Hey everyone, Sam Ovens here and welcome to week five of the consulting accelerator program.

This
week is called Fractal Facebook Evolution. In week five it’s going to be all about Facebook ads and
specifically like how to learn Facebook ads like an absolute ninja. I’m going to give you the complete
understanding of Facebook ads all the way from understanding the paradigm you which you need to
have and the way of thinking about Facebook, how the platform works, how the algorithm works, how it
evolves and everything. Then down one layer into the strategy and the exact game plan. What is our
strategy, how does it differentiate from other peoples strategies and how we’re competitive and how
can we win. Then a layer below that which is our tactics. Specifically what do you do? Step by step what
do you set up, how do you set it up and I’m going to give you the templates, I’m going to give you the
swipe files, I’m going to give you everything and then all the way done to actual click by click instructions
of how to set everything up.

We’re going from the highest level view which is like the paradigm in the way of thinking about it, all the
way down to the actual step by step click by click instructions. This Facebook training has taken me a
long time to put together and I just decided in the end I was just like, “I’m just going to teach them the
whole thing.” Facebook is an interesting thing to teach because you can’t really just tell someone how to
do it by step by step instructions because then what happens is they run into an error or they face some
uncertainty and they don’t know what do because all they knew how to do is just follow some step by
step instructions.

This time I’ve decided to teach everyone in full detail and full depth so that you thoroughly understand it
yourself so that if you face uncertainty or any issues, then you’ll know what to do because you
understand how this platform works, you understand its true nature and you will be able to do all of that
stuff on your own. I’m still going to have the step by step instructions but I’m going to give you the full
understanding as well which is going to make you really dangerous out there because I don’t think
anyone else has an understanding of Facebook like this and you’re going to be one of those people. It’s
going to be an awesome training, I can’t wait to share all with you. So let’s get started.

Here is what we’re going to cover today in these training module. We’re going to start off with your
proof of concept which is your niche-offer-result hypothesis proven in nature. So we’re going over there
and I’m going to explain why it’s so crucial to have a proof of concept before touching Facebook ads.
Then we’re going to talk about fractals and the fabric of the universe and where there is one, there is
many. Then mapping your niches genome and searching for the blue swan DNA. Then Facebook’s
algorithm; the all seeing eye and the invisible hand. Then man and machine; the symbiotic partnership
for scale. Then sacred Facebook; calculation for the heavens of scale and profit and then finally the
philosopher’s stone, an order from chaos in the blues swan empire.

These are some pretty different titles, however, what I’ve decided to do is teach you it like this because
I’m going to use metaphors for explaining every different part of Facebook so that you can relate it back
to different things and understand it. Instead of just using the technical terms, I’m going to give you the
technical terms but I’m also going to give you the metaphors and everything that we use. I’ve pretty
much turned Facebook ads into a game and so I’m pretty much teaching you the game theory for that
game which I have so that you can thoroughly understand it and it will make it a lot easier for you. So
that’s why these titles are a little bit strange but when we get you through this whole training, you’re
going to have a understanding like never before about how Facebook works.

Let’s start with your proof of concept, which is your niche-offer-result hypothesis proven in nature.
Where you should be at in this training program right now. If you followed step by step and you’ve gone
through the instructions and you’ve done what you’re supposed to do, then here is where you should be
at right now. You should have your niche-offer-result hypothesis worksheet complete, that should have
been done back in week one. Same with your message hypothesis worksheet, that should all been done
back in week one. Then you should have adjusted your sales script which was in week three. So this was
taking the sales script, adjusting it to fit for you and then practicing it with other people in the Facebook
group, jumping on sky. The practice is really important. Then assembling the war machine which was in
week four. That’s setting up your website, your funnels, getting all of that stuff live, having the
availability to accept credit cards, registering your business, getting your domain name, all of those
things and sitting your 30 day action.

Then you should have gone out and done some real world testing and iterations. This is when you use
organic methods to go out there and actually try and get clients. So you talk to clients, you set up real
strategy sessions, you send out emails, you do all of that stuff and you get on the phone with them and
you take them through the script. You just keep going through and if you get nos, you write down the
feedback, you record all of the feedback and then you iterate if you need to or you don’t if you start
getting clients. If people will tell you no on the phone, you will iterate and you will try and improve your
offer, your niche-offer-result hypothesis and you go back to the market for testing.

Once you’ve got a paying client, that’s awesome, then you want to go and try and get another and then
try and get another one. If you got three paying clients, then that means you have a proof of concept
and that means that your niche-offer-result hypothesis is proven in nature, and in nature I mean just in
the real world. It’s proven to resonate with your niche because three people won’t buy something
unless there is something going on there. Three people don’t buy something unless your offer has struck
a nerve and it really does provide a crucial update for the revolution of themselves or for the business or
whatever. So that’s why we aim for three and once we have those three, that’s awesome. You’ve got
their proof of concept and that’s where all of the fun really starts to begin.

If you have completed this process and proven your hypothesis in the real world by getting at least three
paying clients, you have proof of concept. Proof of concept is the correct combination of the niche-offer-
result formula. It means you’ve keyed together the right things here. You’ve got the right niche, then
you’ve got the right offer to get them the desired results which they have. We teach all of this back in
week one. When you get these three valuables keyed together the right way, then that’s when you
typically achieve proof of concept. If you don’t have them keyed together properly, then things aren’t
going to resonate with people when you start talking to them and you’ll record their feedback and you
iterate. You’ll try different key combinations here and you will get to the correct pattern after a few
tries. That’s just how it works.
If you have proof of concept, it means that you have keyed together three variables in a way that is
optimal for the evolution of your niche and proof of concept is everything in business. If you don’t have
an established proof of concept yet, then you should keep things simple by sticking to organic methods.
Stick to organic methods; send out emails, send out lamp email, do the Facebook post, all of that stuff.
Get your proof of concept using organic methods. Seriously you don’t want to miss with Facebook until
you’ve got that because it’s just going to really make things harder for you, it’s going to cost money, you
will end up getting frustrated and everything you want to keep things as simple as possible while you are
playing with the different variables in your proof of concept. Once you’ve got that sorted, then you can
come to Facebook because without an established proof of concept, Facebook will burn you at the
stake. However, if you do have and established proof of concept, Facebook will become your best friend
and provide you with nearly infinite scale. How? Week five of this training program is going to show an
intricate detail like you have never seen before. So make sure that you buckle up and take this process
one step at a time.

The first part of this training, Fractals and the Fabric of the Universe: Where there is one, there is many.
Here is something that most people don’t understand about the world. Almost everything in the
universe is fractal. You might be thinking what’s a fractal? Fractals are self-similar never-ending patterns.
It’s easier; a fractal is a never-ending pattern. Fractals are infinitely complex patterns that are self-similar
across different scales. They are created by repeating a simple process over and over in an ongoing
feedback loop. Natural fractals include branching patterns like trees, river networks, lightning bolts,
blood vessels, et cetera and then spiral patterns like sea shells, hurricanes and galaxies. Then manmade
fractals include things like the internet, the telephone system, social networks like Facebook and
Instagram and LinkedIn, the radio networks, the TV networks and so on and so forth, there’s many of
them.

But all of these things, these both manmade ones and these natural ones, these are all fractals of how
they sort of all grow using a self-similar pattern that never ends. There’s two images of different fractals
on the screen here. On the left we’ve got the branching one which is trees and river networks and things
used, then on the right we’ve got the spiral one which is what different shells and storms and what the
systems use. We see fractals everywhere in nature. Here is an example of one with a tree. You can see
how it branches out here. As it keeps branching, you can see it just keeps it just keeps following that
same pattern. Each time it branches out, it follows that exact same pattern and that’s a fractal. Trees
grow using a fractal pattern. Here is another fractal pattern and this is zooming into a pretty much
infinite scale. You can see regardless of how far we zoom it in, the pattern always looks identical. It just
doesn’t matter how far we zoom in, we’re still looking at the same shape. This is what happens with
fractals. It doesn’t matter at what scale we take it to, it looks the same or it looks similar.

A simple pattern repeats itself over and over again and it never ends. Here is what’s fascinating, fractal
patterns repeat at any scale. So whether you view a fractal pattern from an airplane at 30,000 feet in the
air or on the ground with your own eyes or under the power of a NASA microscope, they always appear
the same. If you were to observe the tiny branching pattern within the leaf of a tree, that same
branching pattern would exist throughout the entire tree on all of its leaves, on all of its branches and
even its roots within the ground, the exact same pattern will just keep repeating. If you were to observe
the roughness of a coast line over one kilometer, the same roughness pattern would exist 14 kilometers
and 400 kilometers and the entire coast line around the entire continent. Here’s two images. On the
right here you can see first of all the tree. If we were to zoom in on that one branching pattern at the
top of that tree, it would look like the tree. Then if we were to zoom in on one of the branching patterns
within that branching pattern, it would again look the same.

Here is a coastline down the bottom image. You can see there is a scale of one kilometer, then at 10
kilometers, then at 100 kilometers and it looks similar at every different scale. This is what we see with
fractals. As it is large, so it is small. As it is small, so it is large. It’s just the same. As the microcosm, so is
the macrocosm and as the atom, so is the universe. What does this have to do with business and
Facebook ads you might be wondering? More than you can possibly imagine. Are you ready for it?

As is our proof of concept with three, so is our proof of concept with our entire industry. Here’s fractal
patterns and our proof of concept. So when you establish proof of concept by proving your niche-offer-
result hypothesis in the real world by getting at least three paying clients, the behavior and dynamics
and math that you observe during your testing stages will be representative of the behavior, dynamics
and math you observe when scaled up industry wide. Think of small niche test groups as the microcosm
and the entire industry as the macrocosm. Whatever traits you observe during testing will be similar
only magnified when scaled. Here is two images, one of your proof of concept if we would have map it
and the other of your entire industry.

If you talked to say 100 people and 20 of them ended up purchasing, then we would probably say similar
sort of conversation rates when we went out to your entire industry. Or if you sold your proof of
concept, if you got just one client and the one person who signed up it was a real struggle to get them to
sign up, well then if we go and scale that proof of concept, chances are we’re going to have a lot of
trouble trying to get clients when we scale up. Whatever results you observe in your test group during
your proof of concept testing stage, we are likely going to see the exact dynamics all the way through
the rest of the scaling. That’s why that initial testing stages are so crucial. That’s why in the training I talk
about sitting your foundations, making sure they sit correctly. That’s why we go through our scientific
method of iterating and choosing the right combination of variables when it comes to niche-offer-result
because it really is everything.

If we have something out of alignment at the small scale, then when we take it up to the large scale it’s
just going to be massively out of alignment because it’s just going to be the same problem only
magnified, 10x, 100x, 1000x, however much we scale it. So you need to make sure that whatever
conditions you have in your test, you’re happy with as we start scaling that right up because what we
observe in the pattern of your proof of concept, we’re going to observe pretty much the exact same
pattern as we start scaling it up. That’s because our proof of concept behaves like a fractal. It won’t be
exactly the same but it will be similar. It will appear similar and there will be similar economics, similar
math in the conversation rates. If it was a real struggle to get anyone to sign up, then it’s probably going
to be a real struggle to get everyone else to sign up. However, if we got three clients and they all signed
up and there were extremely happy with our offer and everything, then chances are we’re going to
experience that as we start scaling through the rest of the plan with your industry. This is a fascinating
thing to understand in business.
Simply put, if what you have works at a small scale, what you have should work at a large scale and with
these three clients, there is more, a lot more. This isn’t some bullshit theory I read in a text book, this is
street theory learned on the front lines of capitalism with my own money at stake. Here is a screenshot
of one of my ad account and you can see that I served with this campaign 106 million impressions. With
the same conditions I experienced with 20,000 impressions, I experienced with 100 million impressions.
If you know a bit about Facebook, serving 100 million impressions is quite a lot of impressions. If I am
able to go from that scale at 20,000 and 20,000 impressions is still a decent amount, but if I’m able to go
from 20,000 to 100 million and keep things in alignment without just totally blowing things up and just
sending the entire campaign into chaos, then that means that I know how to keep things fractal and I
know how to keep things the same as what I experienced at the small scale.

Here is the amount spent, $1.854 million and I’ve spent a lot more than this. This was just like a one
campaign that was running for a period of time. 1.85 million. The same ROY I received with $1,000 in ad
spend, I received with over $2 million in ad spend. A lot of people they talk about scaling and they talk
about scaling campaigns like $100 a day or they talk about scaling campaigns up to like $1,000 a day and
some of the best Facebook gurus in the world claim that between all of their different clients, on all of
their different accounts over multiple years they’ve spent $1 million in ads. I’ve spent more than 2
million, way more than that, sometimes I’ve spent nearly $1 million in one month and that’s on one
account. So you can see the difference. I’ve been able to again be able to scale things to a massive scale
and keep everything in alignment.

While everybody else complained that they needed to refresh their ads every week, I ran the exact same
ads for 18 months without issue. In fact some of them got better. I developed a completely new
understanding of Facebook advertising. It was like I merged with the machine. I could understand the
nature of the system. How it worked and how to work with it to achieve results nobody thought were
possible. After observing the other advertisers and so called Facebook experts, there’s one thing I can
tell you for sure, almost nobody knows what they’re doing when it comes to advertising on Facebook.
They are trying to teach a cat to bark. We need a completely new paradigm and methodology in way of
thinking about Facebook because the current ways are broken. That’s what week five of this program is
all about and the dawn of a new epic changes in the rules of the advertising game. So we’re going to talk
about some massive changes which are happening across all advertising channels right now.

When it comes to scaling, you need a way to reach the masses efficiently so your proof of concept can
spread. How does something spread? How does something reach the masses? We can learn by
observing nature and nature is better that any human at spreading things and reaching the masses.

In nature things spread through propagation and the evolution of organisms. Propagation is when
organisms multiply. An awesome way to look at business and ads and campaigns and everything is with
like the evolution of organisms. It makes so much sense. It makes more sense than anything else I’ve
ever looked at in parallel to business. Organisms are any complex thing or system having properties and
functions determined not only by the properties in relations of the individual parts but by the character
of the whole that they compose and by the relations of the parts to the whole. It sounds a bit confusing
there but what it means is an organism is any system made up of individual parts with these
interrelationships. All the different parts affect each other individually and then the whole affects all the
individual parts but then the individual parts affects the hole, and that’s what an organism is. Organisms
are fractal.

Nature uses organisms. Like nature if we look at how plants and bacteria and coral and all of those
things work, they are all organisms. If we look at … What is an organism? An organism is basically a
complex system. Therefore, nature is a system. So if we are to look at nature and be like, “Wow this
thing is really powerful, it outsmarts us every single time, it’s better at spreading things than us, it’s
lasted longer than us, it’s way more resilient than us, so what can we learn from it?” Nature is a system
and fractals are a system as well and the universe is a system and you are a system and then within you,
you have other systems. For the past 300 years we have traded everything in the universe as mechanical
and linear. The root issue and the current understanding of reality is that we’re separate from other
things.

This is what classical physics or classic physics really taught us that the world is all mechanical and each
part is isolated and has a separate instance and we can kind of break that part and it won’t affect
another part and that’s pretty much our classical understanding of things. Also that we’re separate and
that we are isolated from other things. Like if I have phone on my disk and I’m looking at my phone and
I’m not touching it, then I would say I’m separate from that phone. There is space in between me and
the phone, there is distance and we are isolated. Anything that’s going on in inside of me, isn’t affecting
what’s that in that phone and what’s in that phone isn’t affecting me because we’re not touching. That
is the classical understanding that things are isolated and separate.

Do you remember my examples of interconnectedness from week two’s mindset training? I told you
how I noticed that one subject was interconnected to another subject. Totally different subjects in
different books, written by different authors but somehow interconnected. Then how my thoughts
would affect the outcome of a call. Like if I thought the call was going to close and sometimes it
wouldn’t, and if I didn’t have any sort of thoughts in my head, then it often went the right way. Then my
observation in Facebook ads performance, I noticed when I watch them all the time, the ad performance
wasn’t very good. Then I noticed a correlation between my results and my client’s results. When I
started doing well, my clients did really well and when I was having kind of a tough time, my clients
would often be having a tough time. I wondered how could these things be interconnected. I noticed all
of these correlations between all of these different things.

Scientists and other so called experts would tell you that these things have no connection and are
completely isolated from each other. If you would have asked anybody if there was interconnection
between these separate things, they would laugh at you and say it’s just a coincidence. When anybody
writes off as a mere coincidence, the left hand doesn’t know what the right hand is doing. As Leonardo
da Vinci said, “Learn how to see, realize that everything connects to everything else.” The answers have
been right in front of us. Look at the names of these things. Solar system, ecosystem, social system,
immune system and our nervous system in side us. These are two system inside if us. Our immune
system, nervous system, the solar system is all of the planets and everything, the ecosystem is all of
nature, social system is how all human beings manage and structure all of their social interactions.
All of these things are systems. They all have the word system in there, we put it in there. Miracles,
disasters, coincidences and magic, these are all words used to describe systems that we don’t
understand. When we say things are a coincidence or when we say something is a miracle or magic or
whatever, it means that’s just kind of a word that we ascribe to something because we don’t understand
the system. But somewhere in the system there is interconnection between those things and somehow
those things are having a cause and effect relationship with each other. If we knew it, then we’d be able
to predict everything. However, we just understand it. That’s kind of what classical physics has left us
with. It’s like we understand all of these things that touch each other and connect and everything and
we think everything works mechanically but when we don’t understand things we just say it’s magic or a
coincidence or a miracle or whatever, but these are just systems.

The thing is that mankind doesn’t understand nonlinear systems and to understand the Facebook
platform and scale up your consulting business successfully, you must understand nonlinear systems.
This is really the first thing you have to learn before really touching the Facebook ads platform because I
see people do it all the time and they just don’t get it and it confuses the hell out of them. They end up
giving up or they end up thinking that Facebook is stupid and they know better even though it’s not
working for them. You must understand nonlinear systems.

Now we’re going to talk about understanding nonlinear systems and don’t worry I’m going to keep this
super simple. This is going to be some very basic stuff here. First of all what is the difference between
linear and nonlinear systems? We’ll start with linear systems. Up the top here we’ve got the read
straight line chart and with linear systems, we have an input that’s equal to an output. So if we put one
unit in then we will get one unit out at any scale. It doesn’t matter if we scale it up 10,000x or just 1x, if
we put in one input, we will receive one output. Linear systems produce outputs in direct proportion to
the inputs at any scale. For example, if you pay $100 for a hotel room and have a five out of ten
experience, then pay $200 for a hotel room and have a 10 out of 10 experience, then the pricing system
for hotel rooms would be assumed as linear because if we spend twice as much, then we get twice as
much. If we put 100 units in, then we get out a five out of ten experience. So if we put 200 units in then
we get a ten out of ten experience because it’s linear.

That is the current understanding really that most people have. They think that if something has a 1:1
input output sort of ratio that it’s going to continue on forever and it’s always going to be like that and
it’s not going to change. That’s how people treat pretty much everything in the world right now and
people especially treat Facebook like this. Someone will do a test campaign and they will spend say $100
on ads and they might make back 200, so they then scale it up to $200 and they expect it to just go up to
$400 but it doesn't behave like that. Then they get totally confused, blown away, then they freak out
and they either mess it up or they quit or they complain that Facebook doesn't know what it's doing. I
also seeing people [cover anthis 00:30:29] working and then they duplicate it or something, and then it
stops working. They're like, "How did that happen because it's just a clone of the successful ad? How can
we take a clone of a successful ad and make it exactly the same, and then have it not be successful while
the other one is still being successful?"

Well, when that happens you know you're not dealing with a linear system and is the first giveaway that
Facebook is not a linear system. For anyone of you that's tried it before, then you know exactly what I'm
talking about and this is probably going to make a lot of sense. However, if you haven't used it before,
don't worry. You will find out pretty much within your first couple of days what I mean by this.

Nonlinear systems. This is the one down the bottom with the blue chart. With nonlinear systems at any
scale, one input could equal any possible output. Nonlinear systems are not even predictable with math.
Scientists and mathematicians don't like these systems because they can't fit them into their little
models, their little spreadsheets and their little things which they like to do. Scientists always like to
reduce things to all these drawings and everything so that they can appear smart. However, it doesn't
work like that. With nonlinear systems we can't really come up with any math that describes them
because if we put one input in, then we might receive one input out a particular scale. But if we scale it
up, then if we put one input in, then we might receive 100 inputs out or 1,000 or a million or nothing.
That's how nonlinear systems work.

Nonlinear systems product outputs with no proportion to inputs and very wildly with scale. For example,
if you spend $100 on ads and make $1,000 back, and then spend $2,000 on ads, then make $10,000
back, the advertising system would be assumed nonlinear and Facebook advertising is nonlinear,
business is nonlinear, pretty much everything in the entire universe is nonlinear. If you think about just
drinking a coke, that is nonlinear. The first sip you have from the coke is the best. It's like the most ... It
tastes really good. Your satisfaction on the first sip would be like 10 out of 10 but then you get to that
last sip, is your satisfaction anywhere near as high as the first one? No. So you can't say that one sip of
coke always ... That wouldn't be a linear system because if the input is a sip of coke and the output is
satisfaction, then what happens is with scale it doesn't hold in inputs and outputs at the same direct
proportion. It starts to have diminishing returns.

Because linear systems don't account for the effect on other areas of the system. So we're only using a
linear system and let's say we're using a coca-cola, if we're drinking one of those, it doesn't take into
account the fact that we just had a sip of coke and the fact that our stomach is now starting to fill up
with liquid, then maybe we aren't going to be enjoying it as much. Pretty much linear systems they don't
really work. They can't really describe anything in the world. So this is the current understanding for
most people in the world and is broken. The nonlinear system is what Facebook uses. We really need to
understand this before we go into the world of Facebook and that's why I'm showing it to you now
because otherwise you'll see things in Facebook ads platform that really makes you scratch your head
and wonder what's going on.

Most people think if everything is linear but in reality almost everything is nonlinear. All of nature, all
natural things are nonlinear. Humans make the mistake of cutting things into pieces and analyzing them
on their own without understanding their relation to the system as a whole. Scientists love to dissect
things that they might ... They cut up a tree and look at all these different parts of the tree and be like,
"Aha! This is what's happening with this tree." However, they don't stand back and understand the
relation of the tree to the rest of the entire forest or that one part of the tree to the rest of the tree.
They don't understand interdependencies and different relationships between the different parts of
things. They only dissect and look at one little part and this is a mistake. For example, with Facebook ads
I see this all the time. This one is huge.
I see people get obsessed about their cost per click. For a long time it was going around that people
were all psyched out about these two cent clicks. People were like, "I know how to get two cent clicks or
I know how to get 10 cent clicks or whatever," and everyone was getting all hyped up about getting
really cheap clicks but that's just one part. That's just looking at one tiny little piece and it's wrong to
look at that because really it doesn't mean anything without looking at all of the other parts that are
connected to it. So we see a lot of time people getting really obsessed about their cost per click. They're
like, "Oh my cost per click is too high. It's $4 per or $5. This is way too high. Or how can I make my cost
per click down to like a dollar or 50 cents?" But it doesn't matter. What is more important is how it
connects with everything else because I've always said I would pay $1,000 a click if 100% of clicks
purchased. You think about that for a moment. It breaks everyone else's paradigm. It's what I say to
people.

They're like, "No. You're cost per click should be this price or this price," and I'm like, "What about that?"
And it always stumps them. It just shutters their entire paradigm right there because they don't take into
account interdependencies on different things because anyone in their right mind would spend $1,000 a
click if 100% of clicks purchased and your products was more than $1,000. Therefore, you can't see it's
some sort of hard road for cost per click because it doesn't take into account other things. Another one
could be cost per lead. I see people all the time they want the cheap leads. They want the $2 leads, the
$3 leads and as soon as they're on a campaign that they might getting leads at like $10 and they start
freaking out. They're like, "Man, $10 a lead, that's so expensive. I want to get the $3 leads." Again, it
doesn't really matter. What's more important is the ROY, are we profitable and are we getting
customers because I've always said again, that I'd pay $1,000 a lead if 100% of leads purchased. So I
wouldn't care if everyone else was saying that you should be getting leads for $1 or $3. I'd happily pay
$1,000 a lead if 100% of leads purchased and my product was worth more than $1,000. Again, that
breaks the classic understanding.

This is the difference between nonlinear and linear systems of thinking. Most people who are analyzing
these individual parts and setting hard roads for each individual part, they're using linear systems.
They're assuming that in order to have a good campaign that this isolated instance must be in this
particular form. However, they're not taking into account the nature of the overall system. Really what it
looks like is this. Cost per click influences cost per lead. Cost per lead influences cost per strategy session
which influences cost per acquisition and that all influences the return on the investment. Then the
return on the investment affects our company as a whole. It depends whether we can actually pay that
sort of money to acquire a customer and whether that ROY is going to fit in with the rest of our business
metrics.

So all of these things are interrelated and they all have interdependencies on different things. So if we
pay $1,000 a click, that might not matter if 100% of clicks are buying and our ROY is strong and our
company is profitable. You get my point. I'm saying here when you're looking at Facebook, it's important
to not zoom right in and isolate one little instance and get obsessed about that. What is most important
is the nature of the overall system. Then typically what we do is if the nature of the overall system if it's
bad, so if it's not profitable, that's when we zoom down and we got into the individual instance and we
look for where it's bleeding and we fix that individual instance. However, if the overall system is doing
really well, then we wouldn't really care so much about one of the metrics being a little bit out. This is
the mess understanding shift for most people that they need to make. They don't understand how all of
these things are interrelated.

I've had a landing page conversion rate of 25% before and so I thought I might try and improve the
landing page conversion rate. So I changed the landing page around and I managed to get the landing
page conversion rate up to 40%. I managed to get it up 15%. So I assumed that my profits and the
amount of money I make should go a lot and then I waited around for about five days for the test to
carry on and get enough traffic so it would be statistically significant and I ended up losing like 20 grand.
I couldn't get my head around it. I was like, "What is going on? I improved the funnel, how is it now
losing money? How can you improve your landing page conversion rate and ruin your entire campaign?"
If we were using linear systems thinking, then if you improved your landing page conversion rate,
therefore, you should improve your profit. However, I just improved my landing page and somehow
ruined my entire campaign and this is what happens again to everybody. I see this all the time. They
miss one little piece and it breaks down the whole thing.

You've got to understand how all of these things interrelate with everything else. It is possible to get
your cost per click down and not make any money because of it. I pay about $10 per lead at the most
and we've tried to go down to like $3 leads but when we go down to those leads, they don't buy, we
don't make any money. So I'm going to care if I'm paying $10 a lead and making millions or do I want to
be at $3 a lead and lose money? This is the understanding where people just don't know what they're
talking about because quite often when people ask me about my Facebook advertising stats, they'll say,
"How much are you paying per lead?" And I'll say 10 bucks and they're like, "Ooh. That's too high man.
You need to get somebody to look at that," and I'm like, "Jesus! This person is supposed to be one of the
good Facebook people." This is what we see everywhere.

You just don't look at those individual things. It's not what's important. What's important is the nature
of the overall system. Like I said, Facebook advertising is as nonlinear as it gets and you need to measure
the separate parts but you must keep in mind the interrelationship with the campaign and the company
as a whole. Understanding nonlinear systems is vital. Let's cover the basics of nonlinear systems so that
you can become a master at this and the simple components of nonlinear systems. There's only three
things: systems, branches and nodes. So don't worry, this isn't getting all like weird and science or
anything like that. This is just so but simple and you've drawn a little thing like this before anyway. This is
what a system is built up of, just branches and nodes. A branch is just a line that connects two different
things and then a node is one of things where these two things intersect. So you can see branches and
nodes. Then the system is the collective of everything. If this system here is made up of one, two, three,
four, five, six, seven branches and two nodes, then the system is made up of seven branches and two
nodes. It's just the overall thing, the entire organism and then the branches are within it.

This is how evolution works. All the evolution for everything forever it all uses systems that have
branches and nodes, and the overall system would be the ecosystem or nature. You can see how a fish
and different species evolve using this branching pendent. This is how DNA works. So this is how your
DNA works. Here's how DNA splits out. You can trace it back here. If 50% of your DNA would come from
your mother and 50% from your father, and then it would split out into there mother and father, then
into this and this and this and it keeps going wider and wider and wider. That's how your genes and your
DNA are made up of all of these different things just like this. It's just again a system made out of nodes
and branches.

This is how your brain works. Inside your brain it pretty much just looks like this. There's all of these
different things and this where the electricity fires down like a synapse. That's how you have a thought
and you've got different thought patterns. The way you have a thought pattern is habits, tendencies,
biases, all of those things, those are paths that you've burned through your brain and really you've set a
really good pattern firing electricity down that specific path. So when you've got a habit, you've burned a
particular way down your brain and so as soon as you see a piece of stimulus, the synapse fires and the
electricity shoots down. That's why it's quite hard to break a habit because you're creating a new branch
and a new node and a completely new path and pattern through your brain. The more you run that
thing, the more you burn that path into your brain. If you would look at the inside of your brain, that's
how it works. Again, nodes, branches. It's a system.

This is how social media works for the individuals and for the entire collectives. Facebook has some
insane data. They can see ... They could just look at a map like this for any individual. They could at you
for example and say, "Okay. Here's this person's," let's say your James, "Here's James's different friends
and how they cluster. He's got his summer camp friends, then he's got his one time event friends which
he made at [ranravim 00:46:32] one time, then he's got his school friends, then he's got different camp
friends, random people, then he's got his sports team member friends and then he's got some outlier
friends over. This is what Facebook can tell. If they look at their data, they can really just map it all. The
way your friends' groups work and the way your sports teams and all of those different things work
again, it's just the system of branches, nodes just built up by that.

This is how Facebook campaigns work. This is how the actual structure of a Facebook campaign works. It
starts with an Ad account and then it branches down to a campaign. Then within a campaign we could
have an Ad set that's another branch down and then within an ad set we could different ads and then
it's another branch down. Within an ad, we've don't different things like an image, a headline and copy.
Those are all different branches. So you can see again this is a system built of branches and nodes, and
this is how the entire internet works. You can see here's all of the ... This is an actual mapping of the
globe and all of the different internet connections going between all of the different countries. You can
see the lines between them. Again, this is a system that's built up of branches and nodes, and if you've
wondered why the call it the web, that is why because it pretty much just forms one big web.

Hopefully you're starting to see how everything is connected to everything else. Literally everything in
the world is a system and all of the systems are made up of just branches and nodes, and that's how
everything is made up. Even the things we can't see, electric thing, things in space, things in our body,
things everywhere. Thought patterns, DNA, everything there is. However, we just don't understand a lot
of those different systems or we can't see them so we don't understand them but everything is
connected to everything else.

Now let's talk about what this has to do with Facebook ads and scaling your business. We're going to
talk about mapping your niche's genome, searching for the blue swan DNA. The way I think about
Facebook ads is pretty strange. However, I didn't get good at it until I was able to understand every part
as well as each part's interrelationship with the system as a whole. It dawned on me that this was the
missing piece of the puzzle and everyone's understanding as well as all of the training programs to date
from all of the experts. This is the thing that everybody missed. Instead of teaching with do this and do
that tactical instructions that break down the moment you run into issues or uncertainty.

You know, there are so many programs which teach people to do this and do that and the instant they
do it then it's all very well and it works, that's awesome. But as soon as they run into an obstacle or as
soon as they have to think for themselves, they can't do anything because all they knew how to do is
follow instructions. Don’t get me wrong, following instructions is great. But if you're going to build a big
business, you need more than instructions. You need to know what to do. One thing's for sure, things
are going to go wrong. That's what happens eventually like all things change. You can guarantee it that
things are going to go wrong and that's when you're going to need to understand how to do things
instead of just having these step by step instructions.

That's why in this training I'm going to give you both. So I decided to teach you the paradigm which is
our total way of looking at it and comprehending it as well as the strategy which is our game plan, our
game theory of the whole thing and the tactics which is the drilled down individual things which we
have to do all the way down to step by step; click here, type this, copy paste these instructions. So the
whole thing from the highest view to the most granular piece. This way you'll know what to do, why
you're doing it and how it fits into your overall strategy for your entire business. This is why I have
named different things with strange titles and metaphors to help you understand the way I think about
Facebook ads.

So this is why this particular part of this module is called Mapping Your Niche as A Genome: Searching
for The Blue Swan DNA. What are blue swans and what is swan DNA? We have blue swans and red
swans. This is what we call them in the way we run Facebook ads. This makes it way easier to
understand and when we're communicating with each other and everything, it's just super simple.
We're like, is it blue swan or red? A blue swan, blue swans are what we call profitable Facebook ad set.
An ad set is just something that contains an ad and an audience. So it's a particular ad paired with a
particular audience within an ad set. If that's profitable, which means it's making money and it's
producing ROI, we call that a blue swan. We want blue swans, that's profitable ads.

Then red swans are what we call unprofitable ad sets. So that's an ad set with a combination of audience
and ad that doesn’t make an ROI for us or it makes an ROI but at an unsatisfactory level. That's a red
swan. Basically, we're wanting to get as many blue swans as possible and we want to get rid of the red
swans. When we're creating our different Facebook ads, we're trying these different variations and
combinations and then we're letting it play out and then we're killing the red swans from the population
and trying to multiply and propagate the blue ones. We're trying to get as many blue swans as possible.

Then blue swan DNA; blue swan DNA is what we call the genetic makeup of the profitable Facebook ad
set combination. Within an ad set, the way I think about it is, an ad set is like a cell. Within the ad set,
there's a string and this is like a DNA string. It contains three things; the audience, the message and the
image. So you select the audience, you select the message which is the text of the ad and the image
which is the image which goes with the text of the ad. That's the string; audience-message-image and
that goes within an ad set which is a cell. That's how we can tell whether something works or not. If a
particular ad set works, if we have a blue swan, then we're able to look at the blue swan's DNA string
because we can just look inside our ad set and it will say the three dash things. It's also how I name
everything in my ads account. So my ads account has like I don’t even know how many ad sets, tens of
thousands. So many that it will break a normal computer's browser if you open it up. It's huge,
thousands and thousands and thousands of ad sets.

So when you go into that thing, you can't understand it unless there's some sort of naming conventions
and everything. So we use different DNA strings. I'm able to see immediately if an ad sets working. I'm
able to see what its DNA is. If something isn't working, I'm able to see its DNA. I can really see what
different combinations of variables are making it up. This is really important and really handy as we go
on because you don’t want to create an ad set that works and then not be able to identify it's genetic
makeup because then you're not able to multiply it and duplicate and grow it. This is a really simple way
I've created to really understand it. We're just using Facebook ads trying to breed blue swans. We want
as many blue swans as possible. We're going to get red swans as we're trying to grow blue ones. That's
fine. We'll just get rid of them.

We'll just turn them off and delete the ad sets. When we do get successful blue swans, we want to look
at their DNA and we want to breed the healthiest DNA. So even within our blue swan population, we're
going to have the head of the population which is going to be the healthiest ones. The healthiest ones
are going to be the ones that are producing the most profit. If we're going to start breeding blue swans,
we want to start duplicating and propagating from the healthiest of the blue ones, not from the
unhealthiest. What we can do is, we can start … As we start to breed healthier and healthier blue swans,
we can start even turning off some of the blue swans anyway. Even though they're profitable, we can
start culling some of those from the population because we want even more profitable ones. That's how
it works, that's how we think about it and it makes it really easy to understand. We're basically searching
for the DNA make up of profitable ads when it comes to advertising your offer to your niche on the
Facebook platform.

Just like keying together, the niche offers result variables to achieve your proof of concept. That's how
you achieve your proof of concept. Remember we put together these three variables and that's our
hypothesis, that's our niche offer result hypothesis. Then we go to the market for testing. Then we test
with organic methods and we collect feedback on our hypothesis testing sheet. We should do at least 30
calls. If we don’t get someone to buy, then we iterate. We start changing variables based on the
feedback and we go to the market and test again. We keep using the scientific method to achieve proof
of concept. Once we do achieve proof of concept, then that string of niche offer result variables is
assumed to be correct. If we get three clients, three paying clients using that string of niche offer result
variables, then there's a pretty strong chance that we're on to something here and that what we see
here is going to be … We're going to be able to scale that throughout the rest of the industry.

We need to learn the successful combination of audience message image variables to achieve successful
advertising on Facebook. So just like we had the niche offer for result variables when it came to getting
proof of concept, now we've got similar but different variables to achieve profitable Facebook
advertising which is audience-message-image variables. How do we do that? How do we get those
variables right? Well, this is what I refer to as Mapping Your Niche's Genome. First of all, what's a
genome? A genome map is a map of an organism's entire genetic makeup. It tells you everything about
the organism; it's history et cetera. A human being or a particular type of organism like a virus or
anything you could map its genome and it would look something like this on the left. It would show you
all of the different things that make it up, all of the genes inside it, all of the genetics. You could tell its
entire history, its entire family tree, everything from its genome map.

Mapping your niche's genome; so mapping your niche's genome is when you thoroughly understand
your niche, their problems, pains, fears, desires, heuristics, biases, tendencies, responses to different
stimuli, when and where they hang out and more. Mapping your niche's genome is when you
understand everything about them. You understand that if you flush this stimulus in front of them, they
will respond with this. When you understand those sorts of things, you pretty much understand their
genome. If you understand their response to different stimulus, that means that you understand the
thought pattern that's in their brain. When you understand the thought pattern in someone's brain, you
understand them better than they understand themselves. That's when you're getting into some
seriously deep understanding of your niche.

Once you can do that, you are unstoppable because every ad you create is just going to strike a nerve
and trigger different pattern within your niche. You're just going to be able to run circles around
everyone else because you just understand the entire organism and you know where to push, you know
which different areas of the matrix to push on to make different things happen. When you understand
that, it's just your game. That's what happens when you stick to something. That's why we pick a niche.
Don’t worry if you don’t have that yet. You will get it eventually when you just keep going with this
training and you keep following these different instructions.

You already have some of the information for your niche's genome. Remember how we talked about
fractals? We talked about fractals and nature. We can see here there's the tree with the branching. As it
is large it looks the same when we zoom in really really close. Then there's the fractal end of a coastline,
it looks the same at one kilometer as it does at 13 and then at 100 and then the entire continent. With
fractals, as it is large, so it is small and as it is small so it is large. We see the same pattern repeat. Fractal
patterns tell a story about the process that created it. So while a fractal might not show us exactly what
this thing will look like at a large scale, it will tell us a story about the process that created it.

For example with DNA, if someone just leaves like one little hair, if someone just leaves the tiniest little
hair or the tiniest just piece of like dead skin on the floor at a crime scene, they can get that, that tiny
hair and that hair… Sure you might look at it and be like, well that doesn’t look like the person, it doesn’t
because it's just a hair. However, when they examine that under the microscope and look at the DNA
makeup of the hair, they will be able to find the person because that's a fractal.

Within any part of you, even the tiniest piece of saliva or the tiniest piece of dead skin or hair or
anything, all of the code's in there to understand who you are and who your parents are, who your
parents parents are and who your parents parents parents are. It's a fractal and it's pretty crazy how
that works. Fractals and you proof of concept. As it is small, so does large as it is large, so does small.
Here on the left we've got these two images. We've got an example of your proof of concept that might
be a map of all the different people you spoke to, who said yes, who said no and then people who said
yes, how satisfied they were and whether they referred people or what not. There is going to be a
fractal pattern just like the DNA in your proof of concept that resembles the entire industry. When you
establish your proof of concept by getting at least three paying clients and proving your niche offer
result hypothesis, the combination of variables there will provide the initial conditions essential to
advertise on Facebook's platform.

Your proof of concept contains some of your niche's genome. So when I talk about mapping your niche's
genome, what you've already found in your proof of concept, the fractal pattern that you can see in your
proof of concept, that is going to resemble some of the genome of your entire niche. When we say the
genome of a niche, we're talking about your niche is a collective organism and it's genetic makeup. This
is why it is essential to establish your proof of concept before touching Facebook ads. This is why I stress
this point again and again and again because if you don’t have a proof of concept and you go to
Facebook, you don’t know what the genome is. You've got no idea, you're just going blind. Without it,
we have no idea about setting the initial conditions for a successful campaign.

We have got no idea about the DNA string and makeup. Without having some idea of the initial
conditions, we're sure to fail. You can almost guarantee it that it's going to fail. It's going to be hard, it's
going to lose money and even if we are hopeful and successful and we worked really hard, it's still
probably going to fail because we're loading initial conditions just totally winging it. We have no idea
what we're doing. When we do that, we can't expect to know the genetic makeup of some sort of health
organism if we're totally guessing it. How could you go out into nature and just combine three random
things and expect it to grow into a healthy plant? You wouldn’t. You would have to do some testing and
experimentation and research first to know that what you're planting in the ground has proven in some
environment and in some taste to be successful. That's why we have our own proof of concept.

Now, assuming you have established your proof of concept and have the initial conditions ready, and by
initial conditions I mean the string from your niche offer result hypothesis variables, if you've got those
ready, well let's talk about scaling up. Let's talk about taking that DNA string that you've got from your
proof of concept and really just ratcheting it up and up and up and really just getting it systemic
throughout your entire niche; taking over your niche with this new and updated DNA string. Now, let's
talk about Facebook's algorithm, the All Seeing Eye and the invisible hand. When you want to scale up,
you need a way to connect with the people in your niche. There's no way for us to scale without
someone sending some information to the other people.

There's no way for anything to spread or propagate in nature, in business or anywhere unless some sort
of information travels down a branch, a node structure and connects to different people and
communicates with them. That's how everything works. It's how your brain thoughts work, your DNA,
your genetics, your blood, everything. Somehow, something needs to get sent through that network and
go and connect with the right people and deliver them a message so that they can make up their mind
about how they want to react to it.
You need a way to get into the central nervous system of your niche and see if the individuals that make
the organism take your offer. If we think about a niche which is, let's just say our niche is 10,000 people.
All the individual people within that group of 10,000, they're individual people. However, they all make
up part of one organism which would be let's say the personal training niche. Together each of those
individual people are different nodes and all of the different branches in between them are all of the
different ways that they're networked and connected. It might be through social media, email, friends,
and texting, whatever. That's how information disseminates between different people and different
companies within a niche. That's how it really starts propagating and growing.

The way we want to think about it is that without proof of concept, we have a vital update to the
wellbeing of the entire niche organism as whole because we found a problem they have, we've got a
solution for it and we've already tested it with three people and it worked with them and they're happy.
So now it's like we need to get that update uploaded to the central nervous system of the entire
organism so that we can make it healthier and better.

What's the best way to do that? Well, take a look at this and this is pretty crazy. This is Mark Zuckerberg
at one of the latest Facebook events and this is an actual live, real time map of people on the network at
one point in time and the different connections all around the world between the different people that
were happening live. It pretty much illuminated the entire earth. So look at that. That has got to be
probably the strongest network that I've ever seen. I mean, the internet is stronger than that but this is
one platform and it's a social platform so it's heavily networked.

Facebook has 2 billion users, its b, billion. You know, I think there's only like 8 billion people in the world
so that means they've got like a large portion of the entire world on one platform. This is active monthly
users. So this isn't just registered users. This like ones that are actively using it all the time, 2 billion.

Facebook can map more of planet earth in four days than we have done as a collective human race in all
of recorded history ever. They can do it in 4 days and they are getting faster. Facebook knows more
about you than you know about yourself. It’s a better predictor of your own habits and behaviors than
you yourself. You just think about how much data that thing’s got. It knows everything that you have
ever looked at, clicked on, all the photos you have looked at, who you’ve talked to, the different words
you’ve said. It knows how to categorize the different words into different things and tell whether you
are angry or sad or how you feel about this person and how that affects how you feel about the other
people who are related to them and how all of your different networks work and the times you go
online, everything.

It’s been collecting data since the beginning and it’s connected to your phone. It’s got photos of you, it’s
got everything. This thing, it knows a ton. I’d honestly say for everyone that uses Facebook, it’s a better
predictor of their character and of their behavior than them themselves. Facebook would never publish
this data because first of all it would freak everybody out beyond belief and they’ll probably get in
trouble and people would probably stop using Facebook. It’s not like the employees or managers at
Facebook have access to the deep data either. It’s not like just people at Facebook can go and just pull
up all of that stuff. A lot of that stuff is probably protected and no employees or managers or anything
can even go and look at it. It’s stored deep down in these databases and everything.

So who does? Who has an access to all of this, deep intelligent data? Facebook’s algorithm does. The
algorithm has access to everything. This is why we call it the All Seeing Eye because it can just see
everything. There’s 2 billion people on its network and its watching them at all times and it knows pretty
much everything about them and there’s 2 billion of them. That’s as close to an All Seeing Eye as I think
I’ve ever seen. So what’s an algorithm? Here’s what Facebook’s algorithm is, basic example or
explanation. An algorithm is a procedure or formula for solving a problem based on conducting a
sequence of specified actions. It has real-time access to everybody on the Facebook platform and it
knows all of their data for their entire user history, everything.

The way you want to think about it is, think about it as a well networked friend with 2 billion
connections and it knows everything about all of them and it can call of them at one time. So you
imagine if you had this friend in your friend’s group and you meet up with him or her for a coffee and
you knew that they knew 2 billion people. Most people know like 20 people or something. I only really
know like five people well. Imagine if this person knew 2 billion people well. It knew them better than
you knew yourself, all of them and it could recall anything about any of them immediately. If you are
asked, well can you tell me people who are here and who are feeling like this and who are interested in
this and who are in between these ages and with a high chance of buying this, it could immediately
compute that. Not only immediately compute it, it could immediately put a message in front of them
immediately. We are talking in a lag time of 2 seconds.

It could do that at the same time as doing a billion other tasks. That is what Facebook’s algorithm is. It
has access to the entire network, 2 billion people, all of their data and it can segment them, cluster them
together and it can put messages and stimulus in front of anyone at anytime. It pretty much is like the
most powerful algorithm online at the moment.

What’s the Invisible Hand? We talked about the All Seeing Eye and the Invisible Hand. Here’s how we
think about the Facebook platform and its algorithm. First of all we’ve got the network. The network is
Facebook’s branch and node system of 2 billion users. Remember how we said that with systems, they
are made of branches and nodes. In between every different person, they've got all of their different
connections and ways they interact with each other and all these different connections. Their entire
network of 2 billion users, it’s made of branches and nodes and they're all connected in all sorts of
different ways. Likes, just profile views, live calls, voice calls, every way they could be connected they are
all different strings and nodes. That’s what the network is. It’s how it’s got its tentacles into all of these
different things.

Then the All Seeing Eye is the algorithm’s visibility into everything. It can see everything, it knows all of
the data about everyone for all time on that network; so 2 billion users and it can see it all. Then the
Invisible Hand; the Invisible Hand is the algorithm’s decision making mechanism for displaying people’s
ads. It chooses who see’s your ads, when they see your ads, where they see your ads, whether it’s the
side bar or mobile or desktop or whatever, what time they see it and everything and how often they see
it. They might see it once a day or they might see it once every two days. The Invisible Hand is the
algorithm that makes that call.

A lot of people don’t understand this. A lot of people think that whatever they plug into Facebook that is
what Facebook’s going to do. They treat it like it’s a mechanical cogged machine but it is far from that.
Facebook’s algorithm has more of a say in everything than you do. You pretty much have no control. You
influence it maybe in between 5% and 10%. I wouldn’t even say 10%, I’d probably say that you influence
it maybe 5% the rest of it is up to it. Most people think that they control who sees their ads by setting at
the audience. I see people all the time, they set their audience to like a really laser targeted thing. It
might be just a people who make more than 100,000, live in this specific city, who like this gym and who
are interested in this person and they go really granular on the targeting. They are like, "Yeah I’ve got it,
look I’ve got it down to these 1000 people. This is laser targeted."

Then they display an ad to those people and they put it through, they publish it and they think that
Facebook’s just going to show their ad to those people and then it doesn’t. So Facebook doesn’t work
that way. You don’t just give it orders like that, it’s not just going to listen to you. It’s probably not going
to show your ad to anyone if you do that because that is not how it works. It only wants you to set initial
conditions. It wants you to be very generous with the initial conditions. It wants you to set a large
audience of at least half a million people, so that it can then go looking for the people within that
audience because it knows better than you where the people are. So when you try and tell it I know
where the people are, they are zoomed in right here, well Facebook is going to look at that data and be
like, "Well actually no you are wrong so I’m not even going to try and show your ads."

You'll get zero impressions, nothing will work. Or if you zero it right down, Facebook might show your
ads for like a day or two and then they are going to burn out because it’s already shown the ads to all
the people it thinks are interested. It doesn’t show your ads to who you tell it to. It adds its Invisible
Hand onto all of your stuff and it has most of the say. It has probably 95% of the say in who sees your
stuff. You only have 5% of the say. Sorry you don’t have pretty much any of the say with this. The
algorithm takes about 5% to 10% of that into consideration and it decides the rest on its own. If you
don’t know how to work with the algorithm, your ads won’t work plain and simple. You either won’t get
impressions or you will get people clicking on your ads and your ads will burn out in one or two days.

Most people pretty much have their ads burn out every five to seven days and they constantly have to
be refreshing their ads and they think that’s how Facebook works but it’s because they don’t know how
to work with the algorithm. They are trying to teach a cat how to bark. They think they are smarter than
the algorithm when it’s the other way around. You should just be setting initial conditions and you
should be letting the algorithm optimize and operate the entire campaign for you. It has the steering
wheel not you.

So let’s talk about how to work with it. Most people flat out just don’t even know how it works or how it
exists. Then another group of people, they kind of know how it works but they don’t work with it
properly because they think they are smarter or a bunch of people they think that it’s smart but they still
don’t know how to work with it properly. Pretty much no one I’ve ever seen knows how to work hand in
hand with it to really achieve big results. That’s what we are going to talk about right now, man and
machine, the symbiotic partnership for scale.

First off, what does Facebook’s algorithm actually do? What’s it’s function? How does it work? What’s it
crunching? Well it optimizes variables to find the best fit based on a specific goal. It’s basically a natural
selection engine on steroids. Do you remember this from week one? This is the natural selection
algorithm. This is what we talked about in natural law and the consulting equation. It's also how … This is
how all of natural selection works. There’s a thesis and antithesis and then the synthesis which becomes
the new thesis. This is also the consulting equation which we use, which is niche, offer, result.

We are looking for what offer when keyed together with the niche equals the result. So the net should
be the thesis, the offer would be the antithesis and the synthesis would be the result. We are looking for
which three things keyed together here in this formula to achieve what people want. Then when we get
that right, when we form a hypothesis like that and then we go out and prove it in our market by getting
three paying customers, then we know that this is… We’ve got the right variables. However, if people
tell us no, then we have to collect feedback, do enough calls and then we start iterating by changing
around at the different variables. That’s how we achieve our proof of concept. That’s our scientific
method.

We use this for iterating our cells group, we use it for iterating our niche-offer-result hypothesis, we use
it to iterating our message, we use it for iterating everything, it’s a powerful tool. This is what
Facebook’s algorithm uses, exactly, same algorithm because all natural selection engines use this exact
same algorithm when it comes to optimizing because this is how nature works. All of these smart
companies have modeled off of it, which is very smart. Facebook is an ecosystem and it’s a massive
network just like the ecosystem. It has all of this knowledge about all of these different things and who’s
interested in different things and it basically works the same way the ecosystem does.

What Facebook’s algorithm is doing is it’s crunching this all the time. It’s looking at the audience and
then the advertisement that all of the different advertisers want to show and then who is clicking on
what. It’s trying to match the best ad with the right person at the right time so that they click. Facebook
doesn’t want to show an ad to someone that they are not going to click on because that's a waste of
space and it’s a waste of money. Facebook could have showed somebody’s ad which they would have
clicked on and Facebook would have made money. Also if people click on an ad it means they are
interested in something so it’s a good experience for users of the platform because it’s helping them
solve their problems and grow their business or achieve improvement in their life. It’s good for their
businesses so it’s good for them too. It serves everyone. It’s what a good ecosystem does.

The algorithm, the All Seeing Eye within the system that’s really optimizing here, it’s trying to find the
absolute most efficient arrangement of variables so that the overall organism and all of the individuals
within the organism can benefit the most. That’s what an All Seeing Eye does. It really is the
optimization thing that controls everything within the entire ecosystem. Facebook wants to match the
right message to the right person at the right time so that they click. Facebook gets paid and the user
finds something they need to improve their business in life which helps the person, it helps the business,
the person who is advertising and it helps Facebook, it helps everyone. It works the same way our
scientific method works, with the natural selection engine, the thesis, the antithesis, the synthesis. It just
is keying through those different variables trying to find the optimum one. It’s trying to find the proof of
concept for each ad, for each person and it’s doing it for 2 billion people a thousand times a second for
each one. You can imagine this thing is just going through more variables than anything else on earth
probably.

It wants to key together the best combination of variables so that it can advance the evolution of the
users. By helping the users improve their life or their business, it’s advancing them. It also wants to
advance the evolution of the business advertisers. That’s people like you and me. It wants to help them
reach more people who want their services and products and help those businesses grow. It wants to
advance the evolution of the platform itself by helping it make more money and get a bit of satisfaction
from its users. That’s how the algorithm is optimizing.

So why does Facebook’s algorithm need us if it’s so intelligent and if it has so much power and so much
reach? The thing really has more reach than anything. It’s actually how Donald Trump won the elections.
You can look at the studies on it. He spent huge amount on Facebook. He hired one of the best
companies in the world to run his stuff. Pretty much they used the Facebook algorithm to find the
people who are interested and just show their ads to them. It’s become a machine that powerful these
days. That the candidate who knows the most about it will probably have a massive bias to win like for
as long as this thing exists because it’s that powerful. So why does it need us? If it’s so powerful and it
knows so much, why are we in the picture at all? Well it has an Achilles heel. Its Achilles heel is
something that we call initial conditions.

So man and algorithm, they partnership for scale. I’m going to cover what the algorithm does and what
we do and how we are really the perfect partnership. The algorithm, let’s start there. Facebook’s
algorithm has the network, it has the knowledge of everyone on it and a natural selection engine
capable of iterating more variable combinations than 10000 full time scientists could in 10 years and
probably way more than that. That’s how powerful it’s natural selection engine is. What it doesn’t have
is the initial conditions capable of a successful campaign. Initial conditions are the audience- ad-image
variables that key together in order to appeal to the person and get them to click.

When Facebook, it’s got the best network and algorithm and everything but it doesn’t know what to
start with. It doesn’t know what image to show, it doesn’t know what ticks to show in the ad, it doesn’t
know what sort of funnel to show and landing page and everything. It doesn’t know what the objective
for the campaign should be and it doesn’t know what the pain points are for the people in the niche.
That is a blind spot in the algorithm and it doesn’t know those things. However, it knows everything else
and what it’s missing are the initial conditions. Initial conditions are the things that we’ve either
programmed into it at the beginning. It gives it a shortcut. It’s the work that we go and do by
establishing our proof of concept.
We have to work hard organically by talking to people and thoroughly understanding them and iterating
with scientific method trying to find that exact combination, well Facebook doesn’t have that and
without its initial conditions, it can’t do it. The initial conditions are vital and then mankind, this is us.
While we don’t have access to the network, the knowledge of everyone on it or a natural selection
engine anywhere near as capable as Facebook’s algorithm, we do have the exact thing that it doesn’t
have. Once we’ve established proof of concept by successfully getting three paying clients and proving
our niche-offer-result hypothesis, we have the initial conditions necessary for a successful campaign.
Think of it like this, we have studied our niche, we have figured out what the participants within it need
and then iterate it using scientific method to find the perfect combination of niche-offer-result variables.

We’ve keyed through these different variables and we found a match here where it resonates with the
people in the niche. If we have three clients, that means it’s not a one-off, it means we have struck three
times with the specific niche-offer-result variable string. That means that we are on to something. What
we have found here must have some value add or some critical update for everyone within that niche.
That’s really powerful and that’s what we call the initial conditions and this is what Facebook’s algorithm
doesn’t have. This is why I have been harping on about proof of concept, proof of concept for the entire
training program and telling you that we need to establish it because without it we can’t even touch
Facebook, with it we are dangerous on Facebook.

At this point, once we have proof of concept, we have the initial conditions necessary for a successful
Facebook campaign. Now we have to load Facebook’s natural selection engine with our natural selection
engine with our initial conditions and then work with it to iterate and to scale to the entire industry.
Once we can load in those initial conditions, Facebook’s algorithm can just go to town trying all of the
different variations, trying all of the different people and it will find out the optimum arrangement of all
those variables and it will work for us like a machine. It could do more than we could ever do even if we
10,000 full time staff. It is a machine when it comes to finding the correct variations.

All it needs to know is the blue swan DNA string, which we pull from our proof of concept. Once we load
that DNA string in there, it can go and iterate and find the perfect combination of DNA string for all of
the different participants in the rest of the niche and that way you can take over the entire niche. This is
pretty much what it looks like, so here’s pretty much an animation of what the algorithm does. You can
see there’s all of these different variables and it goes around and it’s iterating. It tries this, it’s like, oh we
are going to change this ad, we are going to change this image with this message or we are going to
show it to these people this time or maybe these people at this time. It's constantly just … It moves
about a million times as faster than this. This is a slow animation.

It’s constantly going between all of these different variables and it’s trying to rearrange and iterate all of
these different variables. When you are iterating you imagine how slow you have to do it, you pretty
much write on a piece of paper hypothesis one, hypothesis two, you're collecting feedback and what
not, this thing is moving around at light speed trying all these iterations with billions of people. So that is
the perfect combination. On the left side here says we load initial conditions from our proof of concept
and there’s a picture of mankind and then there’s the algorithm. Facebook’s algorithm starts optimizing
the best variations of DNA strings. We know the initial conditions for blue swan DNA from proof of
concept.
Now it’s just trying to optimize those different strings of blue swan DNA to find if there’s a better option
or slight variations for different parts of the niche, all sorts of stuff. When you do this, your business
starts to scale up. It starts to ratchet up big time. If you follow the instructions around this program, I
can’t tell you how much fun you will have when you get to the Facebook stage but without a proof of
concept, you won’t even be able to turn the ignition on. Nothing's going happen without it.

Now let’s talk about Sacred Facebook Geometry; Calculations for the Heavens of Scale and Profit. When
we use Facebook to scale, we need a way to keep track of the evolutionary path to make sure it’s going
in the right direction because even systems and organisms evolve. They can evolve down the wrong
path. They can evolve badly and end up getting sick and culling the entire organism or affecting other
organisms and causing mayhem. So they can definitely go down the wrong path or go down the right
path and really become powerful and helpful. We need a way to really police it and make sure that it’s
going in the right direction.

To keep track of everything we use KPI’s and something which I call the Polaris Star, so KPI’s and The
Polaris star. The Polaris star, the number one guiding metric and our true north is return on investment
(ROI). We call this the Polaris Star. Whenever we are confused by our metrics or in trouble all we have to
do is sight Polaris and we can correct our course to pull back into alignment. So when we are doing ads,
it’s so important that we have one clear objective in mind other than other things like cost per click, cost
per lead and everything. Because I talk to people sometimes and they are completely nutting out at all
these different metrics and all of these things and they are so confused and they can’t tell heads from
tails anywhere. They are so lost. They’re pretty much chasing their own tail through all of this data.

Then they put their head up and they are like, "Man what do I do? I’ve got this and this, this …" and I’m
like, “Where is your ROI?” And they are like, “Oh I’m not even tracking it.” There you go. That is always
what’s our Polaris Star is going to be and that means like our true north. Just imagine you were out
navigating a sailing ship through the oceans at night, whenever you want to know, if you are heading
north, and you forgot where you were and there were rough conditions and everything, you just look
into the sky and find the Polaris Star and then you just aim for that. That’s how you know you are always
pointing your ship in the right direction and that’s what ROI is for us.

It doesn’t matter what the other metrics say, if we are heading towards true north we are fine. If you are
on your sailing ship and all of your instruments are going crazy and telling you to do this and to do that
and your wife and her girlfriend and husband are telling you that you should go this way or that. There’s
all of these people in your rear. This is pretty much what it's like every day in business. You’ve got all of
these instruments telling you all of this different shit. You’ve got all of these people harping on in your
ear telling you their opinions and you need to figure out what to do. Everyone has an opinion. People
and their opinions are pretty fascinating because a lot of the time they have no idea what they are
talking about but they seem to display total conviction in their opinion even though they have no idea
what they are talking about.
That's why we need a Polaris Star so that we can … If you were in that sailing situation and you looked
into the sky and you could sight Polaris then you wouldn’t listen to anyone. You'd just keep sailing in
that direction. That's why we call it that. That is always going to be our most powerful metric. Then
beneath that we have KPIs. We have a number of key performance indicators which is what we call KPI’s
that measure the individual points within the system so that we can deep dive and check the
performance of each one. Some of our KPI’s include, click through rate, cost per click, landing page,
conversion rate, cost per lead, cost per survey, cost to acquire customer etc.

We’ve got a list of them. I’ll introduce you to all of our KPI’s later in this week’s training. Don’t worry
about it now, we are just giving you a brief overview of the entire system and how to think about it first.
Then we are going to start drilling into the strategy and then the tactics within the strategy, the
workflows and things within the tactics within the strategy. We are covering it from the highest dips all
the way down to the lowest plain.

Now let’s talk about The philosophers stone: Order from chaos in the blue swan empire. Our main
objective with Facebook ads is to grow our Blue Swan Empire. By Blue Swan Empire I mean our
profitable ads. We want to have as many profitable ads as we possibly can because why would we not
want more profitable ads. It just means we are going to be making more money. That’s our main
objective, to grow blue swans and to grow an empire of blue swans.

Here is some notes breeding blue swans. Our main job with Facebook ads is to breed blue swans and
grow the blue swan empire. This means to try different iterations of possible blue swan DNA strings
made up of these variables, audience-message-image. Each ad set acts as a cell and contains a string of
DNA made up of audience-message-image. You want to think of an ad set as a cell. Then within that cell,
there's that DNA string. If the cell is healthy and produces profit at a desirable ROI, we call it a blue
swan. We like blue swans, that's our objective. We want to breed more of them.

If we do have healthy blue swan ad sets or healthy blue swan cells, then we start duplicating them and
creating different off shoots of them and we try even breeding them with other types of blue swans. We
start multiplying them and starting to really propagate the entire blue swan race. I’m going to show you
how to do it in this training program. I’m going to show you how to take different types of ad sets and
really start mutating them and growing them and cloning them and all sorts of things.

If the cell is unhealthy and non profitable; if something's healthy, it’s profitable and if something is
unhealthy it’s non profitable. That’s what we use, it’s just profit, that’s how we judge red swan from
blue. If it’s unhealthy and non profitable we call it a red swan and we cull it from our population and by
cull I mean turn it off and we delete it. So we don’t have any red swans in our empire. It’s just blue
swans and we want to just keep breeding even the best blue ones and we just want to keep even
breeding the best blue ones.

Then once we start having a ton of blue ones, then we start wanting to breed the top blue ones and
even culling the bottom blue ones to make the general population as healthy as possible. It’s pointless
to guess the DNA string for blue swans. We must get the initial conditions from our established proof of
concept. The fractal pattern present in our proof of concept variable combination, which is niche-offer-
result, that’s what you will have. You'll have one of those that’s working if you have a proof of concept.

That will provide us with enough data to set the initial conditions and then Facebook's algorithm will
optimize from there. It will try all the different variables, it will key between them all and it will start
scaling up. Once we have established a healthy population of blue swans, we want to scale up and make
sure that we keep order in the kingdom, not chaos. What I mean by this is, once you have a healthy
population of blue swans, then it’s not just keeping the blue swans, it’s making sure that there’s order
with the blue swans.

That means that, we are making sure that our blue swans don’t get sick or that our blue swans don’t go
crazy or something. That can happen you can have a whole bunch of profitable ads that are all going
really well but if you don’t know how to firm those ad sets and keep flushing variation through them, to
keep the variation in there ... Because any species without variation is going to get sick. If you have
stagnant water, it starts building diseases and unhealthy bacteria in it but if the water is always flowing
then it’s always fine. With any type of species if you don’t have variation coming into it, it gets sick and it
dies. That’s exactly what happens with facebook ads.

If you have a whole bunch of different ads that are all profitable, and if you are not flushing new
variation through there and giving the algorithm chances to create different off shoots and different
syntheses of the different types of DNA, then eventually it will just get sick and die. That’s what we
mean by keeping order in the kingdom and not chaos. Because once things go crazy it’s chaotic and it’s
very hard to restore things once they go too chaotic.

We can restore minor chaos and I'll show you how to do that later on in this program, later on in this
week’s training but once it just sinks into total chaos it’s pretty much irreversible and we just have to
start from a pretty much a brand new population. That’s what we call recovering from the deluge. That’s
when our entire population gets wiped out through chaos and we have to start a fresh.

We don’t want that to happen. That’s why we keep variation coming through and we keep track of
everything with the Polaris Star, ake sure we are hitting in the true north direction and that our empire
of blue swans is healthy and growing.

This week’s training is going to show you exactly how to do that in intricate detail from the highest level
understanding all the way down to the strategies then into the tactics and into the work flows and step
by step processes within those tactics; so everything that you need to know to become a master at this.

Here's how it’s structured. In this first video of week five, I wanted to give you an overview, like a high
level overview overview of how we think about Facebook. And how it’s so crucial that we have a proof
of concept first before we go to Facebook. Then how we work together, man and machine, man and
algorithm to really provide the different pieces of the puzzle that we can both provide best and work
together to achieve massive results. Hopefully you’ve got a very clear understanding of Facebook and
nonlinear systems and all the interconnectedness and organisms and all that stuff. Now it will really set
the precedent for understanding how I think about all of that stuff. Once you understand that then all
the strategies and tactics that we are going to go into from here, should be a lot easier to understand.

There’s 13 modules in Fractal Facebook Evolution Training. The first two to four, they are around the
theory and the strategy. Then after that we get into the specific step by step instructions and it gets a lot
more tactical and a lot faster through the rest of the video. They are not all very long high level videos,
only the first couple of them are and then we get into the specifics. But make sure you watch the high
level stuff first and then go into the specifics. Make sure you follow it one step at a time, one module at
a time because you don’t want to miss this one up when you set it up.

The first one is Fractal Facebook Evolution and you are watching that one right now, that’s just a high
level view. Then the second one is unveiling the Facebook algorithm. I’m going to just show you exactly
how the facebook algorithm makes up it’s mind. We are going to look at all the different characteristics
and tendencies that the facebook algorithm has. What biases does it have and how can we get it to
display our ad over other people’s ads and how can we get it to display to the right people at the right
time, all of those things. We are going to really unveil it and I understand pretty much everything about
that algorithm so I can tell you in scary detail how it does everything.

Number three is Facebook’s book of law. This is Facebook compliance. Pretty much we don’t want to get
what I call the mark of the beast, which is getting our Facebook ads account banned. We don’t want that
because that’s the worst thing. We don’t want that. In order to avoid that, we have to make sure that
we’re compliant with Facebook’s book of law which is their compliance and make sure that we’re all
good there. Once you follow all of that stuff, you’ll find you’ll not have any issues. Number four is
playbook for a new epoch. This is basically our strategy. So our strategy playbook. What’s our game play
and how does it differentiate from other people? What exactly are we doing that’s going to cover all of
that?

Then we’re going to drill into the specific things, the action items. So you’re sitting in your ad hypothesis,
your audience hypothesis that’s hypothesizing what we think is going to work and what we’re going to
load in as the initial conditions into the engine and we’re going to get that from our proof of concept.
That’s our hypothetical blue swan and DNA string combination. Number seven is tracking swans in the
Polaris star. That is all of our KPI’s, how our the KPI’s work and how a Polaris star works, how we can
track that and the different formulas for those and the spreadsheets we use for tracking everything.
Cover it in detail exactly how to keep your eye on the key numbers and be able to separate red swans
from blue.

Eight is the ad and audience templates. How to combine the ad hypothesis and the audience hypothesis
to create the different genetic combinations. We create what I call the Facebook golden mean, which is
the perfect combination of variables to really load into the natural selection engine. It’s five different
message angles with four different images for each angle, which means that we have a lot of variation
there. Then we even create like two to four different variations of those. We load it up with a really
healthy dose of variation and it’s all structured in the right way so that the algorithm works with it well.
That’s what we call the Facebook golden mean and that’s what we load into the engine for the next
step.

Step nine is campaign genesis. This is when we really load in the golden mean architecture for the new
blue swan species and that’s what genesis is. That’s when we create the initial conditions and we turn
on the natural selection engine. Then 10 is governing the initial conditions in the Garden of Eden. That is
when we have our brand new, different blue swan DNA strands and cells out in the Facebook
environment and they’re receiving traffic, they’re interacting and we need to govern the initial
conditions over the first four days. After four days we let things be for four days, we keep our hands out
and then after four days there are certain things we go through to be out with a check what’s a red
swan, what’s a blue swan and how we tidy up all of that and start the propagation process.

Then 11, daily work flow of the king. This is the daily workflow for you or for the person that is going to
be managing your Facebook ads but I’m assuming that’s going to be you. This is step by step what work
flow to go through to make sure that you can govern your blue swan empire and make sure that it
grows, it stays healthy and it doesn’t descend into chaos and end up going like that. These are really
important things to follow if you want to hold the throne of your blue swan empire. Then 12 is
Ratcheting up the kingdom. That is really scaling it up. Going from a small population of blue swans to a
world leading empire of blue swans and the healthiest, leanest, meanest blue swans there is.

Here I teach you different strategies and everything to really scale it up. We’re to push in order for
things to start scaling. I can show you the different parts of the metrics to push to make things go like
10x, 20x, 100x because I know all of the different patterns which have the proportionate outcomes. I can
show you where to push to have one unit of input and have 100x output. I can show you all of those
things. Then solving chaos in the kingdom, 13. This is just basically troubleshooting. If you have any noise
or interference or if you have some minor chaos in your blue swan kingdom, there will be some
troubleshooting guides in this module. If you have a deluge in your empire, we’ll show you how to deal
with that too.

With all the different scenarios here, we have all of the different things you could possibly need. From
the highest level understanding, all the way down to the strategy, then the tactics, then the work flows,
then even how to manage it, how to scale it up and how to deal with issues if they arise. We’re really
covering a lot of stuff here and this is going to be a killer Facebook ads training. I’ve never seen anything
else that’s even gone into one-one hundredth of this detail and depth of understanding. I’m sure this is
going produce some amazing advertisers and help a lot of you scale your businesses exponentially.
That’s it for this module. I will see you in the next one right now. Thanks.