
you guys in the next vid bye mozzie nation you guys are the best and if
you could do me the biggest favor of the entire world click the like
button comment below so i can answer more of your questions in the
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