The Level Up Podcast w/ Paul Alex
LegalZoom Co-Founder Eddie Hartman Explains Why 72% of Businesses Fail
20 Dec 2025
Chapter 1: Why do 72% of businesses fail?
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We don't stop selling. We don't stop selling even when we obtain that client with the onboarding, asking the clarifying questions. Negotiation actually scares a lot of new entrepreneurs. What would you say, Eddie, that's one rule that can help them close deals without feeling pushy?
Imagine that they say, I'd like a 25% discount. And you say, done, 25% discount. Do they believe that your price was real? If they do not believe your price, they may question your value. If on the other hand, you say, I can give you a discount if you are willing to do this. If you're willing to provide a testimonial for me. Exchanges make sense to people. If it's free, then where was the value?
Why didn't you want full frame? Was that price a real price in the first place? To avoid that, when you give something, get something back.
I love how you framed it. I got to share that with my sales team. All right, guys, welcome back to the Level of Podcast. This is Paul Alex, and I'm sitting down with Eddie Hartman, co-founder of LegalZoom. Guys, he's helped companies worth billions figure out how to price smarter, sell better, and grow faster.
So on this episode, we're actually going to be breaking down what it really takes to build a business that not only scales, but stays profitable. Eddie, how are you doing today, brother?
I'm so glad to be on with you, Paul. I really am.
Oh yeah. We had a great conversation about baseball. Now I know that you're a big fan. Not about the Giants, but the Mariners.
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Chapter 2: What role does perceived value play in customer decisions?
And what did you not do? Because you were focused on acquiring. You didn't really charge them very much. You discounted heavily. You gave away free stuff. Of course you did because you didn't want to hear no. You wanted to acquire. And that's the problem.
Or you're that person who said, I'm going to create a great product and I'm going to charge a lot for it because it's going to be super premium. Fantastic. But then one day somebody creates a knockoff version of what you're doing and they're acquiring, acquiring, acquiring and they eat your lunch. The problem is people get stuck in this one engine mindset.
They do one thing super well and they lean into it. They need more than one engine, Paul. If you don't want to stall, you've got to get wallet share and market share. You can't do just one. This is where companies fail. We have examples in the book.
We work, ship, you know, we have a lot of examples of companies because we research thousands where the thing that brought them down and cost them, you not just all their investors' money, but I mean, the confidence and belief of the people who followed them. Think about how much people sacrifice when they're starting something.
To see all that go away just because you believed in yourself and you leaned into one thing And you didn't think, hey, you know what? I need to get out of my comfort zone and go after wallet share and market share together. So that's what we teach in the book. We give a strategy for doing that. And the introduction is written by Bill Gurley.
I don't know if you know Bill Gurley, but a major investor behind a lot of companies, including Uber. If you ask him, he'll explain. That is the way that you become what we call a profitable growth architect, somebody who thinks through and plans. for that future strategy, as opposed to just relying on their one strength.
And Paul, if I could say one more thing about this, the reason it's so deadly, like quicksand, in the early days, it will seem successful. You know, you lean into creating that crazy devoted following. It's how you raise money, because you say, look, you know, the one number I need to grow is net promoter. Look at my net promoter score. People love me. Look at this core of followers.
Or you say, hey, you know what? Look at how fast my listeners and subscribers are growing, right? Or look at how rapidly I'm acquiring new customers. It's insane. And what people don't realize is, yeah, but you're acquiring them at such a discount or you're giving away so much free stuff as WeWork did that, This does not stack up to a sustainable business.
In the early days, it seems like exactly what you should be doing. And it fits with this idea that you believe in yourself. But believe me, you've got to get outside of that comfort zone. You've got to look at how to become a profitable growth architect, bringing together wallet share and market share. And that's really what the book is about. It's about a roadmap to doing that.
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Chapter 3: How can entrepreneurs avoid the single engine trap?
What's the one principle of scaling you wish everyone understood before they start?
fundamentally, as your company evolves, okay, what got you through the startup days is not going to take you into the scale-up days. Evolution, my friend, is the thing that I think everyone would benefit from. The principles are the same. You still need to think about value and price, but here's the thing. Value is subjective.
I have four kids. I have a minivan. I love my minivan.
I really do. My brother is a handsome man, a very handsome man. And he is married now, and he has one little tiny baby. I think you'd have to pay my brother to get behind the wheel of that minivan, the same minivan that I, with my four children, cherish. So here's the thing. You have to realize, Different people will look at what you offer and assign different value to it.
As you grow, whatever it is that you're putting out there, as it becomes more mature, or if you had one product and now you have a portfolio of multiple products, or as your product becomes suitable for a different market, you have to evolve. You have to say, what is the new value that I'm delivering? What is the new jobs that that this segment wants done and am I doing them for them?
You need to potentially blow up your packaging and rethink it in such a way that it fits your new portfolio offerings and the people that you're hoping to reach. I like to say, and it's hokey, but at least people remember it. I say to compare is to become aware. If you only have one offering, Maybe people see everything. Maybe they don't.
The minute you have two offerings, I think you probably experienced this yourself. We got a gold. We got a silver. Everyone's going to look at it and say, well, what's in the gold that's not in the silver? And by doing so, they become aware of the things that you're offering, which they otherwise might have missed.
And remember, awareness, it's that perception of value that unlocks willingness to pay. So the one thing that durable scale-ups do as they exit startup and now have something to defend, yes, they think about retention. Yes, they think about negotiations. Yes, they think about giving and getting and everything else we talked about. What do they fundamentally do? They evolve.
They hold on to their principles. They continue to think price value, but they realize the value equation has changed and they change with it.
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