How To Start A Business That You Know Will Work

How To Start A Business That You Know Will Work


– If you wanna start a business, I would like to make a video for you. Let’s talk about how to start a business, and lets go through some examples
of some that have worked, and some that haven’t worked as well so that you can learn from both. Come on in, grab a seat,
lets have some fun. (whooshing) (upbeat techno music) (whooshing) Now let me tell you a quick story. I bought a business a few years ago, I bought this business
because I liked the numbers and I thought I could get
it to make more money. I bought the business
for 2.3 million dollars, and two years into owning the business, the business revenues
had fallen more than 50%. That’s not good. So, I was not doing a good
job of operating the business, and here’s why. Cause I bought it for the money, and you know what we kept doing? We would see the numbers
fall and then we’d say, “Where’s the next opportunity?” And then we’d pursue that
opportunity for the money again and money kept getting
harder and harder and harder in this business, now at the same time, I’ve had other businesses that I started that didn’t look like they were
the best business on paper. I didn’t have any stats or data to suggest that this was a good idea, in fact, my most successful business,
I have one business that I started with 600
dollars, I then sold it later at a 16 million dollar
evaluation four years later. That business had no data,
had no stats to suggest that it was a good idea, in
fact, my peers looked at it and they like looked at the
market size, and they were like, “Ah this isn’t like, don’t
go, this isn’t a good product to sell, this isn’t a
good business to go into.” and I did it anyways
because I wanted to do it, because I wanted the product,
because I was the customer. Now, how come the business
that made no sense on paper versus the business that made
all kinds of sense on paper, have opposite results? Business is about creating a new value. Business is about creating
new things in the world, and new things are unique to individuals. If you wanna start a
business, you know where the best place to start is? Looking at your life, your
interests, and your problems. That is your best opportunity. You can buy lots of
courses on the internet that will tell you about
the strategies to starting or growing a business,
and those are all great, but they’re only really
beneficial if they’re plugged into something that is unique,
something that’s new, something that is exciting to you. You know, I was speaking
with someone this morning, we were talking about Robert Kiyosaki, the author of “Rich Dad Poor
Dad”, and I didn’t know this, but this person knew Robert
personally, and he said, “Did you know that the
book ‘Rich Dad Poor Dad’ was written to sell games?” Robert Kiyosaki had created a
board game called, “Cashflow”. It’s still around, you can still buy it, and he wrote the book “Rich Dad Poor Dad” as a marketing ploy, a marketing
play to sell more games. There’s no money in making board games, but in Robert’s case,
this educator who just had something that he wanted
to share with the world, created this board game,
wrote a book to promote it, it was the book that took off, but all of that was unique to him. You know, our greatest power doesn’t come from reverse engineering what
worked for somebody else, it comes from being really really dialed in to what excites us. This is supposed to be fun, it’s not supposed to be a grind. Now, it can have grind moments,
like times where you work 18 hours in a sprint, because
you’re enjoying it so much. Times that you give up other opportunities because you want to do this instead, but the constant grinding
yourself into the ground, every time I’ve done
that, I’ve lost money. So in a nutshell, that’s
how you start a business, you start a business by
amplifying what’s fun. Let me give you another example of this, an acquaintance of mine,
his name is Moiz Ali, he started a deodorant company, now deodorant companies are hard, there’s not a whole lot
of people who tell you, “Know what’s a good idea,
start a deodorant company.” There are some big companies
that tend to have a foothold in that marketplace, but Moiz
was unhappy with the solutions that were available to him,
he wanted a natural deodorant that worked and he couldn’t find one. He was using Tom’s, and he’s
like, “This stuff sucks!” like, I stank, and so does this deodorant. (wheezes) that’s what we
call a dad joke, anyway Moiz is like, “I think
I can do this better.” so on his own, he like, starts researching what ingredients would make
for a good natural deodorant, and he tells the story
about how he just posted on a forum to see what other
people thought of the idea, and it ended up getting
voted up to the top, and then when people
started buying the product, then he started making it. Here’s a clip of him telling that story. (whooshing) – Another thing that we test a lot, and this is a little unusual, is product. We’re based in San Francisco,
and so we’re iterating on our product like software
companies iterate on software. You won’t see, like you know,
one of those Itunes popups where you have to accept
it, you’ll just get it. So early on when we launched
the business in 2015, we realized that we had a pretty mediocre repeat purchase rate, it
was somewhere around 20%. Our reviews were coming in
and they were about an average of four stars, it was
pretty clear that we weren’t gonna be able to build
a sustainable business on four star deodorant at
a 20% repeat purchase rate, so what we did is we started
asking customers for feedback, we’re like, “Why aren’t
you buying this again, “this is a deodorant,
you’re going to spend “12 dollars on it once,
what’s preventing you “from buying it again?” The answer was a resounding
application back then, people didn’t like the deodorant
applied under your arms, it was really flakey, and
so we spent the first year of the business trying
to solve that issue. We’re like, “How do we
make this thing apply to your arm easier?” and at the same time one
of the things that we were focused on was like staining, nobody wants a deodorant that stains, so, you know, I literally
would AB test products to see if it they’d stain, I’d rub them all over my t-shirts, throw them in the wash
and see what would happen, and, so we iterate on
our product all the time. In May 2016, we launched
a new formula of Native that was just infinitely
superior to our old one. We saw reviews go from four
stars to about 4.7 stars, we saw repeat purchase
rates more than double, and we knew we had a winner on our hands, and that’s when we really
started scaling the company. We still do that product testing today, so today what we’ll do
is we’ll send the Ryan’s of the world one formula, and the Moiz’s of the world another formula, and we’ll send 5000 or 10000 bars to each, and we’ll look at the reviews six weeks after they make the purchase. We’ll look at their repeat
purchase rate 12 weeks after they make the
purchase, and we’ll say, “Okay, is Ryan’s formula
better than Moiz’s formula?” We actually had a number
that could tell us. We can look at repeat purchase rate, and we’re operating at
a scale where we know whether one formula is
superior to another. (whooshing) – Now what happened on the
other side of this story is that he built a business for two years, and everybody else was telling him that he should do it differently,
they were telling him that he should launch new products, and he should do this
and he should do that. He’s like, “No, I wanna do this my way, I know what we’re good at,
we’re gonna stay in this lane.” and that business sold two years later for 100000000 dollars. There was no data or stats telling him that it was a good move, there
was nothing at the beginning that said, “You know,
if you do it this way, you’ll make 100000000 dollars.” No, Moiz just did what he wanted to do, he did what he thought
would be valuable to him, and to the people that he was around, and he got deliriously rich as a result. You know how Will Ferrell got rich? It’s a great story, when
Will Ferrell was young, Will Ferrell kept getting
fired from different jobs, and he was in his early
20’s, when his mom said, “You know, Willie, why don’t you just do something that you enjoy?” He was failing at everything else anyway, so why don’t you just fail
at something you enjoy, and so he stopped pursuing
jobs, and he went and joined an improv school. It was there that he had a great time, and he got discovered, and he got on SNL, and he started doing movies. (whooshing) – Growing up in Orange County, every kind of local
restaurant was starting to have a comedy night, and so,
I was going up at you know, the Canary in Newport Beach,
and all these local places and getting up there, and
I would come back home, and my mom would be like, “How did it go?” and I was like, “Thank God
I have a college degree.” – Really? – Yeah, so I had this thing
in the back of my mind like, okay, just give it a shot,
and I actually sat down, and had lunch with my father, I said, “So Dad, I think I’m
gonna give this a shot, “I don’t know what that
means exactly, but I’m gonna, “I’m gonna try and get into
comedy, any words of advice?” and he said, you know, “If
it was only about talent, “I wouldn’t worry about
you, cause you really “have some talent, but just know there’s “so much luck involved, and
that if you go down this road, “and it’s starting to feel,
you know, like you’re not “getting anywhere, it’s okay to quit “and just do something else.” and for some reason it’s like
the anti pep talk pep talk. – Yeah – For some reason that
took the pressure off of — – Cause you say it was out
of your hands, it’s like, one in a million if you make it. – Exactly, so I just
approached it with like, this is probably not gonna happen, so might as well just have a blast, and because I gave myself
that break internally, I think it, unbeknownst to
me, opened all these doors, because people could
read that I was so free with what I was doing. (whooshing) – I think Will Ferrell is one
of the pinnacles of success, because you know he’s having
a good time all the time. – Tom Cruise use your witchcraft
to get the fire off me! – I was having a discussion
with Russell Brunson once, Russell Brunson is the
founder of ClickFunnels, he’s been on the Capitalism.com stage, he’s been here on the
Capitalism.com podcast, and Russell Brunson said
something really interesting, he said, “I’ve noticed
a difference between “people who succeed and those who fail, “and it’s a very very clear line. “The people who fail are
the ones who are doing it “for the money, the ones
who succeed are the ones “who are doing it because
they have something “that they wanna bring forth.” (whooshing) – I have some people who are like, “Russell you don’t ever like, you don’t play nice in your business” Okay, and in fact there’s
a quote on this video the other day that one of my guys sent me where basically somebody
told me that they didn’t like the way I was doing things,
I was being too aggressive in my marketing and my
business, and you know, my dad taught me to play fair. My dad taught me to play fair and I said, “My dad taught me to
win, I’m in this business because I wanna win, okay?” I honestly feel, if anyone’s
been around me at all, I honestly feel that my competitors are screwing my customers out
of the happiness and success they could be having,
like that’s how deeply I believe it. That’s why I market so
aggressively, consistently, on and on and on, because I
believe that so much in my soul, that I need to save my customers
from my competitors, okay, and you guys need to have
that kind of attitude if you’re gonna have the chops
you need to really market, and get your message and
your business out there. (whooshing) – The truth is, the way that you get rich, the way that you start a business is by amplifying what’s unique to you. We’re not trained to
cultivate our uniqueness, we’re trained to look at the media, to model everybody else. We see what other people
are paying attention to, well you know what people
are paying attention to? They’re paying attention to
the uniqueness of other people. Athletes get paid a lot of
money cause they’re uniquely good at throwing a ball. Singers get fabulously rich because they’re producing music in a new way. We pay attention to what’s
new, we pay for what’s new, we pay for what is unique, and you know what else happens
when you start a business? You start with one, one
customer, one follower, one investor, one thing,
and then it becomes two, and 10 and 50 and 100, many many entrepreneurs and
capitalists want to say, “How do I start a business
that scales right away and has 1000 customers like this?” Well you don’t. It always starts with one. You’re the first one. Don’t know what product to sell when you’re starting a business? What’s the one thing that you want? What’s the one thing that you
wish you had in the world? What’s the one product that
you’d love to pay money for? What’s the one perspective
that no one else has seen? What’s the one service that you wish somebody would do for you? That’s your sign, that’s
where your ideas live, that’s where the best ideas start. So if you wanna change the world, if you wanna create change, it starts with you. I’m Ryan Daniel Moran,
this is Capitalism.com, thanks for watching,
see you on the next one. (calm music)

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About the Author: Oren Garnes

26 Comments

  1. It's funny you mention when people say a market is too saturated. It doesn't matter as long as you can differentiate and make it better at a unique selling point. It's all in the mind. Good video Ryan

  2. Hey Ryan, I've been following you for years and I'm a massive entrepreneurial failure. I started my first business and made several hundred thousand dollars and then lost my head and thought I was on top of the world. This led me to try and sell a variety of products I knew nothing about. I lost everything. Really thought about blowing my brains out. Felt like I lost my identity. Looking back I know it is just God's path for me. I'm sure some roll their eyes at a statement like that but it is so clear to me that all of that was a stepping stone for me. This video brought it back for me..that first business was in the fitness space and I loved it because it was relevant to my life and a big passion for me. I'm on my lunch break (regular 9-5 at this stage in my life) and I'm working on my current business and I'm realizing, "man I love this current venture." I am the target market. I have the problem and I'm solving it for myself. I know this is right. Hell, even if it isn't I'm just a kid in the grand scheme of things, I'm alive, and I'll never stop trying.

    What a ramble. Didn't mean for that but I guess I'm leaving this comment because I've always been tuned into your content and felt like a fraud because I failed big and now I'm just a regular joe working a regular job listening to you talk about $16m acquisitions. But I know I'll be there in time. I know this content and all of this will work to my benefit in time. And Ryan, thanks again for keeping it real in this internet world of bullshit.

  3. Fantastic video quality. "It all starts with one" that also goes well with "it took me 10 years to become an overnight success" gotta start somewhere.

  4. Preach, Ryan! I love this. So much about entrepreneurship is following your heart, with a brain (as opposed to all brain, or all heart).

  5. Thank you soo much for the great advice Ryan! I love you man and I'm coming for you! I imagine myself doing business with you and have a massive impact on the world! I am currently evolving into the ''Million Dollar Brands'' and I love learning from you!

  6. Love all your videos and podcasts. Including the ones where you talk about religion and mindset. Look forward to meeting you one day at your lake house!

  7. Thanks so much Ryan, this video is right on point for me, perfect timing! Moiz really inspired me. I am about to re-read 'The ONE Thing' too!

  8. Can you give specific examples? Running business is complicated and nuanced and the specifics matter. Selling a business for 16M sounds cool and saying “you wanted to do it make all the difference” sounds nice but I really don’t see the value. Follow your passion blah blah

  9. Thanks a lot, Ryan. Really uplifting episode. Helps to clear many worries of mine as a newbie, and concentrate on important things. Would you be so kind to share where I can find the entire talk by Moiz Ali ? Thanks again.

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