Momentum Podcast: 192
Hack The Code
by Alex Charfen
Yesterday I shared operator on the billionaire code. The level where you're finally at seven figures. One to three million. It's a destination for so much of the entrepreneurial world. For so many it's seen as a finish line, “Oh, if I could only get to seven figures.”
But like I shared yesterday, when you get to seven figures, for most businesses, that is when everything starts feeling broken, and an entrepreneur wants to run back to doing it all themselves. And for people like us we know that quitting is just a fantasy, so you have to go through this. And I want to help you climb the code and get through it. And go reach your fullest potential. Make that dent in the universe. Create the outcomes you always have known you should. And leave your mark. And the most effective hack that I know for climbing the code is to pull your targets closer and start setting realistic outcomes.
Full Audio Transcript
I'm Alex Charfen, and this is the Momentum podcast, made for empire builders, game changers, trail blazers, shark takers, record breakers, world makers and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters. Clearly the most important people in the world. Because entrepreneurs are the only source of consistent positive human evolution, and we always will be.
Hack the code.
Yesterday I shared operator on the billionaire code. The level where you're finally at seven figures. One to three million. It's a destination for so much of the entrepreneurial world. For so many it's seen as a finish line, "Oh, if I could only get to seven figures." But like I shared yesterday, when you get to seven figures, for most businesses, that is when everything starts feeling broken, and an entrepreneur wants to run back to doing it all themselves. And for people like us we know that quitting is just a fantasy, so you have to go through this. And I want to help you climb the code and get through it. And go reach your fullest potential. Make that dent in the universe. Create the outcomes you always have known you should. And leave your mark. And the most effective hack that I know for climbing the code is to pull your targets closer and start setting realistic outcomes.
You know, I was just like a lot of motivational speakers out there a long time ago. I used to think that entrepreneurs should set massive goals and massive outcomes and we should have big hairy audacious goals, and I used to do that myself, and I thought that's how we created success. But I've had a really unique career where I've been allowed to work with the Fortune 500 at the very highest level in the executive suite. I've worked with directly up-close and personal billionaires in a lot of different situations. I've been a consultant to the government, I've worked with major lenders, I've had that experience. But I've also worked with tons of startup companies. As I was a consultant, I was also bringing new products into the consumer electronics market.
When Cadey and I first got together, we started real estate organizations, and I worked in those. I've coached tons of different real estate organizations when we built the CDPE. I've run five companies, I've gotten to over $10 million. And so I also have this experience in startup, and here's what I can tell you. When I look at all of that landscape. The companies who are most successful are the ones who can predict their success, who can predict their results. As you climb the code, your ability to predict your success will become increasingly important and increasingly necessary.
But here's the challenge for so many entrepreneurs is when an entrepreneur hits six figures, you know what their immediate goal is for that year? Seven figures. And in some businesses that might be viable. In fact I've coached some where that happened. But in most cases, unless you have a clear path to get to a million dollars, you're trying to skip a level of the billionaire code.
Set the goal that you know you can hit. Set a target that you're going to crush so that you start learning how to win. Now it might not be as important when you're at the lower numbers, but it gets increasingly important as you get through each level of the billionaire code. And when you're an operator, the place where we have to bring in a team, the place where we have to start getting leverage with people around us, your ability to create predictable success will be the equivalent of how much success you have. Because as you build a team, the accuracy of your predictions will become increasingly important.
Here's why. When you're growing a team, predictable success is crucial. Let's just say you are the entrepreneur that hits seven figures, and you start building a team, and you have a small team around you. And then you tell everyone, "Hey guys, we're going to hit $10 million this year." And if you don't think it happens, I coach million dollar plus entrepreneurs, and this is one of the most common conversations we have on our strategic direction calls.
People pay me five thousand dollars for one hour of my time. And these days we don't even sell it anymore. You have to be in one of our programs that cost tens of thousands of dollars to hear exactly what I'm going to tell you right now, and the conversation I have with my clients over and over again. So you're getting it free. Here's the conversation.
When you hit a million dollars and you go tell your team that the next year you're going to hit 10, and you're shooting for the stars and you're telling your team to chase a dream, here's what happens. You will start to teach your team to lose gracefully. Here's what happens when you teach your team to lose gracefully. What will happen is, the first month, you know, you just hit a million dollars. So if you're going to hit $10 million, what most entrepreneurs don't think about is the first step in measurement. That means next month you have to have $833,000 in sales, or you are behind against the new goal, the new outcome you just set.
And so what will happen, is in 30 days you're going to hit the end of the month, and if you communicate your outcomes to your team, which you must, you communicate your results, you get in front of your team, and you're going to tell them, "Hey, we missed $833,000 by X amount. And then you have to start making it okay. You have to say, "It's okay guys. We'll get it next month. It's not that big a deal guys, we'll come around." You know, you have to start telling them that it is okay, that you just lost.
And then what happens is, in February, when February rolls around, you now have to take whatever you missed in January, plus whatever you didn't get in February, you add those two together, and you might be seven figures behind now. Based on the fact that if you just hit a million, you are at about an $80,000 run rate, and now let's just say you had some decent months, but you still might be over a million dollars behind. And the next month you're going to do it again. And the next month you're going to do it again. And how soon do you think it takes before your goals mean absolutely nothing to your team? How quickly do they get desensitized to losing? How fast does the $10 million target that you set mean absolutely nothing more than something that they should really try and keep a straight face than when you keep talking about it?
Because if there's no realistic outcome, your team just thinks you're crazy. And the challenge with entrepreneurs is that instead of building a habit of winning with our teams. See we like to play from behind. I'm going to take some wild guess, as an entrepreneur, someone who listens to my podcast, you actually get kind of excited when you're behind. And it makes you feel like you have more energy when you're behind. And you set really big goals because that energizes you and gets you excited and gets you moving in a direction. And that feels right to you.
I want you to know something. It does not feel right to anyone on your team when you set outcomes that cause them to lose. If you make your team feel like they are losing they will leave. And here's the problem. If you make your team feel like you are losing, only the people you don't want will stay. The people who will put up with anything, the people who don't really care about outcomes, the people who don't really want to drive to goals, the people who will put up with consistently losing. Like lets be really clear about who that is. You're going to keep the losers on your team. Not the people who are used to winning and overcoming, and breaking through barriers, and crushing.
So when you create a habit of losing you will end up working with people who are comfortable losing. And I don't want to be rude, but that to me is a loser. So you have to be careful with this. Because when an entrepreneur says, "Oh, I'm so frustrated with my team, and they jump up and down. It tells me, "Hey, you're probably doing something that is causing frustration between you, because the relationship between you and your team is 100% your responsibility as an entrepreneur.
Gosh I got a little excited there, sorry. That might have scared anybody listening with headphones. So if you're wearing headphones I apologize. I didn't mean to yell at 100%.
But this is something that I'm incredibly passionate about, I believe deeply in, and I know that if you as an entrepreneur build the appropriate relationship with your team, you will have an incredible experience building the company, and feeling the reflection of having people around you help you. Will there be resistance? Of course there will be. Will there be challenges? Yes, there will. Will there be problems? Absolutely. Anyone who tells you, you can put your business on autopilot, or you can create a self-managing company, or you can do it without any problems or pain, is completely full of crap.
Actually went to Canada for a while to a coach who promised you could have a self-managing company. What a waste of a year, and what a waste of trips to Canada, where he talked about frameworks that wouldn't create a self-managing lawn mowing team much less a self-managing company. It was incredibly frustrating. Why? Because that stuff doesn't exist. Go listen to the podcast one success creates deficits. Your business is going to create challenges and deficits and issues. And the market is going to create challenges, and deficits, and issues. And the more successful you are, the more you expose yourself to new deficits as you have to fill in where you create holes. You know, the more you sell, the more you're going to have to have people in delivery. The more you deliver at a higher level, the more referrals you're going to get, so you're going to have to have more people to sell. And the more that happens, the more your delivery is going to have to shift and modify. The more your customer service department. Whatever it is, success creates deficits.
So I want you to change the way you work with your team, because given the fact that success creates deficits, you want your team to be incredibly transparent with you. You want them to be real with you. You want them to trust you. You want them to be honest with you. You want them to tell you when there's problems, and to tell you when something is going to happen. And the way you do that is you build a relationship with them where you do create a fantasy land. Because when you the entrepreneur stands in front of the room and talks about getting to that $10 million goal.
And by the way, adjust the amount to whatever is appropriate for you. Whatever is unrealistic for you. Because when you stand in front of the room, and you tell them, "Hey guys, we're going to be able to do this, and it's going to come together, and we're going to get there." And you keep like pointing at that big hairy audacious goal that really isn't real, and telling them that it is, you create fantasy land, and that atmosphere of "Oh shoot! We have to like start pretending like we know what he or she is talking about." "Oh man! He's talking about the goals and man, we have no idea how we're going to get there." "Oh no! She's on this again. And every one of us is crazy uncomfortable because we're doing a million dollars. And so if we have to do $10 million and she doesn't know how we're going to get there, it's probably going to be 10 times as hard." That is everything your team is thinking.
So here's how you create a habit of winning with your team. Because here's why, a habit of winning is so important. Number one: It creates trust. When you get in front of your team and you say, "Guys next month here's what we're going to do." Or when you get in front of your team, you say, "What can we do?" And they help you understand that. Then you create goals, and you show them. You get consensus. And then you hit those goals the next month, you create trust and you start building a team of winners.
When you predict something is going to happen. When your team says, "Yes we can do this." When you go out and do it, or you exceed it, your team starts winning. And that trust is going to change everything. Not only will that trust change everything, but the winning does too, 'cause when a team starts winning, every member of the team gets into momentum. They feel the momentum of winning. I want you to understand something about everybody who works with you. You are one of the most important people in their lives. Probably in the top three or four. Unless they have an extended family ... I count like their immediate family as like one group of people, and then when you look at most people who work for you, you are one of the most important people in their lives.
So when you show them how to win, when you create an atmosphere where they consistently win, when you show them how they can predict success and then go nail it, every person gets into momentum. They shift, they become better at what they do, they become better people, they get more excited about who they are. You'll see people shift and change and get in shape, and lose weight and start eating healthy. I've seen this my whole career. It's one of the most exciting times to be in a business.
When you're creating that habit of winning, when the trust is going up, when everyone is in momentum. You know what? Everyone in the building will give you discretionary effort. If you need an argument for pulling the target closer, for making it easier for your team to get there, discretionary effort should be 100% one of the reasons you do this.
Here's what I mean by discretionary effort, and discretionary time. It's that time when the person who works for you is driving home. Or it's that time when they're standing in the shower. Or it's that time when they're doing something else, but they're thinking about the company. Why? Well, because they work in a place where there there's a habit of winning. You've built trust, you're in momentum. They will give you discretionary effort.
So I want you to hear this equation really clearly. When you set realistic predictable goals for your team, and you build a habit of going out and crushing them, everyone on your team will give you more for the same amount you're paying them right now. And whenever an entrepreneur says so me like, "I've hired this team. I just don't feel like they're working. I don't feel like they're doing enough. I don't feel like ..." I start asking about the goals and you know what I find? Fantasy land.
Because when you don't know what your outcome is, when you're on a team and you don't really understand where things are going. Because one million to 10 million, you have no clue how to actually get there. And you don't really know what improvements to make, you don't know what changes to make, it's going to have to be something dramatic. So you're not really able to help the entrepreneur, in place, you know, they can't help you as well as they should. Because you've created fantasy land.
And so when you pull that down. When you make it realistic, everyone on your team can now give you a higher level of effort. So whenever an entrepreneur criticizes their team, this is one of the first places I go. And what I find is, they either have no goals, or crazy goals. People don't know where they're going, or they've been told where they're going and they have on clue how to get there including the entrepreneur in charge.
So I have an alternate route for you to take. And remember, this is exactly the conversation that I have with my clients who are paying me tens of thousands of dollars a year.
Number one: Work with your team, set realistic goals that all of you feel confident with.
Because here's what will happen. You have to trust that teaching your team to win is going to change who they are as people. You have to trust that teaching your team to win is going to make you guys a better company. You have to trust that teaching your team to win, that showing them how capable are, that creating an atmosphere where you win consistently is going to get everyone into momentum, and it's going to give you that discretionary effort, because this will change everything in your business.
And the second thing you have to do is once you work with your teams, you set realistic goals you feel confident with, gain consensus. Far too many entrepreneurs just present goals to their team. If you have a small team right now, gain consensus by presenting it to your entire team, and showing them, and asking if there's any objections, asking if they think you can do it. I want everyone on my team to tell me they are confident in the goals, they're excited about it. When we go through our goal setting meetings, when we do our monthly meeting or our quarterly meeting, I ask dozens of times, "Do you feel confident about this? Do you feel like we can hit this?" In fact, in our last quarterly meeting I got into an argument with Justin [foreign 00:16:46] over podcast downloads because I felt like he was setting an unrealistic goal, and I wanted to pull it closer. That's how conservative I am as a CEO. I am the one who will pull my team's goals closer, because I want to make sure we win consistently.
As entrepreneurs, we get to make the rules. Don't make them so that you lose. Justin was right by the way. We crushed the goal. That's just to give you perspective. That I mean I'll argue with one of my team members that they shouldn't try and do as much.
And then once you've worked with your team, set the goals you gain consensus. Here's the key, communicate your goals and progress in a consistent system. A cadence, so that everyone in your company knows where you're going, not just to people who are involved with goal setting, but everyone. Where you are going, who is responsible for what, and what progress is being made, because as your company grows you will gain consensus.
First, when you're a small business, you gain consensus with everyone you can. When there's only a few people, you want everyone to buy in. Then as your company grows and you separate out a leadership team, you gain consensus with them, then they go explain it to the rest of the team. Then as your company grows you come to an executive team, and a leadership team. You gain consensus first with the executives. Then you have another team where you deal with the leadership team. Then you have everyone in the company understand where you're going.
And this process will grow with you, with your team. And when everyone knows where they're going, who's responsible for what, and what progress is being made, they know the score board, your entire business will shift, because every person in the business will trust that they can give you 100% of their effort, and you're not going to let them down.
And I want you to know something. If you think you're getting 100% effort from your team, you're only right if your team is consistently winning. Because if your team isn't, if they don't know the scoreboard, if they don't know exactly where you're going, if they don't know who's responsible for what, even subconsciously your team members will hold back. Don't fool yourself into thinking that you're the first CEO that can lead a team without the fundamentals of momentum. And knowing your outcome, understanding who's responsible for what, and knowing what progress is being made, knowing the scoreboard is exactly how momentum is created. You can't fight this. It's a law like gravity. You have to have these things in place in a company.
And here's the key. When you as a CEO become more predictable, your results will become more extraordinary. And I think every entrepreneur in the back of their mind wants to be unpredictable and shift and change and do different things, but we also have to understand the difference. We want to build the world changing company that we know we are capable of. We have to take a longer time horizon, become more realistic, show our team how to win, and consistently predict a result and then hit it.
The companies that you and I both respect, the ones that we buy products from, the ones that we are excited about, the ones that we are part of that company's tribe, those companies predict their future like crazy. Apple computer is years out. And not only are they years out, they're years out on results that they know they're going to get. Most entrepreneurs can't even be a week out. For you this is the biggest hack to climbing the billionaire code. Creating predictable outcomes and learning how to absolutely crush them with your team.
If you're ready to climb the code faster, if you want help with putting together the system, the process, exactly what I talk about for your growing team, let us know. You may qualify for one of our coaching programs. If you go to billionairecode.com and answer a few questions for us, one of members will be in contact to let you know or to discuss with you our programs and how we can help you.
Go to billionairecode.com. If you want the cadence, the planning system, the understanding of how to build a team at a rate that's faster than you need to so that you never feel behind, go to billionairecode.com and let us help you.