Episode #226 – How To Confuse The VC’s

Hey everyone this is Russell Brunson and welcome to Marketing in the Mommy Mobile. Hey everyone, yes I’m taking mom duty on today. I’ve got Norah in the back seat, we’re going to pick up Aiden from school. I happen to be one minute late already. It’s hard to be a mom, no one ever told me this, but it’s hard.

Anyway, so that’s what’s happening today. The reason why I’m a little bit late, is we just got off a call with some VC people, which is kind of cool. First off, they’re super cool people, I really enjoy them and everything. But it was interesting conversation. You guys want to hear behind the scenes of some of the funny stuff? In fact, I’m going to title this podcast, how to confuse the VC’s. Because it’s interesting, they have been trying to talk to us for a while and we basically said, “We’re not looking for money, sorry.” And they’re like, “We know you’re not, but we still wanna talk.” And we’re like, “No, we’re not interested.” And they’re like, “Please? We’ll fly out to Boise.” And we’re like, “No.” Anyway, so finally got the call set up. But it’s just funny. I feel like we’re in a good position….Can you guys hear Norah back there, guys?

Anyway, I feel like we’re in a good position. I told my team, “I feel like we’re the hot girl that doesn’t really want it, so everybody wants her so much more.” Anyway, we’re not interested in taking it, but we thought it might be fun to talk to them. Maybe, who knows? Whatever. But we had a conversation, and it was cool. Like I said, super cool guys, enjoyed that whole thing. But it was interesting, if you look at what they’re looking for, there’s 3 core metrics that the VC’s want. They want what’s the cost to acquire a customer? What’s the lifetime value of that customer? And what’s your churn? Those are the 3 core metrics that they asked about that we kind of knew going into it.  And what’s cool is that because of all the funnel stuff that we do, and hopefully you guys are doing, it totally confuses the VC’s.

They have one way of doing things. What’s your cost to acquire a customer? And we’re like, “All of our customer’s are free.” And they’re like, “No, that doesn’t make sense. How much does it cost?” And I’m like, “Well, if we buy ads from Facebook straight leads to a trial, it’s like $150 a member.” And they’re like, “Wow, that’s really good.” And I’m like, “Yeah, it’s really good but we don’t do it.” And they’re like, “Why don’t you do it? You should be spending that money all day long.” “Because we’re a start up boot strap. The money we’re spending is out of my own pocket, and we’re good enough at funnels, that if I’m not profitable at breakeven point of sale, I don’t want to do it. I don’t want to go in the whole too much. If I had a hundred million dollars in VC’s, sure we’ll go waste money on dumb marketing, but we are smart enough to be profitable up front. This is how it works, we’ve got front-end offers, or my free book offers, or The Perfect Webinar script or things like that. What happens, is we buy ads on Facebook, cost us $10-$15 to acquire a customer there, but we make $30-$45 in the funnel, therefore we make $25-$30 from every single customer that comes into our world. And we have a huge follow-up sequence in place that we promote that then gives us all of customers for free. In fact, we make money ahead of time, before they ever become a customer, and then our email sequence gets them into our program for free.”

They’re like, “That doesn’t make sense.” I don’t think they believed us. I was like, “No, this is how it works. We do have a customer acquisition cost on different channels, like affiliates we pay out 40% up to 45%, we give away cars and stuff.” And they’re like, “What? You give away cars? Why would you do that?” I’m like, “Because that’s awesome. That’s how it works. It’s all about recruiting sales teams. Then people come in now we’re selling on-board, we’re selling certifications, things like that. So we’re crazy profitable.” They don’t understand it because they come from worlds that aren’t profitable typically. So we’re showing them our numbers and then we show them the numbers and he’s like, “Wow. I don’t think you guys understand what you guys have right here.” I was like, “Yes, we do. This is why we’re not looking to take money. Everything’s fine. We’re really good at funnels.” Then the next question was, lifetime value of a customer, right. That one was an easier metric, but we’ve only been in business for a year and a half so it’s hard because our customers have to start using us, if they don’t leave us very high. So we showed what the lifetime value of a customer was, but it’s not accurate because the numbers are growing so fast. Alright I’m at the school, I gotta pick up Aiden, I’ll finish up this podcast when I get back.

Alright, I got Aiden and he’s talking about some movie called Norah.com?

Aiden: No it was called Coconutcron.com

Russell: Coconutcron.com. Anyway, to finish off my thought….oh wait, what?

Aiden: Also, do you want me to tell you a story?

Russell: Yes, tell us a story.

Aiden: Okay, so at first starts with Norah.com and its….wait, I actually kind of forgot it Dad.

Russell: Alright, so that’s Norah.com. Alright, let me talk…

Aiden: That’s only half of it.

Russell: I’m going to talk for a minute and if you wanna tell them the rest of the story tell me okay.

Alright so the last have of the story is Churn. They’re like, “What’s your churn?” we’re like, “If you look at the last 3 or 4 months, it’s decreased dramatically.” And they’re like, “how much?” and we’re like, “well I think it before it was at 16% and we added in this one step in the funnel and it dropped it to 12% and then we added in this 21 day ignite your funnel, communication funnel, our on-boarding funnel after they come on, and we dropped down to 9%.” And they’re like, “You dropped it that much in a short period of time?” and we’re like, “Yeah, that’s what we do. We test things, we test all the steps and process and try to decrease churn and we’re always looking to get it better and better and better.”

Anyway, it was just so funny because I don’t think they’re used to these kinds of things. They’re used to having a bunch of money and spending tons to acquire a customer. I was listening to a thing the other day and it talked about Hubspot. They said that Hubspot cost them $10,000 to acquire a customer. Excuse me, maybe it was $1,000 to acquire a customer. Something crazy like that. I’m like, “Are you serious?” It’s so much easier when you understand what you guys understand, what we understand with all these front end funnels. That’s the magic. And then the webinar funnels are profitable, dramatically profitable up front. It doesn’t make sense to them.

Aiden: Dad?

Russell: What bud?

Aiden: I remember it.

Russell: Alright Aiden remembers it, hold on, he’s back.

Aiden: Okay, then the person says, That’s Norah. That’s Zap.  So that’s Norah, and that’s Zap? No! That’s Norah, and that’s Zap. So that’s the rooms zap. And then the baby’s Norah? No! This is Norah, this is Zap.

Russell: You guys all getting that? So, this is Norah and this is Zap.

Aiden: This is Norah, and this is Zap? Yes!

Russell: Nice. So there….I don’t know what he’s talking about, it’s something……Is it a movie you saw?

Aiden: The end. Yeah.

Russell: Oh the end. So that’s a movie…Did you watch that today or is that something you made up?

Aiden: …..but I still like make it .I didn’t watch it today, but I just have to do it on the movie. Like on a camera, then everybody will watch it and they’ll like it.

Russell: That makes more sense. So Aiden right now is wearing some cool Harry Potter glasses.

Aiden: Because I’m a big fan and my eyes are really hurty.

Russell: Because he’s a big fan and his eyes are really hurty. So we went and took him to an eye appointment and his eyes were amazing. So we ordered some…but he wanted Harry Potter glasses really, really bad, huh bud? So we went on Amazon and ordered some, but the wrong ones came. What were they? Did you like the first one’s that came?

Aiden: No.

Russell: No, he did not like the first ones. So we ordered some new ones, and they came and looked awesome. They are about half the size of his head, but he wears them everywhere. Wore them to school today huh?

Aiden: They also like them. They’re really ……..

Russell: And his friend said, “You look weird with them.” But he still loves them.

Anyway, so that’s what I got for you today. I gotta bounce and play with my kids. Just wanted to share that, I thought it was interesting. So that’s how you confuse a VC, have really profitable up front funnels, lower your churn through on-boarding funnels. Increase your lifetime value by having an amazing product and they’re going to be like, “What>? That doesn’t make sense. Why is it so good?” And hopefully you’ll get people coming to you as well. Anyway, I hope that helps you guys. That’s all I got. I’m out of here. Appreciate you all. Talk to you guys again soon. Oh what? One more thing. Say it again.

Aiden: Bye.

Russell: Aiden says bye. Bye everybody.