Episode 134: The Buy Back Time Machine with Dan Martell

Announcer:
This is The WealthAbility® Show with Tom Wheelwright. Way more money, way less taxes.

Tom Wheelwright:

Welcome to The WealthAbility Show, where we’re always discovering how to make way more money and pay way less tax. Hi, this is your host, founder and CEO of WealthAbility, Tom Wheelwright. And what if you could actually have more time and more money? Most entrepreneurs, we think, “Oh, more money means less time.” We have to spend more time. We have to work harder. But what if you could actually work smarter in such a way that you could actually buy back your time and make more money at the same time? And that is the premise of the new book, which is just on its way already to bestseller status, which is Buy Back Your Time. And we have the author Dan Martell. Dan, it is a pleasure to have you on the show today.

Dan Martell:

Tom, it’s an honor. Thanks for having me, man. I’m excited. This is obviously a topic I love, love, love to talk about.

Tom Wheelwright:

Awesome. Well, let’s get into it. First of all, give us a little of your background and tell us where this came from?

Dan Martell:

Yeah, today I’m the CEO of two eight figure companies, SaaS Academy, which is the world’s largest coaching company for software CEOs. And then I also run High Speed Ventures, which is kind of like my family office where I deploy my own capital and invest in software companies, I’ve invested in 50 plus, $4 billion companies, actually one just went public recently, Getaround. And then I also do a lot of work with at-risk youth. I’m, actually, right after this interview, I’m taking off to go speak to a group of kids that are part of a group home foster care system. That’s a big part of my life. That’s my childhood.

I grew up in a really challenging environment and ended up in trouble with the law and eventually a drug addict and rehab. And it was actually in rehab, I spent 11 months in this incredible place that saved my life. And at the end of that program I actually discovered computer programming. So that’s actually how I got into software. The journey to the buyback principle and why I wrote this book was because I had really tried in entrepreneurial and to be successful. I just started young. So at 17 started a company, failed, started again at 19, failed, tried again at 24, finally, crazy idea, but finally read a business book. I read The E-myth, changed my life.

But what happened was is during that journey, this company Spheric, that eventually made me my first million and made me a multimillionaire when I exited it, was that I got really productive, but I was working a hundred hours a week. I was literally burning myself out. And at the time I was actually engaged to get married and I was working for the future we were creating together. I had this vision of having a family and the lifestyle we were going to create. And I just figured I’m front-loading everything and I’m doing the work and I’m reading all these books, about hustle and all these early things. And what happens, I came home on a Sunday afternoon around two o’clock, I’d promised I’d be back around 11:00 because my fiancé had something she wanted me to go to, but that’s how little I paid attention. And when I walked in our house that we’d just bought together, she was in tears in the kitchen and just took her wedding ring off, her engagement ring, and dropped it on the counter. And just said, “I’m done.” And walked out.

And that moment was so crazy to me because it was seven weeks before our wedding, as I mentioned, we just bought a house together. Everything I’d done to that point, 4 years of absolutely putting everything in, risking it all, hustling, was for her and the future. And here I was with more money than I ever thought I’d ever have in my life and feeling absolutely empty and sad, depressed, and even having anxiety attacks. It was crazy. But that became the floor of this realization where I was like, “Well, how can I be so knowledgeable and have success in this thing called business, but just be such a horrible person to be with? Like a partner, brother?” My best friend, Nick, used to joke, he’s like, “Dan, there was a period where I didn’t like you.” And I was like, “Why?” He goes, “Dude, you came to my birthday party with a laptop and you sat in my living room and you were on your laptop the whole time.”

And I literally remember thinking to myself, Tom, I was like, “I’m the best friend ever.” I’m so busy right now, but I went to his birthday party. Like at least I showed up. And what happened was after that moment, I went on this journey of saying, “Okay, I know I’m driven. I’m not going to stop wanting to create in the world. I’m a creator, an entrepreneur. I like solving problems, but I have to find a better way to find leverage with my time.” And that’s where I read all the productivity books and I started going to different seminars and modeling all these people out there that we see, the Warren Buffets, the Richard Bransons, the Oprah Winfreys, is like. You name it, even Tom Clancy, the author, Andy Warhol, the artist, once you actually look under the hood of these people that have created these impressive empires that we all admire, we realize they got really good at leverage.

And what leverage is, there’s only four forms of it. One of my mentors, Naval Ravikant, he built the company called AngelList. A lot of people know him today about AngelList, but I met him in 2009 when I moved to San Francisco. And Naval taught me, he said, “There’s four forms of leverage.” Because time is a constant. You multiply time times leverage, and that equals output. So what’s the difference between somebody that can do more than somebody else? Is they just have a better formula for leverage and output. And he said it’s content, which just is a perfect example. Creating content, one investment of time multiplied times millions, like no extra cost, fractional costs of consumption. For training and SOPs. You can create all these different types of content forms.

Code, think about software, automation. And then there’s capital, which we all know, you know this really well. We take capital and then we’re able to create more from it. And then the fourth is collaboration, which is people, it’s teams. And that was the one, I got good at all four of them, but I would say the collaboration one, that’s where the buyback your time and the buyback principle comes from. Because I believe we shouldn’t hire people to grow our business, we should only hire people to buy back our time. Because if we don’t, we’ll end up building a business that we grow to hate.

And that’s the real risk. If you say, what’s the risk to every business out there, it’s one day the CEO, the owner, waking up and deciding, “I don’t want to do this anymore.” And that’s why I wrote this book. This is the movement that I’m trying to create in the world. The problem I’m trying to solve, the mission I’m on is to just help every entrepreneur, every creator, every artist, do more art and create without ever hitting the pain line of success. ‘Cause I don’t want them to stop. I actually want them to do more.

Tom Wheelwright:

Well, I think that’s the perfect topic for the new year. Glad we’re doing this at the beginning of the year like this. Because, really, that is the challenge of every entrepreneur, is I just only have so much time. Like you say, time is a constant. So let’s go ahead and get started in this. We try to be very practical on The WealthAbility Show. So, you start with the value of a person’s time. So you’re talking about, okay, I’m buying back my time, meaning I’m the CEO, I’m the owner, how do I buy back my time? How do you start with that quantification? I love this, I’m an accountant. How do you start with the quantification of the value of your time?

Dan Martell:

Well, so I’m glad you brought up the math question. Most people I lose them when I start talking math. But here’s the reality, is that every business owner, every CEO has essentially a number of value, dollar amount, that they create every hour of work. It doesn’t matter who you are. Elon Musk to the guy down the street, the Uber driver. At the end of the day, there’s an economic value creation per hour. And I call this your buyback rate. ‘Cause we all need to figure out what the buyback rate is because then we know what things we can take out of our world, out of our calendar and pay somebody else to do, to know that it is a good time trade or a dollar trade. That’s what we get really good at as a great entrepreneur, is to be better trader of time.

And the way you calculate your buyback rate is you take your income, and I use the word income and I state it very simply. I say it’s like your salary you pay yourself, dividends, profit, all that from your business and then I would even throw in discretionary expenses that we all know we just don’t want to pay taxes. So we put a bunch of stuff in the business that shouldn’t be there, because essentially that’s the economic engine of your life. If you take that dollar amount, let’s call it a hundred grand a year, you divide it by 2,000 initially because that’ll give you the per hour value creation, which is if you’re making a 100,000 a year, that’s $50 an hour.

But because I want people to get a four times ROI, then we always divide that by four. And then that dollar amount, $12 and 50 cents, if it’s a 100,000, is the amount that you should be looking at everything you do and figure out can you pay somebody else to do it? So if you just made a list of all the stuff you do in your week and just listed it out, you would literally look at it and say, “Could I pay somebody $12.50 to do that?” Anything on that list that you are still doing, that you could pay somebody else to do, and I don’t care if it’s personal or professional, it’s just not a mathematically good time trade. Million dollar companies were not built off $10 tasks. It’s impossible. That’s the buyback rate. You need to start with that, so that you can then figure out, how do we trade up?

Tom Wheelwright:

Yeah, I would say the one that frustrates me the most is when I see entrepreneurs and they do their own bookkeeping. I’m going, why would you do that? Your buyback rate’s probably $300 an hour, $500 an hour, a $1,000 an hour, and yet you could buy this time at 60, $75 an hour. Why would you ever do that? So why do people do that? Why do they get caught up in that?

Dan Martell:

It’s the mindsets. I always look at growth in business, it’s like a ladder. And on the left side there’s skills, that’s like the left side of the ladder. The right side is beliefs. And then in the center, the rungs are character traits and the beliefs people have around buying back their time. And I grew up in a, I would say a world, and my dad is my hero today, my mom is one of my best friends. I have an incredible relationship with my family today. But I had to unprogram all these weird money beliefs. And a lot of it was just self-worth or fear of guilt. Like can I pay somebody to mow my lawn? Shouldn’t I be doing that and what is my neighbor going to think?

And I remember my dad, he actually owned some rental properties and every Sunday he would leave the family to go mow the lawns of these rental properties. And as I got more successful in business and I kept watching him do this, I remember one time I having a conversation with him, I was like, “Dad, why don’t you just pay somebody to do this? You can afford it.” And he is like, “I like to do it.” And I go, “Well, if you like to do it so much, why don’t you offer to do the neighbor’s lawn?” And he’s like, “Well, I don’t like to do it that much.” And I go, “I think your definition of ‘like to do’ and mine are different because I only do the things I actually like to do and I would do for free almost.”

Literally the work I do day to day I would do for free, honestly. But I also know that that there’s an economic exchange that has to occur for people to show up and do certain things. So I think it’s beliefs, it’s guilt. I coach a lot of female entrepreneurs and the challenge that they have is even in their home, hiring a cleaning lady to come in and support their family by taking some of that stuff off their plate. They have this fear of guilt from what their mom might think of them, because they run a business and they’re worried they’re going to say stuff like, “Oh, you’re so busy, you can’t take care of your own family.” There’s a lot of those fears. At the end of the day, it’s all fear-based.

But my rule is this, it’s like 80% done by somebody else is a 100% freaking awesome. So you got to lower your expectations. ‘Cause I think that’s another thing that stops people. And if you don’t have, let’s say, an executive assistant that supports you in your life, you actually do have one, it’s you. And you’re the most expensive version of that.

Tom Wheelwright:

Hey, if you like financial education the way I do, you’re going to love Buck Joffrey’s podcast. Buck’s a friend of mine, he’s a client of mine, he’s a former board certified surgeon and he’s turned into a real estate professional. So he has this podcast that is geared towards high paid professionals. That’s who he is geared towards. So if you’re a high paid professional, you’re going, “Look, I’d like to do something different with my money than what I’m doing. I’d like to get financially educated. I’d like to take control of my money and my life and my taxes.” I would love to recommend Buck Joffrey’s podcast, which is called Wealth Formula Podcast with Buck Joffrey. I hope you join Buck on this adventure of a lifetime.

Dan Martell:

So it’s beliefs.

Tom Wheelwright:

Yeah. My wife’s actually been very clear to me that the day that my personal assistant walks out the door is the day my wife walks out the door. She goes, “I’m not going to be your personal assistant.”

Dan Martell:

Oh, there’s going to be, yeah. We talk about this all the time. We have a house manager, Betty. And my wife, yesterday, talked to me and she goes like, “Have you ever thought if something happened to Betty, what we would do?” And I was like, “Oh, oh yeah, there’s a plan.” She’s not going anywhere, we take care of her. But if she were to leave, there is a pull the rip cord, get somebody highly trained back into our world as fast as possible because my wife would kill me within three days.

Tom Wheelwright:

So let’s talk about how to do this. Because it’s one thing to, we all know, at least theoretically, that we ought to be delegating, that we ought to be turning things over. But then actually doing it is a whole nother story. When you’ve done this, because you’ve obviously done this several times, how do you actually go about on a day-to-day basis, you go: well, first of all, how do I identify that person? How do I find that person? And then how do I train that person?

Dan Martell:

Yeah, it’s a great question. The lens that I look at everything through is the buyback loop. And the buyback loop is three parts. When you hit a pain line and some people are like, “I’m good. I don’t have any problems, I don’t need a buyback,” that’s fine. But you’re going to hit, if you’re growing, you’re going to hit the pain line. When you hit it, here’s what you do. First off is you audit your calendar and I call it a time and energy audit. And essentially you can do a log of it, because some people aren’t very diligent with their calendar. I am. So it’s all in there. If it is in your calendar, just print off your calendar and you do the same exercise I’m going to teach you how to do, you literally audit your time every 15 minutes and you write down on a piece of paper, what did you do in that 15 minute window.

Once you have a two week audit of your time, then go back through it and for each item, highlight in red things that you hate doing, that suck your energy. Highlight in green things that light you up that you enjoy doing. And then put a dollar sign next to it. One dollar sign if it’s a, let’s say, a $10 task and four dollar signs, if it’s like a $250 type thing or $500, you can decide because it all depends on the individual’s world. But once you’re done that time and energy audit, then you can actually grab all the red, that’s one dollar sign, put it into a bucket and say, “What’s the next hire I got to make to get all that stuff out of my world?”

So if you’re starting off, you’ve never done this, pretty much it’s going to be a personal assistant or executive assistant, a virtual assistant, whatever you want to call them, to take that grouping of stuff off your plate. So that’s the audit part. Transfer is the skill, and this is the skill. Like I said, there’s a ladder of success and one of the left side of that ladder is skills. So you’re going to have to learn this skill. But my philosophy is completely different than most. I call it the camcorder method.

So I literally record myself doing the work. I get three to five recordings doing it. So let’s say it’s bookkeeping. You talked about that earlier. It’s like, why are people doing bookkeeping? If you’re doing it today, record yourself doing it five times. Talk out loud while you’re doing it. I’m logging into my bank account, I’m grabbing the thing, I’m reconciling, I don’t know, bookkeeping. So I’m making up these terms. But I know enough when I talk to my finance team and I’m posting stuff, they tell me that too. I’m posting. And then you talk through it. And then when you hire somebody, you literally give them the recordings. They train themselves. So it doesn’t take any time from me. I call it net time, no extra time. And then they create the playbook or the SOP. I don’t create it.

A lot of people say, “I got to go do a three day offsite to go create these systems and processes in my business.” I did that back in the day. First book ever read, E-Myth, I did it. I don’t do that anymore. ‘Cause I realize they’re so fluid and they change so often that I focus on principles, not process. And for me, the camcorder method is the easiest and fastest way because I’m getting to do the work while I’m documenting it, I’m talking out loud, and then I just take that chunk of work and I give it to somebody else. That’s transfer.

And then fill, this is a big one, Tom. Because let’s say you give somebody an extra day a week to work, most people don’t know what they would do with that day, right? Because they’re so addicted to chaos and responsiveness and being things pulled on them that if you actually said, “Okay, you’ve got a day to improve your business to grow, you bought back all this time, what do you do with it?” They’re like, “Ugh, I don’t know.” So here are the three things.

Number one, I’ve said it already, skills. You have to invest in skills. And skills is also strategy. Some people are like, “Well, I know the next thing I need to work on is how do I get more leads from my business.” That is a skill to develop, but it’s also a strategy to discover. So skills and strategies are definitely a place you want to go invest. So if you get a day back, three hours on the next skill to grow wherever you need to go to. The other one is mindsets and beliefs. Jim Rohn said this to me once, said it to me, I watched Jim Rohn the OG of personal development on a YouTube channel, but I felt like he was talking to me.

But he was talking about, one day, because it’s perspective in mindset. One day this shoe salesman, this door-to-door salesman wakes up and it’s pouring rain, and one salesman looks at it and he goes, “Oh my gosh, there’s so much rain. I could never go out there and sell today. So I’m taking the day off.” The other salesman looks at the rain and he goes, “Oh my gosh, how amazing is the rain? Everybody’s going to be home and all the sales people are going to stay home. So I’m going to get the most conversations.” Mindset. Most people do not realize if you buy back your time, a big part of the opportunity is your beliefs and go study the books, get around people, et cetera. It’s going to help you elevate your beliefs. And then the other part of fill, is relationships. Because a certain level, Tom, you’ve probably discussed this with the people you work with, it’s a who problem, not a how.

Tom Wheelwright:

Right. Exactly.

Dan Martell:

So I don’t need to know how to do everything in business anymore. I just need to know who I need to call to tell me the thing, to introduce me to the person that I got to hire to get the problem solved. And to me, if that’s the framework, the buyback loop, then you can never go wrong because you’re auditing for time and energy. So this is why the more you grow, the better your life actually gets because you’re doing less of the stuff that sucks your energy and you’re getting more productive at your effective hourly rate, your buyback rate, as you grow the business.

Tom Wheelwright:

No, totally. This is actually the process that we are in right now. We’re in a high growth business right now, and this is exactly what we’re doing.

Dan Martell:

I do this pretty much every three to four months right now, just as dynamic as my life is. I’m always doing the buyback loop, just auditing, transferring, moving forward.

Tom Wheelwright:

I think that’s so important though. This is not a one time thing, right? The first time, like you said, it’s for your assistant and then the next time for the next person, the next person, the next person, the next person. But it is something we have to look at all the time. Which brings me to the next point, which is, fine, we’re entrepreneurs, we’re driven, we can pick this up pretty quick. Now let’s talk about our directors, our managers, our staff. All right. How do you get that down the line?

Dan Martell:

Yeah, I literally teach this to all of my team because at the end of the day, if I’m paying somebody six figures to do something, I don’t want them doing $10 tasks. Right?

Tom Wheelwright:

Exactly.

Dan Martell:

But here’s interesting, is oftentimes I’ll have executives come to me and they’re like, “Hey, look, I just got to be honest with you,” because we do one-on-ones and they’re like, “I’m overwhelmed. We’ve got all these things going on.” And I remember one time this team member, Kelsey, she came to me and she was almost in tears. She’s like, I want to do great work, but I just feel like things are dropping and I don’t know how to focus and I’m concerned. And I was like, “Look, I totally get where you’re at. Let me walk you through this process.” And it was the buyback loop and just the exercise of her auditing her time, alone, that was it. She literally was, I was like, “Do a two-week time and energy study.” And she went away. Three days later, she texted me, “I’m good.”

It was very obvious the thing she was doing that wasn’t moving the needle, that was taking mental space, that was causing her anxiety, that eventually, we call it the three Ds. We delegate, defer, or delete. And that’s the first part of really any time management system. So once she understood where her time and energy was, then she got that out. And then as she continued to grow in her output, then we started buying back her time by building a team underneath her. Like my philosophy, when I start companies, the first 12 people, I need to hire people that are potential leaders because I’m going to build the team underneath them. And buying back your time, it doesn’t matter if it’s an executive assistant, a junior copywriter, a ads manager, whatever, depending on the leader I’m trying to build underneath, those are people that you’re buying back their time for them to be more effective to increase their output.

So this works at every level, even if you’re an employee. At the end of the day, you want to be more valuable to your company. You might have to take some of your money to buy back your time so that you have more hours to fill, to upgrade your skills, to be more valuable to your employer so that you can get those promotions and raises to increase your economic production, which is your buyback rate. And it continues going. The highest paid CEO right now is Tim Cook. He makes a $100 million a year. So this is not reserved for just CEOs and entrepreneurs.

Tom Wheelwright:

And I think you make a good point, is that as an employee, I can look at where do I want to be, and say, “What should I be doing if I were there?” And then do your audit based on that time loop, that buy back loop.

Dan Martell:

Buyback loop.

Tom Wheelwright:

I love that.

Dan Martell:

Yeah.

Tom Wheelwright:

I love that. So once again, the book is Buy Back Your Time: Get Unstuck, Reclaim Your Freedom, and Build Your Empire. The website is buybackyourtime.com. Very simple. I like that.

Dan Martell:

Make it simple, yeah.

Tom Wheelwright:

I love that. And this is Dan Martell and Dan, thank you so much for being with us. Any final words for us?

Dan Martell:

Yeah, no, it is an honor. Definitely check out the website before you go buy the book anywhere else, because I’ve actually put a bunch of blueprints on there. I have this one page, preloaded, year template I give away, which is how I manage my year in one page. I’ve got a bunch of different tools for auditing your time and the software I recommend and all the resources and scripts. I just couldn’t put that in the book, so I put it on the website. So be sure to check out the website. And I’m on all social channels. I have a YouTube channel, a LinkedIn, TikTok, Facebook, Instagram, Instagram story is one of my favorite. But love to connect with your listeners and really appreciate the opportunity to share this topic.

Tom Wheelwright:

Yep. Awesome. Thank you. And this is something we all need to be doing when we’re buying back our time. We’ll always make way more money and pay way less tax. See you next time.

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You’ve been listening to the WealthAbility Show with Tom Wheelwright. Way more money. Way less taxes. To learn more, go to wealthability.com.