Daniel S. Peña Sr.
The Founder of QLA – Quantum Leap Advantage Methodology. Daniel Peña Castle Seminar & Your First 100 Million PDF e-book.
The material that Dan Pena teaches is NOT for people that want to make a million dollars. His teachings are only for high-performance people who want to make at least 10 million dollars! The quickest that anyone has done this entire process is Dan Pena who has done it in about 7 months.
The QLA method requires a lot of emotional strength because a lot of things can and probably will go wrong – you will have to handle it!
Even people that attend his famous castle seminar still mostly give up. All QLA castle seminar mentees get a free yearly mentorship from Dan personally, however, his mentorship is very challenging for most people. They have to submit their reports of what they did on a weekly basis and do exactly as Dan tells them – if they fail to do that (because they are either too lazy, lose motivation or are afraid to step out of their comfort zone), it’s all over for them!
Around 20 people attend the average QLA castle seminar but after 6 months, only 1 or 2 may still attend Dan’s meetings and submit their reports – pretty much everybody drops out. His QLA method is really NOT designed to be mainstream because it requires a lot of self-discipline, self-esteem, and a large emotional bank account.
The entire QLA method is quite simple to understand and it seems easy logically, however, it’s a lot harder to do!
This is a simple overview of the entire process – a lot of people fail but the people who make it work, succeed beyond their wildest dreams!
If you want to have a huge business that will make you at least 10 million dollars, it does not make sense to do it entirely alone. You will need to get a chairman and a board of directors or advisors, lawyers, accountants… You need the best people that you can possibly find!
The founder of The Blackstone Group, which is one of the biggest multinational private equity firms said that if you hire employees that are “perfect 10’s” you can build a great company. If you hire 9’s, you are still able to build a good company but if you decide to hire 8’s he does not know how to build a company. With the QLA method, you are going to need the best of the best employees!
You always start by picking an industry – you can also follow a few models.
The first one is starting from scratch – you can pick for example social media and start a social network like Mark Zuckerberg did. The other models include acquiring existing companies, which is actually a much easier way! A chance for success is bigger if you get yourself a company that already works than it would be if you start with nothing. However, the reward will be bigger if you do it with a start-up company (build it all the way up from nothing like Facebook or Google)!
Some industries are better to pick than others, here are a few of them:
Healthcare is a great choice because it is an extremely important part of the society, life expectancy is increasing, people want to live longer and are ready to pay a lot of money for expensive treatments. Some studies show that more than 70% of all the money that is being spent on healthcare is spent in the last 4 months of the individual’s life.
Technology is also a huge industry that is rapidly changing and expanding – there is a lot of money to be made here!
These are my personal favorite top 2 picks – either healthcare or technology.
Of course, if you are already an expert in the real estate industry or you love restaurants, pick that industry because you will spend A LOT of time there!
If you choose to start with a start-up company, you are going to need an idea. This might not be an easy task but it’s also not a difficult one – if you go to Silicon Valley, you will find people with thousands of great ideas that they would like to execute. In case you chose to acquire a company, the best suggestion that I can give to you is to pick a fragmented industry that you will be able to consolidate – the strategy here is to acquire 20 or 50 companies, consolidate them together to get a huge company, and then sell it to an industry giant – in the technology industry you might get acquired by Facebook if you are big enough. If you chose healthcare you can consolidate a lot of clinics or dentistry and sell it in one big package.
If you just go to Yellow Pages, you will see thousands upon thousands of businesses that are currently in fragmented industries and that you can consolidate into one giant company!
In order to achieve that, you will need smart experienced people and a lot of capital! In order to get all of that money, you will need to have a great perception! Perhaps the easiest strategy to raise that kind of money is to associate yourself with people that have already done a lot of business very successfully in the past. If potential investors look at your board and they see Bill Gates, Mark Zuckerberg, Jeff Bezos, and Warren Buffett sitting there, you will get all the money that you need. Even if these superstars don’t come up with something incredibly innovative, they would still probably at least break even to pay off their investors! If these famous entrepreneurs, however, do win, then as Dan Pena would say – you would make so much money that you would not be able to count it, you would have to weight it!
The question at this point is – how to YOU get your chairman, board of directors, accountants, and lawyers?
Start with an anchor chairman – this means you should get a chairman with a proven track record, who has already achieved a lot. He has to be an incredibly successful person. It also helps if your chairman already has some experience in the industry that you are entering. You should make a list of the top 50 people in the industry that you chose and try to get one of them to be your chairman.
This is when that statement that I wrote, in the beginning, becomes true – it is very simple to logically understand why you need a highly-successful chairman, meeting these top 50 people and getting rejected countless times is another story. Your offer to these people is around 25% of your company and you are NOT asking for any money in exchange for that equity – you are giving them free equity in your company which is why you are going to get their interest.
These wealthy individuals get offered a lot of things all the time, which is why you MUST stand out – and turning down one-quarter of a company that they can get without any investment is not that easy to do – especially if they see you as a highly motivated high-performance individual who never gives up. In most cases, you are going to remind them of themselves when they first got started.
There are a lot of techniques that you can use to get in touch with them – personal gifts, “accidentally meeting them” in their favorite places, seminars, conferences… It would be great if you could further build up a stronger relationship with them, however, that is easier said than done because they must be extremely busy (if you try to call them you might have to go through several assistants and other gatekeepers).
When you get your chairman, roughly 50% of the recruiting work is already done! Getting other people to join your company is much easier because they might “falsely” believe that your chairman did a lot of research on the topic and already knows how to do everything – for example let’s say you get Bill Gates as your chairman. Other people would love to join that company even if Bill Gates doesn’t really know how to make this work yet.
The next step is to get 3 to 4 board of directors. If you are building this company in the US, you should rather get board of advisors for legal purposes, when you get sued (and you will because it’s almost impossible to build a big company without any litigation). If you really want to be a billionaire or have at least 100 million dollars, you will almost certainly get sued. Dan Pena is very comfortable being sued and so should you – get comfortable being uncomfortable!
That part is not as tough in Europe, so you can get a board of directors rather than advisors if you live in Europe. Every member of the board should get anywhere from 2 to 5% of your company depending on how active they will be.
If you get someone just so he can build your perception through the roof because he is well known and it makes your job easier when you show your list of directors to investors, then you might only give him 1%. If someone will be extremely involved in your business, you might also consider giving him 10% of the company.
The chairman and board of directors/advisors will NOT be involved in your business in terms of day to day management. You will only have around 4 meetings per year with them. In some of those meetings the entire board is going to meet and in other meetings perhaps you will just meet with somebody 1 on 1 to ask for advice. This process is not very fast, it will take some time to put your dream team together.
After that, it’s time to get your lawyers and accountants. You will get them on “success fee” basis – they will only get paid when you acquire a company. This strategy is not very common when you are small but in the big business world, this is how it’s done! If they don’t want to do that, it means that they are not taking you seriously.
If they only want to work with you on an hourly basis, that means that they don’t care if you win or lose or they don’t think you will make a lot of money and they think you will only waste their time – the strategy that the QLA method suggests is that they only make money when you make definitely is definitely the way to go!
Dan Pena often lets you know that you should join the business clubs that you can’t afford and that don’t want you! The same principle applies to your dream team, lawyers, and accountants. Don’t get random people that just say “yes” to anyone, really get the best of the best!
You don’t want to get any red flags in terms of your financial situation and audits – you also want the best legal advice that you can’t possibly afford!
At this point, the question is – how do you make money with the QLA method?
When you are acquiring a new company, you need to borrow money – if the company is worth a million dollars, you always raise more than that, let’s say you raise 1.8 million dollars.
You use 1 million to buy a company and $800,000 is working capital. If you have 50% of the company, 50% of the working capital basically goes to you – this is a bit oversimplified because you might want to keep this money for other expenses but this is roughly how it works – if your chairman has 25% of the company, he gets $200,000. Some companies that you are going to acquire are going to be very expensive – perhaps you will raise 20 million dollars and 5 million of that will be working capital, so you will make 2,5 million by acquiring that company.
The second way to make money is with dividends. The companies that you acquire will be well established, so you will be paid in dividends for some of them.
And the final way is when you go public – when you acquire hundreds of companies and put them all together, that giant company is worth more than the sum of the individual companies – when you sell your stocks, you get more money than you had before you went public now that the company is worth a lot more.
That is it!
People frequently say that they would like to keep all the equity for themselves rather than giving it away, so here is a question for them – would you rather have 100% of a million dollar company or 50% of 50 million-dollar company?
The answer is very obvious – it is very unlikely that you will build a giant company on your own without any track record because people won’t trust you as much as they will trust your chairman and board of advisors.
Perception is reality – that is what Dan Pena teaches us! You will get to IPO or get investors much quicker if you have a famous dream team around you that banks and investors already know.
Dan also teaches us that we have 2 bank accounts:
- Financial bank account
- Emotional bank account
Financial bank account is now big enough if the emotional account is not big enough – if the emotional bank account was big enough, you would be able to implement QLA methodology fully and make millions!
This entire process takes anywhere from 3 to 7 years to complete at which point you can do it again.