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Matt has this thought experiment he likes to ask people about.
You have a contract job: you need to dig a 100ft hole. The drill that could do it in a very short amount of time costs $10,000. You can’t afford it.
Do you buy a shovel? Do you take out a loan? What is the smartest way to get the job done?
It’s a fun thought experiment Matt uses to see how people think. It leads to a bigger discussion on thinking outside the box.
- 01:57 Matt: I’m trying to do better at thinking outside the box. Facebook and all these things we say that we want to “start the next one of,” all those things were thoughts outside the box. Mark Zuckerberg was going to Harvard and then dropped out. He could have continued going to Harvard and become a lawyer, or whatever he was going to be, and lived the American dream. That’s what you do. He decided to think outside the box and take a risk, so now he’s a billionaire. I’m always pushing myself to think more creatively, and that’s how this metaphor/story came up.
- 02:43 I basically ask this question to anyone and everyone, because I want to hear different people’s opinions. I even ask random people at the grocery store. I want to hear unbiased opinions. We’re going to throw Cory on the hot seat and hear a real live example. Here’s how it goes: you have blueprints for a hole. I come to you, Cory, and I say, “I want you to dig this 100 foot hole, that’s 30 meters. You’re going to get paid a contract wage, so you can’t drag it out to make more money and you can’t really rush it, because it’s going to take what time it takes. The options I’m going to give you to dig this hole are these: you can either use shovels or you can go and buy a machine that you can’t afford, a drill, for $10,000. Your other option is a shovel for $10.” You have $1,000. What would you do?
- 05:11 Cory: Here’s what I would do. This equipment I could buy to dig the hole better and faster costs $10,000, I can’t afford it. I would make sure that I get paid something like 50% upfront so that I can afford this tool.
- 05:36 Matt: What if you can’t? What if the 50% isn’t enough?
- 05:38 Cory: I make it enough.
- 05:40 Matt: The contract is not enough, and it’s already in place. You already agreed to it, but now you’re thinking, “Holy crap, we might need a drill.”
This metaphor is to get you to think how to dig this hole quickly, efficiently, and get out without a broken back, still making money.
- 06:07 Cory: I would go to my friend, Matt Lopez. I’m not sure what I would do.
- 06:13 Matt: Remember what I said—creativity. You have to think about what you’re going to do here. You can’t afford the drill, and you would be able to knock this thing out in only a day or two if you had it.
- 06:21 Sean: You just start with the shovel. Have you ever seen the movie Holes?
- 06:30 Cory: I would think of something else that I’m very knowledgable in that I could sell, outside of the contract on the side. I’m trying to save up enough money doing something else to get that piece of equipment.
- 06:36 Matt: But you’re on a contract that you’ve already signed, so you have to start digging. You did good, Cory. You brought up one thing that nobody else has brought up, and this is what I like to hear from people. You brought up that you would ask for 50% payment upfront, and that is an option. That’s what I do with a lot of my customers—I actually ask for more than that. I like that. Let’s say I didn’t tell you the amount of the contract, Cory, and you didn’t ask me. You should have asked me how much the contract was worth. This is a $10,000 contract, so you could have gotten $5,000. You still can’t afford the $10,000 piece of equipment. Even if you put your $1,000 towards it, it wouldn’t be enough to get the drill. There is another option that you can do that you didn’t say.
- 07:51 The whole reason I’m telling you this story is to get you to think outside the hole. In the chat room, Evan is thinking outside the hole! Obviously, you can dig the hole with shovels. Another option, which America is doing really great right now putting us into trillion dollar debt, is going and financing the equipment you can’t afford. Even if you got the money toward the contract and used it toward the machine, yes, you could use the machine toward other jobs, but let’s make some money! Why are we going to spend what we have?
- 08:40 You can rent the equipment for $1,000, which is money you had in your pocket. You get to keep the $10,000. Isn’t that incredible? People are blown away. It took me a little while to puzzle this all together. I know this is kind of a stupid thing, but I wanted to ask people this and see what they come up with. It’s great, because every time I ask somebody, they come up with something different. Like with Cory, I liked that. The moral of this story is this—think outside the box. Ultimately, it ends up being cheaper and you get to make and keep so much more of your money.
Always be looking for innovative new ways in your industry to be better and do things more efficiently.
- 09:48 Sean: Matt’s doing this thought exercise for people, and he’s looking for people who come up with creative solutions.
- 10:00 Matt: Cory was on the spot, so it’s a little bit harder to say, “I would do this.” Had we given him a day or two, he probably would have figured it out. I’m trying to say not to jump the gun. Don’t be so quick to pull the trigger on things, but think about it. Say, “Let me get back to you tomorrow.” That’s something I’ve learned with negotiations. They’ll want a contract, and I’ll say, “Let me meet with my team, I’ll get back to you tomorrow.” After I meet with my team, they might see something I didn’t see, so we go back and revise the contract and actually make some money on the deal.
Don’t be too quick to pull the trigger, and think outside the box.