The Nathan Barry Show

Rachel Rodgers: If you really want to know how to build your Billion Dollar Creator business, the key is flywheels. Every billion-dollar business is run on flywheels, so today, we're giving you an education on flywheels, what is it, how do you build them in your business, and how do you make your life so much easier so that your business is growing and printing money without your time. That's what you're going to learn today on this episode of Billion Dollar Creator.

Billion Dollar Creator is a show teaching creators how to capture attention and turn it into real wealth. We will deep dive into brands, celebrities, and entrepreneurs who have done it before and show you how you can apply it to your business as an everyday creator.

Nathan Barry: So something that people talked about a lot is, "If I scale my business, doesn't that just mean more work?" Right? Like this is hard, and you're saying you could build a billion-dollar business, and I'm like... So, okay, so that's 50 or 100 times more revenue, so that's probably 50 or 100 times more effort, and you and I have spent a lot of time being like, "No, that's not how it works. In fact, you have to invert that in order to actually achieve any level of scale."

But I think a lot of what comes down to is understanding how to build systems and then ultimately flywheels, so that's what we're going to talk about today. We're going to dive in to the flywheels that we use to run our businesses that we've seen, that we've been teaching in masterminds. Yeah, Rachel, you want to give them a little rundown for the listener of what we've been teaching at a high level over the last, what, four or five in-person masterminds that we did?

Rachel: Exactly. I think people don't even hear the concept of flywheels until they're further along in their business, so I'm glad that we're having this conversation so that they know this is a key piece to the scaling process. When we were at FinCon, I remember there was a speaker. We did the podcast from the stage. There was a speaker that went right before us, and he was basically saying, "I love my family, and therefore, I won't scale my business." And I'm like, "We love our families, and we will scale our business."

You don't have to not love your family, never see your family. You can absolutely scale without that, and the key is systems. If you're trying to do it with hardcore labor, just muscling it, you are going to suffer, and you're not going to scale, and it's going to be very painful. But if you use systems to do it, systems fly without you, hence the flywheel. It's like riding a bicycle where it's just going to start going, the wheel's going to start turning.

So when we've been doing on the podcast tour, we've been doing these tour stops where we've been doing these mastermind days, and we've been teaching people flywheels. So your business can have an overall flywheel that's like, "This is how the entire business runs," and then your business can also have flywheels within the flywheel. So there's a flywheel that your whole business runs on, and Amazon runs on a flywheel, right? Like every large business, this is how they do it. They're finding the flywheel within their company, what drives it, what makes it go.

That's not us pushing the boulder up the hill, but it's just naturally happening, right? You can't help but get to the next step when you take action one. And then there's flywheels within the business, so like each action, like your marketing might have a flywheel, or a specific type of content marketing might have a flywheel. And so we're going to talk about both of those today.

Nathan: Yeah, so that's something that when I first heard about flywheels, it was from Jim Collins in Good to Great, and I think that's where most people encounter it, where he's saying like these great companies all have a flywheel, and he kind of explains what it is, and then he only talks about it at the highest level, right? Like, "This is Amazon's flywheel," of, if I remember that off the top of my head, basically, lower prices leads to more sales, leads to more revenue, which they then use to lower prices. Or leads to scale, right? That scale allows them to lower prices. So that's absolutely true, right?

Businesses have flywheels at a very high level, and maybe five or six years ago, I spent a lot of time on like what is converted to overall flywheel, and now what I found more interesting is to dive in on even more systems-focused flywheels, like lower-altitude flywheels of how something runs specifically in the business.

So maybe first we'll do two things. I want to show some graphics. So for anyone watching, if you go to the Billion Dollar Creator YouTube channel and watch this live on YouTube, not live on YouTube, but watch this at your own pace on YouTube, you'll get to see all the graphics and visuals that we've made for this. And then the second thing is to just give a very simple small tactical example of a flywheel, and then we'll run through some of these other examples.

So I first came across flywheels in Lesotho, which is a country inside of South Africa, back in 2008. We were working on drilling a well and then putting in a water pump for this orphanage that we're doing work at. And what was interesting is that there wasn't a consistent source of electricity there, and so we knew that we couldn't put in an electric well pump that was standard.

We had to put in a hand pump of some kind. And so typically when you do that, you'd end up with a pump that looks something like this, what you'd see at a campground, and that's where it's just a long handle, and you grab that, you pump, and there's a direct correlation between the effort that you put in and the results that you get out.

Now, that'd be fine for camping for the weekend. That's not going to work for a hundred kids for their full-time source of water. And so we put it instead is a flywheel. So just a big metal wheel, it sits up on top of the pump, super hard and slow to get going at first, and then once you start turning it, it builds momentum and it produces more and more results.

So again, if you're watching the video, if you look at the comparison between these two, the hand pump gets immediate results, and the flywheel doesn't get immediate results, but it starts to build momentum slowly over time. And then really on the hand pump, if you ever stop pumping, you stop getting results, and the flywheel keeps spinning with less and less effort. It will stop giving you results if you don't provide input to it, but it's not this arduous task over time.

So that's the concept at a high level. Now, I'll show just this quick example of a flywheel and how it actually plays out, and that's for content ideas. There's this idea that people talk about of like, "If I publish consistently, I'm going to run out of things to say." So it's like, okay, what if we could make a flywheel that continually gives you more ideas of what to talk about? And so you write a weekly newsletter, then that goes out, like my newsletter goes out every Tuesday. I want to have a process that the more subscribers I get, the more ideas I'm given to write about.

And so what I do is I have this flywheel where it starts at the top, where new subscribers come in, and then from there, it's going to go to an onboarding sequence, where it's going to send some of my greatest emails, my best content, and then email three or four in there. It'll say, "Hey, thanks so much for subscribing to my newsletter. Just want to ask a quick question, what's your biggest struggle related to learning how to build an audience, how to design, how to grow your business?" whatever it is that I'm teaching, and I just say, "Hit reply and let me know."

Then what happens is I'm going to capture all those responses, either a label in Gmail or something a little more advanced, like Zapier over to Airtable or something like that, and then when it comes to write about my topic for the week, instead of racking my brain to try to think about what I'm going to write, instead I just go into this repository of struggles and frustrations that people have, and I look through that and I say, "Oh, this seems interesting. Joe's problem seems interesting. Let me write about that." I'm like, "Dear Joe," and I answer his question and I teach that thing.

And then, of course, they go and replace that with subscriber.firstname, whatever personalization I'm going to do, and I make it generic to everyone, and that's my newsletter that goes out. And so then, if we work our way around the flywheel, the more subscribers I get, the more people responding to the question, which gives me more ideas to write of content, and that content, the promotion of it is what gets me more subscribers.

Rachel: Yes. Can I talk about this in another way? In Good to Great, and then also Turning the Flywheel is the other little book that Jim Collins wrote about flywheels, and in it, he says, "I can't help but..." And so he talks about it like when you have new subscribers, there's an automated, "I can't help but email them and ask them, 'What's your biggest struggle?'"

And then when I send that email, they can't help but respond and send me their biggest struggle, right? And then once they send me their biggest struggle, we can't help but create great content because it's specific to what people are saying they want, right?

You're responding directly to what newsletter subscribers want, and when we create great content that is so specific to what subscribers want, we can't help but get more subscribers. So like that's the magic of the flywheel, is that once you start taking this action, you can't help but get the results, and that's what you want for your business or any aspect of your business, that it just flies without it feeling like effort over time.

And I imagine at a certain point, you're like, "No more responses. We have too many emails to write." And we have a version of this, maybe it's too simple in my business, which is like we have this channel on Slack called Rachel Content, just like Rachel Content. And so basically, the top of the flywheel would be Rachel gets inspired, which happens all the time because I'm always listening to podcasts, or going to events, or whatever, having conversations with Nathan.

And so I get inspired, and then I create something, or write something, or I say like, "You know what we should write about? This topic. And here's the bullet points that I would say." Right? And so when I have an inspirational moment, I drop content there. Then when my copywriters are looking to create content for the business, they go there first, they pull things, and then they create a newsletter or a piece of content.

So that's a rudimentary version that probably could be improved significantly, but this is so great because it's automated, too, and it just runs and gives you exactly what you need. I did this for many years, and I think I still have it in my business. It's just that now, I'm so far removed from this part of the business that I don't see the responses anymore.

Nathan: Yeah, this is like a 100-level flywheel that someone could implement right away. But playing with your flywheel that you're talking about, so getting inspired, that creates more content, or you have your team writing that content, then there's some publishing step that comes in there, and then really, there's a lot of ways you would close that loop, and we can talk more about loop closers later, because they're actually quite challenging.

But if you think of options to close the loop, the content publishing needs to create new opportunities, right? Connect you with more people. If you end up at this mastermind... Because of the content, you built a reputation that gets you at this mastermind, which then has all these conversations, and then you're inspired for all these other ideas, and around it goes. And so there's a lot of different ways you could close that loop.

Rachel: That's very interesting to think about, right? It's like, "Okay, what's the inspiration that I need to keep feeding to be able to keep making this flywheel fly?"

Nathan: When it's going to lead to different activities for you, right? Because on one hand, if you had a linear process of going from ideas, to grinding it out, creating the content, to publishing, and you're like, "That's what I have to do," then you're like, "I need to spend more time grinding it out, creating great content," like that could be your takeaway. I think that's a terrible takeaway. That is not how you build a billion-dollar business.

Rachel: Especially now. Nowadays, you have to be almost like omnipresent with your content creation. This is why this is so important because it's like how do you create that omnipresence where you feel like you're everywhere when you're doing it all manual?

Nathan: Right. And so instead, if we think about what's the key driver of this flywheel. Pretty much every flywheel, there's one step that actually provides most of the momentum. We'll share another flywheel in a little bit where it's very obvious what the key driver is, but in this case, the key driver is not the step where you're creating a content. The key driver is where you're getting inspired.

Rachel: Yes.

Nathan: Because the rest of it, packaging the inspiration into content, like someone else can do that work. That can be delegated and streamlined. Inspiration can't be. And so now, we're thinking about, "Okay, what kinds of content could we create that's going to get me the opportunities that are going to inspire me for a lot of other new content?"

Rachel: Yes. I think there's something there where it's like I can't help but share my ideas, my team can't help but create great content as a result. That great content causes me to be in front of a bigger audience. That bigger audience presents me with new opportunities to be inspired, you know? And then those new opportunities lead me to be inspired, and then on we go. So I think that in real life, that's actually how it's working.

Nathan: I think it is. There's probably some flywheel in the tour stop or like the podcast tour that we did, right? Because that's something that was unique, hadn't really been done much before, especially for a new podcast, and so then that, we're out there doing it, people want to talk about it because of it, that gives us things to talk about, which then leads to more people showing up, which leads to growth for the podcast, which allows us to do more tour stops and on from there.

Rachel: And then also, too, we met people who would be great guests for the show or who pointed out, they shared with us Billion Dollar Creator stories. They were like, "Oh, have you looked at this creator?" Right? So it's like there was so much in there. I agree, there's some awesome flywheel in there. I love it.

Nathan: Yeah. It gets me to another point, that often flywheels exist or almost exist and are not documented, they're not spelled out. It's like what we're doing right now, we're riffing on it, we're like, "Oh, there's a flywheel there," and when you go to write it out, it might not quite work, or you might get clarity where you realize, "Oh, this activity is way more important than I thought because it's actually a loop closer."

Rachel: Okay, one more thing I want to add, which is, this reminds me of a book that I read years ago. I've never been a process-driven person or a system-type person, although I have been, I just didn't think I was, right? Because I was already living with systems. But I read this book called Work the System. Did you ever read that one?

Nathan: No, I haven't.

Rachel: Oh, it's so good to just understand the concept of creating a system, particularly in a business, but it's so like rudimentary 101-level and it really helps you get it. And it's about a guy who had a call center, and it would drive him absolutely battered to run this business, and then he eventually figured out, "Oh, he's got to have a system." So one of the things that he teaches in the beginning of the book is like you already have a system for everything.

For example, the toilet paper in the bathroom, you need it to be there, otherwise you're going to be in trouble, right? So there is this system in your household, somehow, some way, that toilet paper keeps getting replenished, right? I know for me in my house, my system is there's like five additional rolls of toilet paper already in there.

Nathan: Pre-staged.

Rachel: Yes, exactly. And then even that, when that gets low, it gets refilled, right? And who's the one who does it? Maybe there's arguments about that. But the point is like that is a system that every one of us has. So it's like when you start thinking that way, "Oh, I already have systems for everything that I do, so I just need to look for the system opportunities within my business," you start to train your brain to think that way because that is an essential piece, like you absolutely cannot create a more scalable business without it. So anyway, just one antidote for the non-system people out there who need help figuring out what this means.

Nathan: Yeah, exactly, that's important.

So speaking of systems, there's really three ways of doing things. I almost said there's three systems, but one of them is not a system at all, and that's what most people do, and that's the entirely scattered process, where you sort of go into whatever set of tasks you're doing or whatever goal you have and you're just like, "What inspires me today? Let me work on that."

Or, "What's the biggest fire that showed up in my inbox?" Or, "What employee is pestering me for the thing they want." Or, "What client is pestering me?" And you sort of jump around somewhere between what's urgent and what's motivating. Urgent and motivating are those two factors that really drive it for you. That's what most people do.

The professional entrepreneurs take things and they say, "Hey, we're going to create systems," usually linear processes where something gets kicked off. Say we publish a podcast episode, we land the new client. There is a linear process that kicks off as we go from there, and that's what most people need to do, and you're going to have all kinds of linear processes in your business. If you don't, you will never scale.

Rachel: Yeah, it's working a checklist, right? It's like you do this, then that, you've checked off the list, and now you're done, and then next time this thing needs to happen, you're starting from the beginning and checking off the list again. So still labor-intensive.

Nathan: Yeah, and so that's where the last process or the last change comes in. If you can take a linear process and bend it around and close the loop, then it can turn into a flywheel. And this is actually what's quite challenging. This is where you're actually trying to get every step to flow into the next one, and like what you were saying of we can't help but do this next step, or each step is the inevitable conclusion of the previous step, which is another way that Jim Collins talks about it.

And that brings you into three different laws of flywheels, and that's where I've defined it of law one is activities flow smoothly from one into the next, law two is each rotation is easier than the previous rotation, and law three is each rotation produces more than the previous rotation. And this is one, when I first mapped this out, I was like, "I think this is how it works."

I actually don't know of anywhere else that people have gotten into this level of detail on flywheels. Most people are just like, "Yeah, your business needs a flywheel." Right? Like we're actually trying to map out exactly how and why they work. But when you do this, it gets to the point where you have something that operates smoothly, gets easier over time, and then ultimately produces more and more over time.

Rachel: Yes. Okay.

Can I talk about something real quick that this made me think of, which was, one of the things for the people who have personal brands, particularly if you sell a service or anything that you sell where your customer is like, "You have to show up, only you. I will accept no one else," right?

Or maybe that's just in your head, but that's what you believe. And so you want to move from being just a personal brand and something more scalable, and so that means you can't show up everywhere, because if you do, then there's a very finite amount of places you can show up, right? You can't be two places at one time, and then therefore, it really limits how much your company can grow, your revenue can grow, all of those things.

And so we're doing customer conversations today, and we were talking to old customers, talking to current customers, and we're gathering data and surveying, which is something we do all the time. We actually need to create a flywheel for that, actually, now that I think about it. So that was one of the things we did today.

And I had a customer who's been with me for a very long time, and she brought up an old program that we did a couple of years ago, and it was our very first time really trying to take me out of the coaching experience and delivering this entire experience with my content, right? Like I created all of the material, but I had other people delivering it, and these other people were "experienced coaches" that came in, but they weren't as experienced in our content.

Anyway, long story short, that was like our draft zero of taking me out, and she was saying, "These things about it were good, but these things, not so great." So it wasn't the most glowing report of her experience of that program that happened several years ago. And I said to the president of my company, I was like, "That was draft one. That was our shitty first draft of pulling me out." And it was hard, right? Like there was a lot to figure out. I was all over it, working behind the scenes, training people and trying to help them help customers be happy, and like so much work, right?

So that was my first rotation law, too, right? Like first rotation was not that easy, did not seem that profitable. However, if we would've never taken that first rotation and tried it, we wouldn't be where we are today, where we have thousands of happy customers and they don't talk to me. They're not looking for me because they're getting results without me. And so now each rotation is producing more than previous rotations.

So that's just another example of that. I don't know if that makes sense, but I just thought that was very relevant because I think when people hear the Billion Dollar Creator criteria, they're very afraid of like, "How do I take myself out of it without losing all of my customers?" Well, you have to create this flywheel, then do the first rotation, and know that it's going to be hard the first time. Then it's going to get easier and easier as you do it because you figure out what's key, that I have to train these people.

So now I have a coach certification where I've trained them for nine months. So now when they deliver, they're doing such an amazing job because they went through this. So it's like if we offer this coach certification, we can't help but recruit more very experienced or smart coaches that have the knowledge, and then they can't help but help our clients get results.

As our client get results, then some of them will want to become coaches, right? And then it keeps the flywheel going, right? There's a flywheel there of training people. We've basically turned this coach certification into a pipeline of amazing coaches for our programs.

Nathan: There's so many things I want to dive into there. First, you touched on something really interesting, that when you're contrasting a hand pump process, which is, in this case, you showing up, you teaching, first, that can be really good. You can make a bunch of money off of a hand pump process.

Rachel: And I did.

Nathan: Not tens of millions and definitely not hundreds of millions, but you can make millions, which is amazing. But often when you switch to the flywheel, it's going to be worse at the beginning.

Rachel: Correct.

Nathan: It's going to be worse and harder, right?

Rachel: Yes.

Nathan: And that's why most people will say like, "I'm going to systemize all this, I'm going to build it in a flywheel," and then they're like, "Never mind."

Rachel: Yep, "Never doing that again."

Nathan: "It didn't work. It's not worth it."

Now you pushed through and you said like, "Wow, that was a wildly painful rotation, and we barely got anything for it, but we completed the rotation. Okay, now, what can we do? What can we optimize on it?" And then as you do that, and we should dive in in a second into the things, like why a rotation gets easier over time, but really, once you did that, it gave you something to work with, and then you notice, "Okay, this got slightly easier. Okay, this is even a little bit easier," and then now you're like, "I don't know, that shit just runs. I've got people for it."

Rachel: I'm actually being told, "We actually don't need you to do that call anymore." Like, "Thank you. Thanks for your contributions, but please go away."

Nathan: Right, because you might disrupt the flywheel. You might come in and go-

Rachel: Correct. Now I am literally a disruption to the process that they've built.

Nathan: Yes. Oh, that's good.

I want to talk a little bit more about the flywheel that you have in your business because it's interesting, right? The core product is that you're providing business transformations, where you're taking someone where they have a business at one level and you're guiding them through both courses and material and community into a different level of outcome, right? Getting to that seven figures.

And one of my favorite things about the tour and really the mastermind before the tour is that I got to meet all of these people that have gone through your programs, and they're always rattling off their business, and it's like, "Wait, and how much did you make from that?" and they're like, "Oh, about 2 million a year," "About 5 million a year," or, "A million a year off of that," and I'm like, "Damn. Rachel's people get results." And it's a testament to that.

Rachel: "This shit actually works."

Nathan: Yeah.

Rachel: Sometimes I'm shocked still to this day.

Nathan: Oh, I love coming across some niche audience where you're like, "Yeah, you can definitely earn a full-time living from this," and then someone implements all the material really well, and they're like, "By full-time living, you meant like $3 million a year, right?"

Rachel: Yes.

Nathan: You have exceeded expectations. That's amazing.

Rachel: Correct. Exactly. Yes. Well, because they believe it's possible, right? Community, there's so many things that go into it, but yes.

Nathan: So diving into that flywheel, as you are attracting new people then to the community, they're joining the club and getting access to the content, building that up, I believe then they're signing up for coaching, and then from the coaching, they're getting more and more results, and then that's going to turn into testimonials, case studies, content, and referrals, which is going to bring more people in, so that's one level of flywheel, and then you have this side channel that drops into an adjacent flywheel, which is your coaches, right?

Because as the community grows, just you isn't good enough. All of a sudden, you and three hand-picked coaches isn't good enough. Now you need a lot of coaches, and so what's the flywheel to create that? And so then, people raise their hand and express interest, then they end up in this separate coach development flywheel, goes through all of your material on from there, and then they're the ones ultimately teaching and providing the value in the main flywheel. Did I get that right?

Rachel: That's right, yes.

Nathan: What's interesting is that a lot of businesses can implement a similar flywheel. Like I was talking to Tiago Forte when we were in LA, and I mapped out a flywheel for his business called Building a Second Brain, and it is about teaching people how to store, track, and recall information so that you have just these amazing productivity systems and everything else, and what we came to is that, "Oh, he needs implementers. He needs coaches in his business for people who, sure, they'll go through and learn it all themselves, but the systems require management, it takes work, and he can't be the one coaching everyone on this."

And so I basically cloned your flywheel to the best of my ability into his entirely unrelated business, right? He's not teaching business and marketing, and growth and sales, and all of that. It's entirely different. But the core flywheel, totally the same, right? Where he has this main large flywheel for the community and content and sales, and then this adjacent smaller flywheel that siphons some number of people off, trains them to the best students, basically, trains them to be coaches and implementers, and then provides that value back.

And I've seen this time and time again where like Reboot, the coaching organization for executive coaches, a lot of their best coaches were former entrepreneurs that were clients, right? And so they have this process where as they bring people into their material and training, then it results in this ultimately being the coaches who are going to deliver a ton of value.

So often these businesses have relatively simple flywheels underneath them, and I say simple, and I don't mean easy at all. There's nothing easy about this, but the core business mechanics are actually quite simple if you can stick to them. And I think the reason that you've been able to scale to such a big level is that you've identified the flywheels and the systems and then you've stuck with them and refined them rather than being like, "Oh, that's working well. Let me jump off over here and do something entirely different."

Rachel: Right. A lot of people try to exit too quick, and you shared that in a newsletter recently as one of your takeaways from the podcast tour, which is that you got to stick with it longer than you think, right? Can you do it in six months? Probably not, but maybe three years if you're willing to stick with it for a little bit longer, but so many people quit early, and that's why they don't get the result.

The other thing I was going to say, that reminds me also of I feel like Goldman Sachs has some kind of management training program. So we've seen this in a lot of corporations, right? They take great employees they already have, put them through management training, those great employees become leaders in the company who can lead, let's say, new departments within the company that help it grow.

So I feel like that flywheel applies to not just coaching or education businesses, but there are other ways that you can sort of scale delivery by building some kind of training program.

Nathan: Yeah. If I were to assign some homework to anyone listening to this, it would be to look at businesses you admire and to try to find flywheels in that. They might have one overall flywheel, but then even try to find them at a smaller scale, right? Like we have a flywheel specifically around telling stories. We have this vision that we want creators to be the heroes of our brand, and so instead of doing these one-off efforts in order to identify a creator, go tell their story, and then over here do something different and back and forth, we have this flywheel of exactly how we find creators.

We go, we interview them, we create a film about them, we have a photographer there as well, and then that results in a written story, a documentary that's on the website. That creator gets all of these amazing photos.

And then you'll find that if you go through our marketing, there's not a single stock photo in there, right? On our website, everything else. You know, sometimes on websites, testimonials are made up, you know? And if you go through ours, not only will there be a written testimonial there and the photo, but you'll notice that the photo's moving kind of like Harry Potter style, and if you click on it, it's just a video of that creator, of Joe Franco, he's this amazing creator, talking about why she loves this specific feature. And so we're publishing a book every two years of creator stories. All of these things come from this one flywheel that just keeps spinning and it has all these amazing byproducts.

Rachel: Yes, I love that so much, and I think that's one of the great ways that you have not made the company about you, which I think it's easier to imagine with a software company, but I love that you've made the company about your clients and made them the hero, and I think that is applicable.

That's another way to sort of implement some of what we're teaching with the Billion Dollar Creator model of how somebody else can be the hero. It can be your client, it could be your team of coaches, it can be somebody else or the system that you're creating that helps people get results, so interesting. Okay.

Nathan: Yeah.

So I want to talk through a couple of the laws, right? So law one, we've talked about a bunch that each step goes smoothly into the next. Law two is each rotation is easier than the last, and there's really only three reasons that things are going to get easier, and that's like you're going to improve the process, right? So you're documenting, you're streamlining, you're realizing, "Oh, this step isn't actually needed. Let's tighten it into what's driving results."

Second is reputation strengthens, so there's more social proof, more of a brand. If we are, let's say we're collecting testimonials, we're trying to sell a course and we're collecting testimonials, we can have a flywheel to do that, and as we get more testimonials, that will improve social proof and then make it so that it's easier to make sales, right?

And then the final one is that you hire a team, right? You automate or delegate the tasks. And so then, you're just like, "Great. I had to do this before, and it took 20 hours of my time every week, and now someone else does it. It still takes 20 hours, but I'm paying for that." There was this line from someone, I'm trying to remember, maybe I've said it on the podcast before, but they go, "What if you could go to the gym, you could get all of the results, but you could pay someone else to do the workout?" Right? But all the results still accrue to you, but you didn't have to-

Rachel: That is the best analogy ever.

Nathan: You didn't even have to show up to the gym. Actually, forget going to the gym. You don't have to show up. You just pay someone else, they do all the work, they lift all the heavy weights, and you get all of the results. And obviously, that does not work at all on fitness. You and I, both trying to work on our fitness journeys, know that you got to show up and do the work. But the crazy thing is, in business, you can do that.

You can pay someone else and say, "Hey, I have an idea. Why don't you bring that idea to life, I will pay you for it, and then anything beyond that level of success accrues to me?" And so I think about that all the time with flywheels. When I'm trying to grind it out and get something done, I'm like, "Wait, I can just pay for this and get all the results the same way."

Rachel: Exactly. And when you have 12,000 things on your to-do list, like we both constantly do, you should see us bumbling into this podcast session every week, but we still show up running from one meeting to the next or whatever, right? Like when you can get that off of your plate, and somebody else will definitely get it done faster than you or I, almost no matter what it is.

Nathan: Yeah, and when you can define it clearly, you can define all those steps, then you know what you need to hire for and what needs to be documented and happening. Because as entrepreneurs, we are most likely to follow that scattered process where we're just jumping around to whatever's interesting and exciting, and when you hire people, you can go for the flywheel and you can hold them accountable to it along the way.

Rachel: Before you move on to the next step, I feel like I just saw a flywheel on this slide. So you're saying like, okay, so if you delegate to team, right? Or an automation, but let's go with team. You delegate to a team member to do a task, the task improves, the process to do the task improves because you have to explain it to that team member and get it out of your head the first time, and then they're doing it and they're like, "Hey, this could be done better," and they introduce some additional benefits to the process and make it better, even more streamlined.

Because you have team doing it consistently and they've improved the process, now the reputation strengthens because things are moving faster, right? Like things are smoother, they're getting done consistently, and with a better process, and that causes reputation to strengthen. So I feel like even the steps that you have here is a flywheel. See, this is what happens, you see flywheels everywhere after a while.

Nathan: You do. And there's a couple things about like when you create the flywheel. I think it's important to form hypotheses on two things. One is you go through the three laws and you check like, "Does my flywheel actually meet three laws?" We'll talk about the third one in a second. But then the next thing is, "Why do I think it's going to get easier with each rotation?" Actually write that out and define it in advance because it'll help you push through the time when you're like, "This is a total pain, and I can't believe I'm doing this. This is so much harder than the hand pump version that I could just go do right now," and then you can remind yourself, "No, I believe this is going to get easier with each rotation because I'm going to improve the process and hire someone else to do it," but define exactly how it's going to get easier. And then in a second, we'll define exactly how we believe it'll produce more.

Writing down those hypotheses, I think, is really important because then it forces you to troubleshoot like, "Does this actually work as a flywheel?" And to say like, I've seen people run flywheels, and it's technically a flywheel, they run it for a long time, and for whatever reason, they won't let go of a step in it. They should absolutely delegate it, and they just won't let that go.

And so if you're forced to go back to the hypothesis that you wrote down and you're like, "Oh, I said it would get easier over time because I was going to delegate this, but here I've been running this flywheel every month for six months and I still haven't delegated. Why is that?" And usually it's because I say like, "Oh, this step, this live class must be taught by me. It can only be taught by me and no one else." And you're like, "Really?"

And then that comes to my favorite question, which is, what would have to be true for this step, this live class or whatever it is, to be taught by someone else? And you're like, "Oh, well, we need someone who's a true expert in it. We need to build up their reputation in the community. We'd probably need to have a few people so we're not reliant on one single person creating it, switching from me as a point of failure to someone else." You list out all these things and you're like, "Interesting. Could you make a flywheel that would develop community members into teachers?" Obviously, you absolutely could.

Rachel: Right, exactly.

Nathan: Okay, so with that in mind, let's talk about law number three, which is each rotation produces more than the last. And in a creator-type business that most of us are working in, there's really only four reasons that each rotation is going to produce more, and that's that your audience gets bigger, your influence increases in some way, revenue increases, and then some version of that revenue, you're able to reinvest more than you were able to before.

So I want to share my favorite flywheel when it comes to demonstrating each rotation produces more than the last, and that is Sahil Bloom's million subscriber flywheel. He talks about this a little bit in episode five when he came on the podcast in New York. But at a high level, he has simple goals. He's just a man who wants a million subscribers on his email list, you know?

Rachel: Simple goals.

Nathan: What more could you want?

Well, what I love about it is he's laser-focused on this. He's got a book coming out and he says like, "Look, my content is fantastic, I know how to build an audience, and if I stay laser-focused on just the goal of growing a newsletter list, then I can get to a million subscribers by the time the book is released." And so the way the process works, he drives new subscribers from social, so primarily Twitter, LinkedIn, and Instagram.

He's using very traditional techniques to bring them into his newsletter. One, just saying, "Subscribe to my newsletter." Two, offering lead magnets, incentives, other things like, "Hey, here's how to plan your year. Download the free guide," right? Any of those things. And then he's also going on other podcasts and sharing content. And it's a pretty traditional playbook.

Once someone goes from being a subscriber, then they drop into ConvertKit's Creator Network. So that's where he is partnering with other creators and they're recommending each other. So it's sort of a multiplier step that happens. When someone signs up to his list, it also promotes the other creators.

When someone signs up to one of those other creators' list, it promotes him. Now he's writing a newsletter twice a week, and so there are micro flywheels that run that newsletter writing process, how he's coming up with ideas, how he's writing it out. He has someone on his team who's helping to format and put it all together so that he's not spending too much of his time on that.

Rachel: I would also imagine that the newsletter itself provides the content that exists on Twitter and social media, like probably there are bits of the newsletters that they've written in the past that they're taking and publishing on social media which then creates new subscribers.

Nathan: Yep, exactly. And so then those two newsletters that go out each week, they're sponsored, right? And so he is getting paid for each one of these newsletters. Let's say in the early stages, it's a thousand dollars per newsletter, and then he's taking all of that money that he makes. Because you have to remember, he has only one goal, that's to grow his newsletter list. He does not care about making money from this. It's just to grow the audience. And so he's reinvesting all of that into ConvertKit's partner network of paid recommendations.

Rachel: This is the most genius thing I have ever heard. I just need y'all to pay attention. So good.

Nathan: I love it.

And so he's able to go in there and say, "Hey, I will pay $1.50 for every engaged subscriber that another creator sends to me, and I get to define engaged." You know, it's they open three emails in the first 14 days, something like that. And then he can set a budget, say $8,000 a month, right? If you're saying two newsletters a week, $1,000 per newsletter, he's generating a little over 8,000 a month, then he can dump all of that back in, and that's going to give him subscriber growth.

So as you walk through it, the more new subscribers he has, the more people who receive his email, which means he can sell sponsorships for more money, which gives him more to reinvest, to grow the list, which gives him more new subscribers, which means the list is bigger, which means he can sell sponsorships for more, which gives him more to reinvest.

So an early rotation of this is going to maybe kick off a few thousand subscribers, but then later on, it's tens of thousands, 50,000 subscribers. And so when he put this in place, he was at a little over 100,000 subscribers. And then now that we're recording this 10 months later, he's over 600,000 subscribers. And this flywheel went from kicking off 5,000 subscribers or 10,000 subscribers a month to now it's kicking off 50,000-plus subscribers a month.

Rachel: Amazing.

Nathan: And he finally got to the point that he's making so much money off newsletter sponsorships that he no longer reinvests all of it. He actually pulls some of those profits because he's like, "Look, 25, 30 grand a month on ads, that's enough, and let me take the other 20 or 25,000 as profit."

Rachel: Brilliant. So good. I love it.

And I think this flywheel, it's like this sort of rudimentary linear process that this is like, the old version of this is I'm an entrepreneur, I send a newsletter, and I've got like, let's say, 100,000 people on my list by building it up over a long period of time of creating content and word of mouth, and then I have a friend who I met at an event or whatever but somebody I'm friends with, and they have their own list of 100,000 people, and maybe twice a year, we swap and they might do a webinar for my audience, and so my audience gets introduced to that person, and so then it's like there's a webinar, there's a whole marketing process behind it.

That's how we get in front of all of these new people. Some of those new people stay on my list, but also go over to that other list, and then vice versa, right? I do a webinar for my friend's audience, I get some of those people on my list, and it's twice a year, and maybe we get like 30,000-person bump, which would be a huge amount from doing something like...

That was the old linear way, which is a ton of work when you hear it described like that, right? This is such a fresh, easy way to do this, and anyone can get in the game. You don't have to be well-connected to do this flywheel, which is that's what's amazing about it, is you have access to this network even if you are not someone who has a big professional network.

So you don't need to have a friend who has a big list that you can ask them, "Hey, can I advertise? Can I put my stuff on your newsletter to your subscribers?" Now you can just buy an ad and you can sell sponsorships, right? So you can get in this game that before, it was like there was a big gate, you know? That it might take years to get behind, and now, it's right there available to you. So this is brilliant, and really, everyone should be doing this. If you have a newsletter or if your business is run on email or run based on subscribers, this is a no-brainer. It's foolish not to do this, truly.

Nathan: Yeah, I love it. When I saw this fully mapped out and then accelerating, that's where we realized just how powerful it is.

But there's two things in it that I want to point out in particular. One is the core driver. We talked about that a little bit earlier, that every flywheel really has one of these steps that's going to be the core driver, and in this one, it's newsletter sponsorships, right? The most important thing in here is that he's making a bunch of money that can then be reinvested.

And so the other really important step is your loop closer, right? It's pretty straightforward to make a linear process. It's actually pretty challenging often to close that loop, and you need that step that's a loop closer. So going from new subscribers, to a creator network bonus, to a newsletter, to sponsorships, that's a linear process, but it requires the partner network reinvesting in advertising to close that loop.

And so whatever flywheel you're working on, I would pay a lot of attention to, "Hey, what's my core driver? What step could I not remove?" Or like, "What step if I removed it would make all of this not work at all? And then what's my loop closer? How am I actually bringing this back down to the beginning?" Because otherwise, it's just a linear process.

Rachel: Yes, exactly. It's like you want something driving it. Like with my coaches, when they complete the program, now a hundred new coaches enter the marketplace, which drives the next step to happen. You know what I mean? So it's like you need something driving things, right? And that newsletter sponsorship, getting the capital from that and then reinvesting even a small portion of it, is only going to drive new subscribers, so brilliant. Loop closers are hard, though. They are hard sometimes.

Nathan: They can be very hard.

Rachel: One thing I really like about Sahil's million subscriber flywheel is that it has one singular focus, and the focus is not, even though it is making money and getting subscribers at this point, that was not the initial goal. The initial goal was get more subscribers, right? The flywheel might look different if the goal was make as much money as possible, right? Then maybe you wouldn't be taking all of the profits and reinvesting it if it was just like, "Make this newsletter profitable," right?

But that's not the goal. The goal is not profitable newsletter. The goal is as many subscribers as possible, which creates a profitable newsletter as a by-product, but that wasn't the goal. So I think one of the most important things is being able to focus and choosing one main goal for your flywheel and not trying to accomplish seven different things with one flywheel.

Nathan: So many times I've sat down to help someone map out a flywheel, and I've said, "Hey, what's your goal for this flywheel?" And they're like, "Well, yeah, so my goals are I'm really trying to grow the audience, I'm trying to make more money, and then I really want to spend less time on this." And I was like, "I think you misheard me. I said, 'What is your goal?' and you answered the goals, with an S." The thing is, like exactly what you're saying, a flywheel can really only have one goal if you want it to spin effectively. It might create other by-products.

Like some of these flywheels might spin so well that then it just happens to kick off so much more of this. Like in Sahil's example, he's gotten to the point that now it's kicking off more money than he feels like he can reasonably reinvest, and that's a great place to be. But I don't think he would've ever gotten there if he had tried to evenly split audience growth and revenue.

And then the other thing is, if you were to invert it and say, "Look, the goal of this flywheel is entirely about producing revenue. I don't care about audience growth. Audience growth will be the by-product," then we would design the offer entirely different. We would not rely on advertising. We'd be selling high-ticket coaching, we'd be selling consulting, maybe we'd have an agency, and so this audience is about deal flow for this agency, or this software company, or something else. And so if you get really clear on what's the most important goal, then it really helps structure the rest of the flywheel.

Rachel: Yep. Focus, not something that we're great at as entrepreneurs.

Nathan: So I think the other thing in simplifying a flywheel, first, get it down to a single goal. Second, even if you have the flywheel in your head, write it out, sketch it out, and see if it works. The number of times that I've thought like, "Oh yeah, this flywheel works," and then I've gone to sketch it out, I'm like, "Oh, that loop doesn't actually close."

And then I think the next thing is really looking at if there's any of these steps that you can eliminate. Oftentimes there are tasks that you've been doing that you feel like are important, but if you test them, you're like, "Wait, I could actually pull this out and I don't need to do that. It's not driving value."

And then the last thing is I like to measure the success of the flywheel. So each time I rotate through it, I'll try to note, "How much time did I spend on each step?" And then the other thing is, "How much friction did I feel?" Right? Like, "This one is really painful." It's this wheel turning that like it spins really smoothly, then it gets to this part of the rotation, then it gets bogged down and slow, then it gets past the stuck point, and then it speeds up again.

That flywheel is never gaining momentum. And so if you can articulate just in your sketchbook of like, "Wait, here's where it's getting bogged down. Okay, in the next few rotations, I'm going to really focus on optimizing this step in particular," then you're going to see like, "Okay, here's a flywheel that can build momentum and really start spinning."

Rachel: Yeah. What you just described is how we wound up with a business coach certification, because the step that was very painful was we would get more clients and then we would need more coaches, and recruiting more coaches became extremely painful because there was just not enough coaches that were experienced with what we teach out in the world. So eventually, I was like, "Oh, well, we're never going to get past this. We're always going to be stuck.

Our business is going to plateau if we don't solve this," and then we had to brainstorm, "How do we solve this, and how do we make it smooth?" and we had to do a lot of work to make it smooth, right? Build a whole coach certification, which was like, some of them have described it as a Harvard education, like it's grad school. It is not an easy training. It's not like a cute online course, right? It's intensive because if you're going to say you're a Hello Seven coach, you got to be good, you know? And we need to make sure that they have the tools.

So it wasn't easy to solve it, but that's the thing that I think makes great businesses, when you're willing to solve a problem that most people would just be like, "Never mind," you know? Because you solved that problem, and now it's smooth for you, and now you have, it's like a competitive advantage that most of my competitors don't have, and if they did, they'd have to start from scratch to build it where we're already past that. Now we're refining and getting better and getting faster. So I think that's a big differentiator, is your willingness to solve that icky part that's taking too long.

Nathan: When the natural thing would be to solve that problem with a hand pump method, right? You're saying, "I have this flywheel that's working well. It just has this one place that we're stuck, where I don't have enough coaches to teach the material and support the community, so let me go off and recruit 5 to 10 coaches. I'm going to train them up, and then, oh, there we go. That problem is solved."

But it's only solved for a period of time because those coaches, some of them won't work out, a few will work out amazingly well, and then the rest will work out amazingly well for a period of time and then they'll move on to the next phase of their life or business. And so because you solved it with a flywheel for creating coaches who are well-versed in your training and abilities, then you have it permanently solved.

Rachel: Yeah, like we'll never have that problem again.

Nathan: Yeah. Unless you take the eye off the ball and, at some point, stop running that flywheel, which I say that not because I think that you will do that, but because that is the thing that most entrepreneurs do.

Rachel: It's so true.

Nathan: They see what is working. They look across the whole business and they're like, "Okay, what is really working here? Oh, a lot of things are really working here. Cool. I'm going to go do something entirely different." And that's the important thing about the flywheel, it's not a perpetual motion machine. You don't start it, get it spinning fast, and then ignore it. It might not take very much effort, but someone's got to be there gently spinning it.

Rachel: Yes.

Nathan: And I know so many examples of people, and I've done this over and over again myself, where I focused on something, got it just humming along perfectly, and then completely ignored it, and come back a year later, and I'm like, "Why is the flywheel at a dead standstill?" It's like, well, because you didn't tend to it, you didn't optimize it and keep the momentum going.

Rachel: In fact, what we do is like throw a monkey wrench in it to make it short, just stops altogether.

Nathan: Oh, there's too many examples of that, and yeah. You know, Rachel, that hits a little close to home. It's too soon. We would never do that. No, I'm kidding.

Okay, we should wrap this up. The last thing that I want to leave people with as we talk about flywheels is where you should start, like what flywheel should you start with, and the tendency is, "I'm going to focus on the flywheel. That's the most exciting or interesting." But I have a big caveat to that. Flywheels take time to get going, and most of us don't have time. And so if you focus on the most interesting flywheel, then you probably won't have enough time to bring it to life and get it really going.

And so what I encourage you to do instead is to focus on the flywheel that frees up the most time for you. And so look at the process in your business where you're spending the most time. Dive into your calendar, dive into business operations, see what's the most time-consuming thing, and build a flywheel for that. And then that new time that you freed up, use that to build more flywheels. But if you go the other way and build the most exciting flywheel first, you just won't have enough time to actually create a system that's really going to work.

Rachel: Yeah, yeah. One of the first flywheels that I built, but I didn't know I was building a flywheel at the time, was around newsletter creation, writing my newsletter. I used to be like up on Saturday night at 9:00 PM, or 10:00 PM, or 1:00 in the morning, whichever. Sometimes I'd get up at 4:00 AM on a Sunday because my newsletter was supposed to go out at 6:00, and I'd be writing my news that are last-minute. And sometimes they were still really good, but that was so stressful, ruining my weekend with this newsletter that I sent out Sunday morning.

When I finally created a process for the newsletter to get written that involved a copywriter, it took me out of it. It involved like creating a voice guide for how I talk and how I write. Like so many steps that went into that, but when I finally got out of it, I was like, "Oh my God, I feel like I just got 30 hours a week back." It was probably more like 10, but it felt like 30, you know? Now you've got time to really devote while that's going, and you can be refining it, like you can now move on to something else. So I think that's so brilliant to focus on first, on a flywheel that can free up your time.

Nathan: Yep, that sounds good.

All right, well, that's it for today's episode. We have a brand new YouTube channel. So if you're not already watching this on the YouTube channel, you should go check it out and subscribe. If you did watch this on YouTube, subscribe. And to find it, just search Billion Dollar Creator on YouTube. You'll find the channel.

And then what else? If you want to know more about flywheels, I have a whole essay that I wrote on it if you just search Nathan Barry Creator Flywheels, and we'll also link to it in the show notes in description. And then finally, a shout-out to all the amazing people who have written reviews for the show. If you haven't done that yet, please do so. That's how new people find it. So that's all we have for today. Thank you so much.

Rachel: Thank you for tuning into this episode of Billion Dollar Creator. If you enjoyed this episode, please like and subscribe, share it with your friends, and leave us a review. We read every single one. If there is a company you want us to profile on Billion Dollar Creator, send us a message on social media and we will consider it. Thank you, and we will see you next time.