Right About Now with Ryan Alford - Why More Revenue Can Mean Less Profit: Yarin Gaon on Growth by Subtraction

Episode Date: August 25, 2026

Yarin Gaon started his first company at 14, built and sold Israel’s largest military-goods e-commerce platform, and now helps founder-led businesses make smarter decisions about growth. On Right Abo...ut Now, he joins Ryan Alford to explain why so many companies stall after reaching $1 million to $5 million in revenue and how “growth by subtraction” can improve profitability. Their conversation covers profit mapping, unprofitable bestsellers, ideal customer profiles, leadership alignment, and the hidden risks of building custom technology. Yarin also explains why entrepreneurs should establish predictable cash flow before raising outside capital and why keeping equity can matter more than chasing a bigger revenue number. This episode offers a practical framework for business owners who want stronger margins, fewer distractions, and a company that actually pays them more. TOPICS COVERED Starting a software business at 14 Building and selling an Israeli e-commerce company Why custom-built technology can hurt a business exit The difference between revenue, profit, and EBITDA Why founder-led companies stall between $1 million and $5 million Growth by addition versus growth by subtraction Finding negative-margin products through profit mapping The plumbing company whose popular service lost hundreds of thousands Identifying the right customers, offers, and marketing channels Why hustle and operational systems are not substitutes for strategy Bootstrapping versus raising venture capital Preserving founder equity while building a profitable business CONNECT WITH YARIN GAON Fractional Partners: https://www.fractional.partners/ Growth Decisions Canvas: https://canvas.fractional.partners/ Growth Bottleneck Snapshot: https://snapshot.fractional.partners/ Free Profit Map: https://www.fractional.partners/free-tools/profit-map LinkedIn: https://www.linkedin.com/in/yaringaon/ CONNECT WITH RYAN ALFORD AND RIGHT ABOUT NOW Right About Now: https://www.ryanisright.com/ Ryan Alford: https://www.ryanalford.com/ Instagram: https://www.instagram.com/ryanalford/ LinkedIn: https://www.linkedin.com/in/ryan-alford/ YouTube: https://www.youtube.com/@RightAboutNowwithRyanAlford

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Starting point is 00:00:00 I am a firm believer of bootstrapping and having self-funding, build a machine that is so profitable that funds its own growth. You don't need to be a behemoth. I will take a $50 million business or a $25 million business at a 20% EBDA, then $100 million business at 5% EBDA any day. That's just a completely different mindset. I favor if you can postpone getting external equity, do it. You don't win by following the playbook. You win by rewriting it. 700 episodes deep with the people who actually built something real.
Starting point is 00:00:38 No theory, no fluff, no shortcuts. This is Right About Now with Ryan Alford. What's up y'all and welcome to Right About Now. What's happening, brother? I'm happy to be here. Thank you for having me, Ryan. Hey, man. I was looking at the child prodigy because I read your story before I watched your story.
Starting point is 00:00:58 14, you're doing stuff that a lot of people weren't doing. You've come a long way, my friend. I appreciate it. Thank you. Learn a lot along the way, too. Where does that come from? I mean, I have four boys I consider to be good kids. Further along than the average bear.
Starting point is 00:01:12 But they weren't 14 and doing what you were doing. 14, I started my first SaaS company. How does it happen? It's a mixture of enabling parents. My father was an accountant. My father was also an entrepreneur himself. So he enabled me because at 14, I couldn't even open a bank account. I had to transact from my father's bank account.
Starting point is 00:01:29 Enabling parents, an interesting problem. and a lot of spare time and a love for money, really. Those mixed in the mix led me on in my path. I know how many things I have going on. It aren't business. And I do a lot with business. I go, man, I don't know what clicks for 14s, 13s. I mean, if you're into sports and we keep ours into it, so they stay active and not on their computers the whole time.
Starting point is 00:01:48 But you have more free time. So if you can put it together, you do have a lot of opportunity. That's a balance of though of not wanting to take away their child. You got plenty of time to work. But at the same time, you can do both or get ahead. It's all about balance, I guess. I loved it. It wasn't really work.
Starting point is 00:02:04 It was building cool shit. I was able to monetize it. Build cool shit. Get money. Sounds like a no-brainer. I remember I was in high school. I remember I had clients, users that were my classmates. It was a really interesting experience.
Starting point is 00:02:17 What made you go? Largest e-commerce platform for military goods in Israel. On the surface, that could sound really big or really small. I think I know enough to know that's probably bigger than I think it would be. But why military goods and what was the secret to success? That was a little later in my journey, not a 14. In Israel, there's a mandatory military service for guys about three years. I served for three years in the military.
Starting point is 00:02:39 I was a soldier. I found a really interesting problem. Two problems. One, as you go, we have a mandatory draft, but the army doesn't provide you with enough equipment. There's a whole secondary market of parents really shopping for their kids as they're going into the military for socks and shirts and flashlights and watches and all that peripheral equipment. The second problem was Israel. observe the Shabbas, the Shabbat, meaning that on Saturday, everything is closed.
Starting point is 00:03:05 So if you are combat soldiers, you get to go home every about two to three weeks for 48 hours. You go home Friday, Saturday, everything is closed. Sunday, you're back at the base. This is really very short time window to purchase equipment. When I was ending my mandatory service, I thought of myself, okay, something here is not clicking. One, why can't I just buy stuff online and get a ship to the base? It seems so simple these days, but there wasn't anything like this before. Why can I just, while I'm in the base, shop on my mobile app, on my phone, just have it chipped.
Starting point is 00:03:34 Problem number one. Problem number two is that there wasn't any specialty stores. Military equipment were sold by hiking stores, like R-E-I type. No niche. Nobody owned the niche. As I finished my service, I was like, okay. I had a little bit of coding background from my previous businesses. I had a little bit of passion.
Starting point is 00:03:50 Let's see. Let's see what happened. I started by selling strings, actually. And he caught. I just grew it and grew it and grew it. We opened a brick and mortar store or two. I sold it to seven years. That's my story.
Starting point is 00:04:00 How old were you then? Were you still a teenager? I started it at 22. I finished my service at 21, played around with it a little bit. 22, I really put my effort into this. And 22 to 29, I grew it. At 29, I sold it. I moved to the States.
Starting point is 00:04:13 I finished my MBA. I had to sell it. I didn't have to, but I didn't want to keep it while I was here. Is selling e-commerce that much different than selling e-commerce anywhere else in the world? My biggest challenge was that Shopify didn't exist in Israel back then. I had to build my website. I built the e-com website. I built the e-com.
Starting point is 00:04:31 When we opened the brick-and-mortar store, I built the POS system, and I built the ERP. And a really interesting point came out of it as I was about to sell it. I thought to myself, yo, I'm so differentiated. I have my own tech stack. I have my own systems. I'm so much better than anybody else because they were all using shitty magento. Yeah, WordPress with WooCommerce. And they're all shit.
Starting point is 00:04:49 And Hebrew is a right-to-left language. So there's a whole component to this. And I learned when I sold my business that my tag stack actually became dead. That's great that I developed it, but I'm the only one that can actually maintain it. When I sold it, the person who bought it or the company that bought it basically had to migrate my website into one of the magenta bullshit. I actually took a major price cut or a discount because what I thought is a differentiator is actually not. It cost me. It cost me quite a little bit of dollars when I exited. That's an interesting learning lesson.
Starting point is 00:05:20 I've seen this both in practice and in real world where we think certain things create value, especially in acquisition, sales and things. that actually don't. And that would be one. And then Shopify would have neutralized most of it because it's just the universal platform now for e-commerce. Love it or hate it. It is actually more lover than anything else. It sort of gets a lot of things out of the way. It creates a baseline. The major operation is already streamlined. And now you can differentiate on the branding, on the product, on the offer, on the micro-optimization. Everybody's playing in the same sandbox. What made you get into investments and fractional ownership and what guided you into this? area. I did my first business at 14, opened my second one at 16, then I drafted, then I did my
Starting point is 00:06:10 military website, the Army Goods website for seven years. Then I sold it. When I sold it, I moved to the States. And I finished my MBA, did my semester at Kellogg as an exchange student. Then I joined a VC, and I saw something really interesting. I joined a VC as an entrepreneur in. Basically, I was the in-house entrepreneur. And my job was to take all the startups that they found invested in and kind of usually ran out of money and to turn them around. That's what I did. But as I was doing, doing this, I was also volunteering as a business mentor at SCORE and at the University of Chicago. And I saw something really interesting. I saw hundreds of companies. And I saw difference between bootstrap companies and venture-backed companies. When I work with startups,
Starting point is 00:06:48 they basically got me for free. The fund used to send me there. I used to come with resources. I'm expensive. And they used to get me for free. But at the same time, I was volunteering and I worked with smaller business of bootstrap businesses. I couldn't really afford me, but needed my help really badly. I can only meet them once every six months, every quarter maybe. But these were fantastic businesses, cash flow businesses, businesses that make profit decision, not just scaling decisions, people that were all in. I saw a lot of VC founders play with money that it's really not theirs. They make different decisions. And I found something really, really interesting in that journey. I found why I think a lot of companies stall and get stuck. When companies grow, they apply different
Starting point is 00:07:31 growth model for different stages. As you start, it's all about growth by addition. And growth by addition basically means I'm going to say yes to every opportunity that comes in the door. I'm going to say yes to different type of customer, different type of product, different type of revenues, different number of channels. I really want to see what works. And that works really, really well in the early days up until you get to anywhere between one and five million dollars, really up until you find product market fit, what we call traction. It works perfectly. But what happens is once you find that most founders, VC and Bootstrap, we all make the same mistake, they keep applying the same growth model of growth by addition. They got the $5 million. They asked, okay, what else can we
Starting point is 00:08:06 develop? What else can we build? Where else can we sell our product? What other type of customer can we acquire? What happens is the business becomes very wide and very shallow. So it's multiple different departments, multiple different type of customers. Complexity goes up, margin goes down, and then the leadership team gets misaligned and they're going to try to figure you're out, okay, so we got here, but I'm not really sure what happens. What I preach or what I saw is there's a better way to grow, not forever, but for a specific stage. As you get to anywhere between $3 to $5 million and you find something that works, you need to shift or founders need to shift from growth by addition mindset into a growth
Starting point is 00:08:43 by subtraction mindset. And a growth by subtraction basically say, okay, I build something, something is working, what is actually worth doubling down on and what is actually was scaling from everything that I've built and almost deprioritizing everything else. So it looks like one type of customer that I want to focus on, one type of product that we want to lead with, one type of revenue stream or channel we want to focus on. And when you do this, you basically take all of your resources, which are very small at that stage. You probably have a small team, not a lot of cash in the bank, but you direct them to a laser,
Starting point is 00:09:11 very, very narrow offer that actually moves the needle. And then you rinse and repeat, you scale that version until you get anywhere between $25 to $35 million when you have a business that is stable enough and enough resource so you can now say, okay, let's get another type of client. What happens is founders build businesses. They build multiple businesses under one umbrella and it creates so much complexity. Have you seen that before? Oh, yeah, I've lived it.
Starting point is 00:09:36 It's why I'm in the lane I'm in now. Choosing a lane. Go deep instead of why. That's what we're saying. I worked for other people and other brands for 16 years before I ventured out on my own. That's the thing I try to preach to people. The grass isn't always greener. Everybody thinks it's cool to be an entrepreneur.
Starting point is 00:09:51 No, you're wrong. It is cool because you control your life, your time. You eat what you kill, all those things. But it's also not so bad being under an umbrella if it serves your needs. And everyone thinks that their needs only get served if they're calling the shots. Or they do it for just even worse reasons, which is I'm cool and I'm an entrepreneur. I've been in it now 10 years in the first six. I can get guilty of this even under the lane that we're in now.
Starting point is 00:10:15 It's part of what makes me great and terrible at the same. same time as far as ideas and everything that's what part of it but i've seen it you spread yourself you spread your team too thin and it stuck with me i read some of your footnotes some of the things you push which is creating value versus creating work and i say all the time activity doesn't mean it's success correct i'm not a plan it's not i like mine that mine is my favorite hope is not a strategy all the ages i've seen it i've watched it and i do think that's what happens and i think it's boring growing in the same lane but it is profitable if you do it right. Basically, as business owners or as operators, really, once we get the business off the ground,
Starting point is 00:10:53 then we're going to make or break. Success is basically based on what I called resource allocation. Your job is not to do stuff. Your job is to decide what is worth pursuing and how much effort does the organization give to initiative A or initiative B. Most times what people do is they don't make a decision at all. They just resource are being spread on all these things that really don't move the needle at all. But another thing that have observed that happens is once people or founders grow to that stage where they start feeling the friction of my business is too wide, their first inclination is let's put more processes and systems in place. Let's control the chaos. Let's put more processes. Let's install EOS or entrepreneurial operating system or scaling up. We just have to
Starting point is 00:11:33 have more better meetings. And my whole thing is like, okay, that's great. But before you systemize or this is not really the root problem, the root problem is usually you just haven't made some decisions explicit. You haven't explicitly chosen where you're taking this business or the people under you are making their own decisions, basically. Step number one is let's design a narrower version of what you have currently, you have your business. It's called version two. And then go and put EOS in place in systems and systemize this. But don't systemize everything you have because it's like 80% of it is not going to produce anything. You want to find the 20% that is actually worth saving. Then double down on that one. Did you see that before? Yeah. Oh, 100%. I'm all about
Starting point is 00:12:13 sayings putting a system around chaos equals chaos anything times zero is zero you know you wrong sometimes there's triage and there's all hands on deck don't get you wrong there's a lot of gray in business is the bottom line but you can't have so much gray that there's not clarity in the thing and if you put these we need a system around chaos then it means you don't have a system around a business you have a system around chaos good luck chaos has never been controlled yeah chaos really means that a lot of times you just haven't made decisions i've gotten a lot better at that but i've seen it for myself And I see it in a lot of other leaders for sure. So you asked me earlier, why did I get this fractional ownership and fractional partner?
Starting point is 00:12:50 My role is to be a fractional partner. Here's what I believe. I believe after seeing hundreds of companies, if I have a company with a strong team that can execute, so people that can actually get shit done, and they have a product market fit, meaning they have a product that people want to buy, their number one challenge usually is around decision making and strategy. My whole belief, if I can come in and I can just help you make some decisions, says if I was your co-founder, but I'm not your co-founder.
Starting point is 00:13:16 I don't have equity in your business. But if I was, here's where I would focus in your business and take the team and help them kind of narrow down version too. They don't really need me anymore for execution. They know how to do their job better than me in their profession. What they need is sometimes someone external saying, okay, you've built this really cool, wide business. What is actually worth scaling from everything you've built here and what can we let go of?
Starting point is 00:13:40 It's really hard to do it when you're inside it. It's a little easier to do it when it's a little easier to do it when someone external comes in and air quick force is a process on you. But I've seen it happens once they kind of narrow it down, they skyrocket. And it's really cool to see because I haven't touched a product. I haven't touched a team. It's just focusing them around clearer version of what exactly they're scaling. Yeah.
Starting point is 00:13:58 And is this B2B, B2C, more B2B or B2C type companies that you're counseling? I work with companies from every different vertical or industry because I don't really care. It doesn't really matter because my expertise is not in the specific industry. My expertise is in scaling and growing firms and organizations. Regardless of your product, that doesn't really matter. I work with DTC companies. I work with plumbing companies. I love the blue-collar companies because they are highly executionable and they focus on profit.
Starting point is 00:14:28 And not just growth for the sake of growth, which is a different conversation that I can have a lot to say about it. But we don't want to grow top line. Topline is not. It's a vanity metric. You don't feed your kids with sales. Feed your kids with profit. And what happens is profit is the average of all of your activities. So some of activities are going to produce a lot of profit.
Starting point is 00:14:44 Some activities take it away from your profit. But people hyperfixiate on the top line as the metric for success. But what we do and when we do it, when we peel the onion and see, okay, what is actually producing profit, what is taking away? There's a lot of aha moments that happens in that process. I think there's some obvious things, not obvious to me, that you probably see, I can imagine. We've talked about some of them, a lot of the founders, too wide, too many things going on. But where do you see the opportunities to cut or be more efficient most often?
Starting point is 00:15:22 What's some of the common denominators? I'll tell you where I don't see opportunity. Efficiency is great once your business model is tight. Efficiency is secondary to what I do with companies. We don't want to make current business efficient because the current business is probably very wide. We want to first figure out what is the 20% that moves 80% of profit. So where's the profit center? Cut everything else.
Starting point is 00:15:45 and then talk about efficiencies. Practical terms, okay? I'm a founder doing $5 million business. What am I doing? First, I would start with what we call the profit map. Let's take all of your revenue in sales. That's great. Let's really try to figure out what revenue or revenue stream or a channel or product or a type of customer
Starting point is 00:16:01 really brings in the profit. And you will be surprised almost with every company that I work with, you'll find that some side of the business is actually negative. And it's eating away other sides of the business. The moment you have that realization, already are ready to cut part of that business. Again, before you systemize and make efficiency, let's figure out what part of our business model is just not conducive.
Starting point is 00:16:23 Shrink it. And then we'll talk about, okay, let me give an example. I'm working with a plumbing company. And they do a home repipe. They do water heaters. They do basic plumbing service. They do filtering. All these stuff.
Starting point is 00:16:34 And as we went through, they are multimillion-dollar companies. They're making very little profit. And as we dug into the numbers we saw, we learned that their second bestseller, which is water heater, actually losing the money. You see, they lose as much money as the profit makes. They lose hundreds of thousands of dollars on this side of the business. The moment you understand this, you can start asking yourself, okay, why? What's not?
Starting point is 00:16:55 And that's a much more interesting question than let's systemize our CRM or let's put a process is on acquisition because you might find that the customer that come for the water heater are not good customer like long term. I really want to focus on customers that are basic plumbing customers that I can build a relationship. And then I want to systemize my acquisition and we, attention and all that. Especially as the company get bigger, it's surprising for a lot of people. I mean, not necessarily for me, but it's surprising that they don't know that, but you don't.
Starting point is 00:17:22 It's hard. You want a $10 million business. You have 50 people inside it, 40 people. It's hard to know where profit is coming from. It's much easier to look at sales because sales are very simple to look at. It requires work and it requires alignment and there's work involved. That's my people. Most of the time just skip it and they just kind of chase, okay, profit is down. What else can we invent? What else can we do? It's just easier conceptually. We're talking very little actually about efficiency and more about strategies for growth. However, at a certain point, I imagine, it becomes about efficiency. I always like to frame this for guys, girls, for specialists, professionals, fractional geniuses. So brand marketing is not performance marketing.
Starting point is 00:18:05 And you got to have awareness before you can have demand. Creating awareness doesn't always create a sale. Where do you fall on the marketing side? of growing businesses when you're evaluating. I start one step earlier. What you're talking about is the funnel, is the top of funnel, middle funnel, bottom of funnel. My whole thing is, do you even know who your client is?
Starting point is 00:18:25 Do you know who your perfect client is? Because when I go, what we do usually with companies, we start with what we call the team alignment challenge, where basically I take leadership team and I ask them the same 40 questions about the business specifically around where you think your client is. What do you think they really want to buy from you? And I compare the responses across the team,
Starting point is 00:18:43 members. And a lot of times you see that there is no shared definition of who the client is. And the reason why I'm saying this is because if you don't have a share definition of who the client is, how would you build an acquisition channel that converts? How would you nail the messaging? How would you nail the conversion? How would you even know where to find them with what hook? When people come to me and they say, I have a funnel problem, nine times out of ten, it's really okay. Who is your perfect client? And how deep do you actually know them? And you'll find that they don't. Or they have multiple of them. If you have multiple of them, it's super hard to. actually nail a campaign. I go back. Who's the perfect client? What are they actually trying to
Starting point is 00:19:18 buy from you? And what is preventing them from buying? Once you have answered, this is simple, but core questions. Then let's go back and look at performance marketing and let's look at the funnel with fresh eyes and ask, okay, is the current messaging, creative campaign channels are actually conducive in converting that kind of client? And you will be surprised. Yeah, I mean, because you can't build the plan until you know who you're targeting. That's another one where I'm shocked and I'm walking there. I've asked, so who's your customer? And everybody's stares at one another. This is not a trick question. How did we get here? How did we get to where we don't really know who our ideal customer is? I'll tell you how, Ryan, because we did it by going with the flow.
Starting point is 00:19:54 And that's how you grow at the beginning, right? You say yes. You basically try a bunch of things and you cast a wide net and whoever comes in the net, I'll take. And that's how you start. But what happens is as you grow, that net casting that net becomes more and more expensive and complex. At some point, you need to say, okay, I cast a wide net. I got a ton of a different fish, which is the fish that I actually want to catch with a hook, not with a net. It's going back to the resources. I only have X amount of dollars to spend on acquisition. Where am I putting it?
Starting point is 00:20:24 And you have to be a little bit more, not a little bit, you have to be much more specific because the budgets get higher and higher. And the complexity gets higher and higher as you grow as an organization. This going with the flow being reactive approach kind of starts to break where you have a $100,000 monthly marketing budget. The tactics or the strategies that you deploy, I think, are pretty clear to me where we've gotten to. As we use our last segment here, you work with companies where you know and you've seen it be successful and you've seen it fail. What does it take?
Starting point is 00:20:53 Obviously, hey, do what you say to do and it will work. There is makeup and there is a proxy. What companies are ready to deploy? And what are the variables of the people that really shouldn't call you because they're wasting their time, their money, and their energy? I've been this quite a while and I've learned a ton of different companies coming in. this being successful, not being successful. Here's what I've learned. One, you have to be profit-focused.
Starting point is 00:21:15 If you are hyper-focused on scale any cost, this is not going to work for you. Because I'm going to basically focus as you on what produces EBDA. For context, I built this as a private equity playbook for my own companies that I want to accelerate is my own micro-private PE. I'm not doing that now, but the idea is how can I take a company and make it more profitable? You have to be profit-focused. That's one. Second, you have to experience the pain.
Starting point is 00:21:35 So if you're growing and you're happy with what's happening in your company, this is not going to work because I'm going to shrink the bit. There's going to be a lot of there's friction. It needs to be friction for us to fix something because otherwise team they're just not going to buy into this. Third, I have to have a team that can execute. So if it's just you as a founder, it's not going to be as efficient because we can build the amazing strategy. But unless you have a team that can actually take this and run with this, it's a very expensive piece of document. It's not producing a lot of value. I work with companies that were just too small where we built this is the perfect growth strategy for you.
Starting point is 00:22:11 And they were not able to execute on it internally or it took them too long to actually deploy it. And the last piece is you have to have the team buy-in. And so I started this with kind of working with the CEO alone. And very quickly I've learned that it doesn't work because decision that we were made together, the CEO and I, then needed to be disseminated or communicated downstream. And people were like, why? What the hell? How did you get to that decision?
Starting point is 00:22:35 So the process then became, okay, let's do it with the team, right? let's take the whole team and walk you guys on a process together with the CEO, kind of in a passenger seat for once. Here is the question. We are here today to answer the question, who is our perfect customer? Here's the process. What do you think? What do you think?
Starting point is 00:22:53 Going them to the process and coming out with an answer at the end of it, great. Once we have this, we can start answering sequential questions. The whole idea behind what I've built, which is basically, I want to just share it because it's called the Growth Decisions Canvas. And it's a free tool. So all my methodology that I'm sharing with you today is publicly open because I don't believe knowledge should be gated. I don't even need an email. If you go to canvas.fractional.com partners, you'll get access to this.
Starting point is 00:23:16 And what this really is, it's a one page that I built. It's called Growth Decisions Canvas. All of your growth decisions on one page. And then the process is how do I answer each question and how does each question guides the next question? Until we have one page in simple English, everybody in the company can follow and have one version of what we're building. Again, you go back to resources. Laser, if everybody in the team have a single narrow version of what we're building and have a strong team and a product market fit, magic happens.
Starting point is 00:23:46 That's the GDC. Well, if you want more money, you got to get down with a GDC. It's just a tool. It's like a business model canvas, but hyper-focused on growth companies. I've seen what happens when people actually use it, and it doesn't cost anything to use it. If you are interested in something like this, the first stage would be go create a snapshot. Basically, I have a questionnaire. there, 18 questions, you answer those, and that would tell you two things. It will tell you,
Starting point is 00:24:10 it would create really cool heat map of what decisions in your business are preventing you from growing. Are you not clear on your ICP or is it your acquisition problem? Or is that a, you're not clear on where profit is coming from? Or do you have a vision problem? It's kind of a map up where. And the second thing it would do, it will tell you what is the first module that you should be doing with me or without me. So give you a starting point. See what happens. Yaron, I want you to drop that link you mentioned for the GDC and all of your links. You've been really great. I appreciate it.
Starting point is 00:24:46 Thank you for having me, Ryan. By only finishing remarks, if you are experiencing friction in your growth, don't default to processes. It's just before we systemize and we stole EOS and we spent all this effort in systemizing, let's really figure out what version of your business is worth scaling, then go systemize it. Get out the eraser before we bring out the multiplication. If you want to really build something of value that is profitable, yes. If you want to build a very big, unprofitable business, then keep going as you do. It sounds like you're a firm believer that if you're going to become a behemoth in your category, equity, venture capital is necessary.
Starting point is 00:25:20 Venture capital is not the appropriate growth mechanism for a lot of companies. Venture. Here's been two sentences I know because we're almost at time. Venture capital or if you get venture optimizes for a binary result. Either you're going to make it behemoth or we don't care. you fail. We're really writing down the investment. And when they make investments, they make investments from a position where I'm going to invest in 20 different companies. I know 16 are going to fail the model. I know two are going to be okay. And two, one, two are going to make it basically
Starting point is 00:25:48 make for the whole portfolio. They're going to make it big. When you optimize for this hyperscale as a founder, you make decisions that are not always profitable and not always makes sense. If any, I am a firm believer of bootstrapping and having self-funding, build a machine, build a machine that is so profitable that funds its own growth. You don't need to be a behemoth. I will take a $50 million business or a $25 million business at a 20% EBDA, then $100 million business at 5% EBDA any day. That's just a completely different mindset.
Starting point is 00:26:21 I favor if you can postpone getting external equity, do it. Basically, when you sell equity, you're selling risk. The earlier in your journey, you're bringing investors, the lower your valuation would be because they're buying risk. If I can first figure out the business model truly, create this version too, and I have a supermodel or a model that I know that predictably prints cash or that I put $1 in and spits out $1.15, then go get investors to accelerate. People just get it too early. Do you riskify it, and that's really what this is. Make it less risky.
Starting point is 00:26:53 Make it predictable. And then go and search capital. It doesn't have to be equity. It can also be debt. And you can take a loan. If you have a certainty that I'm going to put $1 in, I'm going to get $1.15 out. why would I sell a part of my company? I'm just going to go to a bank or a lender and get debt and keep my equity.
Starting point is 00:27:09 Equity is participation in risk. If I can de-risk my company as much as I can, I can have options. Capital is much more abundance. That clarity mattered. And I've got a hundred percent degree. I'm following that path myself. I haven't ever had a partner. It's nice.
Starting point is 00:27:24 You get optionality. You get to run faster, keep more of your company. Why would I get investors if I don't really have to? There's a time for it. You nailed it. It depends on a lot of variables. Think of this. Capital is gas. If your machine or your car is not fully built and you pour gas on it, they would light on fire.
Starting point is 00:27:41 That's true. Because capital comes with expectation. But once the machine is built enough or the car is built enough and you put gas in the tank, then flies. Make sure you get the gas when the machine is actually built. Then you'll fly. Otherwise, you're just going to light yourself on fire. Drop those links and ways to reach you. First step, just take the snapshot.
Starting point is 00:28:00 The snapshot. The snapshot.comfractional partners will drop the link. take the assessment. See, you can invite your team to do it too. Just see what's not clear around your business model and your decisions or what decision needs to be made. Yarn, it's been a pleasure, man. Appreciate all your insights and for coming on the show.
Starting point is 00:28:14 Thanks for having me, Ryan. Hey, guys, you're to find us. Ryan is right.com. We find highlight clips of this episode, the full episode and audio and video. And of course, links to Yarn's GDC. Growth Decisions Canvas, yes. Growth decisions, canvas. Get the blueprint to what he's doing.
Starting point is 00:28:31 and we appreciate His graciousness and offering that to everyone. So take advantage of it. Those tools are out there. He's done the experience. He's done the hard work. And he's a smart guy. So learn from him. We're here always to help you in your entrepreneurial journey.
Starting point is 00:28:44 So next time right about now. Here's the truth. Information doesn't change your life. Execution does. So don't just listen to this episode and move on. Take the idea. Make the call. Launch the thing.
Starting point is 00:28:59 Fix the problem. Build what you keep talking about building. For more, follow Ryan Alford on Instagram at Ryan Alford. And watch or listen to every episode at Ryanisright.com. This is right about now. Now quit waiting. Go win.

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