SFB Newsletter #13

Hey 👋

I’ve been engrossed in the new Elon Musk biography this week, written by my favourite living author - Walter Isaacson - who’s also done Biographies on Da Vinci, Einstein, Benjamin Franklin and Steve Jobs.

All of which are in my top 10 favourite books I’ve ever read.

I love biographies and in fact it’s why I’ve been a bit slow in publishing the newsletter the past few days - I couldn’t put it down.

In the beginning of your business journey I think it’s important to focus on understanding the principles, strategies and tactics that underly business - you need to know the basics of marketing, sales, operations, products and finance to make a dent and build a great business.

But there is a moment when I believe a second phase of learning begins. It’s all about learning to make the right decisions. This will be the difference between you leading yourself and your company to success or demise over the long term.

And for this sort of education - in my personal opinion - biographies are the best resources on earth…

This book about Elon is perhaps the greatest resource ever created about innovation and what it really takes to innovate at the highest level.

Over the Holidays - do yourself a favour and grab the book and read it.

I was both surprised and incredibly happy to discover Elon’s 5 step Production Algorithm on page 284, directly dictated from Elon to Isaacson, who shadowed him for 2 years to write the book.

I thought you may find some value in it so I’ll break it down here and apply it to small business. I found myself smiling constantly throughout the book every time it was mentioned, which was every few pages after it was brought up.

Elon Musk’s 5 Step Production Algorithm.

1. Question Everything

2. Delete

3. Simplify and Optimise

4. Accelerate Cycle Time

5. Automate

Along with these collary principles.

1. All technical managers must spend time working, building and coding - at least 20%.

2. Camaraderie is dangerous for real results.

3. It’s ok to be wrong - just don’t be confident and wrong.

4. Never ask your troops to do something you’re not willing to do.

5. Whenever there are problems to solve, don’t just meet with your managers - do a skip level, where you meet with the level right before.

6. When hiring, look for the right attitude. Skills can be taught.

7. Maniacal sense of urgency is our operating principle.

8. The only rules are the ones dictates by the laws of Physics. Everything else is a recommendation.

Perhaps the most jarring and interesting amongst these is the ‘camaraderie one…’ I’ve seen some very strong evidence for this myself in recent years. An interesting thought, and something I’m thinking a lot about after reading it.

Anyways - For now, let’s dive into the 5 step production algorithm. This is the same algorithm Elon uses to run Tesla, SpaceX, Solar City, Neuralink, the Boring Company, Twitter and his new AI company X.ai.

He refers to it religiously in all of his companies and meetings.

1. Question Everything

One of the most consistent things I saw in the book - whenever an engineer would make a suggestion - such as having to use a certain material, or safety method - even down to the use of one or two bolts…

Elon would ask, ‘who exactly made that suggestion?’

If that person was in the building he would summon them immediately to explain it. If not he would research the idea in it’s entirely to find which principle of physics it was based on.

The level of detail Elon can get to on a subject is incredibly unique and I believe it’s for this reason - he traces both ideas and objects to their origin. 

If there is one thing to take away from this newsletter it’s probably this…

Most of the time we take on ‘basic ways of operating’ from our industry and the people around us.

Often without any real reason.

I see this every day in the work that I do - many of the systems people use are based on ‘industry standards,’ - so the question becomes - who created these industry standards?

An example is having a long sales cycle in your business, or taking deposits and then processing the whole payment ‘later’ when the job is done. Often these standards slow down the efficiency of cash flow - and for no real reason.

Someone, somewhere decided to stop closing the entirety of the sale now - so they draw out the process and try to process small amounts now instead of the whole amount in bulk.

Generally - most inefficiencies in business exist because ‘people identify’ too much with their ‘business type.’ For example - ‘I’m in property - so this is the way we do things.’ ‘I’m a coach so this is what we sell… etc’ Best to just be a business owner instead.

At the end of the day the quality of your business will be based on the quality of questions that you ask.

A small list of questions to begin the process of ‘QUESTIONING EVERYTHING!’

• Mindset - Do I love the work I do? Who asked me to do the work?

• Mindset - What experiments am I running on my health this month - whose habit’s have I installed?

• Sales - Why do I price my product in the way I do? Who’s idea was that? Is this just based on ‘an industry standard?’

• Sales - Am I closing over 50% of inbound leads?
  (If not - sales system is underperforming - even if over performing on industry standards)

• Product - Am I selling my product in a way that can scale without me?
  (If not - what changes can I make this quarter to achieve it?)

• Product - Am I selling my own product or someone else’s?
  (You’d be surprised how often people are just selling someone else’s product - often without knowing)

• Marketing - How can I turn my Lead Gen cost centre into a profit centre? Who told me how much I should pay for leads?

• Marketing - Am I getting outside my industry for marketing ideas? Who told me to use the forms of marketing I do - are they masters?

• Operations - Who created the procedures in the business? Could they be faster?

• Operations - Why exactly am I doing this the way I do it - Who created this system?

• Finance - What’s my expectation for business profit percentage? Who did I get that from?

• Finance - Do I pay myself first or last? Whose idea was this?

If you’ve been following along the 6 pillars approach: these are the areas to ask questions. If you create great questions in these areas you will be much more likely to scale.

A big breakthrough for me in reading the book is to trace ideas to people, and then find if that idea is founded on anything substancial.

2. Delete

Dan Sullivan once said, ‘all results begin in truth;’ once you’ve drilled down to the truth of the matter by asking quality questions you can ask whether this thing is truly necessary.

This could be a system, a software, an idea, a product range, a part or a process.

Some recent examples of this for me; I deleted my personal facebook and all other personal social media channels. I deleted my old CRM and instead just use a combo of beehiiv and slack.

Both these examples have saved me countless hours (social media) and hundreds of dollars a month.

Often when we feel stuck or like we’re not producing the results we want - we seek to add more to the business.

This could be adding extra steps in our funnel, or adding another ‘low ticket’ product to make the sales cycle ‘easier.’

This is often a mistake. As ridiculous as this may sound - often the solution is to simply do more of what is working to produce results or has produced results in the past.

I’ve now started 4 separate businesses - each business reached a higher level of revenue and profit - and each business was more simple than the last. Honestly it was unintentional, this just happened naturally as my knowledge has grown I’ve found myself more focussed on simplicity.

Again it’s helpful to go through your 6 pillars and delete everything that is not productive or useful. If you delete the wrong thing you can just add it back in so hypothetically there is no risk.

Examples include; Social media channels, distractions, phone numbers, old emails, old leads, software products, products, steps in your sales system, staff members, bills, tasks.

Or in the example of Elon, Deleting > 80% of twitter’s staff.

When Elon first got control of twitter he brought a small team of 3 of his most trusted SpaceX and Tesla engineers, (one of which was his nephew) they were tasked with downloading all of the code the currently employed 2,500 software engineers had ever written at the company - they went through line by line and judged their work based on their output and the features they created. He then fired 90% of them.

The question he asked was, ‘how productive is this person and what proof do they have of their creativity and productivity’ - all subsequent decisions were based on this, which I found an interesting use of his production algorithm.

3. Simplify and Optimise

You may not be able to flat out delete the thing - but you can simplify it. Improve the system by cutting away to the minimum viable system.

Elon’s hack for this is to buy toy cars. Toy cars are created with the minimum possible materials and cost. Some of the biggest decisions about Tesla’s production were based on insights gained from toy cars.

This is where you create the system - a system is a replicable way of producing the result. Here you make sure you can replicate the exact objective you’re trying to achieve.

4. Speed up the Cycle Time

So often we focus hard on results - but we forget to ask an even more important question - how long did it take to achieve it?

Marketing is a good example of this. How often do you hear people talk about ROI or ROAS (Return on ad spend) - whether it be 250% or 2,000% - but how often do you hear people talk about time?

Great you got a 2,000% ROI but it if takes 60 days on average to achieve it - I’d argue a 250% ROAS today is probably more valuable. I can compound and self fund 60 cycles of 250% before you’ve got your 20x.

Another way of thinking about this is cash flow. When growing cash flow in a company - it’s not all necessarily about ‘scaling’ - it’s about speeding up the cycle of cash in the business.

5. Automate

During the book, Elon goes through many months where he’s literally sleeping on the floor of his factories going into ‘demon mode.’ He’ll work for 20+ hours per day, often to save the company from going bankrupt or to fix a severe problem.

During one of these moments, he discovered that one of the biggest mistakes of his career was trying to over-automate the tesla model 3 factory. They ended up throwing out hundreds of pieces of machinery that were clogging the production line.

Within 6 months they had increased Tesla model 3 production from 2,000 to 5,000 units per week - which by almost everyone else, was deemed an impossible task.

This is a common one I also see in small business. Often when business owners stop feeling inspired by their work they’ll try to automate things - but if this is done as the first step it can end up creating the opposite of everything automation is great for.

For example - trying to automate your sales system is much harder than people think. It’s a great idea in theory but can frequently lead to a tailspin.

This video below gives a great insight into the level of automation vs human interaction in the tesla production line.

What’s my feeling on the ‘politics’ and constant presence of Elon in the news?

A quick google news search on Elon will show a heavy weighting of media negativity on Elon recently.

I believe that in response to the intensity of Donald Trump becoming president of the United States in 2017, it send massive earthquakes through into the other side of politics - the left.

Since this moment - there has been a global shift in the way the left and the right treat each other - and the extremes on the edges have become more polarised.

Even people in the middle who refuse to become highly polarised are now treated with aggressive attitudes. It’s all very tribal.

Even over here in Europe the extreme right and left political parties are getting into office - pretty wild considering the death and destruction that’s brought onto the earth in the past 120 years because of this exact thing…

Let me be clear - I don’t have any political allegiance to anyone. I think the whole system is incredibly dense, and I doubt it will still be functioning in it’s current form in 20 years, yet I’m also of the belief that anything you resent in life you become. So I try to look for the blessing in both sides.

It’s not the left or the right that’s the problem it’s allowing yourself to be pigeon-holed and polarised into either side that presents the real issue.

Just like politics I think there are two sides to people - we have a light and a shadow. And those who bring the biggest lights have the darkest shade.

It’s no surprise that Elon both has been extensively subjected to trauma and continues to expose himself to trauma at a fairly high level.

He’s also responsibly for firing more people than you can imagine, is known for his ruthless coldness in doing so and puts his foot in his mouth on twitter a few times per month.

He’s human. Arguably the most productive person ever, no surprise he casts a big shadow.

I’m not for cancelling anybody, especially not the most productive entrepreneurs on earth. It’s part of human nature - wanting people to be one sided is futile, and that’s why I feel politics in it’s current form is very dense and not fit for the purpose of accelerating human consciousness.

I guess that’s my politics - I want people to be free, I like less regulation, I like it when people are able to build the things they want to build without having to ask for permission.

Maybe I’m a centrist libertarian, I don’t know?

I honestly try and distance myself from it and just focus on what I like doing.

I’ve found, when I’m triggered by ‘political ideas’ it’s highly correlated with a lack of growth and productivity on my part.

It’s an opium for the masses.

All this to say - Let’s not get caught in the weeds, let’s embrace both light and shade and when someone as brilliant as Elon share’s his algorithm we should probably stop everything else we’re doing and listen.

Talk soon,

Ben.

PS… How You Can Support This Newsletter.

This newsletter is free.

As it stands I’ve invested over $500,000 of my own money to discover the principles, strategies, techniques, tools, tactics and systems I share with you in this newsletter.

This money was invested into books, courses, retreats, consulting (1 on 1 and groups), coaching, business masterminds, seminars and events over the past 10 years.

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PPPS… I’m still not finished my marketing series by the way - I’ve got an edition on ads coming later this week. Stay tuned. 👀