https://www.youtube.com/watch?v=\_x6n-CmZqjo

1 00:00:00.000 --\> 00:01:00.000 so i've been looking to having this
conversation for a couple months and it was just sitting on the schedule
and i kept looking forward to it and i found myself you know a couple
minutes into the phone call and i said hey just out of curiosity how
much are your companies doing a year in revenue right now he said well i
think we're doing over a billion dollars a year now and that's when i
was like man i have a lot to learn from this guy so hi my name is alex
romosi i'm the owner of and ceo of allen gym launch prestige labs and
five other portfolio companies and i have absolutely nothing to sell you
you know there's a lot of people out there who struggle to make money
and are struggling to you know grow their net worth and i made this
channel to make sure that you are not one of them what i want to share
with you is some of the kind of excerpts or the private conversations
that i had with a man doing a billion dollars here in revenue that's
privately held so his company or companies are privately held he owns um
50 of them and uh he's probably in his mid 70s for the security of that
individual i'm not going to reveal his identity but what i will do

2 00:01:00.000 --\> 00:02:00.000 is give you all the lessons that i
wrote down as a result of this conversation all right the first thing
that i think before i even get into it that i'm going to get asked from
this video is like well how do you get access to guys like that and um
further along this video i'll explain how he went from 100 million
dollars to a billion dollars a year in revenue his process around that i
also talked about how he organized his personnel and did his incentive
programs uh where he was allocating his capital that he felt he got the
best returns from so jam-packed lots of good stuff for you from a man
who has done it and lived it and so the first one is about how do you
get access to something like this and so one of the things that i think
i hear on like the entrepreneur channels and things that i cruise around
and snoop around down is i hear these big mass market people say like
just go buy a millionaire a lunch or just say you'll go work with a
millionaire for free um i don't think that's realistic because you have
nothing to offer that person and so i think the first step is
self-awareness of understanding that like you only have x amount of
value now

3 00:02:00.000 --\> 00:03:00.000 your intention should be to increase
that value you have in the achievements that you have so that you can
gain access to higher level people so now i've gotten to the point of my
career where you know he knows that we're doing just under 100 million a
year and so i had real questions that i wanted to ask him and the person
who made the introduction was like hey this guy's legit you know he he
loves all your all your content and all your books and things like that
could you would you know would you mind helping him out or taking a call
and so he agreed which was crazy for me and i was really really thrilled
about it but you know if doesn't matter where you're at you can probably
just add you know a zero or multiply whatever you're doing by five and
that's probably around where somebody where your cutoff might be so if
you're making a hundred thousand dollars a year then you know gaining
access to somebody making a million dollars a year is probably around
where the cutoff is going to be for what your you know achievements will
give you access to and that's kind of the the reason that i think a lot
of these coaching programs and masterminds and things like that exist is
because people can't gain access to that level of person uh without some
sort of you know prior achievement and if you haven't achieved it then
you have to compensate that

4 00:03:00.000 --\> 00:04:00.000 that person with money in some way
right we got on the phone call and this was layla and i am playlist my
wife she runs these companies with me she's co-ceo she actually just
started a youtube channel if you want to check that out but the the
first thing that i asked him was i said hey ben uh i had been stuck at
you know mid 30 million dollars a year uh between 30 and 40 for three
years and you know i just from listening to some of the stuff that you
had really understood the breakthrough of how to get to 100 and right
now we're pacing probably about 85 but i think that that breakthrough
was was key which was understanding to focus on people now you might be
like well duh i have heard that everywhere alex why are you so dumb
great question i think that what i did not understand was that as the
entrepreneur we believe that we are source of everything and at a
certain point there's only so much influence that you can have and maybe
i'm just not influential enough that's that's possible right but your
ability to influence people one level two level three level four levels
of management below where you're at you know dilutes over time like you
are

5 00:04:00.000 --\> 00:05:00.000 potent but you become disseminated as
levels of manage and get introduced which is natural when you whenever
you grow an organization right the first thing that he said that i
thought was really powerful was understanding what levels of talent
exist and so he said there's really just stars and superstars and one of
the things that he said completely shifted my perspective about how to
view those things and i'll tell you what that was in a second but the
key point that he said is that every business that is going to grow and
be self-sustaining must have three superstars and i was like huh that's
really interesting and where he divided the superstars out was actually
exactly where i would have divided them out as well which was you need
to have somebody who's in charge of acquisition you have someone who's
in charge of delivery and someone who's in charge of operations and
shared shared services right that means one person gets new clients one
person delivers on promises and the third person keeps the first two out
of jail by making sure that bills are paid and and payroll happens and
legal and i.t and all the lovely things that come with running a
business that no one ever

6 00:05:00.000 --\> 00:06:00.000 thinks about he was like if you have
three superstars then that business can grow on its own the second thing
um was layering on the incentive packages appropriately and this is
something that you know charlie munger warren buffett you know and this
guy i feel like i see this common theme around the guys who make the
most money in the world is that they are not afraid to give up a little
bit of the pie to make more people wealthy so that the pie itself can
grow it's easy to say it's hard to do and i think one of the biggest
mistakes that i made for the vast majority of my early business career
was not understanding how to align incentives and you know i think
charlie munger says like show me the incentives and i'll show you the
outcomes and so when i started out in my career i thought that i just
had to partner with everyone and that wasn't the right call for me at
the time because i ended up partnering with people who had the same
skill sets as me because they seemed cool and we like the same things
but the reality is that i should have been partnering with people if i
was going to partner uh with people who had different skill sets so i
might have been the acquisition guy because that's probably i would say
my my skill set but i should have partnered with somebody who was

7 00:06:00.000 --\> 00:07:00.000 really good at delivery service product
etc and had somebody who really owned the operational you know portion
of the business and so that's what i should have thought of now mind you
i had a mentor early on in that time in my life who said listen you
might need an accountant it doesn't mean that you have to give them
equity in your company right you just pay them as a vendor and that was
again something that i did not understand when i was earlier on and so
just if you're starting out your career you know you don't need to give
away equity in your company to get things done you can just pay for them
and that's okay in fact it's encouraged because the most expensive
equity you typically give away is in the beginning and so being mindful
of that and leveling up your skill sets so that you don't have to i
think a lot of times can yield disproportionate returns and in the
companies that i have grown to you know eight figures multiple figures
and now knocking on nine have come from companies that i that i own
right and have very small percentage of equity that i allocate to people
who are star performers which leads me to one of the things that he
talked about that i referenced earlier which is understanding the
difference between superstars and stars

8 00:07:00.000 --\> 00:08:00.000 and so um he said something that really
stuck with me and after this i'll tell you what he said about how he
allocates his money and whatnot because i think that was really cool but
how he identifies superstars he said listen you we all want superstars
right and we know him when we see him but what i have noticed is that
i've never not thought someone was a superstar and then later realized
they were he said now i've had people who came in and i thought they
were superstars and then they they it turned out they weren't superstars
but i've never had the reverse happen where someone comes in i don't
think they're a star or a superstar and then they become one and so i
took that as a key learning for myself which is once we're bringing in
high level talent we're bringing in leaders we're bringing in drivers
that if we don't immediately think that they're a superstar then it
means that they're probably not a fit for that role and that can be hard
because one of the biggest things that gets in the way of excellent is
good enough i can tell you as somebody who's hired so many good enough
people and i think later now hired true

9 00:08:00.000 --\> 00:09:00.000 superstars the difference is is is
uncanny it's night and day that they're able to solve problems bring
solutions to the table and implement them without your input oftentimes
what you know you have to end up doing which is why the gap between 30
to 100 million is about giving up the next level of control which is
kind of the control around high level decisions right you have to give
people the autonomy and the power because a superstar wants that kind of
power right they want that kind of authority they want that
responsibility and they want they want the responsibility because they
want the credit for the outcome right and so this was something that
took me a long time to understand and the way that he incentivized those
people that he shared with me and i will share with you right now so you
guys don't have to get a billion dollar a year you know entrepreneur on
the phone is he said he would set up profit shares for those ceos and he
only did it for the ceos of his companies he had so many beliefs i'll
share one of them with you right now he said i don't believe that
businesses should make a profit and so this man is clearly a philosopher
at this point in his career just fyi the guy's mid-70s peaceful as can
be salt of the

10 00:09:00.000 --\> 00:10:00.000 earth and i was like i don't even know
what that means he said i said can you clarify that he said i believe
that profits are unnatural he said i don't think that they're naturally
occurring i think that a business if left on its you know lift to its
own devices will pretty much break even and i thought about that and i
thought and i thought more and i thought more about it i was like i
guess that's true he's like it's unnatural to create profits and it
takes willpower to create profits because you have to create outsized
returns compared to the marketplace because everyone else most of the
time is the same resources as you do or you know they have the same 24
hours they've many times the same access to skill and talent that you do
and so if you have the same access skill and talent you know and you
have the same resources or similar resources then then how is it that
you're going to out-compete them it takes something unnatural it takes
something above and beyond and so for him he believed that creating
profits is a natural and is the sole responsibility of the ceo which i
thought was interesting i'm not sorry 100 agree it might not i just
might not be at that level yet i don't know um but he said he shared
five percent of profits with those uh

11 00:10:00.000 --\> 00:11:00.000 entrepreneurs and he also gave them
the opportunity to buy in truly buy-in not just like giving equity but
buy in bigger and bigger chunks of the company he said i think one of
his biggest companies that he has the ceo owns like 30 something percent
of that company now and started at 5 or 10. and so the reason i'm
sharing this is that like at a certain point the company becomes a
conglomeration of companies of of drivers who are driving growth across
channels right across individual profit centers that all roll into one
larger conglomerate and so just just fundamentally shifting my
understanding of like what business will become instead of like oh i'm
going to sell you know a hundred doors now i'm gonna sell a thousand
dollars and i'm gonna sell ten thousand dollars right and i say door it
could be pens or ball caps or it doesn't really matter but the point is
is that we're selling a widget of some sort right instead it's it's you
might have a business that sells a hundred you know doorknobs and a
hundred doors and a hundred door frames and door insurance and all that
type of stuff around and each one of those things becomes a profit
center

12 00:11:00.000 --\> 00:12:00.000 for the overarching conglomerate and
has a driver who has specialization within that industry and has done it
before and so i think when he shared this to me like it reinforced one
of my core beliefs which is advanced people are advanced because they
never don't do the basics like so many people you know myself included i
would see people on stage and they would say what they were doing and i
was like there's no way it's that simple but i think the reality is it
is that simple it's just not easy finding good people is hard it's the
number one issue all businesses have it's like because if fundamentally
every single person who's listening to this right now is three amazing
hires away from all the growth you've ever wanted like think about that
like we're all three hours away from all the growth we've ever wanted
and our time back and i feel like i'm just beginning to really
experience this as an entrepreneur and i'll tell you it's trippy it's
weird not being needed and i would encourage it and i think that there
were multiple times throughout my career where i thought that i was not
needed and i stepped away and then things crashed and then i had to jump
back in and so maybe you've had that experience too but when that
happens sure there's process issues etc but

13 00:12:00.000 --\> 00:13:00.000 most times it's because there's a lack
of talent and i'll share one conclusion that i made from this thing and
i'll tell you what his investment advice was but one of the conclusions
that i have is that the size of the corporation is directly proportional
to the amount of superstars that are present and so when you think i'm
like superstars i'm not talking stars stars are great you need a players
right but who are who are the people of that x factor that it fact that
something different that can really drive right and as a company gets
bigger he even shared this too he said you know you need fewer drivers
and you need superstar tenders you need people who are not hunters but
but farmers who can just tend to the company overall and make the
incremental improvements because a lot of times companies grow in a
stepwise fashion so it's huge growth plateau huge growth plateau huge
growth plateau and then we as entrepreneurs think we're you know
breaking something when in reality that's just oftentimes is how growth
occurs because there are bottlenecks there are constraints that are on
the business and then you de-bottleneck them and then you experience the
next level of growth

14 00:13:00.000 --\> 00:14:00.000 and usually you de-bottleneck them
with a person who has experience or who has talent in that specific area
who can solve the problem for you and has done it before as promised
what i'm going to do is i'm going to wrap this puppy up with his advice
on investing and so he said so i'm just giving you straight from the
horse's mouth this is what he told me so he said you know we've done
really well in real estate we have a couple hundred million dollars in
real estate and we've done it all through the company and so he and his
partner um share share the equity in the deals that they do and they buy
all multi-family real estate so big buildings with lots of apartments he
said when i buy he said i'm more concerned on return of capital than
return on capital so i'll say that again he said i'm more concerned when
i invest with return of capital than return on capital and i thought
that was it just consistently reinforces what i keep finding with the
people who are worth so much more who are worth 500 million worth of
billion dollars is that the high risk stuff everybody who's poor wants
to buy the lottery ticket but

15 00:14:00.000 --\> 00:15:00.000 everyone who's rich just wants to own
the lottery game and make 10 a year on it right and so he said that for
him he just wants to invest in things because he realized that he's like
no matter what he's like the tenants are paying for the mortgage for me
he said sure you know some of them we did better some of them we did
worse he's like but overall as long as i thought all the fundamentals
were sound um then i was going to just have a great store for my wealth
and he's like and sure we lucked out a few times uh but for me this is
him saying this he's like but for me that has been a really uh great
vehicle and i was like okay well jiminy rules of thumb you know just off
the top of mind of of uh of how you pick those spots and he says you
know in general i never i never passed a a cap rate of eight he said so
if it was below eight i wouldn't do it um and that's that's how he
picked his deals and i thought that was really interesting and so you
know layla and i have looked at that in terms of rules of thumb for the
purchases that we're looking at and whatnot he would rather have
slightly higher value buildings that he thought there was less risk in

16 00:15:00.000 --\> 00:16:00.000 that he felt more guaranteed that his
capital would come back to him than trying to you know maximize his
internal rate of return and i think to a certain degree that goes with
the leverage that he might employ like how much debt is he going to take
on to buy this facility because if you get more debt then you're going
to get better returns but you also increase your risk and so coming from
a man who obviously doesn't need anything else in life i thought that
was also valuable because i think as you as you grow as an entrepreneur
it becomes so much more about downside mitigation because you know
adding you know doubling your net worth doesn't really change anything
about your life but cutting your net worth in half does and so it's
really about like what are we what problem are we solving what are we
trying to accomplish here and making sure that the way that we make
decisions is aligned with that these were uh some of the notes that i
had let me make sure oh and i'll tell you the one last thing they told
me i said all right so we followed your advice of getting you know from
30 million to 100 million this is this is really good you're going to
want to listen to this one um i said okay well then how did you get from
100 million to a billion and this is stuff that you will never find
anywhere all right you will not find this anywhere written down because
there are so few billionaires

17 00:16:00.000 --\> 00:17:00.000 and there's so few people who are
doing a billion dollars here in revenue who can actually share this with
with truth and his answer will crack you up or at least it cracked me up
and so he said he said well i'll be honest with you man he said you know
when we were we did 100 million a year for for four or five years and he
said and honestly we got so burnt out because we kept wanting to go you
know wanting to grow we just couldn't grow it anymore so we couldn't get
past 100 million he said so we pretty much just gave up and we we took
the company we broke it into 100 little pieces and we gave um you know
profit sharing and small equity pieces phantom equity to our our best
superstars and our drivers and he said me and my partner pretty much
kind of checked out he said and here's what's crazy five years later we
were at 500 million and five years after that he said we were at a
billion and i was like wow and i was like so so i mean what would you
what would you say like so how do you how do you go to a billion and he
was like i think the way you get to a billion is not trying to get to a
billion and i was like man like that's like it was it was that i

18 00:17:00.000 --\> 00:18:00.000 felt that i was like really he said i
think it was luck it's like i think there was a lot of things that
happened and that that you know things were aligned a it showed the
humility that the man had but also that you know he's like there's a
couple key decisions that were super important uh for our development
within those companies um and he said and i oppose them but it was it
was decisions that were made by the leaders of the company and they did
it anyways he's like and they were right i was wrong and so i think it
just underlined a huge humility but the reality that for most of us
entrepreneurs like we don't have all the answers like we have a lot of
answers but we don't have them all and i think that seeing how he did
that going from 100 million to a billion dollars a year and that he was
like it's luck and it was basically incentivizing a lot of people and he
was growing the pie it was making other people wealthy and allowing you
to participate in their creation of their own wealth i think that makes
a lot of sense because the drive uh i will say personally as an
entrepreneur to make more money after a certain point at least for me in
my current chapter has has diminished significantly and my

19 00:18:00.000 --\> 00:19:00.000 desire has has shifted far more to
making things like this and helping other people out because i think i
think the world needs it so anywho i think that the reason that his
company was able to grow and this is just from my perspective is that
all these other people were getting their kind of first nut for lack of
better term and he was able to capitalize on them getting their you know
grow driving so hard uh because he was able to give them that incentive
uh to do so and so hearing him say that was really cool for me um and i
think that for me as an entrepreneur hearing that it was much more like
well the way to go forward is really finding the superstars putting them
in the right places giving them incentive not being greedy and being
humble enough to to accept that we don't have all the answers and so
anyways i hope this private conversation with a billion dollar year
revenue uh this was revenue right what cash collected per year uh
entrepreneur had to share about his investments about how he saw
business in general about how he thought profits were unnatural i hope
you found value in this

20 00:19:00.000 --\> 00:20:00.000 because i um i definitely did and i
hope you did the same so if you like this hit subscribe and i'll see you
next vid bye
