From Solopreneur to Scalable Enterprise with Ryan Deiss

PodcastScaling

Apr 1

Episode 835: Show Notes

Have you ever wondered what it takes to leverage your business into a scalable enterprise? Well, today we're going to explore just that with a very special guest, Ryan Deiss. Ryan is a serial entrepreneur, author, and investor, with a proven track record of building successful companies. He is the founder and CEO of The Scalable Company and DigitalMarketer, and a founding partner at Scalable Equity, an equity accelerator that builds, acquires, and invests in b2b media services and software brands. He's also the brains behind the Traffic and Conversion Summit, the largest digital marketing conference in North America, and the author of the book Digital Marketing for Dummies.

In today's episode, Ryan and I delve into his entrepreneurial journey, starting from his very first company which kickstarted his career. We explore the invaluable lessons he's learned and what he recommends for businesses in their infancy. As for those businesses that don't quite make it? Ryan breaks down the biggest reasons and shares insights on what it takes to scale a business from half a million to millions more. Whether you're a budding entrepreneur or a seasoned business owner, there's something for everyone in today's discussion. So, without further ado, let's dive into the world of entrepreneurship and scalability with Ryan Deiss!

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How Ryan Started His First Business

Back in 1999, as a freshman at the University of Texas in Austin, Ryan launched his first business from his college dorm room. In those early days of the internet, with Google still in its infancy, everyone was clamoring to start a dot com company. Inspired by the entrepreneurial energy around him, Ryan decided to learn web design to kickstart his journey. After struggling to find clients, he finally landed a gig with a lactation consultant. Despite feeling out of his depth in this particular field, he decided to jump straight in!

Things took a turn, however, when – due to unforeseen circumstances – she couldn't pay him. As a consolation, she offered him the rights to an ebook on making baby food. Understandably, Ryan was pretty skeptical about this, but he accepted. He admired the care she took with her customers and was impressed with her desire to support them after their time with her as a lactation consultant.

Despite Ryan’s initial reluctance, he soon realized the potential of her ebook and sold it online, laying the foundation for a successful ebook publishing venture. By the time he graduated, he had turned a seemingly odd opportunity into a six-figure ebook publishing empire selling little niche books, proving that sometimes, the most unexpected paths lead to success!

Monetizing Knowledge

Over the past 30 years, Ryan encountered plenty of doubters who didn't believe in monetizing knowledge. When he started selling ebooks online, some people were adamant that nobody would pay for them. Luckily he only encountered these detractors after experiencing a year of success, or he might have been discouraged from even starting. Today, there's similar skepticism about paid courses, with people saying everything's free on YouTube. But what Ryan has learned, repeatedly, is that people are willing to pay for knowledge, especially when it's presented in a unique and convenient way.

Setting Yourself Up to be Scalable

To set yourself up for scalability, even in the early stages, it's crucial to get crystal clear on your target audience and niche down to a point where it may feel uncomfortable. Ryan emphasizes that this means being prepared to say no during the sales process if a potential client doesn't align with your ideal customer profile. In the service industry especially, there's a temptation to accommodate every client's request in order to maintain the relationship. However, this leads to a situation where you're essentially running multiple bespoke programs for different clients, hindering scalability.

While it's okay to operate this way initially to understand your ideal client, at some point, you need to choose a specific avatar and focus on delivering one specific end result. This level of specificity is essential for productization and scalability. Without it, true scalability becomes challenging, if not impossible, to achieve.

How to go from Primary Operator to Scalable Business

Transitioning from being the primary operator to implementing systems that can run without you is a crucial step in building a scalable business. Ryan recommends that you start by visualizing your value creation process, mapping out every step from customer awareness to fulfillment. Identify critical tasks prone to errors and create checklists and processes around them. Delegate responsibilities to your team, providing them with clear instructions and training. Develop scorecards to track performance and make adjustments as needed. By gradually transitioning responsibilities and empowering your team, you can implement systems that allow your business to operate efficiently without your constant presence.

How to Grow your Sales as you Scale Your Team

According to Ryan, when hiring for critical roles, entrepreneurs are inclined to make one of two mistakes. Either they hire someone too junior, relying on personal connections rather than experience, or they try to hire someone to replace everything they do, jumping straight to hiring a CEO or COO — even if the company is very small. The key is to identify tasks you're willing to delegate. For instance, if you handle all advertising, calls, and sales, decide which tasks to hand over first. Consider hiring a specialist for prospecting and lead generation before hiring a closer. Take it one step at a time, starting with tasks that can be easily delegated and gradually building your team as your business grows.

Scaling Fast and Staying in Business

A study by the Kauffman Foundation and Inc Magazine revealed that two-thirds of companies listed on the Inc 5000 fail, emphasizing that growth isn't always the solution. While revenue is crucial early on, businesses often struggle to scale beyond $3-4 million, entering a challenging phase known as the "swamp of scale." To overcome this, Ryan explains that entrepreneurs must transition from running a startup to building a true enterprise and recognize that they can't be the most valuable person in the company. He breaks down why success in scaling requires a focus on teamwork, systems, and data-driven decision-making and how you can accomplish the challenging task of getting through the swamp of scale!

Why Businesses Fail

One of the biggest mistakes Ryan ever made was when he decided that his company was beyond his capacity to run and that he should fire himself. He did this because he felt like he didn’t know what he was doing and that he needed adult supervision. What he did then was bring in a new CEO, abdicate full responsibility, and hand everything over to someone who did not understand the culture or how the company created value.

What happened next was devastating. Instead of making smart, informed decisions, the new CEO simply started making lots of cuts to improve profitability and cash flow because that’s how they were incentivized. The results were that they destroyed the company culture, causing a lot of their best people to resign, and ultimately leaving Ryan with a company that was practically bankrupt.

While this was a devastating mistake, Ryan did take away a crucial lesson from this experience. Don’t quit on a bad day because even if you feel overwhelmed, you are still the best person for the job (and you have what it takes!) This story comes with the caveat that you should definitely bring in extra help if you need it. Just don’t hand over everything to someone else who doesn’t understand the company!

When It’s Okay to Stay Small and When You Should Scale

The idea of intentionally keeping a business small often stems from fear rather than genuine preference. Many who claim they want to stay small actually desire the benefits of scaling, like having a larger impact, generating higher income, and organizational growth. However, they doubt their ability to achieve this and settle for a smaller vision. It's important to acknowledge that choosing to stay small is valid if it aligns with personal goals. Yet, it's crucial to make this decision consciously, without letting fear dictate the outcome.

Ryan emphasizes that scaling a business doesn't necessarily require advanced degrees, outside expertise, or expensive tools. Instead, it involves breaking down the process into manageable steps and gradually seeking help where needed. The key is to make decisions confidently and intentionally. Scaling a business may seem daunting, but with determination and strategic planning, it's achievable for anyone willing to embrace the challenge!

Quote This

“I call it the founder’s paradox. It states that the more valuable you are to your business, the less valuable your business is.”

—Ryan Deiss

Highlights

How Ryan Started His First Business [0:01:17]
Monetizing Knowledge [0:05:55]
Setting Yourself Up to be Scalable [011:59]
How to go from Primary Operator to Scalable Business [0:13:55]
How to Grow your Sales as you Scale Your Team [0:19:14]
Scaling Fast and Staying in Business [0:23:26]
Why Businesses Fail [0:28:06]
When It’s Okay to Stay Small and When You Should Scale [0:32:32]

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Ryan Deiss

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Ryan Deiss is a serial entrepreneur, author, and investor, and according to Shark Tank star Daymond John, “His companies practically own the internet.” Ryan is the Founder and CEO of The Scalable Company, DigitalMarketer.com, and a Founding Partner at Scalable Equity, LLC, an equity accelerator that builds, acquires, and invests inB2B media, services, and software brands. Ryan is also the founder and host of the Traffic & Conversion Summit, the largest digital marketing conference in North America. He also quite literally wrote the book on modern marketing, Digital Marketing For Dummies (Wiley), which is now in its second edition. As a sought-after speaker, Ryan has shared the stage with top business leaders and celebrities like Sir Richard Branson, Gary Vaynerchuk, Sarah Blakely, Martha Stewart, Tim Ferris, Daymond John, and Dave Ramsey.