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Feb. 13, 2023

The Two Pizza Team Rule: A Proven Method for Building a Successful Business (#203)

The Two Pizza Team Rule: A Proven Method for Building a Successful Business (#203)

Jeffrey Feldberg is the co-founder of Deep Wealth. The M&A journey for Jeffrey began when he said "no" to a 7-figure and "yes" to mastering the art and science of a liquidity event. Two years later, Jeffrey said "yes" to a 9-figure offer. During the process, Jeffrey increased his company value by 10X.

How did Jeffrey increase his company value 10X and go to a 9-figure liquidity event? Jeffrey created the 9-step roadmap of preparation for a liquidity event. 

The Deep Wealth Experience has you learn the 9-step roadmap in 90-days. At the end of the 90-days, you create a blueprint to help you optimize your business value. You also have the certainty of capturing the maximum value for your liquidity event.

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This podcast is brought to you by Deep Wealth. 

Your liquidity event is the most important financial transaction of your life. You have one chance to get it right, and you better make it count. 

But unfortunately, up to 90% of liquidity events fail. Think about all that time, money and effort wasted. Of the "successful" liquidity events, most business owners leave 50% to over 100% of their deal value in the buyer's pocket and don't even know it.

Our founders said "no" to a 7-figure offer and "yes" to a 9-figure offer less than two years later. 

Don't become a statistic and make the fatal mistake of believing that the skills that built your business are the same ones for your liquidity event. 

After all, how can you master something you've never done before? 

Are you leaving millions on the table? 

Learn how the 90-day Deep Wealth Experience and our 9-step roadmap helps you capture the maximum value for your liquidity event.  

Click here to book your free exploratory strategy session.

Enjoy the interview!


[00:00:00] Jeffrey Feldberg: Welcome to the Deep Wealth Podcast where you learn how to extract your business and personal Deep Wealth.

I'm your host Jeffrey Feldberg.

This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.

When it comes to your business deep wealth, your exit or liquidity event is the most important financial decision of your life.

But unfortunately, up to 90% of liquidity events fail. Think about all that time and your hard earned money wasted.

Of the quote unquote "successful" liquidity events, most business owners leave 50% to over 100% of the deal value in the buyer's pocket and don't even know it.

I should know. I said "no" to a seven-figure offer. And "yes" to mastering the art and the science of a liquidity event. Two years later, I said "yes" to a different buyer with a nine figure deal.

Are you thinking about an exit or liquidity event?

Don't become a statistic and make the fatal mistake of believing the skills that built your business are the same ones to sell it.

After all, how can you master something you've never done before?

Let the 90-day Deep Wealth Experience and the 9-step roadmap of preparation help you capture the best deal instead of any deal.

At the end of this episode, take a moment and hear from business owners like you, who went through the Deep Wealth Experience.

Welcome to the Deep Wealth podcast. And for this episode, it's a solo one as we're going to do a deep dive on an incredibly powerful strategy that can help take your business to the next level. So I have a rhetorical question for you. As you know, a Deep Wealth and the nine step roadmap, we do double duty with our nine steps. On the one hand, it's all about business growth and ensuring that you're finding the best ways to grow the business. And at the same time, while you're doing that, you're also preparing for a future liquidity event. And when all is said and done, you've done two things on the one hand, you have a thriving and profitable business that you can keep forever. And on the other hand, you have a business that you can sell tomorrow, both terrific choices. And the point is that you have a choice.

So here's the rhetorical question for you? Would you like to know a strategy that can be the rocket fuel for not only your business growth? But to help you create a market disruption. And the short answer is, come on Jeffrey. Of course, I absolutely. You want to know what that is? So here's another question for you. What would you say if I told you that the fuel for your growth was pizza?

Now, all joking aside, you may be saying, Jeffrey, what have you lost it? Are you off your rockers there? What are you talking about? Pizza and growth. And actually, truth is stranger than fiction. I'm talking about the two-pizza team rule which is a proven method for building a successful business.

And look no further than one company that put this out there, worked for them, and is working for others. Now you may or may not have heard of this company. The company I'm referring to is Amazon and all joking aside, the founder of Amazon, Jeff Bezos. When the company started and it began to rapidly grow, he noticed that as the size of the teams increased their results decreased, it took them longer to do things.

And in looking for ways to get things done, have it done quicker. Remember it, Amazon is all about the customer. And by the way, in the show notes, I'll put some links to some terrific books about Amazon and communication and strategies, the company story. But what Bezos saw was. How can I put something out there that people can remember to keep the team size, the right amount?

And so when it comes to team size, we want the Goldilocks of team size. If a team is too big, Nothing's really going to get done. It's going to be slow. It's going to be lethargic. And on the flip side, if a team is too small, While the people aren't going to be able to handle it. There are going to need more people or more resources to get things done.

So the Goldilocks of the right team size is the two-pizza rule. So what's the two-pizza rule. Well, as you can imagine, what it's saying is if two pizzas are not enough, To feed your team. The team size is too big. And on the flip side. If you have two pizzas and the team can't finish the pizza. Well, the team is too small. So what we're looking at is the right team size. And you may be wondering before I go further. Okay. Jeffrey will, what is that magic number? And the shorter answer is it depends.

When you dive into the research and there's been all kinds of studies that have been done on this, the magic number, it's a range anywhere from 6 to 12, but I'm going to settle on somewhere between seven to nine people for a team. Again, every business is different. Cultures are different, but the rule of thumb is two pizzas. Have to be enough. To feed the team. Now, when you look at Amazon and their history, what we find is that when basles implemented the two-pizza team role, he found that the approach, it encouraged a culture of ownership and a culture of accountability. And from that ownership and from that accountability came innovation.

And as we talk through the strategies of the two pizza rule, when it comes to ownership, accountability, and innovation, That is really a perfect storm for both growths. And market disruption. So let's now understand the two-pizza rule. So at the heart of the two pizza rule, it's having teams that they know they have the autonomy that they can think big and that they can be creative.

The team members. Are automatically they're taking ownership in their work because they know the team is not big enough that they can pass it off to someone else. And here's just a quick thought experiment. Perhaps you've been part of a committee or you've been on a board and it's a large committee or board.

Projects are being talked about and you know, you're busy, you have other things to do. And in the back of your mind, you're probably thinking, well, you know what? There's other people on the committee it's big enough. Someone else will handle that. That all goes away when that's not the case. When you have a smaller team where you just can't walk away, someone else's going to do it, there is positive peer pressure, okay, I'm on this team. What am I going to contribute? All eyes are on me. How can I help this team? And the other thing that they found was through that innovation and through that passion that comes out of it.

You want to create a market disruption. You want to make a difference. When you have a small enough team, you have comradery. You have unity. Now let's do another thought experiment. I want you to think of a time where you were on a team. That was just right. It wasn't too small. It wasn't too big. Let's go back to that peer pressure.

For you just to walk away and leave it up to the other members of the team to do it. You didn't do that. Why? He didn't want to let the team down. You knew that everyone had to pitch in to get the goal done and chances are, you're also passionate about getting that golden, whatever the subject matter or your was, you were passionate. You love that. You want to see that out there. You talked about that all day and night.

Uh, in terms of your area of focus at the business. So now that you understand what's behind the two-pizza rule, let's talk about the team size and how we actually achieve the goals. So, as I mentioned earlier, Studies show that the size of the team is directly correlated to the success of a project.

And once again, if the team size is too big, if the team size is too small, chances are better than good. That you're not going to meet the goal. The Goldilocks of team sizes. Again, between that seven to nine, the team is agile. They're able to adjust as the marketplace changes as a new situation arises, they can accommodate that with ease. They're not being bogged down by having all these people, endless emails, phone calls, meetings, all kinds of red tape that's going on.

And on the flip side, because the team isn't too small, they have the right number of people that they can divide and conquer. They can tackle these issues as they're arising to figure things out and get that done. Now I want you to think about something in today's business environment and really through the internet.

It's a global environment is no longer just in your backyard, who the competition is. Your competition is not only domestic, but it's also international. It seems every time you turn around, there's a new competitor from a different country who wants to put you out of business. So the ability to respond quickly to find those inflection points, and if you're familiar with the nine-step roadmap, and of course you are.

You'll know that step number one, that the big picture. It's all about finding those inflection points. And for those inflection points, those are blind spots that we're not quite aware of in the marketplace left on check. A blind spot can put you out of business. But if you know about the blind spot, if you know about that inflection point,

That can put you out of business so that you can go into a bigger business. And as you know, at Embanet. Embanet and one that was focused on keeping the seats filled. And we do that through our hosting, our technical support, our course development and creation. But at one point in time, we sense there was an inflection place in the marketplace. Didn't quite know what it was, but we sense that things were changing.

And then I took one of our X-Factors, the magic wand question. And I asked one of our clients. Actually, it was Jon Clarke at Colorado state university. He was the associate Dean at the business school. And I said, Hey, John, What's going on, what's keeping you up at nights when it comes to your business? And he said, Jeffrey, funny, you should ask that. As it turns out, later today, I'm having a board meeting, and I'm having to go in front of the board is actually not a great situation of why our enrollments are down. Hey Jeffrey, do you think you can help us fill those seats?

Help us find those students. And what I thought would take me two weeks actually took two hours. But it resulted in creating Embanet 2, whose focus was on. How do you feel those seats? What do you have to do to make that happen? And because we picked up on that blind spot, that inflection point Embanet 2 put Embanet 1 out of business, but Embanet two was a bigger business. And when you look at our nine-figure liquidity event,

Much of the value came from Embanet 2 in fact Embanet 1, it was relatively a rounding error in value compared to Embanet 2. And before we go on with the two-pizza rule of how do you roll it out and what does that look like? I'll share this. If you don't have the right team size. If it's too big if they're just missing things. So if we would have missed that, Embanet.

That inflection point, what would have happened to Embanet 1? Well, keeping the seats filled with technology and the 24 7 support desk. In course, conversion, that business would have kept on going, but. Technology became easier. And the IT departments at universities were catching up, and although they were never as good as Embanet, there's times in business where good is good enough.

The university wouldn't have had to pay for anything because it was a fixed cost already with the IT department and good as good enough for the university.

Eventually, what would have happened is Embanet 1 would have either gone out of business. Or profits would have become flat. Neither is a great situation. So when we find those inflection points, This is where we can really move the dial on the business and really coming out of here. One of your action items, why not create the right team size to find those inflection points because what you find?

Wow, that can be a game changer, and finding inflection points and what to do with that. That's a whole other episode. And we do cover that on the Deep Wealth podcast with the guests that we bring on and some of the solo episodes. But for now, let's get back to the two-pizza rule. So how do you roll out the two-pizza rule in your business? We've talked about the benefits. We've talked about the team size.

What does it look like? Well, the first thing that you want to do is why not find a specific problem in the business that you haven't been able to solve. And you're going to make that problem. The goal is to solve that problem. And you want to ensure that whatever that outcome looks like, it's easy for people to understand.

Part of what you're going to do is you're going to determine what are the key performance indicators, the KPIs that we're going to use. Uh, to measure the progress of solving that problem. So we've identified a specific goal that we want to achieve. We've put some KPIs behind that. Next, we want to choose team members, but not just any team members is people in the business who are self-motivated. And what's nice when you're implementing the two-pizza rule, you're probably going to end up topgrading your business.

What do I mean by topgrading? When it comes to topgrading the business, you're going to ask yourself, do I have A players or do I have B players, C players?

And over time, you definitely want to remove the C players and also the B players so that you only have A players. Now, something interesting happens. Your definition of, A player today. Maybe a B player, six months from now or a year from now. And that's a wonderful thing. You always want to be moving the dial for what you consider an A player in your business. You always want to be getting better talent. World-class talent, specifically talent that is smarter and better than you.

As you know, Deep Wealth one of our favorite questions does the business run without you? And unfortunately for most business owners, Whether they have a management team or not. The answer is no. When you have the right A-players in place, you can have a business team that runs it without you, and that frees you up to do all kinds of other things. But I'm going to stop that there that's a whole other episode. You hear me talk a lot about that.

Let's go back to how you're rolling out the two pizza rule in your business. So we've identified the team members. They're self-motivated, they're passionate about achieving the goal. It's the two-pizza rule. We know that the size of the team. That they can eat two pizzas, and there's not too much pizza. There's not too little pizza. It's just right for them to eat. That's how we have that, right? Again, seven to nine people on the team size. Now here's the key thing. And this is where most business owners miss the boat.

When it comes to the teams, the team must know that they have autonomy to make changes the old proverbial, running it up the flag pole to get the permission to do it. That's gone. That doesn't happen. And in the process, you're eliminating emails, phone calls, meetings, waste of time, all that red tape, and bureaucracy.

That goes out the window because the team knows that they have the autonomy to make those decisions. And you also want to make sure that you set up your teams for success and not failure. You want to ensure that your teams have all the resources that they need. Perhaps resources may be training in a certain area, or it's mentoring, or it's access to technology, whatever the case is, you want to be able to give them a budget and to make those decisions without running it by you or senior leadership, the team should be able to do it and really is going into this as, Hey, tell me about it afterward.

What you're effectively saying to the teams. Hey. Figure out the problems. And tell me about it afterward. Let me hear how you figure things out without getting bogged down in having to get permission and effectively what we're doing is what every business owner wants. And this is what we strive for.

We are training our team members, the employees. To think like an owner. And not an employee. It's not, Hey, you know what? It's someone else's problem. I'm just here to collect the paycheck instead. Listen, I'm an important member of the team. That team is depending on me to get things done, I can't let them done. And I'm passionate.

To figure things out to get these problems out of the way and to find solutions. So that's how we're going to roll it out. Now, you and I both know we're always going to come into some kind of road bumps or hiccups along the way. Let's talk about strategies that we can do when you do come into challenges and where things are getting bogged down.

And at the same time, we have to remember that the two-pizza rule and the whole mindset that goes along with that. That's new for most companies. And you'll notice that I said mindset. A two-pizza rule is not a to-do list. Okay. Check. I have the right number of people. Check I've given them a goal. Absolutely not.

The two-pizza rule has got to become a mindset in your company because it enriches the culture. And at the heart of the two-pizza rule, I mentioned it at the very start. It's innovation. It's taking ownership. It's unity. It's comradery that we're all going to get this done. And as good as your business is.

Chances are that in those areas, you may not have that. It's a new way of doing things for people. You want to encourage them and make sure that they know that they can do it. So when you do run into an issue, the first thing that you want to do. Is speak to every single person on the team. I hear the concerns. Listen, you don't have to necessarily give an answer right away.

And as you're hearing their concerns, I want you to ask yourself a question. Is the narrative around the goal? Number one is an understood. Is a narrative easy to understand? And is a narrative compelling. Is it something that gets people out of bed or is it the same old, same old?

I can't tell you how many times when I'm speaking to countless business owners, I ask them to share the company vision or mission. And they'll share with me and truth. Be told its words on a page that are meaningless. Look in your own company. Don't shoot the messenger here. Maybe you have your vision or mission up on the wall, somewhere in the office.

But is that all is doing, is it collecting dust? Is it lots of words? That don't mean anything they're not inspiring or is it getting people out of bed excited to be able to solve these problems and to make things happen? So make sure that the narrative around your goal. It's easy to understand it's compelling. And also speaking of mindsets.

You want to ensure that you and the team expect, Hey, there are going to be issued. We'll deal with those issues as they come up. But we're also going to keep focused on the big picture. We know what we want to achieve. And as things come up well, perhaps it's pointing out blind spots in the business. It may be showing deficiencies in how we're doing things, and we'll deal with that, but we're never losing sight of the big picture.

We're always moving one step forward. To achieve that goal. Get that done. Make the difference out there. Great. That market disruption helps solve those problems. Make us better for our customers. And so when you're implementing the two-pizza rule, when you're finding a goal, why not pick a goal, that it may not be the biggest goal, but it's not going to be the smallest goal either?

You want to have some early success. People start to talk about that. So as you roll out from one project to another project to the next project, You're enjoying that success.

So now that we've talked about the two-pizza rule, let me share a quick story. I'm going to go back to Embanet. When we found that inflection point in the marketplace of how do you fill the seats? It wasn't enough to keep the seats filled. It was now, how do you feel the seats? At Embanet because we had that cockroach startup mindset. And in the show notes, you can read our article on cockroach startups and all about that, of what goes along with that. But the mindset really had us follow at the time, the two pizza rule, even though it wasn't around at the time we were following it through the Kako shut up mindset.

And when we were trying to figure out, well, how do you fill the seats? We had two years of problems. We weren't figuring out we were failing one initiative after the other, but we kept the big picture in mind. And as we began to add other team members, we always ensured that there weren't too many people. We wanted accountability. We wanted people to really feel that pride in terms of what was going on out there. So when Embanet two began to get some traction, it was still a small team. It was not a bet. The farm decision that we're going to take all the money and all the people and put them into Embanet 2.

Instead, it was a mindset of, Hey, this is an experiment. Let's try this experiment to see if we can do something new that no, one's never done before. And because we took that mindset of an experiment and because the team size was just the right size. That's when things began to click communication was easy. It wasn't bogged down. The team made changes on their own.

And before you knew it in the blink of an eye. Embanet 2 it. Got the traction. We got the clients, and that's when we created the market disruption. And we never looked back was easy. No. Were there challenges along the way? Absolutely. But it was a cockroach shut up mindset. It was a big picture. It was that narrative. Again, the eminent narrative was to change the social fabric of society. One e-letter at a time. And that was a rocket fuel that kept us going. So now that I've put that out there let's do a quick recap.

So the two-pizza team rule a proven method for building a successful business. And what I spoke about was, well, where did it come from? It came from Jeff Bezos, the founder of Amazon. And this was the rule that he came up with as Amazon was growing quickly. And again, the two-pizza rule, two pizzas are enough to feed a team.

If the team is still hungry, the team is too big. If there's too much pizza left over the team is too small. And why Bezos put this approach in place? He knew that the right team size encourages a culture of ownership and accountability. And the end result is innovation.

And so when you understand the two-pizza rule, you understand that a gives teams autonomy. The autonomy to think big. The autonomy to be creative and the autonomy that they have, the innovation to create a market disruption. And when it comes to market disruption, Amazon is the master of market disruptions. Look at all the disruptions that they created, all fueled by the two-pizza rule.

And so you also heard why the team size it's the seven to nine people. That's at the heart of achieving the balls. And you also learned that studies show that teams that are too big teams that are too small. Don't do it. But when you have that seven to nine team size, in terms of the people on the team, that's where they feel the responsibility.

They're thinking like owners. And they're able to be quick and agile and respond to an ever-changing marketplace. Next, we spoke about how do you roll out the two-pizza rule. And there we said, find a goal, make it an inspiring one, create a narrative as very clear, choose KPIs that make it very easy to measure. And then you're going to want to choose team members that are self-motivated. They're passionate. They want to put this goal into action into the marketplace. And then lastly, what we spoke about was your mindset of how do you overcome challenges when you're implementing this. And that is to never lose sight of the big picture, ensure that your communications around the goal are clear, and that everyone understands what those are. And to speak to people one at a time as problems come up to really understand why those problems are coming up and that everyone is prepared to make the changes that are needed.

You want to make sure that the teams have the resources in terms of training or tools. Tool sets or technology or mentoring, whatever the case may be. To help them overcome any challenges that they're facing. So there you have it. That's the two-pizza team role, a proven method for building a successful business.

And as you know, one of our traditions here with the Deep Wealth podcast, before you leave any episode, you make a commitment to make a change, to take some action right now.

So before we wrap up this episode, here's your mission. What goal can you choose right now that you can implement both the two-pizza team rule, as well as conquering that goal? Think about that for a second of whatever that goal is going to be. Perhaps it's a problem that's been plaguing your business. Perhaps it's finding that next market disruption, but whatever it is, make that decision right now, you're going to have a goal.

You're going to speak with your team about this, and you're going to implement the two-pizza team role.

Now you may be saying, Hey, Jeffrey, guess what? We already have the two-pizza team rule we're already doing it. And my response to you would be twofold. Number one. Congratulations. That's terrific. Second, what can you do to make your two-pizza team rule even better? Can you expand it to take on more goals? Can you make some changes to make it even more effective? Whatever that's going to be.

Ask yourself. The question, if you're already doing this, how you can do that even better? Again, I encourage you to go to the show notes. We'll have links for books and articles that you're going to love that will help you with this.

And as we begin to wrap up this episode, I have my usual quick question. Did you find this episode interesting? Did it give you some new ideas? Did you get value out of this? And I'm hoping the answer is yes. And when you answer yes, my ask of you on your favorite podcast platform, whatever that is, give us a review. Let others know that we're out there. Together we can make a difference because, a Deep Wealth, our mission is a change of the social fabric of society one business owner at a time, one liquidity event at a time. And with your help of giving us a review, letting other people know about us, we'll grow the community. And speaking of growing the community, another heartfelt thank you. Or now ranked in the top 5% of podcasts globally by Lissa notes, but not have done that without you.

We are so grateful for your support. It's an official wrap on this episode, the two-pizza team rule, a proven method for building a successful business. And as we like to say here at Deep Wealth, please continue to remain healthy and safe.

[00:26:13] Sharon S.: The Deep Wealth Experience was definitely a game-changer for me.

[00:26:16] Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of a hundred times that. Anybody who doesn't go through it will lose millions.

[00:26:26] Kam H.: If you don't have time for this program, you'll never have time for successful liquidity

[00:26:31] Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

[00:26:37] Lyn M.: Compared to when we first began, today I feel better prepared, but in some respects, maybe less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix.

[00:26:53] Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately.

[00:27:15] Sharon S.: There was so much value in the experience that the time I invested paid back so much for the energy that was expended.

[00:27:26] Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

[00:27:39] Kam H.: I've done an executive MBA. I've worked for billion-dollar companies before. I've worked for smaller companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even.

[00:27:57] Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at this.

It's five-star, A-plus.

[00:28:24] Kam H.: I would highly recommend it to any super busy business owner out there.

Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever.

[00:28:43] Jeffrey Feldberg: Are you leaving millions on the table?

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Enjoy the interview!