Jun 25, 2021
Most of the time we have to lose money before we can make a profit in our businesses.
Evan Stewart is the founder and chief evangelist for the Obsessed Academy and helps others build a life they can be obsessed with through private events, his Obsessed Conference, and his Obsessed Podcast. He has become a world-renowned life and business strategist who builds success by first losing money.
In today’s episode, we’re going to discuss how we can build a successful business by focusing on quality before we focus on monetization.
Evan’s Entrepreneurial Journey
Evan came from a family of entrepreneurs. When he was growing up, instead of wondering what type of job he would pursue a living, he thought about what service he could provide to others.
In college, he jumped into real estate, had the opportunity to scale his business, and became the top 1% of realtors in Texas. His real estate company became his first step in learning and growing on his entrepreneurial journey. With so much success, he discovered a new passion: a passion to help others achieve that same success he did. He began to meet great people, build relationships, and eventually started Obsessed Academy where he helps consult entrepreneurs in building a successful business.
“The core of everything I do comes down to this ideology that individuals deserve to be inspired, fascinated, and motivated by where they live, where they work, who they live and work with, and how they live and work,” Evan said. “We can all be the best version of ourselves. . . . People have so much potential in them to do incredible things to impact the world and make money around what they're doing.”
From the examples of his parents, Evan learned that entrepreneurship is all about relationships and service. His parents helped teach him to recognize a healthy relationship with great communication and systems in place so that issues in one area don’t affect another area. Evan’s relationship with his parents helped him identify healthy relationships not just in his marriage but also with employees, partners, and customers.
One of the greatest lessons he has learned throughout his journey is to focus on people. We shouldn’t be focused on money but on the relationships, we can build and the people we can serve.
Don’t Focus on Monetization
Evan’s best monetization strategy is to not focus on monetization.
“Don't focus on monetization,” Evan said. “I'm not saying don't be profitable. I'm not saying don't focus on sales or money, but I'm speaking specifically to those that are looking at building as much profit as possible in the early stages. [Instead] focus on quality first, and monetization second, and after your product becomes the market standard, switch.”
Instead of only focusing on making a profit, we should focus on providing as much value as we can to our target audience and customers so we can build relationships and build our credibility. This strategy will help us achieve the greatest lifetime value out of our customers.
If we try to be profitable right off the bat, we likely won’t. Starting a business often requires risks and investments. We may have to spend three years building our business without any profit, but if we are focusing on quality, we will eventually see a great return on investment in the long run.
Evan’s Obsessed Conference is not a profitable event. Yet. He mapped out a 10-year plan for his event to lose money in the beginning while they focus on the quality of the experience and relationships. They currently have an 85% audience retention rate because they are providing so much value to their customers with little cost. He does this with the long-term game in mind. Because he is building strong relationships with his customers now, later, when thousands of people attend his event, they will be more willing to spend money on an event they already know provides value.
We can make a profit by losing money in the short term first. If we're in the business of positively impacting lives, we will be much more likely to monetize in the long run. “The best data [to look at] are . . . the businesses that have grown significantly because of your relationships together,” Evan said.
Are we here for the short run or the long run? While some businesses can find success in the short-term run, most businesses find more success by making long-term goals. If we are aiming to be successful in the long run, Evan encourages us to ask ourselves, “How can we minimize profit right now to focus all our needs on the quality of our services and relationships with our customers?”
Most companies make a goal to earn as much money as possible right off the bat, even before they have validity, history, credibility, following, and a customer base. Instead, we want to focus on building credibility, relationships, and quality first, before we focus on making a profit. When we do this, we are much more likely to see exponential growth down the road.
If we look at some of the biggest and fastest-growing companies of our business careers, the Googles and the Amazons, we will find they followed a similar model: quality first, profit second. Google didn’t focus on monetizing for years, they built reach. Amazon did the same thing. They operated for years without making a profit. They focused on reinvesting back into their company to provide the highest quality and greatest value service they could. As a result, Google and Amazon are both in positions where they have tremendous value and influence.
“Look in the mirror and [ask], ‘Am I doing this for me and overcompensating for an insecurity, or am I doing this because this is a mission distribution method for achieving some type of greater mission?’ That's the question we need to be asking ourselves,” Evan said.
Charge What We’re Worth
After we have focused on building the quality of our products or services and establishing relationships with our customers, we need to determine what to charge. How do we set the price of our products?
Evan wrote an article, “How to Charge What You’re Worth Without Seeming Like a Jerk.” In it, he wrote, “There are two simple answers to this question: one, ensure you are up to date on industry standards and norms in your market. . . . Take some time to do your research so you’re aware of where you stand. Two, gather data every single time you win or lose a sale. . . . ‘Your market worth is what a buyer is willing to pay is common knowledge among sales professionals. Ensure you’re collecting this data.”
When we are determining our prices, we need to look at what our competitors are offering while also paying attention to the value our customers perceive our products or services to be worth. Evan recommended that when we choose our prices, we should really be competing for better quality over the lowest price. If we try to have the lowest price, we will almost always be beaten.
“If you compete on price, you're going to constantly be shopped out to the lowest bidder. If you compete on quality, then you'll never have to justify your price,” Evan said.
When we charge our customers based on high-quality services and products, we will be able to charge more since we are providing better value. It is worth it to reinvest in better customer service, get more team members, and pay for higher quality team members so we can provide better service to our customers. It's an ascending spiral. As we increase our value, our customers will be willing to spend more on our products, even over a cheaper price.
“If you believe that quality is important, then charge what you're worth, and then prove that you're worth what you've changed through the experience with the customer,” Evan said. “You have to prove why you're charging that or the market is going to reject you.”
While making a profit is essential for business success, we should still focus on the customer’s needs. How can we build relationships? How can we provide value? When we prioritize quality and value over profit, monetization will come naturally.
Thank you so much Evan for sharing your stories and insights with us today. Here are some of my key takeaways from this episode:
Connect with Evan
If you enjoyed this interview and want to learn more about Evan or connect with him, you can find him on LinkedIn or visit his website at evanstewart.co. You can also listen to his Obsessed Podcast for more insights from him.
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