Momentum Podcast: 558
Part 3: The Billionaire Code
by Alex Charfen
Listen in for the third part of the presentation on The Billionaire Code. As a refresher, The Billionaire Code is a matrix of 9 levels that every entrepreneur goes through to get from start-up to $100 million and beyond. In this episode, I reveal the remaining levels that we left off on in part two.
As I mention in the episode, no matter what level you are at, whatever gets you there will crush you moving forward. Aside from revealing the remaining levels of the matrix, I go into a conversation about what I call the entrepreneur's dilemma. Which is – we know we need far more help, protection, and support that the average person to get where we want. But, any request for help makes us feel vulnerable and exposed. Tune in to learn how you can overcome this, learn to level up, and continue climbing The Billionaire Code.
If you missed them, make sure to go back and listen to parts one and two now!
Full Audio Transcript
Jeremy Bergeron: Hey everybody. This is Jeremy Bergeron, checking back in from Alex Charfen's team. This is the third part of a presentation Alex gave on the Billionaire Code. This is a matrix of nine levels that every entrepreneur goes through from zero to $100 million plus. On this episode, Alex starts to talk about the remaining levels of the Billionaire Code, from $1 million per year all the way up to a $100 million dollars per year. Check it out.
Alex Charfen: I'm Alex Charfen and this is the Momentum podcast, made for empire builders, game changers, trailblazers, shot 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.
... operator, check out this shift. And I want you to just see, when I say what gets you there will crush you moving forward. So at builder you're overtime and you really don't have a choice. At 300 to a million, you're going to have to do a lot in the business to get it done. You're going to have to be the person who executes. You're going to have to make decisions, you're going to have to get things done, because there's not going to be a team there. You can't afford a full team at 300 to a million, but you can start building a team. And then what happens is at operator, now you have to go from doing as much as you can yourself working overtime, to delegating your time.
Operators are one to 3 million. It's where you get into the two comma club. You're at a million dollars. And the number of businesses in the United States at a million is only 700,000. Think about that. 29 million businesses in the United States and only 700,000 will go past one million dollars. Only 3% of businesses ever get past a million dollars. So if you've already done it, congratulations, you're in the 3% club. That is a very rare thing to do. It's a rare place to be. Your fallback question is, how does my team get ahead? See, first you have to delegate time. One to 3 million, you have to start delegating what is taking your time to someone else. So if you're making sales calls, someone else has to make the sales calls. Whatever you're doing, someone else has to start doing that so that you can continue to expand the business.
And the fallback question is, how does my team get me ahead, is you taking what you do and giving it to your team. How does my team get me ahead. How do I continue to grow. And the biggest need is to scale consistent delivery. Because at one to 3 million, you now have a business that you're delivering a massive amount of a product or service or an outcome that you sell. And to scale consistent delivery and make sure that the client that comes in at one to 3 million is getting the same service as a client that came in at 300 to a million, or at one to 300, that they still get the same outcome. They might not get the same personal connection with you, but they still get the same outcome. So how do you scale consistent delivery. And to graduate from operator, you have to do one of the hardest things that we do as entrepreneurs. Build a team and train them to do what you do well.
But here's why I say that's one of the hardest things that we do as entrepreneurs. I call it the entrepreneur's dilemma. Here it is. We know we need far more help, more protection and support than the average person to get to the destination we want, to get to our full outcome, what we want to do. However, any request for help, any ask for protection and support that we have to make, makes us feel vulnerable and exposed. Do you know you feel that way? I know I do, and the way that I've been able to get past it, the way that I've been able to overcome it, is to just do it. So to graduate here, you have to build a team and train them to do what you do well. And when you have systems and frameworks and there's clarity around how to do this, it's a lot less precarious than it sounds. And it's not as hard as it sounds. But anyone who tells you that this is going to be easy, you should be careful with them. Because we can make it easier, but still these transitions, this growth, this amount of change, there's going to be challenges. And so what we do with our clients is we talk through the challenges, we give them the frameworks, we show them the solution so they can continue to grow, continue to scale, it's consistent delivery, and build a team.
And if you've ever thought, I can't manage, I can't do this, there's no way I can do what you're saying, to start to actually get leverage and build a team, here's what I want you to know. We've had dozens of clients that have come in and said the same thing, and within just a few short weeks they start building a team. Because when you have a process and a system to follow, it makes it easier. I don't ever want you to talk yourself out of the success that you can create and the change you can make in the world.
So as you see, the numbers are falling pretty quickly of how many businesses are each one of these levels. 16 million, six million, 1.7, 1.9, and then only 700,000. When you get into operator, you operate the business to the place where you build the team and you train them to do what you do well and you graduate to the next level leader. Let's take a look at leader. Big changes here. Annual revenue, three to 10 million. This is like where the air is getting very thin. There's not a lot of companies up here. Only 300,000 out of 29 million. That's a tiny fraction of a percent. And at this level you no longer delegate time. You now go from delegating time, which is having other people do things for you, to now you have to delegate success.
At three to 10 million you have to be able to tell somebody on your team, this is what I want to get done. This is where I need your help. This is what I need you to take care of. And then walk away from it so that they can do it... Oops, what the heck did I just do? Sorry, everybody. Oh, there's the zoom webinar chat. Now I can see it. Sorry about that... So when you get to this place of leader, you're now delegating success and I want you to understand what that means. When you delegate success, that means you're giving someone on your team an outcome. You're telling them where you want them to end up and then they're getting you there. That is a massive difference between delegating time. And again, is this an easy transition for entrepreneurs? Not for most of us, because we have to go from asking people to do stuff for us to now asking people to create a result for us, and it's not easy.
I'm in this place right now. I'm delegating success as much as I possibly can. I'm showing up with my leadership team every day and delegating success, telling them why I feel constraint, getting things off of my plate. The fallback question is how does my team get ahead? Check this out. It goes from how does my team get me ahead, now we have to make the shift from me to we. At this level leader, that's one of the hardest transitions for entrepreneurs to make. Our whole lives it's been about us. Our whole lives it's been about how can I go faster, how can I do more, how can I make this happen, how can I get to the outcome. And a lot of us have thought patterns like if it's going to be done right, I'm going to do it myself. And so we have to overcome all of those, delegate success. And then the new question we ask is, how does my team get ahead, how do I support my team, how do I pour into my team, how do I help them grow, how do I find the right resources to help them grow, how do I coach them to grow. And the biggest need is now not just scale the processes to consistently deliver, now you have to add a team to consistently deliver.
So first we scale the business, then we scale a team around it. And then to graduate, especially at three to 10 million, you recruit and develop a leadership team. This is one of the most critical parts of growing a business, is finding the other people who can lead with you. Because as you grow a leadership team, here's what happens. You have other people in the business that can make decisions with you. If you've never had a leadership team, then I want you to understand something. You're in a place where you have massive decision fatigue. Decision-making fatigue is real.
Decision-making fatigue has been talked about for decades. It is the fact that as human beings, we wake up in the morning with a certain like size gas tank that we can use to make decisions. And if we deplete that tank, we start making bad decisions. We start making challenging decisions. Pressure and noise goes up for us. It can cause anxiety or frustration or confusion, lack of sleep. Cortisols. We can get puffy. We put on weight without understanding it. Decision-making fatigue can affect us all over the place. And so the way you overcome decision-making fatigue is you recruit and develop a leadership team that can share decision-making with you. So not only do you delegate success, you share decision-making with your team, and that will keep you sane as an entrepreneur and keep you in momentum and moving forward.
So once you're in leader... And then let's just look at the bottom level of the last three. You build systems and process around what you do well. Then you build a team and train them to do what you do well. Then you recruit and develop a leadership team. Let's take a look at what you do at owner. Owner is now such a massive shift again. We go from 10 to 30 million. This is rare. There are so few companies that get here. Now there's some major changes. At 10 to 30 million you actually give up autonomy of your time. Don't panic. I know that sounds crazy and I know it sounds like somebody else is going to manage you, but you actually turn your time over to your team. Now I do this early when I'm growing a business. I try and get my team telling me where they need my time as early as I possibly can.
Because at 10 to 30 million, I want you to understand something. If you're the entrepreneur and you're making all the decisions about where you're going to spend your time, you're going to be the biggest liability in the business. Because at 10 to 30 million, you can't possibly know everything that's going on. Your team knows more about what's going on than you do. So you have to give up autonomy on time. That means you tell your team, okay, you tell me where I need to be. You tell me where I can help you. You tell me how I can help this company grow and move forward. And it's not just absolute. You give up autonomy of time in a process, in a system, where you structure it so they know when they can use your time, how they can use your time. And when you do it, everything in your life will move forward faster.
Whenever somebody says, "I just don't know that I could ever do that," think of any entrepreneur you respect or anybody in the world who's making a difference that you respect. Chances are somebody else is managing their time, or they wouldn't be able to do everything that they do. So giving up autonomy of time changes how your entire business works. And then your fallback question at owner, 10 to 30 million, is how do my team get even further ahead. Because here's what happens. If you didn't feel it at three to 10, at 10 to 30 you feel the fact. And it's a fact that your business' ability to grow and your ability to grow the business is 100% dependent on your team. It's dependent on how your team works together, it's dependent on how they are cohesive together, it's dependent on how they communicate. Does everybody know the outcome that you're driving towards? Does everyone want to know the role that they play, the scoreboard that you're using to make sure that you have perspective as to whether you're creating the outcomes you want?
And if they don't, this is where things can get really challenging. So you have to consistently be asking, how does my team get further ahead, how do I develop them more, share more with them, be more transparent, give them more decision-making authority. And the biggest need at 10 to 30 million is scaling your communication with a larger team, and then decision-making. Duplicating your decision-making over a bigger population of people so that everyone knows how to make decisions, how to purchase, how to hire, how to onboard, how to participate in meetings, how to plan, how to execute. So your team should have systems for all of those things so that they know how to move forward in your business. You can't leave it to chance. When you scale communication systems and decision-making, your business will grow quickly. And then to graduate you create multiple levels of leadership. You just created a leadership team, and like that you have to turn around and start creating multiple levels of leadership.
When I said what got you there will crush you moving forward, are you starting to see it? Let's just take an example of like builder and time. Let's say you get to 300,000 to a million, and you're working overtime, and you decide you're not going to delegate time. I'm just going to keep doing it myself. I have confidence in myself. I can keep doing this. I've had friends who've done this. I've had friends that have actually gotten really high. They've gotten up to five, six, 7 million without ever delegating time. It's temporary and it comes crashing back down, because if you're driving all of that volume, all of that responsibility by yourself, it will crush you. It will hurt you, it will be painful and it will be hard, a lot harder than it has to be.
Let's take another one. If you get to operator where you're now delegating your time, and then you get to three to 10 million, and what you keep trying to do is just tell people what to do, you will like hit decision-making fatigue so fast and you will live in a state of anxiety. Because if you can't delegate success and say, here's the outcome I want, you literally are transactionally managing everybody in the business. And transactional management is when you tell people what to do, check that it got done, tell them what to do again. How many of you have been there? It is excruciating for people like us. Transactional leadership, however, is when you give people clear outcomes, delegate success, coach their success along the way, and you get leverage results. You can't lose in this situation. Over here you feel like you're constantly losing, micromanaging and overwhelmed.
Let's go to the next level. Investor. When you get out of leader and you move up to investor, you're now at 30 to 100 million. The number of investors in the United States is only 70,000 businesses. Your time is to coach and support your team to maximize their return on time. Here's what happens at 30 to a 100 million. At 30 to 100 million, every one on your executive team is now running a portion of your business. It's as big as you were running in the level before. That's just how it works. Your executive team's always one step behind you. So now you have to coach them to give up autonomy of time. You have to coach them to get leverage. You have to coach them to do the things that they need to do to grow the divisions of your company.
Your fallback question is how do we help others get ahead. At this size business you can go out and get a partnerships, JVs, alliances, and at this size business, people want to partner with you. They want to play with you. You look at any company in marketing at 30 to 100 million and there are people lined up to work with them. JV, partner, help them increase their business. So you start asking how do we help others get ahead, because you've already asked the questions about your team. You've solidified that. Your biggest need in this size business is scalable investment management and tracking systems.
Here's what that means. At 30 to 100 million, you are making investments all over your business. And I want you to know something. At 30 to 100 you're not going to know everybody in your business. It's always been weird for me, when we grow a business to the point where I walk in one day and I'm like, "Hey, who's that?" And somebody says, "Oh, we just hired him in customer service." So it's somebody who works with us on my team and I don't even know him. Well at this size, at 30 to 100 million, that's going to happen a lot. So you need investment management and tracking systems. You need a scoreboard for this greater organization that shows you what's going on in each critical point in the company. And when you build that, you can manage a business this large without getting overwhelmed, but it's the process of building it and knowing exactly where it is, or exactly where the scoreboard is that you can continue to grow your business, get ahead and create the success you want. And to graduate from investor, you grow a leadership development system.
Here's what happens. As you grow your org chart, you know that org chart with the CEO on top and then the biggest spaces at the bottom, well what happens is your company grows, so does that org chart, and we need more and more people here to fill in. And where you will find the biggest deficit at 30 to 100 million, I've watched it so many times, is you won't have enough leaders. There won't be enough people who are trained in your leadership in order to grow the business. And if you don't anticipate that need, things can become very challenging, because you bring in managers and department leaders and supervisors that don't understand how your business works, and they can start pulling in different directions. You can lose your culture, you can start having [inaudible 00:16:36], people in the wrong team, wrong place, leaders who are not leading in a way that you would want them to.
So in order to overcome that, you grow a leadership development system where you teach people this is how we build process, this is how we hire people, this is how we create the right project and execute. This is how we create a strategic plan for anything that we're doing. This is how we run a meeting. And you show readers how they can do that so they can help you grow your business Because at 30 to 100 million, you now don't just need an executive team to help you duplicate decision-making and lower decision-making fatigue, you need an entire layer of leadership that does that, and that layer is only going to grow, or layers, will only grow.
So once you graduate and grow a leadership development system, you get to the last level that we currently have at the Billionaire Code. And that is what we call entrepreneur. At entrepreneur, a 100 million plus, there's only 22,393 businesses in the U.S. that are here, which is incredible because there's 29 million businesses. So it's less than one 10th of 1%. We actually have a couple clients that are headed towards this number so fast it's shocking, and we feel like they're going to get there in the next couple of years.
At entrepreneur your time, you invest your time, you give away your time. And at a hundred million dollar business you showing up to a charity event is a big deal. A hundred million dollar business, you have a lot more influence and a lot more affluence. You can make things happen. Your fallback question at this level is how do we help everyone, because at a hundred million you can do JVs, partnerships, you can have a massive effect on the market that you're serving. You can help the people that are in your tribe. You can help people around you move forward and continue to grow your team. And your biggest need is to scale your influence and contribution.
I see a lot of entrepreneurs starting out, trying to create influence and contribution. This new term of influencer is actually kind of interesting because you will have the most influence in the world when you have an actual organization behind you. The influencer who has millions of dollars that can't really get anybody to do anything has now become a cliché. Part of the reason is when you start with trying to create influence, you don't actually create a huge contribution or an effect. And to graduate from entrepreneur, you grow your legacy.
Now I want to show you the whole Billionaire Code to make a point really quick. See how the lower right hand corner says grow your legacy? Far too often today I see entrepreneurs starting at legacy projects at seeker, or starter, or promoter. A lot of them at seeker. Or builder, or operator. And here's what happens. You start chasing two rabbits at any one of these levels, one's going to get away. And until you have a real organization with a clear infrastructure that is running, and you have the people doing the right things, and you have an investment manager mid tracking system, you should be careful about ever working on a legacy project.
I've been helping entrepreneurs grow businesses and scaling companies for over 20 years, and I've now developed like a almost knee-jerk reaction to somebody talking about a legacy project because I've seen so many projects distract from the core business, put the business out of business, and then legacy project falls apart. At a hundred million that's where you should start focusing on it. That's where people are going to hear you. That's where you're actually going to make a massive difference. This is the Billionaire Code.
Jeremy Bergeron: Hey everybody, this is Jeremy from Alex Charfen's team. Thanks for listening this week. If you'd like some help growing and scaling your business, if you want to know how we're helping entrepreneurs at every level of the Billionaire Code, head over to this website, billionairecode.com/apply-now, that's billionairecode.com/apply-now.