The Sawdust Principle

I was watching one of Alex Hormozi's videos the other day and he dropped a concept that stuck with me. He called it sawdust. It's one of those ideas so simple it's almost annoying, and once you see it, you see it everywhere.

The sawmill and the sawdust

Picture a sawmill. Their whole business is wood: they cut it, process it, and sell planks to construction companies. That's the main event. But every time they run a log through the saw, they produce a byproduct they never set out to make. Piles and piles of sawdust.

Most owners ignore the sawdust. It's just the mess left over from the real work. But here's Hormozi's point: if you want a new revenue stream, the dumbest move is to run off and start, say, an iron ore processing plant. That's a brand-new business with brand-new headaches, built from scratch. The smart move is to first look down at the sawdust you're already producing for free and ask, "Can I sell this?"

Turns out you can. Sawdust gets turned into particleboard, wood pellets, animal bedding, all sorts of things. It was going to pile up anyway. Every bag of it you sell is pure money you were otherwise sweeping into the trash. Leaving it on the floor is leaving money on the table.

So what's Hyppo's sawdust?

This got me thinking about my own company. I'd been studying our competitors, GoDaddy, Hostinger, GoHighLevel, the usual crowd, and something clicked.

We build websites. We already charge a monthly care plan to maintain those sites. And to do that work, we're already managing our clients' DNS, the behind-the-scenes settings that make a domain actually point to a website. In other words, we were already elbow-deep in domains every single day.

So the domain itself, the plain www-dot-yourbusiness-dot-com, was our sawdust. Companies charge to host that domain, separate from the website, and we were sitting right on top of that work without charging a dime for it. So we entered the domain hosting space.

Full disclosure: it's not glamorous

Let me be totally honest with you: domain hosting is boring, and we barely make a profit on it. On purpose. In fact, we deliberately price it lower than everyone else. Where Hostinger might charge you fifty bucks a year for a domain, we'll charge you fourteen.

That sounds insane until you see the four reasons behind it.

One: it's basically free money. We're already managing the DNS. Hosting the domain is sawdust, a byproduct of work we're doing anyway. Even a thin margin on it is margin we weren't collecting before.

Two: it's an easy yes. Nobody on earth wants to pay fifty dollars for the exact thing they can get from us for fourteen. When you save a client money on something they're already buying, they say yes almost reflexively. And an easy yes builds the trust that makes the bigger conversations possible later.

Three: it makes us faster. This one's a little selfish and I love it. When a client's domain lives on someone else's system, every time I need to change a DNS record I'm chasing them for GoDaddy verification codes and waiting on a text-message confirmation for every tiny edit. When it's on our system, I just log in and do it. No codes, no texts, no back-and-forth. Serving the client gets dramatically smoother.

Four: it's a new rung on the value ladder. More on that in a second.

The value ladder, quickly

If you've never heard Russell Brunson's "value ladder" idea, here's the gist: you offer things at every price point, so there's always a next step for someone, up or down. Say your top offer is $10,000 a month. That's a big commitment. So you keep rungs below it, maybe $5,000, maybe $3,000, maybe $200 a month. (Russell would insist every price end in a 7, but I'm just illustrating here.)

The domain is the bottom rung. Picture a prospect who loves what you do but just can't swing the big number yet. Instead of letting them walk, you say: "I hear you, the budget's not there right now, but I want to work with you. Let's start by saving you money where we can. You're paying fifty a year for your domain? Move it to us and it's fourteen." Boom. Now they're a client. Now they're on the ladder. And people climb ladders they're already standing on.

The actual principle

Strip it all down and the Sawdust Principle is just this: before you chase some shiny brand-new business, look hard at what you're already doing and ask what byproducts you're throwing away. There's almost always a revenue stream hiding in the stuff you already produce. Being resourceful beats being new.

And we're not done. I've been watching what a few of our competitors are doing, and there's more sawdust to sweep up. I won't spoil it yet, but let's just say I've got a list.

Back to the sawmill

So here's the order of operations. First, the sawmill squeezes every last dollar out of its sawdust and gets its current operation running as lean and profitable as it possibly can. (There's probably a proper business-school term for that part. I'll let someone else look it up.) Then, and only then, does it go build the iron ore plant, start making iron, and maybe corner the entire nail market.

The mistake almost everyone makes is doing that backwards. They get bored with the current thing and sprint toward the shiny new thing before they've captured half the value sitting right under their nose. Don't be that person. Sweep up your sawdust first. Then go conquer.

Sitting on sawdust you're not selling?

We help businesses find the revenue hiding in what they already do. That's what we do at HyppoAI.

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