The 5 levels of business in 12 minutes

MMatt Gray
Small Business/StartupsAdvertising/MarketingManagement

Transcript

00:00:00"Most people try to hustle their way to making millions.
00:00:02"I spent the last 16 years learning
00:00:03"the five levels of business,
00:00:05"and now I can work where I want, when I want,
00:00:07"and my portfolio of online businesses
00:00:09"makes me $13 million a year.
00:00:11"Most people fail not because they're lazy,
00:00:13"but because they try to bring level one behaviors
00:00:15"into a level five business.
00:00:16"But the truth is, each level requires a death,
00:00:20"a death of old identity, old systems,
00:00:22"old habits that are keeping you back.
00:00:25"So in this video, I'm breaking down
00:00:26"the five levels of business,
00:00:27"what's going to break at each stage,
00:00:29"and what you need to implement to scale seamlessly.
00:00:32"Let's get into it."
00:00:33Level one, the scrapper.
00:00:34At this level, most people overthink everything
00:00:37and then never start.
00:00:38But the ones who make it, they master one skill
00:00:40that has nothing to do with strategy.
00:00:42When I started BitMaker at 20,
00:00:44I had no idea what I was doing.
00:00:47This was my first business.
00:00:48I was broke.
00:00:50I had hardly any experience, fresh out of business school,
00:00:54and I was delusional.
00:00:55While this was a strength,
00:00:57it also led me to a ton of mistakes.
00:01:01Marketing came down to me.
00:01:03Sales came down to me.
00:01:06Finance, me.
00:01:07Operations, me.
00:01:09Legal, me.
00:01:10And sleep, never.
00:01:13And that had a knock-on effect.
00:01:15You know, the amount of times I thought
00:01:17I just wanted to give up must have been 60, 70 times.
00:01:20I think we glorify the founder journey,
00:01:22but at this stage, you guys know it.
00:01:25Shit can get hard, like real hard.
00:01:29You know, at this stage, really, I think the key thing
00:01:32is to focus on just getting your first customers
00:01:35that love your product.
00:01:37Whether that means outreaching to a thousand people,
00:01:40whether that means creating my personal brand,
00:01:42putting organic content out there,
00:01:43going and hiring great people, whatever it takes,
00:01:46I'm gonna commit to making this idea a success.
00:01:49I'm saying this just to be real with you guys, right?
00:01:51For those of you guys going through this, I get it.
00:01:54One thing I also come back to is this essay from Paul Graham,
00:01:58which is do things that don't scale.
00:02:00You see all these businesses that are going
00:02:02and raising $100 billion or being valued
00:02:04at $500 million or whatever, right?
00:02:06But the reality is that a lot of these big businesses
00:02:08that you admire started off with humble beginnings.
00:02:11You know, Airbnb was just some random email
00:02:14from Joe Gebbia to Brian Chesky saying,
00:02:16"Hey, you know, maybe we should go and try putting a mattress
00:02:20"in the spare bedroom I have for South by Southwest
00:02:23"in Austin this weekend."
00:02:24You know, same thing with Shopify.
00:02:25Started as just an online store for snowboards,
00:02:28slapped together by Toby Lutke.
00:02:30Fast forward 15 years later, $100 billion company.
00:02:34Be okay with doing things that don't scale early on.
00:02:37Focus on building something that people genuinely love.
00:02:41So if you wanna master this level, sell a simple offer.
00:02:44Get outside the building and making sure
00:02:45you're talking to at least 30 customers.
00:02:48Incorporate their feedback in terms of their dreams,
00:02:51their desires back into the product to build something
00:02:54that is irresistible.
00:02:55I strongly suggest you also go
00:02:57and are building your personal brand,
00:02:59putting content out there because at the end of the day,
00:03:02distribution is your moat.
00:03:04Next level, the operator.
00:03:06Most people get stuck here for years.
00:03:08They're making money but dying inside
00:03:10and there's generally one thing they're doing wrong.
00:03:12I had earned my second company.
00:03:14We were making 30 to 50K per month
00:03:16but I was working like an absolute psychopath,
00:03:18really scaling something that at this point
00:03:21was starting to break.
00:03:22Now the issue was that our product, it was not repeatable,
00:03:26it was not scalable and we weren't able
00:03:28to deliver it on time each month.
00:03:30And so what started to happen was that the cash flows
00:03:33of the company got super clunky.
00:03:35What I realized I needed to do was start getting super serious
00:03:37about the people that I had on board
00:03:39and about our product as well.
00:03:41You know, it was important that anything that we sold
00:03:44was scalable, repeatable and can be delivered on time.
00:03:47Now beyond just the product, there was also issues
00:03:49in how I was hiring, right?
00:03:51At this stage, my hiring processes were anything but rigorous.
00:03:55Google's product Oxygen found that the number one trade
00:03:58of high-performing managers isn't charisma, it's systems.
00:04:01This means that the right decisions matters more
00:04:03than just being liked.
00:04:05Now when you think about going
00:04:06and actually scaling your business,
00:04:07I think the things that start to really matter
00:04:09are things like your systems, your taste, your team
00:04:13and the overall culture of the company.
00:04:15You mix that as well with having your own founder-led brands
00:04:18that you're owning your distribution long-term
00:04:20and you've got the system set up for success.
00:04:22So if you wanna move on to the next level,
00:04:24go and document five recurring tasks
00:04:26that you have on your plate.
00:04:27Document them in a Google doc,
00:04:28go and film yourself doing them in a loom,
00:04:31go and determine the person on your team
00:04:33that can then take that off your plate
00:04:35and make sure that they are owning it now going forward.
00:04:38Now you're ready to go and move on to the next level.
00:04:40Your job at level two is to stop being the bottleneck.
00:04:43And if you want my scaling roadmap
00:04:44that breaks down each of these levels
00:04:46and the core checklists that are required
00:04:48to scale seamlessly to the next stage,
00:04:50go and check it out via the link in the description.
00:04:52Level three is one of the most exciting, the CEO.
00:04:54You've built something real, but now you have a new problem.
00:04:57Something that's either gonna make you
00:04:59or break you over the next 12 months.
00:05:00When my second business ERB started crossing 150K per month,
00:05:03I had to go from doing everything to building a machine.
00:05:06I think at this stage, right,
00:05:08you start to become a chief detail officer,
00:05:10trying to work more on the business than in the business
00:05:13by having the right people in place,
00:05:15the right systems in place,
00:05:16so it doesn't all come down to you.
00:05:18Making sure that you're pushing
00:05:19the decisions in your company down
00:05:21so that they don't need to all go and get bubbled up to you
00:05:24by saying, you know, what do you think we should do?
00:05:26And then gradually coaching people
00:05:28and empowering them to go and use their judgment,
00:05:31their intuition and data to make those decisions
00:05:34so that you can focus on the decisions that only you can make.
00:05:38So you're probably wondering as a CEO,
00:05:40with so many things going on,
00:05:42what do you need to focus on?
00:05:44Well, I think it comes down to three things,
00:05:46numbers, people and culture.
00:05:49Getting into the first, numbers.
00:05:51This is where I see 97% of founders completely fail.
00:05:55I'll ask them things like, you know,
00:05:56what's your profit margin, your cash collected?
00:05:59You know, what was your profit last month?
00:06:01What's the total cost of your team in a given month?
00:06:03And they stare at me blankly
00:06:05almost as if their eyes are glazing over, right?
00:06:08That is your first mistake if you're looking to be CEO
00:06:11because you need to have an intricate understanding
00:06:12of how every decision you make impacts the numbers.
00:06:15The second aspect obviously is your people.
00:06:17You know, no matter what company you're building,
00:06:20you are in the people business,
00:06:21the business of going and bringing on A players
00:06:24that believe in a vision
00:06:25and are willing to do whatever it takes to get there.
00:06:27And the third aspect is your culture.
00:06:29Your culture eats strategy for breakfast.
00:06:32If you have a great culture of people
00:06:34that are willing to do what it takes,
00:06:35they're hungry, they're coachable,
00:06:37they obsess around quality and the customer experience,
00:06:40you know, you've likely built something
00:06:42that's set up for success.
00:06:43Here's how you finally become the CEO of your business
00:06:46and your life.
00:06:47First, you're gonna wanna go and build an org chart
00:06:49for your next 12 months
00:06:50and start to figure out where your gaps are right now
00:06:53and start to fill those with A players.
00:06:55Second is you probably wanna start building a dashboard
00:06:58and even something simple like Google Sheets
00:07:00that has like the 12 core metrics across your business
00:07:02on a week by week basis
00:07:04so you can make sure that you're tracking these things
00:07:06and growing them every single month.
00:07:08From there, you wanna make sure
00:07:09that you have the right meeting rhythm in place
00:07:11inside of your company,
00:07:12likely running leadership meetings every single week
00:07:15and then core department meetings as well
00:07:17at the same cadence.
00:07:19This meeting rhythm essentially becomes the heartbeat
00:07:21of your company and will ensure you have continuous momentum
00:07:24into the future.
00:07:25Your job at level three is to become a real CEO.
00:07:28Level four, the empire builder.
00:07:30At 250K per month, you've won,
00:07:32but there's a ceiling that most people hit
00:07:33that stops them from reaching seven figures monthly.
00:07:35You know, I remember going and talking
00:07:37to a mentor named Justin
00:07:39and I wanted to grow the audience as big as possible.
00:07:41And just a few words from Justin,
00:07:43you know, it transformed my thinking.
00:07:45He said, "Matt, if you're looking to do that,
00:07:47"you need to set your audience on fire."
00:07:50And so sure enough, I started to go and analyze our presence
00:07:53on platforms like X, LinkedIn, YouTube, Instagram
00:07:56and go and try to think about, you know,
00:07:57what was every piece of content we were putting out
00:07:59and how could we go and make it a hundred times better?
00:08:02You know, it was from looking at the details in our videos,
00:08:05the sound, the script, the lighting,
00:08:07the overall kind of concepts that we were putting forth,
00:08:09the titles, the thumbnails, the team, the workflows, right?
00:08:12It was looking on the writing side
00:08:14about the subjects we were putting out.
00:08:15How could we transform all of this
00:08:17to make the most exceptional founder content in the world?
00:08:20It's important to know your math,
00:08:21not just so that you're building
00:08:22a hyper profitable business long-term,
00:08:24but also so that you have what I believe
00:08:26is the most valuable metric, peace of mind.
00:08:28You know, we want to make sure
00:08:29that you're able to sleep at night
00:08:30knowing that you have a business
00:08:31that's continuing to compound cash flows
00:08:34and not compound stress.
00:08:36So your action steps here are to make sure
00:08:39that you have an unbelievable CFO in place.
00:08:42And from there, I like to make sure
00:08:43I'm getting a CEO scorecard every single Friday,
00:08:46which show me the 12 core metrics across my entire business.
00:08:49The next thing then is you want to make sure
00:08:50that you have an amazing leadership team in place
00:08:53because at this level,
00:08:54you can't be making all the decisions, right?
00:08:56You need to empower leaders around you
00:08:58that can hire other amazing leaders, right?
00:09:01And can push your business forward in your absence.
00:09:04And at this stage too,
00:09:05you want to make sure that you're really dialed into
00:09:06what is your zone of brilliance?
00:09:08Your job at level four is to scale
00:09:10without losing your soul.
00:09:12Level five is the icon.
00:09:13Most people will never get here,
00:09:15but the ones who do make this one small shift.
00:09:19When George Lucas was building the Star Wars saga
00:09:21back in the 1970s,
00:09:22before he had even released the first movie,
00:09:24he had already made the scripts for all three.
00:09:27He had planned out the universes, the planets,
00:09:29the galaxies, the actors, had it all lined up.
00:09:32Sure enough, he released the first movie
00:09:35and it was a box office success
00:09:36and he already had the next two lined up.
00:09:39And it's not just George Lucas,
00:09:40you rewind to even Walt Disney.
00:09:42In the early days of Disney,
00:09:43he went and drew out the entire universe he was building.
00:09:47It wasn't just the characters,
00:09:48but it was the animation studio, it was the theme parks.
00:09:51It was the, you know, merchandise and the figurines.
00:09:54He had it all planned out.
00:09:56And this is the same pattern
00:09:57that I've taken to my last three businesses
00:09:59that has made them a success, right?
00:10:01It's having this master plan,
00:10:03having this universe that you're building out, right?
00:10:06For me, it's making sure that I'm serving founders
00:10:08through epic retreats,
00:10:09not just the ones we've done in Bali, Sedona and Mexico City,
00:10:12but going and actually buying a retreat center
00:10:14in the Dolomites where I can have peak experiences
00:10:17with the best founders in the world.
00:10:18It's going and taking these YouTube videos to Netflix,
00:10:21traveling the world, giving back,
00:10:23helping famous founders across the world
00:10:25go and scale to new levels,
00:10:27helping creators become better business people,
00:10:29helping amazing business folks become founder-led brands,
00:10:32and really sitting at that intersection of business
00:10:36and the creator economy.
00:10:37People don't buy what you do,
00:10:39they buy who they become by doing it.
00:10:41They're not buying a program,
00:10:43they're buying the transformation that you're providing them
00:10:45by actually going and giving the service you do.
00:10:48You know, oftentimes we forget
00:10:50that when we're building a brand,
00:10:51a brand is more of an emotional experience than anything,
00:10:55right?
00:10:56It's a feeling you get when you think of a certain logo
00:10:58or think of a certain person.
00:10:59For Apple, it's creativity.
00:11:01For Nike, it's victory.
00:11:03For founder OS, it's freedom.
00:11:05Oftentimes it's making sure that you're communicating
00:11:07that aspirational identity and vision for the brand
00:11:10because inevitably that's what people are really buying into.
00:11:13So refine your vision into a 10-year roadmap.
00:11:16Think about your brand
00:11:17and all the areas you want it to exist.
00:11:19What's the big vision there?
00:11:20You know, when you think about your team and your org chart,
00:11:22how's that gonna need to evolve over the next 10 years?
00:11:25How does your offer and your product suite need to evolve?
00:11:28If you have troubles thinking big in this department,
00:11:30leverage AI to help you think 10X bigger.
00:11:33It's by charting out this vision
00:11:35and then making sure that you put it
00:11:36into a visual presentation for your team,
00:11:39include it in all your onboarding materials,
00:11:41and make sure that you go and upload it
00:11:43to a given 10X project inside of Chat GBT
00:11:47that's gonna help you go and continue to march
00:11:49towards this ambitious vision every single day.
00:11:53Your job at Level 5 is to create a business
00:11:54that becomes a household name.
00:11:56If you wanna go and get my five levels of scaling roadmap,
00:11:59you can go and check it out via the link in the description.
00:12:01All right, so as you can see, these five levels,
00:12:03they're a bit complicated, right?
00:12:05And I understand, this shit ain't easy.
00:12:07So if you're scaling your business
00:12:08and you're trying to go from one level to the next
00:12:10and you want support, you want systems,
00:12:13and you want access to me so that I'm literally
00:12:15in your corner helping you move
00:12:16through these levels seamlessly,
00:12:18you should go and apply to founderOS
00:12:20via the link in the description.
00:12:21Go and book a call, we'll understand what level you're at
00:12:23and understand where you're really trying to go
00:12:25and we'll see if we can help.
00:12:26And if you wanna learn the psychology
00:12:28behind creating a magnetic brand,
00:12:30go and check out this video right now
00:12:32and we'll get into the details there.
00:12:34Be sure to like and subscribe
00:12:35and welcome to the founder freedom movement.

Key Takeaway

Scaling a business to $13 million a year requires a series of identity shifts where the founder moves from manual execution to system design and eventually to visionary brand building.

Highlights

The five distinct stages of business evolution: Scrapper

Timeline

Introduction: The Identity Shift Required for Growth

The speaker introduces the five levels of business based on 16 years of experience and a $13 million annual portfolio. He argues that failure often stems from applying Level 1 behaviors to Level 5 problems, which prevents effective scaling. Each stage of growth demands a symbolic "death" of old habits, systems, and identities that no longer serve the business. This section sets the stage for a deep dive into what breaks at each level and what must be implemented to progress. The ultimate goal is to move from a constant hustle to a position of freedom and high-level strategy.

Level 1: The Scrapper - Survival and Customer Love

At the Scrapper level, the founder is responsible for every department, from marketing and sales to legal and finance. The primary focus here is not complex strategy but mastering the skill of starting and finding the first customers who love the product. The speaker references Paul Graham’s essay "Do Things That Don't Scale," citing early humble beginnings of companies like Airbnb and Shopify. Founders are encouraged to talk to at least 30 customers and incorporate their feedback into a simple, irresistible offer. Building a personal brand is also highlighted as a critical distribution moat for the future.

Level 2: The Operator - Systems Over Charisma

The Operator level is characterized by earning revenue but facing burnout because the product and processes are not repeatable or scalable. The speaker shares his experience making $50K monthly while working like a "psychopath" before realizing that systems are more important than charisma. This stage requires documenting recurring tasks using tools like Google Docs and Loom to hand off responsibilities to team members. The goal is for the founder to stop being the bottleneck and ensure that delivery is consistent and on time. Moving to the next level requires a shift toward rigorous hiring and the creation of a strong company culture.

Level 3: The CEO - Numbers, People, and Culture

Transitioning to a true CEO involves moving from doing tasks to building a "machine" where decisions are pushed down to empowered team members. The speaker emphasizes three core focus areas: numbers (profit margins and cash flow), people (hiring A-players), and culture. He notes that 97% of founders fail here because they lack an intricate understanding of their financial metrics. To succeed, founders should create an organizational chart for the next 12 months and establish a dashboard of core metrics. A consistent meeting rhythm is also introduced as the "heartbeat" of the company to maintain momentum.

Level 4: The Empire Builder - Precision and Peace of Mind

At the Empire Builder stage, typically around $250K per month, the founder must focus on extreme quality and high-level leadership. The speaker discusses how he improved his content and distribution by focusing on the minute details of production and scripting. A key requirement for this level is hiring an exceptional CFO to provide the founder with "peace of mind" and financial clarity. The founder must identify their "zone of brilliance" and empower a leadership team that can hire other leaders. The ultimate objective is to continue compounding cash flows without increasing personal stress or losing one's soul.

Level 5: The Icon - Visionary Legacy and Brand Identity

The final level, the Icon, involves creating a business that becomes a household name by selling a transformation rather than just a product. The speaker uses George Lucas and Walt Disney as examples of leaders who planned entire universes and 10-year roadmaps before their initial success. Brands like Apple, Nike, and the speaker’s own Founder OS are defined by the emotional experiences they provide, such as creativity, victory, or freedom. Founders are encouraged to use AI to help think 10X bigger and communicate their aspirational vision to their entire team. The video concludes with an invitation to join the "founder freedom movement" and apply for personalized scaling support.

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