Grow Without Hiring

[00:00:00] Ken: Throughout history, we've faced innovation downturns, upturns, recoveries, and everything in between. The economy grows, it contracts, it changes, but what we often miss is that as entrepreneurs. How we are doing is not just about the economy, and that's where this concept of the two economies comes into play.
[00:00:23] Ken: When we think about how to grow without hiring, we can't just look at the macro level. It's more specific and it's about how the market responds or doesn't respond to your services, to your growth. And in certain cases to your stability. At the time of this recording, economists are calling what we are in today, the K shaped economy.
[00:00:45] Ken: You don't need an econ degree to generally understand it. Maybe you've heard this before. The rich are getting richer, the poor are getting poorer. Now, at least here in the us, the Consumer Confidence Index is very low. But what caught [00:01:00] my eye more is the expectation index at 65 where anything below 80 historically precedes a recession.
[00:01:09] Ken: Both of these are a little bit squishy. They don't often reflect exactly what's happening. In job markets or any hard data, this is just how people feel. But for reference, that 65 number is lower than it was during COVID.
[00:01:25] Ken: And this is not about fear. The data is the data. I consider data knowledge and power. And as I mentioned a moment ago, even when there is a strong job market, even when the numbers look good in the economy, it doesn't always relate to how we actually do in our businesses. So one of a number of benefits of tracking along with me. Is that I actually look at things like this, and I also have ample first party data, both quantitative and qualitative. You hear me share stories all the time about client conversations, what I'm talking [00:02:00] about with prospects and so forth.
[00:02:01] Ken: So when I've been talking with. My clients, dozens of founders, consultants, entrepreneurs. It's not actually uniform and it's not actually clear. Some feel like the market is alive and they're seeing progress. Others are not feeling happy. They're saying that this year so far has been below what they expected.
[00:02:24] Ken: There's not a clear pattern on the surface, but there is a pattern and it relates directly to the two economies,
[00:02:32] Ken: and I want you to really let this sink in. What I'm talking about today isn't just about whether your business grows this year. It's about more fundamental aspects of whether your business is misaligned or mistuned.
[00:02:47] Ken: those that seem to be doing well right now have more sophisticated, complex, bigger lighthouse clients. And they are closing deals because of that. In some cases, they're doing better than expected,
[00:02:59] Ken: I have [00:03:00] clients focused on high-end luxury
[00:03:01] Ken: Who are still seeing spending and having great quarters. I have a client selling AI education and training into medium sized businesses who are still closing, if not closing bigger deals. And obviously, yes, I have something to do with that. The point here is that money is still moving and at the same time there are definitely parts of the market that are struggling.
[00:03:21] Ken: What it's not, however is random.
[00:03:23] Ken: Tying it back to some of that data I mentioned a moment ago, the smaller an organization or a businesses. Let's say for example, you're selling to a founder who has not raised capital. They have full control over their business. The more they act like an individual consumer, so when uncertainty rises, they pull back.
[00:03:44] Ken: They may not tell you no, they just don't tell you. Yes, they wait and they're waiting. For something to help them feel confident to be back in the market again.
[00:03:56] Ken: And so while last year, the money was jammed up because of these [00:04:00] bigger policy shifts at a macro global level, these same people today are benefiting from multi thousand person organizations or from budgets in the parts of the market that are still spending lots of money.
[00:04:13] Ken: so as I'm outlining this, you're saying, okay, great, I'm kind of getting it. So what,
[00:04:18] Ken: well, the first, so what is that? There is a mistake that many founders, entrepreneurs, consultants, solopreneurs, make during this type of climate. and you're starting to think, okay, I get it. I can't just wait for. Leads to drop in my lap. I can't just wait for clients to start to renew. I can't just be status quo. But the first answer that often comes to mind is to think that doing more is the answer. More conversations, more outreach, more channels, more technology.
[00:04:47] Ken: I have a saying that sits on my desk, more conversations, more sales. You've probably heard me say it before and it reminds me not to be comfortable, but here's what's different about that in the two economies. If you try to do more [00:05:00] conversations with a part of the two economies that is afraid, that is uncertain, that is unsure, no amount of volume is going to change that
[00:05:10] Ken: when you're operating in that lower half of the K, you cannot unfortunately out volume, what I will call fragile. Psychology,
[00:05:20] Ken: and this is why all the way back in episode eight, I outlined why it's important to stop waiting for growth and testing market segments, which is also something we'll talk about a bit today.
[00:05:31] Ken: And for me, the benefit of history, the benefit of having done this now for longer than I like to admit, but I have felt the two economies before, and in some ways the two economies are always operating. But I did build a seven figure business during the great recession. And part of what allowed me to do that at that time was my angle of innovation.
[00:05:53] Ken: I was building mobile applications for smartphones when that was brand new to the market.
[00:05:59] Ken: And I [00:06:00] did fine, but I believe with my knowledge today, I could have positioned that even better.
[00:06:04] Ken: The point is that I was aligned with where. Innovation was moving, and I've historically done that, and that is part of why I've had the longevity that I've had in my business.
[00:06:15] Ken: So what does that conversation show up like today? Well, it is a bit different. It doesn't mean ai. It means AI as a system versus a tool as we covered recently. It means the specialist era of ai. It means building that 2030 company, and one of the tenets of that is speed, iteration, decisiveness, efficiency.
[00:06:39] Ken: That doesn't mean however, discounting, it doesn't mean taking on a client just because you need revenue.
[00:06:47] Ken: Instead, it means that we have to understand the changes that are happening require us to have systems that allow us to execute more efficiently and to serve our clients better.
[00:06:59] Ken: I've [00:07:00] been working with clients and one last week specifically, and building a client-focused GPT. And I invited a bunch of my other clients out to come take a look at that. So now as they begin to think about that themselves and they say, okay, how can this help me on the back end once I actually sign off on a client?
[00:07:18] Ken: It doesn't mean that just because they were more efficient, they should charge half as much. It does mean however, that they can operate differently and it doesn't. Require them or you to just chase after whatever the latest, greatest thing is.
[00:07:33] Ken: For example, my client who is doing this AI training, they were an early mover, just like I was with apps,
[00:07:41] Ken: and this is the part about innovation. If you're still delivering. The way you did five years ago, 10 years ago, maybe even two years ago. That is the problem. I spoke with someone recently who's making, you know, let's just say roughly half a million a year, maybe a little bit less than that. Seems [00:08:00] great, right on paper, that sounds amazing.
[00:08:01] Ken: A lot of you are saying, sign me up for that. But they also have a business model that a hundred percent is going to zero over time.
[00:08:08] Ken: So the number looks nice, but they are working six days a week with a family. They only get cash through the door because of infrequent referrals, which means that they have lumpy revenue. Big months followed by zero months, not knowing when the next thing is coming through the door.
[00:08:25] Ken: And this is why the two economies is not about more. It's not about grinding. It's not about what has worked until today. Obviously, it's great to have solid money. It's not great to not realize things are shifting or even realize that things are shifting and doing nothing about it.
[00:08:43] Ken: Within the context of this conversation, revenue does not automatically mean longevity.
[00:08:49] Ken: So from someone who's been through it before, let me tell you this, and I hope that you feel the realness of this. I hope that you feel this is coming from someone who's lived [00:09:00] through the two economies. Your resolve will be tested. In certain cases, your solvency and liquidity may get leveraged or exhausted
[00:09:10] Ken: depending on where you sit across these buyers. If you had buyers who used to close quickly, they will now start to hedge just as quickly. You will have prospects, you will have clients who won't say no, but they also won't say yes.
[00:09:26] Ken: And from my viewpoint, there are multiple headwinds at once. It's not clear right now if it's about macro AI policy, people just being unhappy because of the weather, especially in the Northern Hemisphere. The point is that there are factors that we can't fully isolate relative to the US and how the economy's doing.
[00:09:46] Ken: The consumer confidence index is puzzling.
[00:09:49] Ken: So as it stands today, as of this recording, what we don't know is how long this shift will last. What we do know is that money is still flowing [00:10:00] in certain parts of the market. And this is kind of the maddening part of it, and this goes back to the rich getting richer and the poor getting poorer.
[00:10:06] Ken: There are billionaires being minted with ai.
[00:10:09] Ken: The number of them is fairly astounding,
[00:10:12] Ken: so there is significant money flowing at the top of the K. And you might say, oh yeah, well this is where the AI bubble bursts. Independent of that, the money is there today.
[00:10:22] Ken: The real questions that I've asked my clients that I ask myself regularly. And now I ask of you, did you decide purposely or on accident to focus on the bottom part of the K? Did you choose the wrong segment? Did you focus on what you thought was a lighthouse client, but actually is just a legacy client in disguise?
[00:10:41] Ken: I can't give you certainty across the board here, but I can tell you this, you don't have forever to assess whether your target segment will bounce back. You don't have forever to wait and see. You have to decide whether the softness is temporary or whether you need to make a more fundamental shift to target a [00:11:00] different lighthouse client who will continue spending over the rest of the year.
[00:11:04] Ken: I've said this before and I'll leave you with it again today. I feel strongly about this. The 2030 company I've talked about over the last number of years continues to compress right before our eyes. I can't say today whether this is just a temporary blip and we will continue to go back to the same trajectory, but we all are feeling it.
[00:11:25] Ken: We all don't know exactly what's happening, but something does feel different. And we don't get unlimited time to figure it out, so please don't write this off. Even if we see confidence return, or the market show stronger signals, the world and the market continue to change, I appreciate having the hard conversations with you, and I feel very confident and certain of this, it's more important than ever to know how to grow without hiring.