TEA 249: How To 10X Your Ecommerce Brand (Logical Vs Exponential Scale)

Introduction

0:00SPEAKER_00Hey, this is Josh with the Ecommerce Alley Podcast, and I want to say thank you for listening to this audio-only special episode. We're starting to drop some audio-only episodes. So, anyone who's on YouTube, you're probably not listening to this because I'm on audio now. But if you're an audio listener, we just want you to know that we are dropping twice as much content for you because we love you and you're near and dear to our hearts. Now, today I'm really excited. It's just me, it's not Dylan, and I'm here sitting in the studio with my notes, and I'm very excited for what I'm gonna talk about

0:30SPEAKER_00because this is an exciting topic to me. It's also a very difficult topic to discuss because I think that there's a lot of different perspective around the idea of scale and what that actually looks like. So I'm gonna be talking to you about logical versus exponential scale. And if this is your first time listening to the e-commerce alley podcast, just a little rundown on us. We've been in business for about 13 years. We've worked with over 700 direct-to-consumer physical product e-commerce brands, mostly on Shopify, I would say. And

1:01SPEAKER_00we help them scale. We help them implement primarily meta-ads frameworks to really uh grow their business. But there are also plenty of other things for all of you that are clients listening. Uh, you know we go well beyond meta-ads, but that's usually the first thing we dial in because it allows us to scale, which is what we're gonna talk about uh today. And so if that is you and you're interested in working with us, go ahead and go to eCommerceally.com/slash work with us, just all together. Uh, we'll have a link in the description as well. And you can get an idea of hey, what does it look like to work with our team, get access to our frameworks,

1:32SPEAKER_00and help help let us help you grow your e-commerce business wherever you're at. We work with people that are just getting started and we work with people that are doing just under a million dollars per month. And so, all that said, let's dive in. I'm excited to talk about this. I hope you're excited to talk about this because scale is a super sexy word and also a very buzzword that we we talk about all the time. Some people come in, so many people come into our programs and they're like, hey, I just want to scale, I want to scale, I want to scale. And their idea of scale is different. There are different

2:02SPEAKER_00levels of scale. And I look at scale as like you have logical and then you have

Setting Exponential Goals

2:08SPEAKER_00exponential. And I want to talk about the differences between them and I want to show you a simple frame of thinking that will help you unlock something exponential inside your business. And so I did this exercise with a group of clients, oh, a couple groups of clients over the last few weeks here, and I talked to them about goals. I said, hey, let's uh I want to talk about logical versus exponential goals. And I, and and I said, for all of you here, and I I took a, I took, I had six people and I had them give me their goals. I said, okay, so

2:39SPEAKER_00what is your revenue goal? Let's use revenue very simple goal. What's your revenue goal by the end of the year? And the first person was like, $750,000. And I was like, great, where are you at right now? And they're like, well, last year, or what did you do last year? And they well, last year we did $450. I'm like, okay, very logical. $450 to $750. Next person, what do you want to do? And they said, $750,000 as well. I'm like, okay, where are you at? Where were you at last year? And they $435,000 in revenue. I'm like, okay, very logical. Then I said, next person, they said, a million dollars. I want to break the million threshold. I said, what did you do last year? And they $700. And

3:10SPEAKER_00I went down and I said, I went to a subscription box. I said, what do you have in mind? They 5,000 subscribers, we were at 3,000 last year. The next person said, I wanted to do 2.3 million and we we did 1.2 million last year. The other person said I want to do 1.9 million and we did 1.3 million last year. And so there's there's just a trend. Most people don't want more than 100% growth in a year. They set goals that are very logical. And the way we often set goals is uh based on the past. I don't know if you've ever heard this before, but you hear past performance

3:41SPEAKER_00is a predictor of future performance. Very common. We we most people, maybe you've heard that, maybe you haven't, but ultimately we could say past performance is going to basically predict what the future is. When we look at stocks and the stock market, we could say, hey, they're their last five years. This was the average ROI. We could predict that for the next five years. And in the stock market, that makes sense. Like that's usually how we operate. But in business, especially when you're the owner of the business, there is exponential growth that can be achieved.

4:13SPEAKER_00And so we often believe that past performance is what we look at to then set our future goals. And then the present actions we take will get us to the goal. So I look at past, present, and future. We look at the past performance. So when you're setting goals for the year, you're probably like, hey, what did we do last year? Okay, great. We're gonna do that in a little bit, and that is now our future goal. And then our present actions are gonna the things that are gonna drive us to achieve that goal. Very, very logical. And so most people look at their previous

4:43SPEAKER_00year and then they just add a little bit. And so we're in this session and I ask uh everyone who's at the goal, I started saying, Well, why did you set the goal that you set? Most people, some one of the one of the ladies said, Well, because I know with 85% certainty that I'm gonna hit it. And we just all kind of laughed and everybody like nodded in agreement. That's pretty much why we set the goals that we have, because we're we're certain that we're gonna hit them. They're very safe. They're very safe. So logical goals are very safe, they're very possible, and we have like this 85%

5:13SPEAKER_00certainty. If we just do the same things we're already doing, we're going to achieve this. So go from $450,000 to $750 is not that hard because you already have established as a business what is working. And oftentimes you just do the same thing of what's already working and you get to that point. Uh, there's a book out there called 10x is easier than 2x. It's kind of a similar frame of thinking. And it's kind of like if you're trying to double 2x year revenue, most of these people, by the way, their goals were like

5:43SPEAKER_0070 to 100% over the previous year. So it's always like 70 to 100% growth people are looking for, which is which was so interesting. All six of them were in that range. And when we think of doing that, that's just pretty much doubling. And to double, the reason the book talks about it is it's easier to do, is because you have a lot of options. Like if you're a subscription box, it's like, well, we can get a little bit more customers, we can reduce churn just a little bit, we can add a little bit to our AOV, we could try to get a little bit more gross profit margin out of it. Like there are a lot of

6:14SPEAKER_00answers to double your business. Add 70 to 100%. There are a lot of answers in order to get there. But when we talk about 10x or an exponential goals, an exponential scale, it's harder. You don't know the answer. And there's something about the human brain that cannot comprehend setting goals when you don't know if you're gonna hit it. And

Using Time Constraints

6:36SPEAKER_00so in this whole group, we go through and everyone gives their numbers. And I said, What would be an exponent, a number that you couldn't fathom? And one of the people that was doing 700 or 750, I forget what it was, who a million dollar goal. They said, Well, like five million would be crazy. And I was like, okay, so five million, that's almost seven times the growth, six to seven times the growth that you had in the last year. I'm like, okay, that is a lot, right? That's a that's a huge amount of growth. And I said, Why didn't you choose five million?

7:07SPEAKER_00And they said, Well, it's impractical, impractical, I hate missing my goals, I don't uh I don't want to take on debt, things break when you scale, and I don't know how to do it. And that was their answer. And I wrote all this down and I kind of put it on the my iPad for everybody to look at. I said, Does anyone else feel this way about your potential exponential goal? And every everyone just was like, Yes, we we would feel all of these things. It feels impractical, we don't want to fail ourselves, we don't want to take on debt, things are things break when you scale, right? And and how are

7:38SPEAKER_00we don't know how we're gonna do it. It's like Yeah, that's the goal of setting hard goals. You don't know how you're gonna get there, and that is what it challenges you to do as an entrepreneur. It challenges you to say, I don't know the answer, but I am determined to find the answer in a way that is abstract that I've never considered before. And so if you don't set something as a goal that requires you to do that, you're not going to change. And you'll experience the growth you probably want to do. You'll just keep doing the same things,

8:09SPEAKER_00right? But you're not gonna have the big growth that you may actually truly want. And honestly, the growth that might challenge you as an entrepreneur and take you to a new level because of who it's forcing you to become and forcing you to solve. And so I love the idea of thinking exponentially versus logically about a lot of things because when you think exponentially, it challenges you to go to a new level. And I love that we're all entrepreneurs for the goal of we love challenges, we

8:40SPEAKER_00love overcoming things that most people would look at and be like, I ain't doing that. There's no way, it's not possible. Wow, wow, wow. And we're like, let's freaking do it. I'm gonna rally the troops and we're gonna conquer this mountain that I have no idea how we're gonna do it. And then we get settled in our ways. We have a little bit of growth, we have a little bit of success, and we're like, hey, let's just start setting logical goals. The whole team feels better when we hit them, right? I feel better when we hit them. Plus, I don't, if it's too much, I don't know how I'm going to accomplish it. And so that's kind of the difference between logical and exponential goals. Logically, we will look at

9:11SPEAKER_00the past and we will then set the future and then set our present actions in order to get to the future goals that we've set. But the problem is if it's very logical, the present actions you're gonna do are usually not gonna change a whole lot. You're just gonna do the same things over and over again. And if you want to have big growth and you wanna really challenge yourself as an entrepreneur, I challenge you to set an exponential goal that is so uncomfortable that you're like, I have no idea how it's possible or how I would even do this. And if that's the when you get to that number

9:42SPEAKER_00and that is the answer, that is the goal. Now you might fall short. That's totally fine. That's how life, I mean, that's how life works. But ultimately, if you set this, it challenges you to think differently. So if you can set an exponential goal, here's the power, here's the next step to that. You then need to, you then need to set a time constraint that will force you to change what you're doing now than if you didn't set that goal. So for example, there's a there's a law, maybe you've heard of it, called

10:12SPEAKER_00Parkinson's Law. And don't quote me on this because I'm gonna probably butcher the official definition and someone can get me on it at Josh Coffee on Instagram. But Parkinson's law states that work will expand to fill the time allotted, or at least that's what I've heard it said. So basically, if you say, hey, I'm gonna give myself this amount of time to do this thing, you'll wait until the last minute. If you say, hey, I'm gonna, I'm gonna lose this much weight in a year, you're gonna wait until like November, and then suddenly you're like, oh, it's Thanksgiving and Christmas, and you know what, I'm just gonna give them on the goal anyway. And so we do the same things all the

10:42SPEAKER_00time. I'll give you an example. For me, I uh I lead worship at my church, and I've done it for 15 years, and the church has grown tremendously, and we have two services. We're about to double in size with a huge building that we're doing. And let me tell you, I run the e-commerce alley. That's my full-time gig. I'm a co-founder of Breezeway. We I have vacation properties down in Tennessee, and that requires time. Now, luckily, I don't oversee that entirely, so it's not as much time. But and then I lead worship. That takes me 12 hours a week to lead it. And so some

11:13SPEAKER_00people are like, how do you have time? And I'm like, I don't even know. But all that said, it's time for me to move on from that role. I'm ready to move on. I'm ready to actually hand it off to somebody else. And I've told our pastor and I told myself, hey, I'm gonna, I'm gonna do this by the end of the year or do this in the next year. And I've been telling myself that for uh, I think five years now. And so about a month ago, I said, this is gonna be off my plate by August 31st. I'm gonna give myself, I'm gonna give myself three months to actually, or I'm sorry, by

11:43SPEAKER_00July 31st. I'm gonna give myself three months to do this and and I'm gonna be fully transitioned to someone else leading and I'll still participate if I need to, and I'll still coach and stuff, but someone else is gonna step into the leadership position. Well, because I set a time constraint on a very difficult thing that I didn't know who the person was, what they needed to learn. I didn't have all this stuff primed that I needed to hand off and what that would look like and the ramifications of it. But I'm like, this is the goal. This is the time frame. And because the time frame is an in a small enough amount of time,

12:14SPEAKER_00it means that what I do now has to change in order to accomplish that. But if it was a year out, the problem with me saying that for five straight years is that it's so far out that I get to the end of the year and I didn't change anything that I did because I felt like it was so far out that I would eventually get to it. And so using a time constraint is what's going to allow you to change what you're doing now to get a different outcome. Time can be used as a powerful tool to really move you, to move your team, to move whatever has to happen. I'll give you another

12:44SPEAKER_00example. We need to hire a secondary salesperson. And the one that we have right now, my brother Jacob, he's our main sales guy, and he's on paternity leave for three weeks. And because he's on paternity leave for three weeks, we're like, we should probably wait until Jacob gets back, start the process. And I said, no, we're going to literally build the application, the entire process. We have a really cool like hiring process. It goes to this cool website, it's interactive, what they have to do to apply. It's really neat. They have to submit a Loom video. It's like this whole process. And then

13:14SPEAKER_00we're going to have to move on this. I want, I want this person hired in less than four weeks. Application, all the things thrown on ZipRecruiter, indeed, locally, advertised, LinkedIn ads, all the stuff like that. We need everything done. We need applications all in within two weeks. We need people interviewed within one week, and we need the decision made within one week after that. Now, I normally lead all of it, but I set a time constraint that forced me to actually do something different. I couldn't do it. And so I had to pull people in who were able to lead charge on that. And now I just have the final interviews tomorrow, and then we're we've wrapped

13:45SPEAKER_00up. And we kind of already know who it's going to be. And we did that in three weeks. And so using time can actually time is the second component of this. So here I'm going to give you a little equation. I want you to think about this. Number one, exponential goal times time constraint equals ruthless standards. So you first need to set an exponential goal that you can't comprehend how you're going to accomplish it. Then you need to set a time constraint that you have no idea how you're going to accomplish that

14:15SPEAKER_00difficult thing in the time period that you've allotted. And by doing that, it's going to require you to have ruthless standards. And these are standards in what you do, but more importantly, what you drop. Standards in what you choose to no longer do, and that you will no longer take on. Most of us when we start our business, we get in, we start doing everything. We're on social media, we're on email, oh SEO, okay, oh now we got to do SMS. Oh, now

14:45SPEAKER_00I'm doing Google ads, I'm doing TikTok ads, I'm doing Facebook ads, now I'm doing, we're doing Pinterest ads, we're doing everything that we can, right? We're doing all of this stuff on the marketing front. We're doing, we're we're buying and doing monthly product launches in our business. We're, we're, we're, hey, Christmas is coming up, so we're gonna launch like 13 and a half new products, and we're gonna have to source all this stuff and get it all in. And then we're like, oh, well, now I have a cash flow crunch and I can't really afford the inventory for the evergreen stuff that I normally sell because I put all my money into the new product launches and back and forth and back and forth, and we're juggling credit cards to pay for all the different

15:16SPEAKER_00things because we need to front the inventory for the down payment to get the stuff in, and so, but we need to sell stuff, and so we get into this spot where we are doing so much. But scale is usually an experience by subtraction. So you experience scale by subtracting the things that you're doing. This is this is simplification, right? This is simplicity over complexity. And I see this all the time with clients. We have we work with I don't know how many off the bat.

15:47SPEAKER_00It's a little over 200 e-commerce brands right now between our alley and max profits membership coaching programs. And they come in, we give them all the training, we have coaching sessions happening every day. Some days we have two coaching set, two 90-minute coaching sessions in a day. Like it's like we're literally coaching half the day. It's crazy. And so clients come in, and you know what they do? They do this. It's really exciting. And oh, it's so fulfilling. It's one of the best parts of what I do is I get to see people come in and I get to see them subtract all the crap they've been doing that isn't moving the needle because they come in and we say, you need to do meta ads, you need to do

16:18SPEAKER_00this, you need to do this. And we just simplify their marketing funnels, their sit and we simplify their marketing strategy in order to grow the business and predictably get new customers. They come in, they do the thing, and they grow like crazy. Literally, this is bizarre. But in the last 24 hours, I got four messages from different clients. One said, Hey, I can't make it to the in-person event in July, but I cracked my first six-figure month and moving faster than ever. And I asked him, I said, I couldn't remember because he came in like a year ago. I said,

16:48SPEAKER_00What were you doing when we first met? He said, $4,000 a month. I'm like, dude, you go from $4K a month, like a side hobby, to $100,000 a month in less than 12 months. That's nuts. I got another text from a client that said, Oh my goodness, this is so nostalgic. I'm down in Florida with my parents. And I actually just found this PO for a $3,000 in product that I placed 12 years ago, and now we're doing over $6,000 a day in sales in our subscription box business. Another client texted me this morning and said, Hey, I just want to let you know, cross six, eight hundred thousand

17:18SPEAKER_00in monthly revenue for the month of May. And he said, like when we met, they were just doing under 200. So I mean, it's just bizarre what can happen. I had another client that came in. Now he is a very successful business and he does several million dollars a year in that. He's probably gonna like three, four million this year. He decided to start a different business. Now, again, that's gonna be this this all comes together because he's actually, we had this conversation, and he is doing an exponential scale strategy by diversifying into another product that has more margin in it. And in the testing of that, he brought it to a $10,000 in sales

17:48SPEAKER_00in the first three days of launch. It was like idea to execution in two weeks. So he gave himself a really tight timeline to make it happen. And I see this all the time. People come in, they experience this really awesome scale through

Scaling by Subtraction

17:59SPEAKER_00subtraction. But then the danger is what happens, and this is the really hard part, is you simplify things and then things start to scale, and then they create and add complexity, and then they get stuck again. You get stuck, right? You like, you figure out the thing and you're like, oh, this is so awesome. But you you, as entrepreneurs, we are inherently chaos junkies. We're so used to chaos happening and nothing going how we want them. When things start working the way that we want, we think that something's wrong. So what we do when things are wrong, we go back in, we

18:29SPEAKER_00got our grubby little paws on it, we start adding all these things and adding stuff to our team's plate and adding stuff to our plate. And then before we know it, we have this hot mess, we're stuck, and we're wondering why the heck we're stuck. When the answer was, you added, you dummy, you added more stuff. You need to subtract and keep the subtraction for now as long as you possibly can. Uh, you can grow so much more than you you are at right now if you just subtract things you're doing and you just do more of the thing that actually works. That's a really simple way to think about it. Uh we have I had someone go through our

19:00SPEAKER_00go one of our $27 courses. He he owns uh a men's hygiene brand. He went through one of our courses like I think three years ago. It's pretty a long time ago. And I became friends with him and he was never an actual client, he just bought our course. It was really cool. He goes