For any founder starting a business, it's important to for them to understand this cycle. Um I think you call it like the crash burn cycle or something because if you're not aware of the cycle, when you hit certain parts of it, you're probably going to think that there's something wrong with you. >> Yeah.
>> And but there's a certain inevitability to this crash cycle. I'll put it on the screen for anyone to see. >> Yeah.
>> This is this is the entrepreneur life cycle until you learn how to break free from it. And so there are six stages. You have stage one, which is uninformed optimism.
This is where you see your friend or you see something online and it looks like they're making money or it looks like there's some opportunity and you think, "Oh my god, that sounds amazing. " And you have optimism because it looks great, but it's uninformed because you have no idea what it entails. So then you dive in and you say, "Okay, I'm going to pursue this this thing, whatever.
Is it baking cupcakes or I'm going to I'm going to do lawnmowing or I'm going to do crypto trading, whatever. " Second step is you get into it and you're like, "Oh my god, I don't know. There's so many things involved in this and this is significantly more complicated than I I expected.
" So then you become an informed pessimist. You now know uh that it's hard or significantly harder than you expected. The third stage is you have your crisis of meaning or the value of despair.
So you're continuing to do this stuff. It's continuing to not work and you keep working and it keeps not working. And so this is the step and this is the this is the point of truth and this is the cycle where the the paths of the entrepreneurs split and the vast majority of people take this next step which is they then say you know what there's that thing over there that my other friend's doing maybe I should do that instead and so then they hop back to uninformed optimism and then they go boom to informed pessimism and they just go around and around and around and they live the same six months uh for 20 straight Now the other path of from the valley of despair is sticking with it.
And so then you become an informed optimist because now you understand you still understood all the bad stuff but you also understand the good stuff and how to avoid the bad and maximize the good. And then once you're there you do you stick on that path long enough and you end up achieving what you originally thought was really easy and fast. And so that cycle, this is more or less the um the Alex Ramoszi life story, which is why I can so intimately describe you to the steps, is that I call that loop and that uh the person on the other side the woman in the red dress, which is probably my favorite part of the Matrix movie, which is Neo, who's the main character, uh is in a program to teach him one thing.
And so he's walking uh through the crowded streets of what looks like a New York City with Morpheus leading him. And uh he's drawning on about something that he's supposed to learn. And he says, "No, were you listening to me or were you looking to the woman looking at the woman in the red dress and and Neil was looking at the woman in the red dress as Morpheus is talking and then he says, "Look again.
" And he looks back at the woman in the red dress and it's Agent Smith with a gun pointed at his head. And in that moment, he's like, "Freeze. " And he explains that you're either one of us or one of them.
And they are the people who are sentinels sent to destroy us. And so what appears to be the woman in the red dress is actually a d agent from the system meant to destroy the opportunity that you're in right now. And so I love the woman in the red dress so much because it's so real because you're in this thing.
You're in this relationship with your business and you're like, you know, this girl seems great. And then you you get to know and you find out she snores when she sleeps and all of a sudden it's like you know uh you know you see you see the sweatpants and no makeup in the morning and you realize that sometimes she's moody whatever but you get to you start to get to know you're like I don't know if we're going to get married but like you know this is kind of where we're at. And then you see a woman in the red dress and you're like you know what I think that's the girl and so you quit this relationship with your business and you get into that relationship but then you realize that that girl has crabs.
She has a crazy ex-boyfriend and you're like oh my god I didn't want to deal with any of this stuff. Right? And so my CFO, so was one of the first people that you're like, "Oh my god, I hired that person.
It changed everything. " So my CFO in Jim Launch um had taken four companies from zero to 100 million. Um she had done over 40 M&A transactions.
Her largest one was 5 billion. Super experience. Um she was at the very end of her career.
And she was like, I'll take you guys I'll I'll take this one last ride with you guys. And so you know, mind you, Leila and I'm 26 or 27 at the time. Leila's 23 24.
And we're sitting across the table from a very experienced business person being like, "Please help us. " And so one of the things that she taught me that I I will never forget is she said, "The grass is always greener on the other side. You just don't know that it's fertilized with shit.
" And she and she she's southern, so she had this deep southern act. She's like, there's always [ __ ] >> [ __ ] everywhere. And so she's like, "I've been in enough businesses to know that all businesses have shit.
" And so you just have the [ __ ] you don't know about and the [ __ ] you do know about. And you're in this business. And so this is the [ __ ] you know.
And that has been so profoundly impactful in my life because it was so hard for me to break the cycle. Really hard for me. Um I mean I gave you my my life story of the many businesses that I've been involved in.
And so like the entrepreneurial ADD has been so real for me. And I've made some of the biggest career mistakes by just pursuing and splitting my attention between multiple endeavors. And I can say truthfully that this 2024 was the first year and this is now 2025.
The first time in my life where I haven't experienced FOMO. So fear of missing out. And it was one of those things that I just always had.
I would see somebody doing I was like, "Oh man, I mean I should be getting into that like that. I shouldn't be doing this. I should doing that.
" Um and it was it was one of those things kind of like being happy where like you don't realize you're happy. You just look back and you're like, you know what, that was a really good year. You know, like you kind of like you kind of see it in retrospect.
What I realized was that now when I hear someone say like, "Oh my god, I crushed it with this thing. " I think that's amazing for them. I'm sure there's tons of problems that I don't know about and that's amazing, but I'm gonna keep doing this thing because it's the only thing I know how to do pretty well and I'm just going to keep compounding my information advantage against everybody else who thinks this is easy and wants to get into it.
And so, um, I think that that every any any massive company that you know of has existed for multiple decades. And in order for something to exist for multiple decades, the founder has to stay focused on that thing for the whole time. And I measure focus by the quantity and quality of things that you say no to.
And I measure commitment or I define commitment as the elimination of alternatives. And so if you think of marriage as the ultimate commitment, then it is the ultimate commitment because you've eliminated literally every alternative besides this person. And so I think that many business problems and many entrepreneurs would 5x 10x their business if they simply gave themselves no way out.
This is what I'm doing and I'm I mean the term you know burning the boats but I'm eliminating all alternatives and structuring my life such that I I make it very difficult to pursue the alternatives. And I think by doing that, you can actually conquer this this cycle and make it past the split where you go uh crash and burn and then restart the doom loop or make it to informed optimism and then eventually to the achievement that you want. There's so much there.
There's so much there, but it's such an important point. Um so where should I start? So at that moment here, this crisis of meaning moment, >> what I see so much of is entrepreneurs not necessarily quitting the old thing, but just taking on something else.
>> And I get entrepreneurs will come up to me in the gym and they'll say, "Hey, Steve, um, just want to let you know what I do and see if you can offer me any advice. " And then they'll list three things. They'll say, "I'm starting this crypto thing with my friend Dave.
I've got this hair business where we're selling on ecom and I've got this other thing. " Yeah. >> And they almost assume that the more things they're doing, the higher the probability that they'll be successful in something.
>> My mom was that. My my mom has started 30 businesses. And I watched for my whole childhood how she would start a hairdressing salon and then the person down the street running an estate agents would come in and say, "We're making loads of money as an estate agent.
" She'd start that. That business would suck. She'd hit this moment of crisis of meaning.
then start a furniture business in a she so she jumped between 20 to 30 businesses >> and it's kind of still happening now where they last 6 months they eventually go bust she sort of like you know like the monkeys that swing to the next branch swings to the next thing and there's never been the escape velocity that comes from this informed optimism part >> so yeah this it really rang true for me in every sense of the word this idea of like of focus going against all of your inst instincts and your emotions, but being pivotal to achievement. >> I think entrepreneurship is far more a war of the heart than it is a war of the mind. Like we can understand what we should do, we just don't do it.
And I think that's why um we are so much better at giving advice than we are at following it. So most people if they just followed their own advice, they'd be successful, right? And so um with this kind of valley of despair, I call it um niche slapping.
is like, "Don't make me niche slap you. " Which is like when you have three things going on, it's like, "Let me like slap you into just picking one. " Because the thing is is that any of them can work, but none of them will work unless you pick only one.
>> Because it's actually, in my opinion, an exercise in arrogance to assume that you doing three things is somehow going to beat somebody who's doing one. And I can promise you, the competitor who is going to beat you is only doing that one thing. and you think a third of your time is going to beat theirs.
No, it's not going to I think it's arrogant. And so there's actually like an under there's like an underpinning of ego underneath of this. And I say this as somebody who did this.
So like when I had the launch business, I also had my six gyms. I also had a chiropractor agency and I also had a dental agency. And so I would introduce myself.
I'm like, "Oh, I own lots of companies. " But I think one of the biggest misconceptions when you're an entrepreneur is not understanding the difference between being an owner and being the CEO. And so they might hear that you have a portfolio.
thing might hear that I have a portfolio and be like, "Okay, well, they have a portfolio, so I must model that. That guy's tall. I should play basketball.
" Doesn't work that way, right? I should be So, if I want to be rich, I should fly private. Doesn't work that way, right?
Um it's conflating order. >> And so, we must do these things in order uh to get the outcome. We have to concentrate on only one thing in order to get the outsized return.
and that spreading of attention, especially when you're newer in the entrepreneurial career, it's like you already don't know so many things. How do you now want to have three sets of unknowns that you want to try and conquer at the same time? And the the fallacy of thinking is that I'm going to try all of them and see which one works, but none of them will work because you're waiting to see which one will work.
Because you can force, in my opinion, you can force one thing to work. Provided like I'm just I'm going to just assume basics like you're selling you're not selling $5 bills for $4. Like you know the normal economics of a business like if if if if a real estate business exists there are other people are making money.
There are hair salon businesses where people are making money. There are lawnmowing business where people are making money. You can make money in all of them.
You just can't make money in all of them. >> Yeah. Yeah.
Yeah. At the same and it it's when you walked in today and you sat down on the chair I said like what's going on with you professionally? I remember what you said.
You said more of the same and better, which clearly comes from your wisdom, my my infinite wisdom, right? Well, it's just from from from from suffering. Um the the the woes of this.
Like the biggest entrepreneurial mistakes I've made in my career have all come from splitting my attention. Every one of them. Like every single one of them.
Like I talked about how I had the e-commerce business that I bolted on to my to my licensing company. I should not have done that. As soon as I did that, my my revenue started slowing down in its growth.
>> Why did you? >> Because I was add like I just I was like, "Oh my, I don't want to leave money on the table. " And I want to I want to be so violent about this.
You are always going to leave money on the table. That is the result of focus. But you're you're leaving a small amount of money on the table to pursue the much larger money that's on another table of just sticking with the thing that you're on right now.
Because compounding, if I were to show a chart here, it's like if you're at year three of your thing and you want to think about moving to year zero of a new thing, you have to compare maybe year zero of a new thing grows faster, but it has to grow faster than year 3 to four of the thing that you're on right now. And I think that's the people will compare year zero to year zero, but not year four to year zero. And the thing is is you actually we have a linear life.
And so we that is it's an unfair but true comparison of the opportunity cost. And every exceptionally um successful entrepreneur that I know has just stuck with one thing for such an inordinate amount of time. And I think there's a quote by um I want to say Shane Parish, but he said um success is doing the obvious thing for an extraordinary period of time without believing that you're smarter than you are.
Yeah. And it's just like you we we know what we need to do and comp so we don't need to make our lives more complex. Complexity will come with scale.
I promise. And so just simply trying to do more of what you're already doing well is already hard enough. Don't add anything else.
And so like if you need to write some sort of commitment of like I'm just going to stick with this then do that. But the what happens is when we were talking about the levels earlier about like beating the bosses. So what happens is you know how to beat boss one through three of of the game.
And so then you just say, "Okay, well I'm just going to start the game over and beat boss I mean this this time it's going to be different. " But then you just get to level three again and then you're stuck again. And so people just keep getting up to level three and new and new and and new endeavors over and over again because they never learn how to get past that boss.
And so you just have to confront the uncertainty of knowing that you don't know how to do it, but that you will figure it out if you keep doing enough repetitions. And that's where you talk to as many people as you can. You see what they said, you consolidate it all and you say, "I think this is the highest likely path.
It might not work. " But I do believe fundamentally that if we cut people's hair well and we do it for a long period of time, we will have a thriving business. And if we have a really good model from that thing, we might be able to open up another location.
And if we keep our cost down, we might be able to have an actual model that we could either invest our own capital or bring somebody else and take it national, right? Like all of these like I have yet to find a business that can't get to $100 million a year that has a permutation of it that exists. You're a dry cleaner.
Fine. Well, cool. we'll build the model and either we can license the model, we can franchise the model out, we can get outside investors, we can scale it nally, we can do it.
But the crazy goals are only crazy because people have crazy timelines. They're actually very sane goals if you extend the timeline out. If you have a a true 10ear goal or true 20-year goal, almost anything is accomplishable.
I mean, almost every multi-billion dollar company is about, you know, they get it's usually between like year six and 10 when companies get to kind of like those big numbers. And most people who are listening to this are five years into entrepreneurship, but you're six months into the thing that you've been working on right now. And you keep restarting the clock for getting to year 10 every time you start over.
And I think that's the part that it took me a very long time to figure out. And I think it takes a lot of entrepreneurs like everyone messes around with a lot of stuff in the beginning because you just don't know what you're doing. >> And so in my experience, it takes about five years for most entrepreneurs that I know to just like find something that works.
Like I'm like takes about 5 years to figure out which way is north. >> Yeah. Yeah.
>> And then it takes like another five years. And a lot of people that's it. Like they they restart.
They they they go off crash and burn. Um >> and it takes another five years to build something that can can create generational wealth. So it's about a 10-year slug.
And here's the really hard truth about it. If you have a job right now, for almost all of that five years, you quit your job because you don't want to work as hard as you are and you want to make more money. And as soon as you quit, you will realize that you are now going to work way harder than you were and you're going to make less money for an extended period of time.
The one benefit is that you get to claim all responsibility for how little you make and how much you work because you're like, "My boss is an idiot and it's me, but it's the truth. " And I think that in some ways having that um optimistic ignorance is actually one of the really redeeming traits of entrepreneurs. And one of the really hard parts is that the biggest jump you have to make gets so immediately reinforced from the freedom you have from being able to, you know, chart your own path.
But that big success of quitting one thing and starting another, you need to immediately forget. And I think that fundamentally that is why so many entrepreneurs keep doing it is because the first time you do it, it's the biggest rush ever. You quit your job, you do the business, and and you get some some first traction.
And that that first dollar that you make when the new business, it's like the best dollar ever, right? But it's such a strong reinforcer that what does it reinforce? It reinforces stopping what you're doing and starting something else.
And so I think one of the fundamental errors of entrepreneurship is that sometimes the jumping ship to start this thing is the lesson that you need to immediately unlearn because after that you have to just stick with it for a very long period of time. If you love the D CEO brand and you watch this channel, please do me a huge favor. become part of the 15% of the viewers on this channel that have hit the subscribe button.
