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August 29, 2024 • 2hr 35min
#831 - Dan Martell - How To Stop Wasting Your Time & Money On Things That Don’t Matter
Modern Wisdom
Dan Martell is an entrepreneur, investor and author. In this episode, he discusses his "buyback principle" for scaling businesses and freeing up time, as well as strategies for running both your business and personal life more effectively. The conversation covers topics like delegating tasks, hiring the right people, managing relationships, and shifting your mindset as a leader.
#831 - Dan Martell - How To Stop Wasting Your Time & Money On Things That Don’t Matter
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Key Takeaways
- The "buyback principle" states that you don't hire people to grow your business, you grow your business by buying back your time. This allows you to focus on high-value activities.
- Most entrepreneurs hit a "pain line" where saying yes to opportunities creates chaos in their calendar. This is when you need to start delegating and outsourcing.
- The first step is usually hiring a virtual assistant for 10 hours a week to handle administrative tasks like email and scheduling. This allows you to practice delegating.
- As you grow, continue to delegate and hire for roles like delivery, marketing, sales, and leadership. The goal is to build a machine that runs the machine.
- Record yourself doing tasks via video and have your team create SOPs. This allows you to transfer knowledge efficiently.
- Run your personal life like a business - have regular meetings with your spouse, set goals, measure progress, etc. This creates alignment and prevents resentment.
- When hiring, use profile assessments, cognitive tests, and give candidates test projects to evaluate fit. Don't just rely on interviews.
- "80% done by somebody else is 100% freaking awesome." Let go of perfectionism to scale.
- Express preferences rather than criticizing. Focus on creating the future you want rather than dwelling on negatives.
- Celebrate and reinforce positive behaviors you want to see more of, rather than punishing mistakes.
Introduction
Dan Martell is an entrepreneur, investor and author. In this episode, he discusses his "buyback principle" for scaling businesses and freeing up time, as well as strategies for running both your business and personal life more effectively. The conversation covers topics like delegating tasks, hiring the right people, managing relationships, and shifting your mindset as a leader.
Topics Discussed
The Buyback Principle (15:11)
Martell explains his "buyback principle" which states that you don't hire people to grow your business, you grow your business by buying back your time. The key steps are:
- Look at your calendar for the past two weeks
- Identify tasks you don't enjoy that could be done by someone else for 1/4 of your hourly rate
- Delegate those tasks to free up your time for high-value activities
He emphasizes that this allows you to focus on the activities that will actually grow your business, rather than getting bogged down in low-value tasks. As Martell puts it: "If you buy back my time, then I can go do the thing that is the Achilles heel or the friction point or the bottleneck of why I'm not growing."
The Pain Line and When to Start Delegating (44:35)
Martell discusses the concept of hitting a "pain line" where entrepreneurs start to feel overwhelmed:
- Being on your phone constantly, even on vacation
- Partner getting upset about constant work/delays
- Not having space to think strategically
- Sacrificing workouts, routines, self-care
- Physical symptoms like shingles from stress
This is when you need to start delegating and outsourcing tasks. As Martell says: "If you tripled your business over the next three months, what would break? Most people couldn't even absorb opportunity because of the way they built it."
Starting with a Virtual Assistant (55:53)
Martell recommends starting by hiring a virtual assistant for 10 hours a week to handle administrative tasks:
- Email management
- Calendar/scheduling
- Basic research and tasks
He suggests using overseas VAs at first to practice delegating at low stakes. The goal is to learn the skill of working with and training someone else. As you get comfortable, you can expand their hours or hire full-time.
Email Management System (59:44)
Martell shares his email management system:
- Use Gmail with delegated access for assistants
- Set up folders/labels for different types of emails
- Have assistant triage emails into appropriate folders
- Only look at "Dan" folder on phone
- Have daily call with assistant to review important emails
The goal is to have the assistant handle 99% of emails, only bringing the most important ones to Martell's attention. This frees up significant time and mental energy.
The Replacement Ladder for Hiring (55:53)
Martell outlines his "replacement ladder" for hiring as you scale:
- Administrative - VA, personal assistant
- Delivery - account managers, support roles
- Marketing - building marketing systems
- Sales - the "freedom stage"
- Leadership - hiring people to run departments/company
The idea is to systematically replace yourself in different areas of the business, moving up to higher-level roles. This allows the business to scale beyond just you.
Creating SOPs and Training (1:23:01)
Martell recommends using the "camcorder method" for creating SOPs:
- Record yourself doing tasks via video
- Have the person you're delegating to create the SOP
- Review and refine the SOP
This allows you to efficiently transfer knowledge while also testing if the person understood the task. Martell emphasizes always having the SOP open when doing a task to reinforce the process.
Running Your Personal Life Like a Business (1:59:52)
Martell applies business principles to his personal life:
- Quarterly offsite with spouse
- Weekly meetings with agenda
- Family core values
- Measuring progress on different life dimensions
He says this creates alignment and prevents resentment from building up. It also models good habits for kids. As Martell puts it: "If you wake up every day to try to make their dreams come true, everything gets easier."
Hiring Process (1:47:34)
Martell outlines his hiring process:
- Initial video submission to filter candidates
- Profile assessments (e.g. Kolbe, Profile XT)
- Cognitive tests
- Test projects
- Final interview
He emphasizes the importance of test projects, saying: "I can't work with you until I work with you." This allows you to evaluate how candidates actually perform tasks and collaborate.
Letting Go of Perfectionism (1:27:41)
Martell discusses the need to let go of perfectionism to scale:
- Adopt the mindset: "80% done by somebody else is 100% freaking awesome"
- Focus on the value of freeing up your time, not perfection
- Recognize that some people will love tasks you dislike
He emphasizes that your judgment against certain types of work can prevent you from delegating effectively. Let go of the need to do everything yourself.
Expressing Preferences vs Criticizing (2:22:40)
Martell shares an insight from his coach about shifting from criticism to expressing preferences:
- When you feel frustrated, ask "What would I have rather happened?"
- Express that preference to create the future you want
- This is more effective than criticizing or getting upset
He gives the example of responding positively to his wife's text about the kids, even when he felt criticized. This approach helps create the relationship dynamic you want.
Celebrating Positive Behaviors (2:26:26)
Martell discusses the power of reinforcing positive behaviors:
- Identify behaviors you want to see more of
- Publicly praise and celebrate those behaviors
- This encourages others to emulate those behaviors
He contrasts this with criticizing mistakes, which makes people afraid to take initiative. The goal is to create a culture of looking for "bright spots" to reinforce.
Conclusion
The conversation with Dan Martell provides a wealth of insights on scaling businesses, managing time effectively, and shifting your mindset as a leader. Key themes include systematically delegating tasks, hiring the right people, applying business principles to your personal life, and focusing on reinforcing positives rather than criticizing negatives. Martell's "buyback principle" offers a framework for freeing up time to focus on high-value activities that drive growth. Overall, the episode emphasizes the importance of building systems and processes that allow you to scale beyond just yourself, both in business and life.