$100M Offers - The Lost Chapter

## Your First Avatar "These aren't the droids you're looking for" -Obi-Wan Kenobi, Star Wars: A New Hope 2019 -I can't remember the month. The room was cold and dark. Presenters filed on and off stage. We sat at the "cool kids" table for business owners who had software over $10,000,000 ARR (annual recurring revenue). We felt good about ourselves. Our software company ALAN had recently crossed $1,700,000 per mo threshold in its first six months. As we chatted between speakers, the event host got on stage. "Our next speaker is someone everyone should pay close attention to. This man is responsible for over $50 billion in sales." The noise in the room quieted. The host continued, "...He is a specialist in pricing and profit maximization. He worked for years at Vista, one of the most renowned software private equity funds in the world." Gulp. Reality check. I'm still a minnow. The speaker broke down the process Vista used to grow companies. Their method was unlike any I had heard. Here's how it worked. When they consider acquiring a company, they analyze the company's current customers. They look for the customers who stay the longest and pay the most. Then, they score them according to this value. The highest scores go to the customers worth the most, the lowest to the ones worth the least. If they feel there's a vein of underserved valuable customers, they buy the company. Once they buy a company, they'd cut channels that brought the low value customers. Then, they double down on the channels that brought in the best ones. That's it. More of the high profit customers. Fewer low profit customers. Rinse. Repeat. When he broke down the math, it became even more obvious. It was Pareto's principle (80/20) on steroids. Twenty percent of customers bring in eighty percent of revenue. If you replace the eighty percent with those high spenders, you grow the business 5x. No small feat, especially in billion dollar companies. I wondered how I could apply this method across our portfolio. Since then, it's become a pillar of our value acceleration method (VAM) at acquisition.com The lost Chapter of Alex Hormozi's Best Selling book in business and finance $100M Offers