https://www.youtube.com/watch?v=MA-5y9s80Qs

1 00:00:00.000 --\> 00:01:00.000 welcome to mozy nation in this video
i'm going to be sharing with you the three most important lines that you
need to draw in your business that you probably are not and i want to
show you some different uh combinations of these lines and how
dramatically it will impact how much money you make and ultimately the
value of the company that you ultimately build so if you don't know my
name is my name is alex from mozilla and acquisition.com we do about 85
million a year and i have nothing to sell you this is a rona-sponsored
episode so if i'm less chipper than normal um that is why uh we thank
our sponsors as always and so these are the three lines that i think
everyone needs to understand all right so line number one right here i'm
gonna make sure that you guess so if you can guess right now which each
of these lines are going to represent you have price you have value and
you have cost of goods all right so every line has every business has
these three lines within everything that they sell you have how much you
sell it for you have how much value the person gets and you have what it
costs you and what

2 00:01:00.000 --\> 00:02:00.000 i want to show you is the mental
framework and the interplay between these things and how dramatically it
can shift your business so this is the value line this is what they are
getting this is the price line this is how much you charge this is the
cost of goods line which is how much it costs you to fulfill on this
value right right okay so here's where it gets kind of cool if we move
our price up see how little value we have here this means that we have a
low customer surplus customer surplus is the excess between what they
pay and what they get the higher the surplus the greater the distance
between these two things here the more value they will perceive that
they have gotten from your services the bigger this discrepancy is the
more viral your business will be imagine there was a day years and years
ago where you could have access to

3 00:02:00.000 --\> 00:03:00.000 everything in the entire blockbuster
store on demand from the comfort of your home and you could do it for
less than it cost to do a new release and uh to run a new release
wouldn't that be amazing well they did create that and that was called
netflix and so what they did was they priced it so low but their cost of
goods was still lower because the cost of the incremental cost of adding
a single customer was is basically nothing right and so their gross
margins here is still very high because for them they can still lower
these things even more and so what i'm telling you at the end of this
video is that the trick to how you actually can build a fortune simply
understanding the interplay between these three lines if i have one
takeaway for everybody who's watching this is that if you can think
about your business just using these three lines then you will be able
to build a fortune if we have here our cost of goods at the bottom and
we raise this all the way to here

4 00:03:00.000 --\> 00:04:00.000 and we have a you know a ton of
customer surplus what kind of business is this this is going to be a
business that probably doesn't need to market very much this is going to
be a business that is probably operationally difficult probably a
service-based business and probably runs on very thin margins many
businesses run like this these are a lot of old school businesses that
grow consistently every year by you know 10 15 per year and they don't
have a ton of money to reinvest in resources they're very operationally
efficient in order to run a business like this that's business scenario
one let's see if you can guess what type of business this would be so
this is most of your generic mom-and-pop businesses decent margin let's
say this is the baseline here sorry there's our baseline decent margins
here decent margins decent value just kind of another run-of-the-mill
business um nothing underwhelming or overwhelming about this business
and this is what most small

5 00:04:00.000 --\> 00:05:00.000 businesses operate like so let me tell
you what type of business i would like to try and create my goal is
always to find a way to provide something that's excessively valuable
they cost me almost nothing to make unique expensive sticky year for
those of you know guys who uh know that channel it's one or one of that
video it's my favorites i want something that costs almost nothing
provides tremendous value and creates a big customer surplus and here's
what's crazy the bigger you do this discrepancy the more viral your
business will become for me as i feel like i've aged in entrepreneurial
doggy years the more i strive for this than anything else because if you
conquer this piece you conquer the customer surplus in terms of how much
value they are getting for what they are paying then you will have an
infinitely scalable business because you will have a quadratic way of
expanding which is through word of mouth which is the antithesis of what
everyone in the marketing world will tell you but the

6 00:05:00.000 --\> 00:06:00.000 goal should always be to have a
business that grows on word of mouth the problem is most people don't
have enough word of mouth because this surplus is not big enough if you
have the surplus big enough and you go from good to great and great to
so good that people cannot help but tell their friends about you
remarkable or remark worthy that is how good it is then you will have
more customers than you know what to do with and your cost of
acquisition will be zero and your your business will grow quadratically
not linearly that is the difference between making money and building a
fortune and i thought of this visual with the three lines and i just
thought it was really telling and so i thought i would keep this short
in the spirit of rona to show you this but if you can think through how
you're providing value and really focus because the things that you can
control you can control all three of these variables but when i'm trying
to diagnose a problem that i want to solve as an entrepreneur i think
how can i provide the most value step one step two how can i lower my
cost of goods sold to a crazy degree

7 00:06:00.000 --\> 00:07:00.000 and then once i know how i can lower my
cost of goods sold to a crazy degree i'd rather have something that cost
me a penny that i can sell for 10 cents that has the value of 10 and if
you have that kind of value that you're able to deliver you will make a
literal f ton of money and so i think this is a useful framework you can
plot your own business you can probably plot your competitors business
using this simple framework and i thought i would give it to you because
it's one of the tools that i use when i'm thinking through how valuable
an enterprise could potentially be and how i can move these lines around
to create value create margin and ultimately take home the most money
and help the most people just like everything that we do hopefully the
price that you paid was the time the value that you got was hopefully a
framework that you can use to apply to your business and the cost of
goods sold for me is the time that it takes me to do this and the the
many failures and lessons i've learned and suffered the hard costs of
failure to make these little uh frameworks for you so anyways mosey
nation i love you guys

8 00:07:00.000 --\> 00:08:00.000 uh the reason i make this uh stuff is
because a lot of people are broke and i don't want you to be one of them
as always i have nothing to sell you keep being awesome if you enjoyed
this hit subscribe if you didn't love either way catch you guys next
video bye
