Scale, Mess And Debt

everyone Simmons here and in today's video I'm gonna talk to you about scale miss and debt and I'm gonna tell you why most people love scale and they want to scale and they try to scale and they they do scale but then why scale leads to a big mess that looks like that and then how really miss when it lifts unmonitored unchecked and lift in the state of a mess instead of being cleaned up turns into debt which is essentially having a better today at the cost of tomorrow and then with time we face tomorrow

and when we face tomorrow that's worse than today then we have to you know look the monster a nice deal with it pay it and deal with the consequences of our actions and so recently you'll probably notice that last week I didn't make a video there was just nothing and then the week before I made a short one because I was real busy at work and so the reason for that and the reason why sometimes I don't make videos as consistently as I'd like to it's because I got a company to run and I'm trying

to scale it and we do scale it and it always leads to a big mess there to always have to clean up and I also have to pay back debt and I don't mean the debt like financial debt sometimes it could be financial debt but there's many different forms of debt and I'm going to explain all of these different forms of debt to you explain how all of this happens how this is actually the the reason why most companies cease to exist because once you're missed and your debt takes up a hundred percent of your

time and energy then you cannot innovate you can't make new products you can't improve your products you can't do new things and you can't seek and push new frontiers because a hundred percent of your time is taken by upkeep or admin or operations or just trying to tame this damn mess all right so I've got eight things that I want to share with you eight points let's get right to it and I'm going to throw in a couple of stories to explain this how this is being present in my life as well so let's get

started now the first one is the first point that I have is that these things run in cycles it goes scale Mis dit cycle so it pretty much looks like this you've got scale happening that leads to a mess and that leads to debt right and when it you it's natural for this to occur by the way so if you want an example of this in like some other area of life right a prime example would be like body building we are when they're trying to scale which is basically like bulk up and get bigger

they are trying it to eat as much as possible they call it like bulking right and when they're doing that they're not really too concerned about putting on additional fat right so they eat a lot of food and they do get fatter their body fat percentage goes up and they're not too concerned about that because they're mostly trying to get bigger they're trying to scale right but then what they do is when they get bigger then they go into a intercutting phase which is when they focus on eating like less carbs and less things that

make you better and focusing more lot on different types of exercises to really bring down the body fat right and when you operate in this cycle of like walking cutting it sometimes is more efficient than trying to bulk and cut at the same time right because if you're trying to cut in like not edom at not eat as much food and trying to bolt it the there opposite ends of the spectrum really right now this is a real simple way to put it but this happens in business too like when you're trying to scale you

have to move quick you have to make fast decisions and you have to be sometimes kind of scrappy and you have to cut corners here and there right that's all part of scaling if we were trying to scale perfectly without accumulating any kind of mess or or cut any type of corner then we wouldn't scale we would just maintain so that's the nature of scaling and then the correct thing to do after like a period of scale is to deal with that mess you've got to come in there and clean it all up sort it

all out and often put in a new infrastructure or new systems or whatever to handle that new level of scale that you've experienced and then you come back to scaling again but what I see time and time again is a lot of people just scale up the mess builds then the mess Fester's they don't deal with it and then it comes around by some in the ass and it takes down the whole machine it takes down the whole business just both gone right I see it all the time and what you've got to do is

you've got to pay back the stuff you've got to clean up the mess and so that's the cycle just like a body builder has to cut after bulking like in business you've got to you've got to scale and then clean it up right and it goes in a cycle right pretty simple now let's talk the second point about different types of debt types of debt so is financial which is just think of debt which is basically having a better today at the cost of tomorrow that is dead right not just financial debt we you Oh

lots of money to your credit card or whatever it's having better today acosta tomorrow every time you do that you're accumulating debt so for example sleep dead let's say tonight I don't go to sleep I might get more work done today but that thing's gonna bite me tomorrow and on the aggregate I'll probably do less right so if I was to think long term probably best not to do that right you get the point then there's financial debt I might buy like a big-screen TV today with money I don't have on some credit card and

pay off a lot of interest and then I'm having a better today at the cost of tomorrow right there is also product did this is a big one so really people forget in business that people buy like a products or services and generally because of the quality of the products or the services and how much value it adds to them in their life and quite often in the beginning companies a product focus like their try to truly make a great product and then comes the scale and the complexities and in before long with all of

the management of the financials the management of the team the systems the communication the operations the admin the customer support and all of this crap that's going on right and trying to grow it and focusing on all this marketing and all these things the attention tends to go away from the product and on to just operations and when that happens you can't make the product better and then competitors around you are making their product better or people might be inspired to actually create a product out of frustration because your product sucks right quite often the

new generation of products comes from users of products who were once satisfied that no longer are because their company stopped focusing on their product right so most companies breed their own competition in their own demise by forgetting about their product to the point that the users that were happy to pay the money now just have to they left with no choice but to build their own and overtake you right so I see this one happen all the time and you know what even inspired Google was Yahoo they just thought that it was ridiculous that when

you typed in the name of like a president on YouTube on it sorry on Yahoo that it like didn't even work and they thought it was just ridiculous that a search engine didn't work so they just out of frustration they were just forced to build Google right so this happens product did is big and it's real and processed it right so in the beginning when you start a company you might just get customer support through to your personal email no problem at a hundred a thousand customers massive problem now you can't even go near your

gmail account without getting like heart palpitations right so it might be it might work at a small scale but later on it doesn't function that way anymore and you need a bit of process or a bit of system you might need to put in a customer support system there's also talent did right so you might have talent at the thing that you're good at but then you might focus on running your business and looking after operations and then with time your talent tapers off and other people's talent ramps up and you're stuck in a situation

there is also team debt right when you start out it's just you you add a bunch of customers to the picture and a bunch of time you get a Miss and now all you can do is just focus on the admin and you can't do the things you need to do anymore right and so there's also perception did so if you don't like focus on making sure that your marketing message is consistent and like driving the core values of what you really care about with your brand or if you don't if you if your customer

support isn't right or the people that are interfacing with your customers in your market aren't doing the right job then you're building up perception did where the perception of the aggregate market your niche does not match the reality due to like communication problems on the front lines of your business right so all sorts of debt and you've got to monitor all of these things it's okay to build up a small amount of debt that's normal but you've got to pay it back before it gets gnarly takes you down right so the biggest one I probably

see here the biggest one you guys probably used to and know a lot of is time debt and financial debt right like if you keep saying I'll do later do it later do it later do it later to all all of the things then later is going to come and then you're going to be right and that's what a lot of people do with credit cards and things like that to product debt is the biggest one I see in business right now third one is basically just a simple rule that did occurs when you have

better today at cost tomorrow so whenever you're making a decision you want to think all right what are the pros and cons of this decision like what are my options here and then what are the pros and cons for each option and you want to run to time frame scenarios you want to run a long term and a short term right because some decisions like I'm no eating a salad or going to be it early wait they don't seem that great right now but longer term they're great and then you know eating a burger and

having 10 beers and staying up till 5 a.m. might seem quite great right now but doesn't seem that great later on right you want to you want to weigh these different options you want to look at pro and con short term long term for all options and then look at the goal you're trying to achieve short term long term and then you want to like shuffle between these different options here until you find the one that is most optimal for what you want to achieve right and you always want to consider this this basically is

what makes people successful right is they're just very good at thinking about the long term in debt and there's actually a study called the marshmallow experiment and you can google it and what they basically did is they got bunch of children in and they presented them with two options one was have one marshmallow right now you get it now you can eat it or the second option was have no marshmallow now but wait a period of time which wasn't defined an unknowing period of time and get two marshmallows right now most children chose option one

they had the one marshmallow now instant gratification right of course this is why people use social media so they most children to debt very few children chose to wait the period of time watch the other children eat the marshmallows just sit there and then later have their two right now they tracked those children after that experiment for the duration of their life and they tracked them on a basket of different metrics to see how successful they were from relationships family health and social life and also like financial success and happiness right they looked at all

of these different things and by and large the children that delayed gratification and chose to wait the period of time and have a better tomorrow at the cost of today aunt I did those children were the most successful and really this is all the successful person is at its core is somebody who can delay gratification think long term and keep a clear head and not build up debt right so for debt kills businesses and the reason why it does this is because you can't innovate so all the business needs to do really is stay at

the forefront at the absolute frontier of whatever it is that they do right now really for a business to do good it has to really be the best in the world at something right so you really want to think what is something that I'm really passionate about what is something that week be the best in the world ad and then you really want to get there and you want to do that's your main priority until you get there until people are like what's the best option for X X being problem then you would hope that

your market would respond with this person's product right that's really all you need to do in business to do really well that's a lot harder to it's easier said than done so it takes all that if it probably take you years but I mean that's the best way to grow a business and that's been like my main focus with my company is just to have the best products for these different problems right and I know that we're there when people say this is the best product I've ever purchased for this or when people in different

communities saying what's the best product for this and people say this right now it takes all of work to get there and you can't get there overnight and you can certainly make money in all of those things along that way along that path it's not like you don't get any reward until you get there but the reward is immense there and that's really what you should be focusing on right now how you get there is by having the best product the best service providing the most value now the way you do that is through innovation

which is rethinking these things you don't accept like the status quo you don't just build a knockoff of somebody else's thing because if you try to copy this person at their thing then they're going to be better editor than you because they literally invented it right now the only way you can beat their person at their thing is if they start screwing it up which is very common right so you can do that but the the other way is to like innovate right and that's the main way and that is to rethink all of the

assumptions that this person who is currently leading has made right you want to rethink that and then quite often there's a new paradigm or a new philosophy or something that comes in which enables you to make a product that's superior now to innovate it takes an extreme amount of attention energy time focus right it's a resource vacuum it it really just sucks it right up and that's how you achieve it so the only way that you can really stop innovating is when you're doing something else or you're just plain stupid right and you just you

you have the option to innovate but you don't well that's just plain stupid but if the moment the main reason that I see people stop innovating is because the the admin and the operation starts taking up their time and they can't innovate it's not like they even have the option they want to but they can't right and so that's what did does over time I noticed this with my own company so I went from about two million dollars a year to like eighteen million dollars a year back in 2000 and I think it was 2016

2017 during those two years right I almost died there was so much scale all all of a sudden like and when there happened I was still one person my company was just me I worked from home and I did all my customer support I did my admin my bookkeeping my accounting like financials I just did everything made the products that the marketing made the ads made just everything did it all and it was fine it like 2 million year but then all of a sudden that we boom right up and it was it was that

there was a big mess right and honestly thinking probably almost died at one point because I was working like sometimes just two days straight and then I'd crash and go to sleep and I was just trying to catch up on this thing and trying to like trying to win but no matter how hard I tried to work the mess was getting bigger and I was at the end of my biological limits but that that happens to people and when that happens my main concern wasn't really like about me not being able to do the work

and get it done my main concern was the fact that I was spending all of my time and energy and focus doing admin just trying to handle poor tickets fix broken systems or just keep the machine running right and I knew that it was only a matter of time before somebody else and have out innovated me took me out that was my main concern and so the primary motivation for me to fix that situation and get end like calm that chaos right down was so that I could get back to innovating right and as a

CEO or an entrepreneur you want to constantly be trying to push back on the operational complexity of your business and push it back and keep it restricted and constrained to a small thing because as it gets bigger the thing that it's eating over here is innovation and once it takes a big enough chunk out of innovation it's only a matter of time before somebody gets you right and by gets you I mean makes a bit of product or a service so that is why it kills businesses and so when I went from that to millions

like 18 million a year it honestly took me about two years to fix all of that damage like I had every system I had was broken I was getting like 500 support tickets a day and it was just me and so I had to just block out all the noise and just work like I've never worked before I remember sometimes I was doing like 120 hours a week of work you should I do not recommend there it almost went insane at multiple points and I think I'd probably almost died and so in hindsight it was

actually really stupid I should have just hired some people to help me a lot earlier but when you like I've said in previous videos when you get sleep-deprived you get delusional so I didn't even think that me trying to do all of that work myself was dumb because it was impossible like I wasn't in a rational state of mind to even be able to see that right and the reason I wasn't in that rational state of mind was because I was sleep-deprived in highly stressed and in an emergency situation right and so I learned from

that experience don't get put in that position because you might think you're rational and smart now but put you when you get put into a situation like that it's hard to see clearly and so I spend a lot of my time thinking about how can I make sure that never happens again and I keep this thing this operational complexity to a minimum and keep the majority of my time 80% 90% free for innovation right that is the main thing I think about how can I run my business so that it keeps growing it has positive

cash flow its profitable and it has great products but it's operational complexity and it's time demands from me personally are very small so that 80% of my time can be spent thinking about tomorrow not dealing with today right so most of my time most of what I do would be put into two buckets really one would be and this probably is 20% of my time would be like cleaning up messes paying back all sorts of debt I do a lot of that 20% the other 80% is thinking about tomorrow thinking about the future and building

things that we're going to be using in the future so like planting seeds for future harvest right because the money that I'm making today is really the byproduct of work done two or three years ago right and you want to think like that too so I don't want to make a mistake of just trying to like just trying to skate on the work I've done three years ago without you know building for the future because that will come to an end right and the main reason that it will come to an end is because if

this complexity comes and eats my time away I can't plant seeds for tomorrow harvest disappears so what do you do number five solution and I've kind of already seed this throughout this but you must be conscious of all of this and you must pay it back routinely so the first thing is just some kind of awareness right because you've got to be aware of debt better today cost of tomorrow just run that simple analysis on any scenario whenever you're in it what does my is my today better what is my tomorrow like and if today

if today's asymmetric - tomorrow tomorrow's bad today's good that is dead do enough of that get yourself into trouble but when there's sacrifice today gain an advantage tomorrow which is basically the inverse of did that one is good right so that's a simple way to think about it so you need awareness of this thing and you also need to pay back routinely so by pay back routinely I mean you've got to go in some kind of cycle right now my business does a lot of this and it typically looks like this so in 2000 and

I typically have like a year of boom and then let me think of 17 was yeah so 16 was boom right 2016 for me was like 2 million - like 18 million a year like that boom but then in 17 I was basically dealing with the shitstorm that I created in 16 and so I'm pretty sure we did not we actually went back a little bit to about like 14 or 13 million in 17 not because we couldn't grow I knew how to grow I knew how to do that trick right just to spend more

money on ads just keep pushing your foot on the gas but I knew that if I it keeps doing that it would would be an explosion and it probably wouldn't be very good for anybody so I just had to bite the bullet and deal with the the mess I made and all of seventeen I spent my whole 2017 just cleaning up the mess and what we did is you know I hired a lot of people and we put systems in place we built our own billet billing system we built our own elearning system because we

had broken these other products we had to get customer support people trained them put customer support systems in place we also had to get an office and a general manager and create different like communication channels through slack and through like meetings and whatnot we IED to do all of this stuff to basically clean up the mess I'd made and then that was sixteen seventeen was like down a bit but then in 18 hours really excited because by the end of 17 I had built a serious infrastructure like in 16 I was doing 18 million a

one-person like million dollar a year infrastructure right just imagine my putting a Lamborghini engine in a Toyota Corolla right that's basically what I had done here and their thing was just it was not it was about to explode all right so then in 17 I made sure that we got like a lamborghini chassis to match the Lamborghini motor and that required me to go back a bit paying back the debt sorting it out but then in 18 and abled me to go up like this again and so just put in here if we were like

2 million [Music] then here was 18 million and then at the end of 17 were like like maybe like 13 million or something which is back then here we got to like 34 million or something and this was in 18 right and then I remember and this is the hard thing to deal with when you're doing when you do this like sometimes you've got to make you've got to take a step backwards to make two steps forward but when you take a step backwards it doesn't feel very good because like you're used to winning and

making bitter bitter bitter like all the time and everyone around you is used to seeing you like grow but then when you've got to like go back a bit to clean up the mess it's not as exciting and no one really is like all that it's just not a very exciting story it's not a growth story it's a person cleaning up a mere story which is not really you never hear about those stories right so it it's hard to do that like emotionally and for your ego too but the then you get to do something

awesome when you've done it and I remember in 18 when we exploded to this level I remember a lot of people like whoa where the hell did this guy come from what did he do what is his magic trick and I was like man those same people just didn't they didn't really care or listen when I was cleaning up a bunch of for a whole year straight and so now they're trying to look at what I did in eighteen to figure out how I did that I was like it's what I did in seventeen that

sucked that's how I got there but now we're in 19 and I have another one of these messes to clean up it's not as bad it's a different means so this means here was like systems mess the systems that I had in the business like billing system support system just just all the systems were like broken and we had to build our own ones right that was what got us through here and we had to hire humans all right had to hire a team to like manage the systems but then in 18 we got to

like fully exploit those systems but then at the end like in 19 must of the problems that came up were human problems not system problems and I had to learn how to better run a team how to like hire better talent and really how to deal with the human side of business more than the system side right and so all like towards the end of 18 and all through 19 I've spent most of my time trying to hire really telling to people trying to improve our team reduce it in size like to some core players

and that's where most of my focus has been and so what I'm doing now in nineteen it's not the most exciting of work and we will go back a bit here on on revenue not that much but what we are able to do is actually improve profitability even though we're going back a bit on revenue we're able to improve profit because there's less waste because we're cutting a lot of costs instead of adding a lot of costs right and I'm also trying to reduce the demands that the operational side of my business places on me

personally because at the end of 18 I had no time left at all why I had to do so many things that I had no time to create anything new and that really annoyed me because I knew that it would be screwed in a give it a year or two three max gone right so when to do something about it and so really a lot of my time this year has been pushing back on that I used to have zero hours a week to spend on innovation and planting seeds for the future now I have

80% of my time to do that so reduced back that and yep that sort of been doing so then will be able to take full advantage in 20 of this new infrastructure right so there's an example of how to actually solve this thing and I know a lot of entrepreneurs are like worried about doing this like one step back to take to step forward thing honestly all the biggest jumps I've ever made like the big two to 18 yep that was a year of work like building infrastructure from 18 to like 34 one year of

lame stuff but the lame stuff gets you the infrastructure and the Foundation's you need to erect that sort of like scaffolding to really handle that much scale right now what else have we got here be ok with one step backward two steps forward this is a big one I meet so many people who just cannot they cannot even consider doing that right and that's the reason why a lot of people don't get good at things or don't try or don't start a business or whatever because let's say they call it like the golden handcuffs right

let's say you're a respected individual with a respected job earning a like a really above average salary right well you're quite happy in that position it's quite nice you can have a good lifestyle all of that stuff but if you were to go and start your own thing you're not going to be very good at it you're going to be everyone's going to question you like dude do you know what you're doing maybe you should get a job again and you're going to kind of suck because you're brand new with it no one's great at

something like right off the bat and you're not going to make as much money initially so there's that and so you have to take a step backwards and most people can't do that but they always want the two steps forward but sometimes these things the step back comes before the two steps forward and then number seven was going to be stories of times I've taken time and to rebuild it and how it paid back immensely already told you those so stories so there was like the key ones was 16 was scale 17 was debt paying

back a teen was scale 19 was like some debt paying back this debt was systems the stick was humans team infrastructure all right now if you look at this pattern here boom boom you kind of see what's going on right so you want to think about this awareness and pay back routinely kind of cycle and you want to think about this in your business right you want to keep tally like I always keep a long list of all of these these debts I've even got one with our product that I call detail did right which

is all of these tiny little details lightly say you click on something and it just loads funny right I think that pisses me off I can't handle it so I have to write it down in the detail debt list but I don't want to distract our whole team to fix this little detail right now because we're trying to push a big initiative which is more important but I know that if enough of those small little details build up the product will suck because when it comes to products that's all about the details and you've got

to keep track of these things you don't need to solve them all now but you need to keep record of them and then you need to have these payback cycles we we flush it out and this happens with building software too in technology this Tec did right the main the main thing that takes down like software companies is tic right there adding feature adding feature adding feature adding feature adding feature and they're going really well but then they're not updating the core or the infrastructure at the base of all of this right and generally there's

some smart engineers if they're in here at all they probably left after some time because they keep screaming at the top of their lungs like we need to fix the core but no one wants to listen typically marketing does they want to keep adding features right because features are sexy and they make people go like oh so typically these engineers just do the that these people screaming at them and tell them to do they keep adding the features and with every new feature comes exponentially more complexity because of the complex interactions between all of these

things right so then there is like a Black Swan event which is typically a complete meltdown or explosion and then out of there that dust emerges like a competitor that's better because they've been basically in the darkness building something better right so that is what happens when you don't pay back the debt so you got to think about it now eight is can I fit there my advice to you think long-term minimize upkeep now I call upkeep basically work that is required for a thing to maintain right so if your whole life and your whole

day is spent up keeping then it's only a matter of time before someone gets you you not only need to keep the thing up and maintained but you need to make it not require so much of your time to stay up kept that you also have time to improve it right it's not enough to maintain we must improve to which some people can't even maintain and the reason why they can't even maintain is because the thing is in disrepair because they've accumulated too much debt there is if you accumulate too much of it it is

impossible to pay it back right so you you're just screwed and in that case you've got to start fresh right so that's my advice think long term minimize upkeep and keep the thing up and a good way to really minimize this is this little acronym thing that goes like this can you see them yeah I could need so yagnik what does this mean I always think about this you ain't gonna need it the solution to a lot of this is yoga knee and you ain't gonna need it like you think about this fancy chatbot thing

that's fancy everything there's so many fancy things out there and if you add too many of these things and then your whole life will become upkeep and when your whole life becomes upkeep you can't innovate and when you can't innovate you'll be gone with a bit of time so root-cause yogini you ain't gonna need it so that's basically it for today's video on scale mists and debt and how to deal with it and how to not be an idiot so if you liked it click the like button and if you really liked it click the

subscribe button and I release the video like this once every week most of the time on a Tuesday and if you like this one you probably like the other ones also let me know what you think in the comment section below let me know which one of these appeal to the most or which one of these really is going to help you the most when it comes to your business in your personal growth and if you've got suggestions for future videos let me know in the comment section I'm going to be reading them all myself

personally because I like to see the feedback and a lot of people's ideas and problems that they tell me about in the comments become future videos so you guys and girls shape the future content of this channel so thanks for watching I will see you in the next one soon