digest
Short Summary
Main recommendation: The video's central answer is that the best businesses to start are those with high gross margins, and it ranks four models from lowest to highest margin: product businesses (50–60%), agencies/service businesses (60–70%), coaching/consulting/courses (70–80%), and software (80–90%). These figures are presented as 2024 best businesses, not 2026 as the title suggests. Gross margin is defined as the revenue from a sale minus the cost to make it, so a $5 product costing $1 to make has a $4, or 80%, gross margin. The speaker argues the highest-margin businesses with the highest dollar amounts are the best, and warns against low-margin models like restaurants (about 45%).
Key Points
- Gross margin is the core metric: Warren Buffett is cited as saying great businesses have high gross margin, and the speaker advises aiming for 70–90% rather than a restaurant-level 45%.
- Product businesses struggle with cash flow and distribution, so the speaker recommends pre-selling via crowdfunding (Kickstarter, Indiegogo), selling direct-to-consumer to skip retailers, and investing in the brand through reviews, press, and word of mouth.
- Agencies scale when they target a strong market pain, productize services into a single outcome-based offer, sell recurring revenue, and build repeatable systems and checklists so work can be delegated.
- Coaching works best when the operator sells their expertise, gives away education freely as marketing (education-based marketing), and builds a community among clients.
- Software's near-zero marginal cost makes it highly profitable, but it depends on a sticky product solving a painkiller problem, a boring industry with less churn, a strong first-time user experience, and retention.
Details Worth Noting
- Concrete instructions:
- Product businesses: (1) Pre-sell the product on crowdfunding platforms like Kickstarter or Indiegogo to validate demand and fund production before building; (2) sell direct-to-consumer, skipping wholesalers and retailers to avoid cash flow problems (Amazon is cited as a major channel); (3) invest in the brand by using premium products, prioritizing reviews and word of mouth, pursuing press, and driving traffic.
- Agencies: Target a strong pain point (the speaker suggests using AI tools to find and solve business inefficiencies, and negotiating pay based on money or time saved); productize one specific service (for example, logo design, onboarding experience, or the discovery call) and sell outcomes rather than hours; sell ongoing recurring contracts of three, six, or twelve months; build a checklist-based system so you can hire people to follow your process and replace yourself.
- Coaching: Get comfortable charging for your expertise, since the transformation happens at the transaction; teach what you know for free on social media, at seminars, and on stages to build an audience that later pays for implementation support; build a community where clients can meet each other through dinners or meetups.
- Software: Build a sticky tool that solves a must-have "painkiller" problem used daily rather than a yearly or nice-to-have "vitamin" problem; target boring industries such as local services, lawn care, body shop software, or government, where competitors are less likely to be swapped out; design the first-time experience like level one of a video game so users reach "activation" (core value) quickly, without overwhelming them; prioritize retention by analyzing why customers leave and trying to win them back.
- The speaker cites examples of product companies: Pela (biodegradable phone case), Laundry Sauce (modern detergent), and Lomi (food composting device), while noting many product founders lose their savings.
- The speaker says he runs one of the largest coaching organizations for software CEOs, and he personally completed over 1,300 Clarity calls over two years before calling himself a coach.
- Caveat: the speaker notes that many product founders lose their savings, and that software customers who lack daily usage tend to churn, for example with dating sites or tax tools.
Bottom Line
Choose a business by margin and then execute the model's specific bottlenecks: pre-sell and go direct for products, productize and systematize for agencies, give away education and build community for coaching, and focus on retention for software.
